HomeMy WebLinkAbout2020-10-22; Depreciating City Assets; Rocha, LauraTo the members of the:
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Council Memorandum
Oct. 22, 2020
· To:
From:
Honorable Mayor Hall and Members of the City Council
Laura Rocha, Deputy City Manager, Administrative Services
Geoff Patnoe, Assistant City Manager @ . Via:
Re: Depreciating City Assets •
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Carlsbad
Memo ID #2020237
This memorandum provides information on why the city doesn't depreciate all of its assets, and
explains the differences between how park land, park equipment and park facilities are treated
versus golf course related assets.
Discussion
The city's assets used for governmental activities, such as parks, roads, buildings, land, etc., are
not depreciated when commonly reported. These are reported with a short-term focus,
emphasizing the availability of resources that can be easily converted into cash for near-term
spending.
The city's assets used in business-type activities, such as waterlines, sewer lines, the golf course,
etc., are depreciated when commonly reported. Business-type activities focus on setting rates
that will recover the full cost of operations over the long-term.
When these two activities are combined to make them comparable, the city reports depreciation
on all city assets. However, this is not commonly presented except in the city's Comprehensive
Annual Financial Report (CAFR). In addition, a full reconciliation is included in the CAFR to assist
the reader in identifying the depreciation of governmental activity assets.
Next Steps
The city will continue to report governmental activities with a short-term focus and business-
type activities with an emphasis on the long-term. Additionally, the city will report in the CAFR a
comparable statement including both governmental and business-type activities which will show
all assets and their corresponding depreciation. This will include the various components of parks
(land, buildings and other improvements).
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Kevin Branca, Finance Director
Administrative Services Branch
Finance Department
1635 Faraday Avenue I Carlsbad, CA 92008 I 760-:602-2430 t