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8 <br />approximately $62 million in water projects, almost $50 million will come from <br />Grants/Donations. <br />Staff and Council have had ongoing discussions about decreasing the city’s debt. The <br />Infrastructure Reserve (Fund 409) and related tax levies will be a crucial tool to fund future street <br />projects and decrease the city’s debt load. The Funding Sources & Uses report shows the <br />planned/possible activity in that fund, including tax levies, Minnesota State Aid, and a possible <br />contribution from the General Fund. All of these numbers are for modeling purposes only at this <br />time and will be part of the larger strategic financial planning and 2026 Budget & Levy <br />processes. <br />Additional funding analysis shows the totals of each type of funding and amount of debt relative <br />to the total projects. Staff’s current goal is to average approximately 1/3 of all city-funded <br />projects being paid with cash. Two significant county projects requiring city contributions in the <br />near-term and minimal infrastructure reserves in the near past make this goal difficult to achieve <br />when looking at all projects and all funding (excludes MPCA-funded treatment plant). We get <br />close to that goal in years three through ten at 37%. And when looking exclusively at city- <br />funded street expenditures – from Infrastructure Fund and General-Levy Debt – we do reach that <br />goal. <br />Using the aforementioned funding assumptions and strategies we expect to decrease the city’s <br />debt to just over $30 million -- slightly more than half of the current level – by 2040. In order to <br />accomplish this, the Infrastructure Levy will need to continue to be increased. The current <br />assumption increases that levy by 18% per year (excluding inflation). Increasing that levy does <br />not decrease debt levies at the same rate, however, so the “debt levy + infrastructure levy” will <br />continue to increase, unless we are able to further subsidize infrastructure expenditures through <br />other sources. <br />Water, Sewer & Stormwater projects are funded by those enterprise funds. Our goal is to utilize <br />cash for most projects, though we have one remaining project we have tentatively planned for <br />bonding. Final decisions regarding bonding are determined in that year based on available cash <br />and other factors. <br />Attached Reports – <br />•Infrastructure – Summaries for Streets, Water, Sewer & Stormwater <br />•Infrastructure – Details for Streets, Water, Sewer & Stormwater <br />•Infrastructure Reserve – Funding Sources & Uses <br />•Financial Analysis – Infrastructure <br />•Projections of Existing & New Debt <br />•Debt & Infrastructure Levy Projections <br />•Debt Service & Infrastructure Levies as a Percentage of Tax Capacity <br />Vehicle Replacement Fund <br />The Vehicle Fund is the only capital fund whose purchases are split across departments, and as <br />such it seemed appropriate to bring some attention to it separately.