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_ Definitions <br />Capital assets — Assets which cost $5,000 or more and have a useful life of two or more years. <br />Capital Improvement Plan — A comprehensive 20 year outlook itemizing all capita] assets and their <br />replacement funding requirements. The plan will take into account useful asset lives and salvage <br />values. <br />Replacement Cost— In today's do]]ars, the cost to replace the asset. If it is expected the retired asset <br />will have a salvage value, the estimated salvage value should be deducted from the expected <br />replacement cost. <br />Asset Life — The number of years which is the asset is in use, also lrnown as the useful life of a <br />capital asset. <br />Bonding — The amount of debt incurred to obtain capital assets. <br />Capital Asset Maintenance — Expenditures which protect the City's investment in capital assets and <br />provide for ongoing upkeep. <br />Equipment — A tangible capital asset which does not qualify as a vehicle, building, street, or park <br />asset. Examples are mowers, tools, etc. <br />MSA Capital Allocation — Municipal State Aid is money the City receives from the State to help <br />pay for maintenance of MSA-designated streets. MSA streets are collector or arterial streets that <br />interconnect to other cities or major thoroughfares. <br />Enterprise Fund — A separate accounting and financial reporting mechanism for municipal services <br />for which is 100% fee supported. Examples are Water, Sewer, and Golf Course. <br />General Governmental Fund — A separate accounting and financial reporting mechanism for <br />spending in which a property tax is generally levied. Examples are police, fire, streets, parks and <br />recreation. <br />Enterprise Fund System Asset — Assets which support enterprise services such as water, sewer, and <br />golf course. <br />Park System Asset — All assets within city parks excluding buildings. Examples would be trails, <br />equipment, and courts. <br />Implementation <br />The City shall use replacement funds to assist in the replacement of equipment, vehicles, and capital <br />building maintenance. New equipment or buildings are to be funded from new dollars, unless they are <br />designated to replace currently owned assets. Funds may be used up to the amount of the replacement <br />funds set aside for that particular asset. Any additional funding shall be from new sources. <br />Page 17 of 19 <br />