§ 3.13.030. General Provisions.

A.

Capital Asset Types and Lives. See the table below for the capital asset categories used by CVWD.

Asset Types	Asset Categories	Asset Life (in years)	Examples
Land	Land	Infinite	Real estate
Improvements	Water Wells	50	Drilling, piping, concrete work
	Reservoirs	50	Tanks, foundations
	Pipelines	50	Waterlines, sewer lines
	Pumping plant	20	Motors, tank sharks
Buildings	Buildings	40	Offices, workshops
	Water Treatment Plant	40	Structure, piping
Equipment	Meters	15	PD, turbine, or compound meters
	Heavy Equipment	15	Excavators, dump trucks, vactors
	Telemetry	10	Control panels, electrical
Vehicles	Vehicles	5	Passenger cars
		7	Light trucks
		10	One-ton trucks
		12	Two-ton trucks
Office	Software	3	For PC's, phones, security, etc.
	Computers	5	PC's, printers, servers
	Furniture	7	Desks, cubicles

 

B.

Scope. CVWD will employ a CIP plan that has a 5-year timeline including the current year carryover. This 5-year timeline helps CVWD to prioritize projects from year to year and establish plans for funding sources.

The capitalization threshold for CVWD is $5,000. Assets are capitalized if the cost exceeds the capitalization threshold except for groups of similar assets such as meters, computers, or printers when the total of the similar assets purchased during the year exceeds $5,000.

C.

Budgeting. The Assistant General Manager (AGM) is responsible for the oversight of the Capital Asset Program and the development of the CIP Budget. The AGM may delegate responsibility to various managers to identify what capital assets are needed and requested in the CIP Budgeting process.

Asset purchases are authorized through the CIP Budgeting process (except for emergency projects) which involves the following steps:

a.

Need is identified - either a new asset is needed or an asset is in need of replacement or major repair

b.

Manager who is responsible for operating the asset submits a Capital Project Request form during the CIP Budget process.

c.

Funding source for the project is identified (See part d.)

d.

Projects are reviewed by the Engineering Committee

e.

Project funding is granted through approval of the Biennial Operating and Capital Improvement Budget by the Board of Directors

The various requests submitted in the CIP Budget process will be compiled by the Accounting Division. The total of the CIP requests must be balanced in the overall Operating and Capital Improvement Budget. Capital funding sources must be identified for each request.

The CIP Budget will be reviewed in detail by the Engineering Committee. The Board of Directors will subsequently review and approve the CIP Budget as part of the Biennial Operating and Capital Improvement Budget.

The procurement process will be handled primarily by the manager who submitted the request. The procurement must follow the steps and rules stated in the CVWD Administrative Policy No. 1.1 - Purchasing.

If actual costs are lower than budgeted, the balance will be unappropriated and transferred to the CIP Reserve or allocated to another project.

If actual costs are expected to be higher than what was budgeted, these options are available within the requirements of existing policies:

a.

Cancel the project or reduce the scope of the project

b.

Transfer funds from another project with lower priority or excess funds available

c.

Appropriate funds from reserves with Board approval

d.

Request carryover of the project with additional funding in the following fiscal year.

D.

Funding Sources. All expenditures included in the Capital Budget must not exceed estimated funding sources available for capital spending.

The source of funding for each project must be identified as part of the capital budgeting process. Possible sources of funding include:

a.

Pay-Go - this source means that the asset will be purchased with resources provided by the current year Operating Activities of the District

b.

Debt - this source can be used to fund large projects with useful lives of 30 years or more. See Administrative Policy No. 1.5 - Debt Management.

c.

Reserves - this source may only be used with Board approval. See Administrative Policy No. 1.3 - Reserve and Financial Benchmarks for the reserves that may be used for Asset purchases

d.

Grant or other outside source - this source may be used only if there is preliminary or guarantee approval of the project.

e.

Carryover - this source may be used when a project was budgeted in the previous year but was not completed. If a carryover request is not submitted as part of the new CIP Budget, the project will be cancelled and the funds will be reallocated to the CIP Reserve.

Due to the significant size and cost of some assets, staff may wish to fund only preliminary engineering/planning activities before committing to funding the whole project. This policy permits funding preliminary activities.

E.

Accounting. Asset purchases will be accounted for in the Capital Asset Accounts. Project numbers will be utilized in order to facilitate tracking of purchases, budgets, and assets in the computerized accounting system.

The Accounting Division will track all assets in a subsidiary ledger that will contain at a minimum: asset name, description, cost, year placed in service, and expected life.

The Accounting Division is responsible for recording the reallocation of funds from projects that were under budget or not included in a carryover request.

F.

Depreciation. CVWD uses the straight-line method of depreciation for all depreciable fixed assets (land, intangible assets, and construction-in-progress are not depreciated). A half year of depreciation is recognized in the year the asset is placed into service and in the last year of estimated useful life. The Accounting Division has the responsibility to track and record depreciation.

G.

Management of Assets. The department that requests and purchases the assets is responsible for the operation and maintenance of the assets. Department managers will periodically measure and quantify the condition of assets. Managers must identify adequate funding to support repair and replacement of deteriorating capital assets and avoid a significant unfunded liability from deferred maintenance.

The tools that should be utilized to manage assets include but are not limited to:

a.

Master plans which are utilized for long-term planning of capital asset needs.

b.

Historical and projected operating costs are considered. If an asset requires excessive amounts of repairs, then the manager should consider replacing the asset. When a new asset is requested, the operating costs over the life of the new asset should be considered.

c.

Inventories should be kept in order to track assets that are susceptible to theft.

( Policy No. 8.7, § 3, 11-12-2013 ; Res. No. 2016-2-4, (Policy No. 8.7, § 3), 2-23-2016 ; Res. No. 2019-2-5 , § 1(Policy No. 1.7, § 3), 2-12-2019)