CC RESOLUTION 5576RESOLUTION NO. 5576
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL
SEGUNDO, CALIFORNIA, ADOPTING THE CAPITAL ASSET POLICY
The City Council of the City of El Segundo does resolve as follows:
SECTION 1: The City Council finds and declares that:
A. The City of El Segundo is required to maintain up-to-date and comprehensive
policies governing the accounting and management of its capital assets.
B. The City's existing capital asset policy has not been comprehensively updated
in several years and does not fully reflect current accounting practices and
recent operational changes and trends.
C. Capital assets —including land, buildings, infrastructure, vehicles, and
equipment —represent a significant portion of the City's total assets and are
essential to the provision of public services.
D. Clear and consistent policies are critical to ensure accurate financial reporting,
effective asset management, and compliance with applicable accounting
standards.
E. The proposed Capital Asset Policies have been developed by the Finance
Department in accordance with current General Accounting Standards Board
(GASB) Statements and other applicable accounting standards, and in
consultation with departmental staff who manage the City's physical and
intangible assets.
SECTION 2: Adoption and Authorization. The City Council hereby adopts the attached
Updated Capital Asset Policy. The City Treasurer / Chief Financial Officer or his designee is
hereby authorized to take any actions necessary to implement the policy.
SECTION 3. This Resolution will take effect immediately and remain effective until
superseded by a subsequent resolution.
ATTEST;.
PASSED, APPROVED AND ADOPTED thi=ayor
ber, 2025.
Ryan U11 ,rn
APPROVED AS TO FORM:
ruax, Ci'l' Clerk Mark D. Hensley, City Attorney
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
CITY OF EL SEGUNDO )
1, Susan Truax, City Clerk of the City of El Segundo, California, do hereby certify that the
whole number of members of the City Council of said City is five; that the foregoing
Resolution No. 5576 was duly passed, approved, and adopted by said City Council at a
regular meeting held on the 16t" day of December, 2025, approved and signed by the Mayor
Pro Taw, and attested to by the City Clerk, by the following vote:
AYES: Mayor Pro Tern Baldino, Council Member Boyles, Council Member Giroux and
Council Member Keldorf
NOES: None
ABSENT: Mayor Pimentel
ABSTAIN: None
WITNESS MY HAND THE OFFICIAL SEAL OF SAID CITY this 16th day of December, 2025.
Susan Tr ,ax, City Clerk
of the City of El Segundo,
California
2
Capital Asset Policies
(Effective staring Fiscal Year 2025-26)
Capital Asset Capitalization and Threshold
Capital Assets are major assets that are used in governmental operations and that benefit more than a
single fiscal period. City of El Segundo will report the following major categories of capital assets that
have an estimated useful life of more than two (2) year.
1. Land ($100,000, with an indefinite useful life)
2. Construction in progress
3. Buildings and building improvements ($100,000 with an estimated useful life 50 years)
4. Improvements other than buildings ($100,000 with an estimated useful life 50 years)
5. Furnishings, vehicles, machinery, and equipment ($20,000 with an estimated useful life 5-50 years)
6. Infrastructure ($100,000 with an estimated useful life 25-100 years)
7. Intangible Assets (easements, water rights, licenses, leases, subscription -based information
technology arrangements) ($20,000 with an estimated useful life 5-50 years)
Land — is always capitalized as a separate capital asset in its own right, even if it is closely associated
with some other capital asset. Thus, the land under a building or highway must be classified as land
rather than included as part of the cost of the building or highway. The amount capitalized as land
should include any land preparation costs that will have an indefinite useful life. Land normally is not
depreciated because it has an indefinite useful life. The capitalization threshold for land will be set at
$100,000, with an indefinite useful life.
Construction in Progress — is an asset class in which you record the costs directly associated with
constructing a capital asset. Once the asset is placed in service, all costs associated with it that are
stored in the construction in progress account are shifted into whichever capital asset account is most
appropriate for the asset. Costs in the construction in progress account are not depreciated until the
asset is placed in service.
Buildings and building improvements — is an asset class used to account for permanent (non -moveable)
structures. The amount reported should include any costs incurred to increase the service utility of a
building or to extend its total estimated useful life (improvements or betterments). The amount should
also include restoration costs incurred as the result of capital asset impairment. The capitalization
threshold for buildings will be set at $100,000 with an estimated useful life 50 years.
Im rovernents othertlan luildin —are permanent (non -moveable) improvements to land that have a
limited useful life (land improvements). Examples include fences, retaining walls, parking lots, and most
landscaping. The capitalization threshold for improvements other than buildings is $100,000 with an
estimated useful life 50 years.
Approved at the December 16, 2025 CC Meeting
urnishin s vehicles rnarwine and a uai rnent— is an asset class to account for moveable items. The
capitalization threshold for furnishings and equipment is $20,000 with an estimated useful life between
5 and 50 years.
