COUNTY OF GRANDE PRAIRIE NO. 1Policy: O-2
POLICY MANUAL
COUNTY OF GRANDE PRAIRIE NO. 1
POLICY MANUAL
Legal References: / Policy Department:Public Works Municipal Shop
Cross References: / Policy Number:
O-2
Adoption Date:
December 17, 2002
Revision Date: / Policy Title:
CAPITAL EQUIPMENT REPLACEMENT
POLICY PURPOSE:
To provide for a process to be followed by all departments within the County of Grande Prairie No.1 to allow for the replacement of capital equipment and vehicles on a regularly scheduled annual basis, and the procurement of new equipment and vehicles as approved by Council.
POLICY STATEMENT & GUIDELINES:
The purchase of capital equipment by the County of Grande Prairie No. 1 creates a contingent liability for the replacement of that equipment at the end of its useful life and this liability grows with the age of the equipment.
In order to recognize this liability, the County shall, in a planned manner, annually transfer to the capital equipment replacement reserve those funds necessary to build up reserves that when replacement is justified and approved by Council, funds will be available for their purchase.
All revenues from the sale of all capital equipment shall be deposited to the capital equipment replacement reserve to be used for equipment replacement.
Procedures for the proper and orderly replacement of existing capital equipment are detailed in the Capital Equipment Replacement Plan, which is approved by the CountyAdministrator.
EXHIBIT(S):
- Capital Equipment Replacement Plan
COUNTY OF GRANDE PRAIRIE NO. 1
CAPITAL EQUIPMENT REPLACEMENT PLAN
This document contains information on all mobile capital equipment and vehicles purchased and maintained by the County of Grande Prairie #1.
The purpose of this document is to provide administration and Council with the information necessary to plan for the proper and orderly replacement of existing vehicles and equipment through the use of annual transfers to equipment replacement reserves.
The purpose of this reserve is not for funding additional equipment purchases.
It is recognized that it is economically expedient to replace and/or discard equipment and vehicles before extensive breakdowns and downtime result, also to replace old, or worn out equipment and vehicles before it becomes financially unsound for the continued use due to extensive repairs. It is also recognized that a liability is created upon the purchase of equipment for the future replacement of that equipment.
The dollars spent on the replacement of capital equipment fluctuates annually with need. The "cash basis" method of funding may cause changes in the tax rate from one year to the next or result in the County leasing equipment, to prevent tax rate increases.
Accordingly, the purpose of this plan is to reduce or eliminate these potential tax rate swings, leasing options with high finance charges, and large fluctuations in annual budgets by providing funding for the proper and orderly replacement of equipment through the use of annual planned transfers to an equipment replacement reserve.
PROCEDURES FOR EQUIPMENT REPLACEMENT
- The original purchase cost and expected useful life, as outlined in section 2, shall be used as the basis in determining the annual reserve transfer. The information will be set up on each unit for which a replacement reserve is required at the time of purchase, on the fixed asset and costing masters for that unit. Actual transfers shall be based on budgeted amounts.
- Equipment and vehicles will be inventoried and classified into one of the following categories, which will identify the estimated useful life.
