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City of Hopkins - 2003 Equipment Replacement Plan . . June 25, 2002 2003 EQUIPMENT REPLACEMENT PLAN DISCUSSIONS Overview The City of Hopkins is beginning the process of establishing the 2003 - 2022 equipment replacemnt plan. Every year the city council reviews with the city manager and staff, the equipment planned for replacement for the next five years. The goal is to ensure the cities priorities and objectives are being met and the funding sources are reasonable and available. ERP Goals . Maintain the integrity, reliability and safety of city equipment. . Provide funding for replacement of current equipment as needed. . Forecast funding needs and tax implications to assure strong long-term financial stability. . Attached is a draft of the 2003-2022 equipmenmt replacement plan. . . EQUIPMENT REPLACEMENT PLAN 2003 - 2022 . Background June 19, 2002 The Equipment Replacement Plan is a twenty-year forecast of equipment needs in the City of Hopkins. It is intended to alert the Council and citizens to the major equipment needs on the horizon. The first year of the plan becomes an adopted equipment budget and relates almost completely to the operating budget of the equipment replacement fund, which is approved on a yearly basis. The remaining nineteen years represent an estimate of equipment needs and funding capabilities of the City. Funding requirements vary from year to year. In order to maintain a fairly consistent levy each year, the twenty-year schedule is projected with a 3% inflation factor and a yearly average dollar need for the equipment replacement fund is presently $703,700. The cash flow requirements to fund the equipment needs in the equipment replacement fund, will experience a roller coaster effect over the next 20 years given the projected equipment needs and 3% inflation rate. Available funds will increase through the year 2016 and then the funds will fluctuate substantially for the next 6 years. The current intergovernmental charges of $506,000 will need to increase every other year by 2.5% for the next 20 years in order to provide sufficient funds to carry us through 2022. The projected increases have been reduced from previous estimates of $10,000. The primary reason for the decrease in needed funding is an adjustment in replacement of the Stuphen Aerial truck. A refurbishment is being planned instead of a . replacement, which is substantially less in cost. The charges to the general fund in 2003 will remain the same. Overall these charges represent 5,9% of total general fund expenditures. Future increases are needed to get closer to the average dollar needed to fund the equipment replacement plan without issuing debt. The Equipment Replacement Plan's basic premise is scheduled replacement of present equipment. A new item, must in the year proposed, be presented in the annual operating budget with a stipulation that replacement will be necessary in the future. Flexibility of the Equipment Replacement Plan is established through annual review and revision, if necessary. Highlights of changes from last year: Fire: The Duty Chief vehicle scheduled for replacement in 2003 has been pushed out to replacement in 2005 and changed to a SUV or truck in place of a passenger automobile. The cost of the larger vehicle is approximately $18,000 more than an automobile 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. By purchasing an SlN or truck it will cost the city approximately $50,000 more than purchasing passenger vehicles over 20 years. . ~ Fire continued: The light rescue response vehicle replacement has been moved from 2005 . to 2007 and is changed from a complete replacement to a chassis rep I acement. 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. A new vehicle is being proposed by the fire department in 2005. The cost of the truck is $35,000. At this time finance is recommending that this vehicle go through the annual budget process for the general fund and if it is approved there, than it can be placed on the equipment replacement plan. 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 of 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. Move the 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. Ci ty 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 radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. Sewer Fund: Move the radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. Refuse Fund: Move the radio system replacement up to 2003 from 2004 to match the police and fire replacement schedule. . .