Understanding Capital vs Non-Capital Projects
In the Commonwealth of Virginia, a capital project is currently defined as one that creates at least 5,000 gross square feet of building space, or exceeds $3 million in total project cost. Below these thresholds, a project may be treated as a non-capital project or an operating expense.
In comprehensive terms, a "capital project" refers to:
- Acquisition of real property;
- New construction projects with a total project cost exceeding $3,000,000 for institutions of higher education;
- Improvements, renovations, repairs, replacement, maintenance, or combination projects for a single building with a total project cost exceeding $3,000,000 for institutions of higher education;
- Umbrella projects.
Special rules apply to energy performance contracts/ESCOs and capital leases.
| Non-Capital | Capital | |
|---|---|---|
| Total Project Cost | <$3M | >$3M |
| Square Footage | <5,000 sq ft | > 5,000 sq ft |