CR 09-063 2010-2014 Equipment Replacement PlanAugust 18, 2009
Proposed Action
Staff recommends adoption of the following motion: Move to adopt the 2010 -2014 Equipment Replacement
Plan.
Overview
The equipment replacement plan is a detailed summary of the next five years of a twenty -year replacement
schedule, for 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.
Approval of the 2010 -2014 allows staff to incorporate the 2010 ERP items into the 2010 budgets and begin
preparation for their purchase. Items that fall under the Minnesota Statutes Uniform Bidding /Contracting
Laws will require further approval by the council before their purchase.
Staff is recommending adoption of the plan.
Primary Issues to Consider
• Should the annual service charges to the general and special revenue funds be adjusted?
• What changes have occurred in the equipment replacement plan since last year?
Supporting Information
• Power point presentation
• 2010 -2014 Equipment Replacement Plan
Christine M. Harkess, CPA, CGFM
Finance Director
City of Hopkins
2010 -2014 EQUIPMENT REPLACEMENT PLAN
Council Report 2009 - 063
Financial Impact: $ as provided in plan Budgeted: Y/N X N Source: Various
Related Documents (CIP, ERP, etc.): ERP Notes:
EQUIPMENT
REPLACEMENT PLAN
City of Hopkins 2010 — 2014
ERP Future
•Revenues in the Equipment Replacement
fund are derived from charges to city
departments that use the equipment.
•Cash flow projections are updated annually
to ensure adequate funds for scheduled
replacements.
• Funding challenges are foreseen in the
future
City Hall Equipment
•The large city hall copy machine is
leased on a 3 -year lease
•Engineering printer /scanner is leased
on a 5 -year lease
• Document management scanner to be
replaced at a cost of $6,500
•Remaining election booths to be
replaced at a cost of $6,500
ERP Background
•The city has established an equipment
replacement plan that is reviewed and
adjusted on an annual basis.
• For 2010 the city is planning on
replacing or upgrading ten vehicles and
five pieces of equipment.
•Following are some highlights of the
plan.
City Hall Equipment
•Annually the city replaces a portion of its
obsolete computers with newer
technology.
•$30,000 per year is allocated to replace
old computers and $16,500 per year is
allocated for network upgrades.
Fire Equipment
•The fire department annually assess its fleet
and adjusts the useful lives of the equipment
accordingly.
• 2008 Aerial Ladder Lease Payment
O 10 year lease at $54,217 annually
• Items scheduled for replacement
O Duty Chief Vehicle
O Two Automated External Defibrillators (AED)
O Stairmaster in Fitness Room
EQUIPMENT REPLACEMENT PLAN 1
Police Equipment
•Scheduled for replacement are
O One admin vehicle - unmarked
O Two squad cars
Funding Equipment Replacement
• The cost of equipment is allocated
back to the user departments based
on life expectancy and cost of the
equipment.
• A 2% increase to the charge is
planned for 2010.
• Increases in the charge are also
planned for future years.
Public Works — Streets
• Large turf mower
• 1 ton dump truck
• Water truck
• Skid steer loader
• Trailer
Public Works Equipment
• All public works vehicles and equipment is
reviewed annually and useful lives adjusted
while maintaining the integrity, reliability and
safety of the vehicles, equipment and
employees.
$2,500
$2,000
$1,500
$1,000
$500
so
Revenue, Capital and Cash
Variances (IN THOUSANDS)
1==
rig 111 "Mr •yEI
o r1I...:Irr
2004 2005 2006 2007 2008 2009 2009
LO Revenue l Capital ® Cash
EQUIPMENT REPLACEMENT PLAN 2
Conclusion
• The Equipment Replacement Plan is a
valuable tool used to assess, plan and fund
future equipment needs of the City.
• By annually evaluating equipment and
adjusting useful lives where practical, the
city has been able to maintain the reserves
in this fund to cover equipment replacement
costs and with one exception has done this
without issuing capital notes or debt.
O Exception — 2008 Aerial Ladder Fire Truck
0 50% financed with a 10 -year capital lease
EQUIPMENT REPLACEMENT PLAN 3