Category / Code / Estimated Useful Life
Law Enforcement Vehicles / TL / replace at 200,000 kms or 3 yrs
Fire Protective Services (Officer truck) / TF / replace at 300,000 kms or 4 yrs
Fire Pumpers - rated trucks / FT / replace at 20 yrs
1/2 to 1 Ton Pickup Trucks (gasoline) / T / replace at 300,000 kms or 10 yrs
1/2 to 1 Ton Pickup Trucks (diesel) / TD / replace at 400,000 kms or 10 yrs
High useage Pickup Trucks (Foreman/Shop/Utility Dept) / TA / replace at 300,000 kms or 6 yrs
5 ton (tandem axle) diesel / TT / replace at 400,000 kms or 8 yrs
Powered packers / P / replace at 10,000 hrs or 15 yrs
Graders-740’s & 160’s (area graders) / GR1 / Replace at 10,000 hrs or 5 yrs
Graders-780’s / GR2 / replace at 10,000 hrs or 7 yrs
Graders-140’s / GR3 / replace at 10,000 hrs or 7 yrs
Rubber tired tractors / TR / replace at 10,000 hrs or 12 yrs
Tracked equipment / TR / replace at 10,000 hrs or 10 yrs
Loaders & Backhoes / L / replace at 10, 000 hrs or 10 yrs
Motor Scrapers / TU / replace at 10, 000 hrs or 10 yrs
Pull Scrapers / S / replace at 15 yrs
Sprayers / SP / replace at 10 yrs
Trailers / PT / replace at 15 yrs
Mower Tractor Unit / M / replace at 6,000 hrs or 8 yrs
Plow / PL / replace at 7 yrs
- If feasible, equipment and vehicles may be transferred to another department, where lesser usage is required until the useful life span is reached. In some circumstances, as determined by the Heavy Duty Shop Manager and Department Head, a unit may be used longer that the above established limits if feasible.
- Equipment reserve funds are accounted for as one fund, which shall be invested and the income earned reinvested and added to the reserve fund. Any surplus equipment reserve funds from disposal revenue or other sources shall be added to the equipment reserve fund.
- Department Heads in conjunction with the Heavy Duty Shop Manager will annually review the equipment and vehicles due for replacement. Once a decision is made as to which items will be disposed of and/or replaced these items will be communicated to the Director of Finance who will list them on the Capital Plan, which will be submitted with the budget.
- At a budget meeting County Council will review the Capital program budget information and make the final decision as to what items are replaced. The cost of purchase of the items to be replaced shall be included in the capital budget. Any disposal proceeds projected, shall be used to offset the cost of replacement. Reserve funds shall be used to the extent available, considering long term replacement required. The reserve fund represents depreciated value and is not meant to offset the cost of replacing a unit with a larger or different equipment model. Any such upgrading shall be funded from operations.
- If an approved item scheduled for replacement is not purchased in the current budget year, any municipal tax dollars raised for the item in the capital budget will be established as a reserve for future expenditures and added to a future year's capital budget.
LONGRANGE CAPITAL PLAN
- Finance in conjunction with Department heads and the Heavy Duty Shop Manager will formulate and update a 10-year capital plan to include future anticipated equipment and vehicles replacement requirements. This plan will be updated annually in conjunctions with the annual budget procedures.
- The long-range plan will include identification of units to be replaced, the estimated year of replacement, original cost, and anticipated reserve fund transfers. It is anticipated that the salvage value and interest earnings shall offset inflation costs when the unit is replaced. Any shortfall shall be funded from operations (tax revenue).
- To pay for new acquisitions (not replacement), the Municipality will utilize current tax dollars, reserve funds excluding equipment replacement reserve funds, or other revenues.
- The equipment replacement reserve should never incur a deficit balance.
- No acquisitions shall be made until approved by Council as part of a budget.
APPROVED UNITS FOR RESERVE FOR DEPARTMENTS
The following units are currently approved for each department. Requests to purchase additional units (not replacement) shall be as approved by Council.
Department No. UnitsUnit Type
Assessment2Pickup truck
Agriculture7Pickup trucks - replacement required
7Sprayers
2Chemical Injection Systems
1Tractor
1Trailer
Fire Services1Truck - 4x4 (high usage)
5Rated fire pumper trucks
Law Enforcement3Truck/sport utility vehicle (high usage)
1Van - SPCA
Landfill1Packer (Clairmont)
1Dozer (Clairmont)
1Loader (Clairmont)
Public Works 18Graders
4High use pickup trucks (maximum mileage in 6 yrs)
2Loaders
2Backhoes
4Packers
11Pickup trucks
2Scrapers
7Tandem axle trucks
1Single axle trucks
3Dozers
6Trailers
1Tractor/Mower unit
1Tractor
3Plows
Fleet Maint. Shop4Pickup trucks
2High use pickup trucks (maximum mileage in 6 yrs)
1Forklift
Water/Sewer2High use pickup trucks (maximum mileage in 6 yrs)
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