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CR 02-140 Equipment Replacement Plan C\TY Or: ~ . HOPK\t'1S August 20, 2002 Council Report 02-140 ADOPT EQUIPMENT REPLACEMENT PLAN 2003-2022 Proposed Action Staff recommends adoption of the following: Move to adopt the 2003-2022 Equipment Replacement Plan. Overview The equipment replacement plan is a detailed summary of the next five years of a twenty year replacement schedule, for most equipment of the City of Hopkins. General and Special Revenue fund equipment items are placed in the Equipment Replacement Fund budget which derives its revenues from service charges to the General and Special Revenue funds, equipment sales and interest earnings. The Enterprise fund equipment in the plan is placed in the individual enterprise fund budgets, in the year in which the equipment is to be purchased. Primary Issues to Consider . . Should the annual service charges to the general and special revenue funds be increased? . What changes have occurred in the equipment replacement plan since last year? Staff Recommendation Finance reconunends adoption of the 2003-2022 Equipment Replacement Plan. Supportim?: Information . Equipment Replacement Plan 2003-2022 \ ~ ,I . ' \ ". ~~' ,.;,~ It.t5f( Yager Finance Director . . Should the annual service charges to the general and special revenue funds be increased? After forecasting the future equipment needs of the general and special revenue funds it has been determined that no service charge increase should occur in 2003. For future years a 2.5% increase in charges will occur every other year beginning in year 2004 and continuing indefinitely. These increases are needed to sustain the equipment fund into the future. This will impact the general fund budget by increasing its budget by $12,725 in 2004, $13,000 in 2006 and similarily into the future. The increases amount to about a .1 % increase in budgeted expenditures. What changes have occurred in the Equipment Replacement Plan since the last year? Highlights of changes from last year: Fire: The Duty Chief vehicle scheduled for replacement in 2003 has been pushed out to replacement in 2005. By pushing the purchase of the vehicle out two years the city will save about $13,000 in compounded interest earnings over 20 years. The light rescue response vehicle replacement has been moved from 2005 to 2007 and is changed from a complete replacement . to a chassis replacement. This change in replacement schedule saves the city approximately $30,000 in actual cost and interest earnings of about $2,000 is gained in two years. The Stuphen Aerial truck replacement has been changed to a refurbishment. This saves the city $387,000 in actual cost and gained interest earnings compounded of $230,000 in 20 years. Police The purchase of a patrol vehicle is moved to 2004 giving the city one year additional interest earnings of $800. Public Works: The purchase of a one ton traffic boom truck has been moved back two years from 2005 to 2007 and extended its life to twelve years instead of 10 years. The savings is in interest earnings compounded over 20 years at $3,500 and extending the life expectancy. The roller replacement purchase is moved from 2005 to 2007. The savings is in interest earnings compounded over 20 years at $1,500. . Engineering Van replacement costs have increased from $14,300 to $16,000. , . Public Works (cont.): Move the public works radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. Two tractor replacements moved from 2003 and 2005 to 2004 and 2006. The savings is interest compounded over twenty years at $2,500. Move brush chipper replacement out to 2004. Activity Center: The replacement of the copy machine is not needed due to a donation of a new copy machine in 2001. City Hall: The telephone system was scheduled for an upgrade in 2002. After further analysis, the upgrade has been moved out to 2003. Upgrading will cost approximately $60,000. Future replacement versus upgrades will continue to be analyzed. Finance: The financial software package needs an upgrade or replacement in 2002. In 2009 we would analyze further upgrades or replace the entire system including utility billing. . Water Fund: Move the public works radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. Sewer Fund: Move the public works radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. Refuse Fund: Move the public works radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. .