I. PROCEDURE
The capital approval flow is outlined in Appendix 2 and detailed below.
• Capital Plan budget is approved at the November Board meeting for the following year.
• All capital expenditures need prior approval before purchase. Exceptions are noted in this procedure.
• Payment for all capital expenditures will be supported by invoices, packing slips or receiving documents as applicable and with the required approvals.
• Budgeted capital expenditures of $100,000 or less will require approval by the
• General Manager and Director of Finance.
• Budgeted capital expenditures of $100,000 or more will require a contract, and be approved by the General Manager and Director of Finance, and the contract terms and Contractor shall be then be approved Board of Directors.
• Budgeted capital expenditures of more than $300,000 will require Finance and Audit Committee recommendation and approval by the Board of Directors.
• Capital expenditures using the Capital Reserve Fund or for new Common Property or expansion of existing Common Property of one million dollars ($1,000,000) plus adjusted CPI-U beginning 2010 will require approval of fifty percent (50%) of the Property Owners vote, and approval of the Board of Directors.
• In an emergency, the General Manager is authorized to spend up to $100,000 and will notify the Board of Directors as soon as reasonably possible which shall not be more than two (2) days after such expenditure
• Unbudgeted capital expenditures of $100,000 or less will require approval by the General Manager and Director of Finance.
• Unbudgeted capital expenditures of more than $100,000 will be recommended by the Finance and Audit Committee and approved by the Board of Directors.
• All non-recurring capital expenditures in excess of one million dollars ($1,000,000) will be publicly presented no later than the Regular Board Meeting prior to the Regular Board Meeting where the project is scheduled to be approved. Capital expenditures of an emergency nature, roads, bridges, culverts or dams are exempt from this requirement in addition to those approved by a vote of the Property Owners.
• The capital approval flow is outlined in Appendix 2 and detailed below.

Pre-planning
Management defines the scope of the project. The pre-planning can include initial engineering and architectural designs to obtain more accurate estimates for the project.
• If the estimated expenditures are in line with the approved Capital/Master Plan budget, an Initial Capital Request (ICR) is completed by the Department Head.
• If the estimated expenditures are not in line with the approved Capital/Master Plan budget and the project is:
--- $300,000 or less, the General Manager will be required to approve the concept before
the Department Head completes an Initial Capital Request.
--- More than $300,000, the General Manager will be required to present to the Board of Directors for a preliminary approval before the Department Head completes an Initial Capital Request.
• Bids are sent to qualified vendors according to the Bid Procedure 152.3

Evaluation of Scope of Project
Staff evaluates the returned bids to verify the bids are within the scope of the project and to negotiate with the vendor regarding pricing and/or make any changes deemed necessary. A value engineering review of the project will be performed as part of this process. Staff, Finance and Audit Committee and Board may change the scope of the project anytime during the capital approval process.

Final Capital Request and Project Justification
Expenditures of more than $100,000 will include a Final Capital Request and Project Justification
• Final Capital Request should include the following items:
• Brief outline of scope of work and rationale for the capital item requested. If the capital item is a replacement for an existing asset (i.e. equipment, building, structures, etc.), provide a brief statement as to why the replacement is necessary.
• Bid amount comparisons including freight, sales tax and insurance.
• Significant contractual and practical differences between the bids.
• Justification if there are less than three bidders.
• Annual recurring expenditures and/or savings.
• Description of all warranties, if applicable.
• Useful life of the asset.
• Reference checks.
• Certificate of Insurance (COI).
--- Consult with Insurance Broker to determine any necessary modifications to the POA’s existing insurance policies as well as the adequacy of the vendors underlying COI limits and surety requirements (i.e. performance bond or contract bond).
--- Minimum requirements are included in Procedure 152.3.
• W-9
• Completed contractor bid certification.
• Request for Pricing (RFP) or Invitation to Bid.
• Completed vendor bids.
• Outline timeline of project, if applicable.
• Vendor or solution recommended by staff.
• Project Justification should include the following:
--- Include any “soft” benefits that would accrue (safety, improving Property Owner experience, etc.)
--- Any other items that should be weighed, such as responsiveness, trust factor other non-specific considerations, if applicable.
--- Incremental revenue produced as a result of the capital expenditure.
--- Number or percentage of Property Owners impacted by the proposed expenditure, either directly or indirectly.
--- Annual or one-time cost that might be avoided.
--- Brief outline of any other considerations or information relevant to making a decision.
See below for examples:
- If an amenity will be closed for project, describe length and net income impact.
- Identify other common property or capital project that would be
closed or impacted.
- Identify and report on any potential conflicts of interest, if any.
--- Explanation of the financial and Property Owner satisfaction impact, if project is not approved.
--- Alternatives considered

Finance and Audit Committee Review
Finance and Audit Committee periodically reviews compliance of this Procedure at the request of the Board.

Finance and Audit Committee Recommendation
If the capital project is more than $300,000 budgeted or more than $100,000 unbudgeted, the Finance and Audit Committee will review the Final Capital Request and Project Justification. The Finance and Audit Committee will recommend the capital project to the Board of Directors or request the staff to provide additional requirements or change scope of project.

Board of Directors Approval
If the capital project is more than $300,000 budgeted or more than $100,000 unbudgeted, Board of Directors will review the Final Capital Request, Project Justification and Finance and Audit Committee recommendation. Board of Directors will approve the capital project or request the staff to provide additional requirements or change scope of project.

Property Owner Approval
Capital expenditures using the Capital Reserve Fund or for new Common Property or expansion of existing Common Property of more than one million ($1,000,000) as adjusted per CPI-U beginning 2010 will go to Property Owner vote. The capital project is approved by more than fifty percent (50%) of the votes cast. The one million dollars ($1,000,000) plus CPI-U amount will include the cost of planning, design and all construction expenditures including a reasonable contingency.

Contract Signatures
All contracts will be reviewed by staff and POA attorney. Contracts of less than $50,000 approved and signed by the General Manger and Director of Finance. Service Contracts of more than $50,000 and capital contracts over $100,000 will be approved by the Board of Directors and signed by the POA President and General Manager.

II. RESPONSIBILITIES
General Manager, Director of Finance and POA staff.

III. SCOPE
This procedure covers all capital expenditures including master plan expenditures.

IV. DEFINITIONS
Emergency expenditures: Expenditures caused by natural disasters, other emergencies that affect the health, safety and welfare of the Property Owners and to prevent or minimize damage or waste of Common Property.

V. RELATED POLICIES OR DOCUMENTS
Procedure 152.3
Appendix

QUESTIONS?

ADDITIONAL RESOURCES