CC PACKET 08231994 - Laserfiche WebLink

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• A AsORA�'�'DU'�i DATE: August 8, 1994 TO: Mayor and Councilmembers FRO,Nf: Michael Mornson, City Manager rMAI: CAPITAL EQUIPMENT FINANCU\G FOR 1995 At the August 3rd Work Session, the City Council expressed a willingness to explore financing equipment purchases with a portion of existing reserves instead of borrowing through the equipment certificate program. According to the 1993 audit, the City has a fund balance in their capital equipment account of $209,650. I would propose we use $134,000 of the equipment reserve in 1995. This would then leave $75,650 in the equipment fund for emergencies, etc. I would also propose starting • in 1995 we start levying $75,000 per year to place in the equipment fund to continue an equipment replacement program. In 1995 I propose we would spend the $75,000 levy with the $134,000 from.the equipment reserve fund for total funds spent in 1995 of$209,000 The $75,000 we levy would be part of the property"tax levy each year that we would do on an annual basis. We will also eliminate the existing certificate of equipment levy, which in 1994 was $76,265. The benefits of this type of financing would be as follows: 1. Eliminate issuance and Moody's rating -- .savings of$7.000. 2. Eliminate interest cost over the life of the equipment certificate -- .savings of$80.000. 3. We can reduce or eliminate the $75,000 levy in any yeaar when the budget is in need of relief. With an equipment certificate, we cannot do that because we are obligated to pay the certificate holder. • The major disadvantage of this proposal would be the spending down of the equipment reserves by $134,000. However, if we levy the $75,000 each year, we will eventually build them back up.