HomeMy WebLinkAboutD-2191-14 Amend 2-13 Capital Asset Policy SPONSOR(S): Councilor(s) Finkam, Schleif
Seidensticker, Sharp and Snyder
ORDINANCE D-2191-14
AS AMENDED
AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF CARMEL,
INDIANA AMENDING CHAPTER 2,ARTICLE 1,DIVISION III,SECTION 2-13
OF THE CARMEL,CITY CODE
WHEREAS, the Common Council (the "Council") of the City of Carmel, Indiana (the
"City") previously adopted Ordinance No. D-1680-04 which established a Fixed Asset
Capitalization Policy which was codified as Chapter 2, Article 3,Division IV of the City of Carmel,
Indiana Code of Ordinances; and,
WHEREAS, compliance is warranted and desired regarding various accounting and
fmancial reporting standards including Generally Accepted Accounting Principles (GAAP);
Governmental Accounting,Auditing and Financial Reporting(GAAFR): Governmental Accounting
Standards Board Statement No. 34; Federal Regulatory Issues and Standards; Government Finance
Officers Association Recommended Practices; and State of Indiana Governmental financial
reporting requirements including;
• Accounting and Financial Reporting Re gulation Manual, Revised June, 2013
(Indiana State Board of Accounts)
• Accounting and Uniform Compliance Guidelines Manual for Cities and Towns State
of Indiana,Re-issued 2013 (Indiana State Board of Accounts); and
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WHEREAS, the Council is desirous of updating the Capital Asset Policy for the Ci ty and
its various Departments.
NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of Cannel,
Indiana, as follows:
Section 1: The above recitals are incorporated herein by reference as though fully set forth
herein below.
Section 2-13: Capital Asset Policy
(a) Definition of Capital Assets
Capital assets include: land,land improvements,including monuments,
buildings,building improvements, construction in progress,machinery and
equipment,vehicles and infrastructure. All land will be capitalized but not
depreciated. All items with a useful life of more than one year, and having a
unit cost of$5,000 or more shall be capitalized(including acquisitions by
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lease-purchase agreements and donated items).A capital asset meeting the
criteria will be reported and depreciated in the government-wide financial
statements.
Assets that are not capitalized(items<$5,000 and greater than$1000)are
expensed in the year of acquisition. An inventory will be kept on all
equipment with a capitalized cost of<$5,000 and greater than$1000.
Exceptions are:
(1) items costing less than the above limits which are permanently
installed as a part of the cost of original construction or
installation of a larger building or equipment unit will be
included in the cost of the larger unit;
(2) modular equipment added subsequent to original equipment
construction of a larger building or equipment unit which may be
put together to form larger units costing more than the prescribed
limits will be charged to capital assets even though the cost of
individual items is less than such units;
(3) cabinets, shelving,bookcases,and similar items, added
subsequent to original construction,which are custom made for a
specific place and adaptable elsewhere,will be capitalized;
NOTE: Purchases made using grant funds must comply with grant
requirements or the above procedures,whichever are the most restrictive.
(b) Threshold Levels For Capital Assets
The following schedule will be followed for the various types of capital assets other
than infrastructure assets:
Capitalize/Depreciate
Land All; Capitalize only
Land Improvements $20,000
Buildings $20,000
Building Improvements $20,000
Construction in Progress All; Capitalize only
Machinery and Equipment $5,000
Vehicles $5,000
City Utility Assets $5,000
Computer Software $ 5,000
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(c) Valuation of Capital Assets
Capital assets must be recorded at actual cost. Normally the cost recorded is the
purchase price or construction costs of the asset, but also included is any other
reasonable and necessary costs incurred to place the asset in its intended location
and intended use. Such costs could include the following:
(1) Legal and title fees, closing costs;
(2) Appraisal and negotiation fees, surveying fees;
(3) Damage payments;
(4) Land preparation costs, demolition costs;
(5) Architect, engineering and accounting fees;
(6) Insurance premiums during construction;
(7) Transportation charges;
(8) Interest costs during construction.
Donated or contributed assets should be recorded at their fair value on the
date donated.
(d) Asset Definitions by Major Category
It is important to the maintenance of accurate records that each asset category is
precisely defined and that all persons responsible for record maintenance are fully
aware of the categorization system. This section further clarifies the asset definition
by major category.
