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Agenda {f' . . AGENDA CITY COUNCIL WORK SESSION Tuesday, July 8, 2003 6:30 p.m. Raspberry Room 6:30 pm City Council Work Session Called to Order 6:35 pm ERP Review, Yager 8:30 pm Other 8:45 pm Adjourn ( <', ~ . e . June 26, 2003 2004 EQUIPMENT REPLACEMENT PLAN DISCUSSIONS Overview ',,- The City of Hopkins is beginning the process of establishing the 2004 - 2023 equipment replacemnt plan. Every year the city council reviews with the city manager and staf( 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. In addition to our normal objectives, this year the equipment replacement fund is reducing its' funding source by approximately 50% or $250,000. Departments were instructed to try to reduce the costs associated with the future replacement of equipment. This was accomplished by closely assessing the equipment planned for replacement, scrutinizing the estimated cost and life expectancy of the equipment, trying to prolong the equipment life expectancy and reburshing equipment instead of replacing it. Through a combination of several equipment changes and better estimated costs, departments were successful in accomplishing this goal. The over all twenty-year replacement costs for the general fund have dropped by $1,363,000. This represents a 10 % reduction in anticipated costs. Included in the ERP draft is an explanation of the changes that were implemented. 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. 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N o 0"\ 0 VI ..... ..... - ..... b b 0'1 VI _ W - N VI 0'1 0 - - .j:::..~ -0 -.l - ~ \0 ~lJt 0 IV 0"\ ~ -.l 00 0 ~o i..J V. ~N "oo-,~'N "....1 0 - -.l \0 VI 0 VI 0\ 0-- 0./::0. ~ ./::0. -.l 0 VI ~ 0\0 0./::0. \0 ..... - ..... "tv "tv w lJt _ w "0 N - N VI - W .j:::.. ~ _ W 0\ 0 0\ \0 W VI ~ IVt...,)N-.l ~ 0 ~ "....1 'N 0.. 'N "0"0 'N 1.0 i..J 00 \0 0\ 0 - - o~oO\ lJt -.l 0 0 0 IV o~o\O -.l - ..... \0 "0 0\ ~ w "tv N \0 - -.l - 0\ .j:::..~ -.l IV 0 \0 N 0 0\ ~\O IV OQ 00 \0 0 "0 tv 0.. ~o ..... b~ 'tn "....1 \0 0 0\ 0 -.l 00 o 0"\ N 0\ W 0\ 0 00 VI 00 VI 0 ~ o ..., ::-;" 5' (Jq n ~ 'E. ..... e:.. Cd ~ - ~ =:I C"l ~ - tv \:::l - t:J ~ - b - -.l "0 00 w ~~~ v) i . . . EQUIPMENT REPLACEMENT PLAN 2004 - 2023 Background The Equipment Replacement Plan is a twenty-year forecast of equipment needs in the City of Hopkins. It is intended to inform 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 I 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 $627,300. 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 remain about the same through the year 2013 and then the fund will experience a substantial increase in funds available thru 2018 in preparation for replacement of some major fire equipment in 2019. Historic intragovernmental charges have been cut 50% to $258,000, as a result of a major loss of revenues in the general fund. It is anticipated that the 2004 intragovernmental charge to the general fund will need to increase incrementally by 2% each year until 2009. The charges will continue to increase each year after that, but at a slower pace. The future increases in charges to the. general fund should provide sufficient funds to carry us through 2023. A goal of the city this year was to reduce its' future equipment replacement costs, Major adjustments in the replacement of future equipment have been applied to the equipment replacement plan to reduce its future equipment replacement costs. Refurbishments, extended life expectancy and Closer cost estimates of replacements have accomplished the goal of reducing future replacement costs, The twenty-year savings amounted to approximately 1.3 million dollars. The charges to the general fund for equipment replacement have been reduced by $250,000 in 2004, The equipment replacement charges in the general fund represent only 3% of total general fund expenditures. Future increases incrementally of 2% every year are 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 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 Luveme 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: The purchase of a 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. "'- . ., " , 1 Public Works: . 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 Bomb 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 uselful 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.