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CR2003-121 adopt ERP ,- j. / CITY Of: \ ~> ~i HOPKINS August 19,2003 Council Report 03-121 ADOPT EQUIPMENT REPLACEMENT PLAN 2004-2024 Proposed Action Staff recommends adoption of the following: Move to adopt the 2004-2023 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 changed? . What changes have occurred in the equipment replacement plan since last year? Staff Recommendation Finance recommends adoption of the 2004-2023 Equipment Replacement Plan. Supportin2 Information . Equipment Replacement Plan 2004-2023 . . / Should the annual service charges to the general and special revenue funds be changed? After forecasting the future equipment ne~ds of the general and special revenue funds and taking into csmsideration the loss of state aids in the general fund, it has been determined that the service charges to the general and special revenue funds will decrease in 2003 and have an incremental increase of 2 % over the new lower base into the future. This incremental increase will occur over the next five years until 2009. These increases are needed to sustain the equipment fund into the future. What changes have occurred in the Equipment Replacement Plan since the last year? The state aid losses in 2003 and 2004 have forced the city to extend the life of major equipment by refurbishing and repairing rather then replacing, in hopes of extending the life of the equipment until absolute necessity of replacement. Highlights of changes from last year are included in the replacement plan and as follows: Fire: The Duty Chief vehicle scheduled for replacement in 2005 has been increased to a squad and the life expectancy has gone from five years to seven years. The cost of the vehicle increased $7,000 but it should last longer. The light rescue response vehicle replacement has been moved from 2007 to 2009 and .is only a chassis replacement. This change allows for additional interest earnings of about $1,400. The Stuphen Aerial truck replacement has been changed to a refurbishment. The refurbishment has been pushed out one more year to 2006 with additional interest earnings of $6,000. Moved the replacement of the Luverne Pumper out to 2007 from 2003, postponing the outlay of capital for four years, with additional interest earnings of $20,000. Moved the planned replacement of the Tele-squirt from 2015 to 2018, extending the life and lowering the costs allocated to the general fund. Moved the replacement of the Heavy Rescue from 2016 to 2019, but increased the estimated cost by $100,000, which causes additional expense in the future and offsets any savings. . Moved the replacement of the .pirsch Pumper from 2018 to 2023, extending the life and lowering the costs allocated to the general fund. . Police: Public Works: . The purchase of an admin vehicle is moved to 2005 giving the city one year additional interest earnings of $400. An adjustment was made to the overall projected costs for replacement of squads, reducing the projection by $8,000 per squad based on current replacement costs. This significantly reduced the amount of charges to the general fund. The replacement of the Front End Loader will remain in year 2005 but the cost has been reduced by $35,000. The current plow and wing assembly will not be replaced at this time. The other Front End Loader replacement schedule has been pushed out from 2006 to 2009, delaying the outlay of $125,000 for capital. The One Ton Boom truck will have only the cab and chassis replaced in 2007, saving the city $28,500. The roller replacement purchase is moved from 2007 to 2012 and its useful life is extended to a twenty-year replacement schedule. This is a savings to the general fund for equipment replacement costs. The Log Truck replacement has been pushed out to 2009 from 2007, delaying capital outlay of $110,000. However, because the truck was stored outside the cab and box are in need of refurbishing. This will cost approximately $7,000 in 2004., The Brush Chipper replacement has been extended from 2004 to 2009, and extended its' useful life from 15 to 20 years. The replacement of a Tractor has been moved from 2004 to 2009, delaying capital outlay of $35,000. The replacement of the other Tracker has been moved from 2006 to 2010, delaying another $35,000 of capital outlay. The Swap Loader will still be replaced as scheduled in 2008 but the costs will be shared between the general fund and the refuse fund saving $27,600 in the general fund.