(1) Land
Land is defined as specified land, lots, parcels or acreage including rights of
way, owned by the City of Cannel, its various departments, boards or
commissions,regardless of the method or date of acquisition. Easements will
not be included as the City does not own them, but as an interest in land
owned by another (i.e. property owner) that entitles its holder to a specified
limited use. The City Utility,however,will capitalize easements.
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(2) Improvements Other Than Buildings
Examples of the Civil City assets in this category are parking areas and
drives, fencing, pools and fountains, underground sprinkler systems,
decorative street lighting and other similar items.
Examples of the City Utilities assets in this category are water supply mains,
collection sewers,wells,fences, intake pipes,manholes, and fire hydrants.
(3) Buildings
All structures designed and erected to house equipment services, or functions
are included. This includes systems, services, and fixtures within the
buildings, and 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.
Plumbing systems,lighting systems,heating, cooling,ventilating and air
handling systems, alarm systems, sound systems, surveillance systems,
passenger and freight elevators, escalators,built-in casework,walk-in
coolers and freezers, fixed shelving, and other fixed equipment are included
as part of the building if it is owned. Communication antennas and/or towers
are not included because they are treated as part of the equipment unit.
(4) Equipment
Equipment includes all other types of physical property within the scope of
the Fixed Asset Management System not previously classified. Included
within this category are office equipment, office furniture, appliances,
furnishings, machinery items, maintenance equipment, communication
equipment, police, fire, laboratory equipment, vehicles, road equipment,
aircraft, emergency equipment, earth moving equipment, text equipment,
civil defense equipment, law enforcement equipment, and data processing
equipment.All supplies are excluded.
(5) Infrastructure
Infrastructure assets are long-lived capital assets that normally can be
preserved for a significantly greater number of years than most capital assets
and that are normally stationary in nature. Examples include roads,
streetlights, traffic signals, drainage systems, and water lines. Infrastructure
assets do not include buildings, drives, parking lots or any other examples
given above that are incidental to property or access to the property above.
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Preservation costs that extend the useful life of an asset beyond its previously
established life are capitalized. Maintenance/repair costs allow an asset to
continue to be used during its originally established useful life and are
expensed.in the period incurred. Examples include patching, resurfacing,
snow removal, etc. Also, routine departmental operating activities such as
feasibility studies and preliminary engineering/design studies will be
expensed as an element of the infrastructure asset. Alleys will not be
included as part of the infrastructure,however.
The retroactive reporting requirements for infrastructure of GASB 34
requires the City to report items put into service from 1980 forward, and
gives the City the option to report items put into service prior to 1980. The
City will report only on items put into service after 1980.
(e) Depreciation Methods
The City will depreciate capital assets by using the straight-line method.
Salvage value will be determined on an asset-by-asset basis. Depreciation will be
calculated at year-end. Land is not depreciated according to generally accepted
accounting principles.
A network of assets is composed of all assets that provide a particular type of
service for government. A subsystem of a network of assets is composed of all
assets that make a similar portion or segment of a network of assets. The following
will be the breakdown of our networks and subsystems:
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(1) Roads/Streets Network
Subsystems: Streets, Curbs, and Sidewalks
(2) Traffic Components Network
Subsystems: Traffic Signals and Street Lights
(3) Drainage Systems Network
(f) Straight-line Depreciation
The following assets accounted for under the Capital Asset Policy will be
depreciated using the straight-line method of depreciation. A gain or loss on disposal
will be reported. The most common useful lives for the Civil City is as follows:
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(1) Vehicles—5 years
(2) Office Equipment—5 years
(3) Office Furniture—20 years
(4) Heavy Equipment—10 years
(5) Fire Trucks—15 years
(6) Buildings—50 years
(7) Building Components (HVAC systems,roofing)—20 years
(8) Leasehold Improvements—useful life of asset or lease term
(whichever is shorter)
(9) Land Improvements—structure(parking lots,athletic courts,
swimming pools)—20 years
(10) Land Improvements—groundwork(golf course, athletic fields,
landscaping,fencing)—20 years
(11) Outdoor Equipment—(playground equipment,radio towers)—15
years
(12) Grounds Equipment—(mowers,tractors, attachments)— 15 years
(13) Computer Software—5 years
(14) Security Cameras– 10 years
(15) Stage lighting-5 years
(16) Mobile Stage Trailer– 10 years
(17) Rigging and Lifts– 10 years
(18) Sound Equipment for Palladium– 10 years