Infrastructure — are long-lived capital assets that are stationary in nature and normally can be preserved
for a significantly greater number of years than most capital assets. Infrastructure assets are the basic
physical assets that allow the City to function. Examples of infrastructure assets include streets, bridges,
sidewalks, drainage systems, water and sewer systems, and lighting systems, etc. Each major
infrastructure system can be divided into subsystems. For example, the street system can be subdivided
into pavement, curb and getters, sidewalks, medians, streetlights, landscaping and land. These
subsystems were not delineated in the City's basic financial statements. The appropriate operating
department maintains information regarding the subsystem. For all infrastructure system, the City
elected to use the "Basic Approach". The capitalization threshold for infrastructure assets will be set at
$100,000, with an estimated useful life of 25 to 100 years.
Intangible Assets — Governmental Accounting Standards Board (GASB) Statement #51 deals with the
reporting of intangible assets in our financial statements. GASB #51 defines intangible assets as assets
that are identifiable and possess all of the following characteristics: lack of physical substance,
nonfinancial nature (not in monetary form like cash or investment securities), and initial useful life
extending beyond a single reporting period. It requires us to record and report intangible assets such as
easements, land use rights (i.e. water rights, timber rights and mineral rights), patents, trademarks and
copyrights. In addition, computer software that is purchased, licensed or internally generated (including
websites) as well as outlays associated with an internally generated modification of computer software.
The capitalization threshold for intangible assets will be set at $20,000, with an estimated useful life
between 5 to 50 years.
Valuation Method of Capital assets
Capital assets are to be reported at historical cost. This should include capitalized interest and ancillary
charges necessary to place the asset into its intended location and condition for use. Ancillary charges
include costs that are directly attributable to asset acquisition. The historical cost should include the cost
of any subsequent additions or improvements, which would extend the expected useful life of the asset
but exclude the cost of repairs or routine maintenance. Items acquired to extend the life of a previously
acquired asset are not required to be inventoried but are added to the historical cost of the asset and
capitalized. Maintenance costs are to be expensed rather than capitalized. The independent judgment
of capital improvement versus repair or maintenance will be distinguished by the asset operating
department on a case -by -case basis. Trade-in value, if any, will be deducted from the asset cost.
Additionally, if the asset traded was not fully depreciated, the ending book value will be added to the
cash paid to determine the capitalized cost of the new asset. A trade-in can be defined as exchanging an
existing asset as part of an agreement to acquire a new Asset. Capital assets acquired under capital lease
are capitalized at the net present value of the total lease payments. Donated capital assets are valued at
their acquisition value. Capital assets that are being depreciated will be reported net of accumulated
depreciation in the statement of net position. Depreciation expense will be reported in the statement of
activities. Individual assets with an initial cost of less than $20,000 will be maintained on an inventory
list for insurance purposes.
Approved at the December 16, 2025 CC Meeting
Depreciation and Amortization Method for Capital Assets
Depreciation (for tangible assets) and amortization (for intangible assets) expense will be measured by
the straight-line method which is historical cost divided over the estimated useful life of the asset.
Formula = historical cost Estimated Useful Live
Depreciation and amortization will be calculated annually based on the actual month of acquisition.
Land and construction in progress are not depreciated.
Estimated Useful Lives of Capital Assets
The standards or parameters for estimating the useful lives of capital assets are based on City's
operating departments' professional judgments and industry averages, therefore determined to be
objectively reasonable.
A range approach is used as a matter of policy, with specific estimated useful lives attached to specific
assets when recorded in order to facilitate depreciation /amortization and tracking.
Disposal of Capital Assets
All Capital assets must be conducted in accordance with City policies, California state law, and the
following steps:
1. The disposal of any and all capital assets, except land and public improvements such as buildings,
must be completed through the Purchasing division in accordance with the Purchasing Manual. Assets
disposed by the Purchasing division will be offered to the other divisions of the City prior to disposal.
2. For vehicles, equipment, and other assets that are maintained through the Equipment division, the
Equipment division is responsible for the cleaning, title preparation, license plate removal, radio
transfer, or other necessary disposal preparation.
3. The sale of land, right-of-way, buildings, and other real property will be managed through the
department/division that is responsible for maintaining and safekeeping of the asset(s) in conjunction
with the Purchasing Officer.
4. For assets other than real property being transferred to another government or non-profit agency, a
public notice and bidding procedure must be approved by the Purchasing Officer.
5. Any asset acquired through Federal funding or tax exempt bonds must be identified as such prior to
disposal. The Purchasing Officer must be notified of the intent to dispose of any such asset.
6. Damaged assets must be identified by each division and notification must be provided to the
Purchasing Officer and the Accounting Division. If an asset is deemed to be impaired in accordance with
GAAP, the division must provide the Purchasing Officer and the Accounting Division with the necessary
information in regards to the impaired asset.
Approved at the December 16, 2025 CC Meeting
7. Appropriate documentation must be forwarded to the Purchasing Officer for removal of the asset
from the capital asset list by the division responsible for disposition of the asset. A Capital Asset
Information form must also be submitted to the Accounting Division.
8. If an asset is scheduled for replacement, the asset being replaced will be disposed of when the
replacement asset has been acquired and will not be retained to expand the City's asset/fleet inventory
without approval of the Purchasing Officer.
Approved at the December 16, 2025 CC Meeting