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~~ <br />~~ <br />ver <br />MEMORANDUM <br />TO: Mayor and City Council <br />FROM: Tim Simon, Finance Director <br />DATE: October 12, 2009 <br />SUBJECT: 2010-2014 Capital Improvement Plan (CIP) <br />The purpose of the discussion is to provide preliminary information regarding projects <br />proposed to be funded. The document is prepared to anticipate major expenditures in <br />advance of the year they may become budget requests. Projects listed in the first year are <br />included in the budget and upon each annual update of the CIP some projects will be <br />deleted, added, or even delayed. Much of our discussion will focus on the 2010 portion of <br />the CIP. After we review the cash flows and projects I will put together the document. <br />Equipment Replacement Fund (Exhibit A). <br />The equipment replacement fund covers replacement of wheeled equipment and vehicles. <br />This fund is replenished on an annual basis through charges paid by each general fund <br />department through their operating budgets. The amount charged to each department is <br />allocated on the estimated replacements over the next 10 years and updated yearly. In <br />addition, the fund receives a portion of the payment in lieu of tax (PILOT) from Elk River <br />Municipal Utilities, interest earnings, and auction proceeds. This fund maintains a large fund <br />balance, but that is necessary given the sufficient variability as we utilize cash reserves when <br />several costly vehicles are replaced in the same year. The replacement cycle is continuously <br />evaluated, based on costs and benefits over the next several years, to determine the optimal <br />time to replace vehicles. <br />The City's fleet committee is actively involved in the long-range planning of the replacement <br />of the City's fleet and financial condition of the equipment replacement fund. Mark <br />Thompson is the current chair of the committee. <br />Government Building Fund (Exhibit B). <br />This fund covers building construction and maintenance, landscaping, and small remodeling <br />projects for the municipal buildings. As you can see in the attached exhibit a reserve balance <br />of $50,000 is set aside annually for future building repairs. Aside from routine updates and <br />maintenance projects the Council may want to discuss the timing of the public works <br />building project. The building is currently estimated at $7 million. The estimate may have to <br />be adjusted as the master planning process gets started. In 2010, the streets department <br />