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REQUEST FOR COUNCIL ACTION Date:September 19, 2022 Item No.: 7.b Department Approval City Manager Approval Item Description:Consider Amendmentsto theCapitalInvestment Policy 1 B ACKGROUND 2 Best practices require that a City have various financial policies and periodically review and update those 3 policies. On June 14 and July 12, 2022 the Finance Commission reviewed a revised Capital Investment 4 Policy that was presented by staff. The current policy had not been updated since 2019. 5 6 One of the proposed changes is to the Street Infrastructure Replacement Fund. This section of the policy 7 categorized the fund as a permanent fund (page 2 of the policy). Per discussion with the City Manager 8 and the Mayor, they thought this had been previously removed as it has not operated as a permanent fund 9 for many years. The reserve amount noted of $8-12 million will be removed and replaced with 10 maintaining five to ten years of construction projects in reserves. 11 12 On page 3 of the policy, we are striking language that references ‘Exhibit A and B’ and replacing it with 13 language that allows for separate council action with detailed fiscal analysis as it pertains to higher cost 14 capital asset changes. We are also removing these Exhibits which are on pages 5 through 8 of the 15 document. This analysis will be part of the procedures manual and should not be part of a financial policy 16 document. 17 18 In the definitions area, Capital Assets cost was increased to $10,000 (page 3 of the policy) which matched 19 the purchasing policy threshold and matches the accounting procedures for recognition of a capital asset. 20 Items that cost less than $10,000 are considered minor equipment and categorized as an expenditure when 21 incurred. The definition for Enterprise fund (page 4 of the policy) was updated to remove the 100% fee 22 supported and to insert primarily fee supported, which is the usual language used when defining 23 Enterprise funds. 24 25 The Finance Commission approved forwarding the reviseddraft investment policy in Attachment A to 26 the City Council for adoption at its July 12, 2022 meeting, Attachment C is excerpts of the Finance thth 27 Commission meeting minutes from June 14and July 12. 28 P OLICY O BJECTIVE 29 The purpose of the City’s Capital Investment Policy is to ensure future capital improvements and 30 replacements are made when needed in a manner which is both fiscally and operationally prudent. The 31 goal of this policy is to provide a stable funding mechanism for the City’s infrastructure by setting aside Page 1 of 2