The city reports five categories of capital assets: land; buildings; improvements; infrastructure; and equipment. Each category is further identified by type.
(A) Land. LAND is defined as specified land, lots, parcels or acreage including rights-of-way owned by the city, its various departments, boards or commissions, regardless of the method or date of acquisition. Easements are not included, as the city does not own them, but has an interest in land owned by another (i.e., property owner) that entitles its holder to a specified limited use. The land improvements consist of betterments, site preparation, and site improvements (other than buildings) of a permanent nature that ready the land for its intended use. The costs associated with improvements to land are added to the cost of the land. Land and land improvements are inexhaustible assets and do not depreciate over time. The city will capitalize all land purchases, regardless of cost:
(1) Land acquired (including right-of-way). Expenditures for the purchase of land, including right-of-way. This includes land where the city has ownership;
(2) Exceptions to land capitalization are land purchased outright as easements or rights-of-way for infrastructure. Examples of infrastructure are roads and streets, street lighting systems, overpasses, sidewalks, curbs, parking meters, street signs and stormwater collection;
(3) The original cost of land shall include the full value given to the seller including relocation costs, legal services incidental to the purchase (including title work), appraisals and negotiation fees, surveying and any other costs for preparing the land for its intended purpose. Also included are contractors and/or city personnel (salary and benefits) used to demolish buildings, excavation, clean up and/or inspection;
(4) The city shall record donated land at fair market value plus all associated costs on the date of the land transfer; and
(5) Purchases made using federal or state funding will adhere to the source funding policies and procedures.
(B) Buildings. A BUILDING is a structure that is permanently attached to the land and is not intended to be transportable or moveable. Any structures designed and erected to house equipment services or functions are included. This includes systems, services and fixtures within the building, as well as attachments such as porches, stairs, fire escapes, canopies, areaways, lighting fixtures, flagpoles, sound equipment, security cameras, lifts and riggings, curtains and staging and all other such units that serve the building. The city reports three types of capital assets as buildings:
(1) Buildings acquired. Expenditures for acquiring existing buildings.
(a) A department shall capitalize buildings at full cost with no subcategories, including the cost of attachments. Examples of attachments are heating, cooling, plumbing, lighting, sprinkler systems or any part of the basic building. The city will include the cost of items designed or purchased exclusively for the building.
(b) Capital building costs shall include land preparation, architectural and engineering fees, bond issuance fees, attorney and financing costs (during construction), accounting costs, and any costs directly attributable to the construction of a building.
(c) A department shall record donated buildings at fair market value including associated costs on the date of transfer.
(d) Purchases made using federal or state funding shall adhere to the source funding policies and procedures.
(2) Building design and construction. Expenditures for design and construction of new buildings. This includes parking garages.
(3) (a) Building improvements. Building improvements are capital events that materially extend the useful life of a building, increase the value of a building, or both. A building improvement should be capitalized and recorded as an increase in the value of the existing building if the cost of the improvement meets or exceeds the capitalization threshold and decreases the estimated useful life.
(b) Expenditures for improvements made to existing buildings. Improvements mean any expenditure greater than the asset type threshold that adds new capacity to an existing building or extends the estimated useful life of an existing building. This includes an addition, a new roof, or a new HVAC system.
(c) Capitalization. Any department, board or commission improving or renovating an existing building shall capitalize the cost only if the result meets all of the following conditions:
1. The total cost exceeds $100,000;
2. The useful life is extended by two or more years;
3. The total cost will be greater than the current book value and less than the fair market value; and
4. Repairs and rehabilitation of less than $100,000 shall be expensed.
(C) Improvements.
(1) IMPROVEMENTS other than buildings include depreciable improvements and betterments made to land of a permanent nature, other than buildings that add value to land but do not have an indefinite useful life. Expenditures for land improvements that do not deteriorate with use or passage of time are additions to the cost of land and are generally not exhaustible, and therefore not depreciable. The definition of this group includes improvements to land which are attached or not easily removed, and which have a life expectancy of greater than two years. Examples are walks, parking areas, drives, golf cart paths, fencing, retaining walls, pools, outside fountains, planters, underground sprinkler systems, and other similar items. The city reports three types of capital assets as improvements:
(a) Roads or drives on city-owned land that provide support to city facilities are assets. sidewalks installed on city-owned land for use by the public and the support of the city facility are capital assets;
(b) Parks and recreation facilities. Cost of acquisition and improvements to city parks;
(c) Distribution and collection systems. Cost of acquisition and improvements to the city’s sewer, stormwater and reclaim distribution systems.
