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8 <br /> <br />Of note in Water projects is the cost of new Treatment Plants. It is currently expected that these <br />facilities will be fully funded by the MPCA with the 3M Settlement Funds. So, of approximately <br />$63.6 million in water projects, almost $50 million will come from Grants/Donations. <br /> <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 /> <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). <br /> <br />Water, Sewer & Stormwater projects are funded by those enterprise funds. Our goal is to utilize <br />cash for most projects. Final decisions regarding bonding are determined in that year based on <br />available cash and other factors. <br /> <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 /> <br />Vehicle Replacement Fund <br /> <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. <br /> <br />The city has been contributing to the fund regularly since 2019. As we’ve built out the CIP to a <br />10-year plan, it became clear that those funding levels needed to increase. The projected tax levy <br />is shown with a starting amount of $450K in 2026 and increasing $50K per year until 2031 and <br />then holding steady. An interfund loan of $500,000 is planned for 2027 to be repaid over a 5- <br />year period to address a shortage in the fund that year. A second interfund loan is planned for <br />2028 in the amount of $1.3 million, to be repaid over a 10-year period, to allow for the purchase <br />of the ladder truck. <br /> <br />Attached Reports – <br />• Vehicle Fund (410) – Funding Sources & Uses <br />