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21788.3 <br />C'3UNCIL MEETING <br />TO: Mayor and City Council <br />FROM: Mark Bernhardson, City Administrator <br />, CITY DATE: February 17, 1988 �I`� <br />SUBJECT: Capital Budget Plan <br />Attachment: A. Draft Capital Budget Plan 1988 Through 2000 <br />ISSUE - Presentation of initial draft of a City capital budget <br />program to gain understanding and begin Council discussions in <br />order to develop an appropriate capital budgeting framework. <br />INTRODUCTION - As part of the strategic planning for the last two <br />years has been discussion of a long range financial plan, an <br />element of which would be long range capital budgeting program. <br />The Council had recently requested a capital budget specifically <br />as it relates to certain decisions concerning long term programs <br />and financing issues. Presented for you as the Attachment A is <br />an initial draft of a capital budgeting program. <br />DISCUSSION - The draft submitted as Attachment A is simply that, <br />a draft. When more fully developed it should provide a framework <br />within which discussions regarding long term capital spending as <br />they relate particularly to Municipal State Aid layout, County <br />Road 15, existing bonded indebtedness together with potential <br />facilities expenditure can take place. <br />As this is a first draft to elicit further discussion, further <br />efforts have not been made to try to "even out" expenditures, <br />look for creative financing alternatives etc. This is not a <br />program that is requested to be adopted at this time. Items that <br />could adjust the program include: <br />- Inclusion of other plans (major ones are not <br />anticipated.) <br />- A review of priorities <br />- Chosing not to do projects <br />- Reprogramming projects from one year to another <br />- Revamping of bonding sizes and years together with the <br />impact of rates. (It should be noted that on a $1 <br />million issue over the period of 15 years, a 1% <br />point difference in interest rates cost about <br />$75,000 over the period of the bonds. This can have <br />a substantial effect in a volatile bond market.) <br />To be most useful, a capital budget should be updated annually <br />prior to the regular budget and based on that review the City <br />would determine budget needs, both for the long term and for the <br />immediate upcoming budget. <br />It should be noted, among other things, that payments for bonding <br />