The following assets are accounted for by the City Utility under the Capital Asset
Policy and will be depreciated using the straight-line method of depreciation. The useful
lives for the assets of the Cannel Utility are as follows:
(g) Water
(1) Buildings and Improvements—50 years
(2) Transmission and Distribution Mains—50 to 75 years
(3) Meters/Meter Installation-25 to 30 years
(4) Pumping Equipment—50 years
(5) Water Treatment Equipment—50 years
(6) Elevated Storage—75 years
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(7) Office Equipment— 10 years
(8) Machinery—5 to 40, 67 years
(9) Hydrants—50 to75 years
(10) Well Equipment— 15 to 20 years
(11) Wells 50 to 100 years
(12) Communications Equipment— 10 years
(13) GPS— 100 years
(14) Clearwell— 100 years
(h) Sewer
(1) Buildings and Improvements—50 years
(2) Sewer Lines—50 years
(3) Lift Station—50 years
(4) Treatment Plant Equipment—10 years
(5) Office Equipment—10 years
(6) Machinery—6-20 years
(7) Vehicles—5 years
(8) HVAC Systems—25 years
(9) GPS— 100 years
(10) Computer Software—5 years
(i) Infrastructure
The following is the list of networks and their useful lives:
(1) Roads/Streets Network
Subsystems: Types of Roads/Streets, Curbs, and Sidewalks—45 years
(2) Traffic Components Network
Subsystems: Traffic Signals —35 years
Street lights —25 years
(3) Drainage Systems Network —50 years
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(j) Capital Asset Acquisitions
The method of acquisition is not a determining factor. Each department should
report items acquired by:
(1) Regular purchases
(2) Lease purchase
(3) Construction by city employees
(4) Construction by other than city employees
(5) Condemnation
(6) Donation
(7) Addition to an existing asset
(8) Transfer from another department
(9) Trade or barter
(10) Annexation
Leased equipment should be capitalized if the lease agreement meets any one of the
following criteria:
(1) The lease transfers ownership of the property to the lessee by the end
of the lease term.
(2) The lease contains a bargain purchase option.
(3) The lease term is equal to 75 percent of the estimated economic life
of the leased property.
(4) The present value of the minimum lease payments at the inception of
the lease, excluding executory costs, equals at least 90 percent of the fair
value of the leased property.
Leases that do not meet any of the above criteria should be recorded as an operating
lease and reported in the notes of the financial statements.
(k) Asset Transfers and Dispositions
Property should not be transferred,auctioned,or disposed of without prior approval
of each department director. An Inventory Disposal Notification Form(Exhibit A)
must be sent to the Asset Manager reflecting any of these transactions. This is a
dual-purpose form for transfers(defined as any movement of an asset by virtue of
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change in location, either by account, department,building,floor,or room)or
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retirement(disposal) of property.
The main points to be remembered when using the Inventory Disposal form are:
(1) Always provide sufficient detail to identify each asset. Most
important is the asset's identification number;
(2) Be accurate and do not overlook any of the needed entry fields;
(3) Type or print all information;
(4) Complete each column for every asset listed on the form;
(5) Directors must sign every form;
(6) Return all information to the Asset Manager in the Fiscal Office.
If an asset is stolen, the department must immediately notify the Asset
Manager in the office of the Fiscal Officer.
(1) Periodic Inventories
A physical inventory of all capital assets (any item over$5,000)will be conducted in
each department at least one time per year and submitted to the Clerk Treasurer's
office on May 1 of each calendar year. The Asset Manager will conduct spot checks
on a random basis. Directors will be accountable for the capital asset inventory
charged to their departments by verifying an itemization of all capital assets prior to
each year-end.
(m) Responsibilities of the Fiscal Officer
The Fiscal Officer will ensure that accounting for capital assets is being exercised by
establishing a capital asset inventory both initially and periodically in subsequent
years. The Fiscal Officer will further ensure that the capital asset report will be
updated annually to reflect additions, deletions, and transfers and to reflect the new
annual capital asset balance for fmancial reporting purposes, as well as the annual
and accumulated depreciation calculation.
(n) Responsibilities of Department Directors
It is the responsibility of the director in each department or his/her designee to
inventory each piece of property and to complete the Inventory Acquisition Form
(Exhibit B).The director/designee will be the focal point for questions regarding the
availability, condition,and usage of the asset, as well as the contact during the
physical inventory process. All assets will be examined after shipment to ensure that
assets have not been damaged. The Director is responsible for notifying the Fiscal
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Officer of any acquisitions and disposals of assets with a value greater than$1,000
and less than$5,000. It is the responsibility of the department to maintain an
accurate record of these assets.
