(A) Purpose. Governments find it useful to report major capital acquisition and construction separately from the general operating fund. Capital projects funds should be reserved for major capital acquisition or construction activities, especially those that would distort financial trend data if not reported separately from a government’s operating activities. The city currently has several capital projects funds and this policy is to define the budget policy for the Capital Projects Fund 301.
(B) Policy.
(1) The Fund 301 Capital Projects Fund should include expenses that meet the following criteria:
(a) Asset life greater than ten years;
(b) Individual item cost in excess of $25,000;
(c) Projects with different phases and costs over multiple budget years.
(2) Capital assets that are purchased with specific intent for one department with a useful life of less than ten years should be budgeted for within the fund which has ownership of the asset. For example, the routine purchase of police vehicles should be reported in the general fund budget as a Police Department capital outlay.
(3) The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset life is not capitalized for accounting purposes and should not be included in the Capital Project Fund budget (or included in the Capital Improvement Plan).
(C) Process.
(1) The capital budget planning/decision making process will include:
(a) Establishing a calendar showing key dates along with deadlines;
(b) Prioritizing projects based on an evaluation of information and criteria: safety, location, return on investment, net payback, public need, connection to other plans, and available funding.
(c) Funding sources should be defined, including any issuance of long-term debt/levying additional taxes.
(2) The Capital Projects Fund should be used to fund projects as part of the long-tem Capital Improvement Plan which is part of the city’s annual budget.
(3) The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset life is not capitalized for accounting purposes nor included in the Capital Improvement Plan.
(Ord. 9353, passed 11-5-2018)