The Dell Rapids City Council on June 16 approved a revision to the city's capitalization policy that allows the city to treat similar low‑cost purchases as a group and capitalize them when the group's aggregate value exceeds 1% of the fund's approved capital program budget.

Claire, the city finance officer, told the council the change responds to a Governmental Accounting Standards Board implementation guide and corrects how the city accounts for multiple purchases that are individually under the $5,000 capitalization threshold. "Group assets will be capitalized if their aggregate value exceeds 1% of the total approved capital program budget for the fiscal year under audit," Claire said.

The policy change addresses cases in which a series of individually small purchases, such as library books, audio‑visual equipment or furniture, together represent a material investment. Claire said the policy will apply only when assets are similar in nature, acquired in a coordinated way and collectively significant; the city will not capitalize unrelated individual items simply because their annual sum exceeds the threshold. She gave a $6,000 example to explain how separate purchases could trigger capitalization under the new approach.

Councilmember Bronshagner moved to adopt the change and Hein seconded the motion; the council voted in favor. Claire said the policy language was modeled on Sioux Falls' wording and reviewed with the city's auditors, Eide Bailly. "This is to avoid unnecessary inflation of the asset base with individually significant items that are not managed or maintained as a capital asset," Claire said.

The amendment instructs staff to evaluate group assets on a fund‑by‑fund basis (for example, a library or other fund) and to apply capitalization only when the group meets the specified criteria and threshold. The council did not direct further study; the motion approved the updated policy language and implementation approach.

Finance staff said the change is intended to ensure compliance with GASB and generally accepted accounting principles while avoiding administrative burdens from capitalizing small, dissimilar items.

Council members who asked clarifying questions focused on how fiscal‑year timing and fund definitions (for example, whether the general fund or a program fund applies) affect aggregation. Claire said the 1% test applies to the approved capital program budget for the fund under audit, not the city's entire budget.