The City has created and implemented an inventory process for all departments,
commissions and all other entities that the City is purchasing assets for. This
process will include designating purchasing authorities; proper purchasing written
procedures — in accordance with all state and local statutes; proper "tagging" of
assets and reporting to the Fiscal Officer; Proper disposal of property, written
procedures; in accordance with all state and local statutes; and reporting to the
Fiscal Officer. This policy will be reviewed by the Fiscal Officer.
Section 2: All prior Ordinances or parts thereof which may be inconsistent with any
provision of this Ordinance are hereby repealed. The paragraphs, sentences and words of this
Ordinance are separable, and if any portion hereof is declared unconstitutional, invalid or
unenforceable by a court of competent jurisdiction, such declaration shall not affect the remaining
portions of this Ordinance.
Section 3: This Ordinance shall be in full force and effect from and after the date of its
passage and signing by the Mayor and such publication and recordation as is required by law.
PASSED by the Common Council of the City of Cannel, Indiana,this 3 � day of
, 2014, by a vote of —1 ayes and a nays.
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COMMON COUNCIL FOR THE CI OF CARM%
Pr, iding Officer evin D. Rider
W. Eric Seidenstic er, President Pro Tempore Carol Schl-'
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' • •: E. Carter Richard . Sharp
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irinkam/ .ci S a er
ATTEST:
Diana L. Cordray, IAMC, Clerk-Tre.t:urer
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Presented by me to the Mayor the City of Carmel, Indiana, this 3 day of
N , 2014, at 8:YO -P.M.
✓ s ta_ -�_ �..
Diana L. Cordray, IAMC, Clerk re.surer
Approved by me, the Mayor of the City of Carmel, Indiana, this 3 ' day of
, 2014, at S:40 P.M. .
i
J es Brainard,Mayor
ATTEST:
AjtAlik_X / ,
4',;
Diana L. Cordray, IAMC, Clerk-Treasu(r
Prepared By: Diana L. Cordray,Clerk-Treasurer
CITY OF CARMEL
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One Civic Square
Carmel,IN 46032
11
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% %/%/�/'°°` Inventory Disposal Notification EXHIBIT A
SECTION I
Department Name: Transaction Date:
Method of Disposal: 1) Worthless Property 2)Auction: $ 3) Sale: $
(Check One) Destruction: (IC 5-22-22-8
see below)
4) Trade Value: $ 5) Transfer: 6) Donated, to whom: Other:
SECTION II
Description of Asset: Asset Number:
Serial#: Model#: VIN #:
SECTION III
WORTHLESS PROPERTY IC5.22.22.8
The following committee has reviewed the attached lit of itemized assets and has determined that the items are deemed
worthless property in accordance with IC 5-22-22-8.
Remarks, if any:
Approved by the Inventory Disposition Review Committee:
Jeff Barnes
Facilities Manager, City of Carmel: Date: / /
Gary Carter,
Carmel Fire Department: Date: / /
Ed Penman,
Palladium Facility Manager: Date:_/ /
Sandy Johnson,
Asset Manager: Date _/ /
Department Director's Signature: Date:
Clerk-Treasurer's Signature: - - Date:
Revised 10/27/2014
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th�y o f Cq Ti. * of f Carmel
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Inventory Acquisition Notification EXHIBIT B
SECTION I
Department Name: Fund Source: Transaction Date:
Type of Transactioni 1) Purchase: 2)Transfer: 3) Location 5) Other:
(check one) (Complete transfer Change: (Complete
section) transfer/location section)
SECTION II
Description of Asset: Asset Number:
Item: Manufacturer/Brand:
Serial#: Model#: VIN #:
{Where Applicable}
Location: Estimated Life Expectancy: Value of Asset: {Please attach or
{miles,hours,months,years} forward a copy of the invoice with document
cost,if donated fair market value)
SECTION III
Transfer or Location Change: Permanent: Transfer Date:
'. Temporary:
Department Transferred From: Previous Location of New Location of property:
property:
Dept. Director's Signature: Date:
Clerk-Treasurer's Signature: Date:
Make a copy of this for your records and return the original to the Clerk-Treasurer's office.
Revised: 11/4/2014