09-11-2000 Council Work Session - Laserfiche WebLink

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Capital Expenditures-2001 and Beyond August 22. 2000 Page 4 Long Lake Fire Equipment Replacement The Long Lake fire equipment replacement schedule requires approximately $500,000 of funding from Orono over the next six years. In addition, the City will participate in funding for a new fire station to be built prior to 2003. A funding option for the Long Lake fire equipment replacement is to include the vehicles in a bond issue along with the fire station funding. If we assume the City’s share of the fire station cost to be $1.5 million, the additional $500,000 for equipment replacement would bring the City’s cost to $2 million. If this is funded through a bond issue over 15 years at 6% interest, the average annual debt serviee payment would be $206,500. Computer Replacement The City now has 30 personal computers (20 in the Administrative Offices and 10 in the Police Department). The majority of these should be replaced every three years to keep up with technology, and to keep the hardware compatible with new software. The replacement of eight PCs per year at a cost of $1,700 each would require funding of $13,600 per year. Total Long-Term Annual Funding Needed The three main areas of expenditure in the Improvement and Equipment Outlay Fund taken together will require total funding of $290,000 per year. This requires increasing the current funding by $152,000. The $90,000 of additional tax levy for capital needs that was authorized at the initial budget work session, in addition to reasonable annual increases in the amount transferred to the Improvement and Equipment Outlay Fund, will enable these needs to be met. Building Outlay Fund/Community Investment Fund The Building Outlay Fund was created as a source of funding for the new City facilities. Because the City issued bonds for the construction of the facilities, the Building Outlay Fund was not used to fund the facilities, with the exception that the interest earned in the fund was used to pay a portion of the debt service on the facilities ’ bonds. The Building Outlay Fund had a balance of $2,376,000 as of December 31,1999. $130,000 of the interest earnings is earmarked for annual debt service on the City facilities ’ bonds through 2007. In past years, capital expenditures related to the City Hall building; i.e. building repairs, office modules, and landscaping, have been funded through the Building Outlay Fund. Earlier this year, the Council converted the Building Outlay Fund to the Community Investment Fund. The Community Investment Fund is to work as an endowment fund to provide a long-term source of funding to assist projects of benefit to the community but that do not have sufilcient other sources of funding. The exception to this, as stated above, is that the interest earned on the fund through 2007 will be used to pay the annual debt service on the City facilities' bonds.