(2) The city shall capitalize repairs or renovations to improvements only if it meets the following conditions:
(a) The total cost exceeds $35,000; and
(b) The useful life is greater than two years.
(3) A department shall capitalize improvements or renovations to existing improvements other than buildings only if the result meets the following conditions:
(a) The total cost exceeds $35,000;
(b) The asset’s useful, life is extended by two or more years; and
(c) The total cost will be greater than the current book value and less than the fair market value.
(4) A department’s donated improvements other than buildings shall be recorded at fair market value plus all associated costs on the date of transfer.
(a) Purchases made using federal or state funding shall follow the source funding policies and the aforementioned procedures.
(b) Historical cost. The cash equivalent price exchanged for goods or services at the date of acquisition is the historical cost. Land, buildings, equipment, and most inventories are common examples of items recognized under the historical cost attribute.
(D) Infrastructure.
(1) INFRASTRUCTURE ASSETS are long-lived capital assets that are normally stationary in nature and can be preserved for a significantly greater number of years than most capital assets. Maintenance and preservation of these assets are expensed in the period incurred. Infrastructure is overseen by Engineering and Public Works. The city reports eight types of capital assets as infrastructure:
(a) Drainage. Cost of improving drainage;
(b) Streets and roundabouts. Cost of adding, resurfacing or improving streets;
(c) Curb and gutter. Cost of adding or improving curb and gutter;
(d) Gateway enhancement and streetscape. Cost designated for adding or improving gateway enhancement and streetscape;
(e) Bridges and tunnels. Cost of adding or improving bridges and tunnels;
(f) Sidewalks and trails. Cost of adding or improving sidewalks and trails;
(g) Traffic signals. Cost of acquiring and installing traffic signals; and
(h) Streetlights. Cost installing or improving streetlights.
(2) Infrastructure improvements are capitalized and recorded as an addition of value to the infrastructure if the improvement or additional value meets the capitalization threshold.
(E) Vehicles, machinery and equipment. The EQUIPMENT ASSET CLASS is used to account for movable items. Supplies are excluded. Machinery and equipment are an apparatus, tool, or conglomeration or pieces to form a tool, or purchased equipment, used in operations. These items can be fixed or movable tangible assets. They will stand alone and not become part of a basic structure or building. The city shall capitalize and tag items with an individual value equal to or greater than $5,000. Machinery combined with other machinery to form one unit with a total value greater than $5,000 will be one unit. Examples of movable items:
(1) Furniture and fixtures. Expenditures for furniture and fixtures, including office furniture and building fixtures, with a unit, cost more than the capital asset type threshold. Normally, such items would be indoors and would not require power to operate. Examples include chairs, tables, bookcases and office cubicles;
(2) Vehicles. Expenditures for on-road rolling stock with a unit cost over the capital asset type threshold, each used to transport persons or objects. May include expenditures for permanent type improvements to new vehicles before placing the vehicle in service for the first time, regardless of cost (e.g., permanent attachments, pickup truck bed covers, bed liners, patrol car light bars, window tinting and the like). Other examples include trailers, motorcycles, automobiles (e.g., sedans, pick-up trucks, SUVs), and on-road trucks to which the city affixes a license plate. Does not include off-road rolling stock to which the city does not affix a license plate;
(3) Other vehicles. Other vehicles (that may not have a license plate) that must be capitalized include: golf carts, maintenance utility vehicles, lawnmowers, tractors and the like;
(4) Machinery and equipment. Expenditures for machinery and equipment with a unit cost over the capital asset type threshold each, are usually composed of a complex combination of parts. Examples include copiers, electronics, power tools, self-contained breathing apparatus, off-road rolling stock to which the city does not affix a license plate, traffic controllers and monitors, and radio equipment. does not include computer hardware and vehicles to which the city affixes a license plate;
(5) Computer hardware. Computer hardware with a unit cost over the capital asset type threshold; and
(6) Computer software. Non-recurring cost of computer software with a unit cost over the capital asset type threshold. For internally generated computer soft ware, only costs incurred during the application development stage are considered capital assets.
(F) Construction in progress. CONSTRUCTION, OR DEVELOPMENT, IN PROGRESS is a special class of capital asset that is still in the process of construction (tangible) or development (intangible). Depreciation does not begin until the capital assets are substantially ready to be placed in service.
(Ord. 22-44, passed 10-24-2022)