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capital assets in Non-Fleet are components of City buildings/facilities such as roofs, carpeting and furnaces, office furniture, playground equipment, public safety equipment, FSC fitness equipment, election ballot tabulators, and utility meter reading devices. The replacements of City streets, utilities infrastructure, and Information Technology (IT) equipment are not included in these plans; instead, they are included in the City's Street Reconstruction Plan, the City's Utility Rate Analysis, and the IT Internal Service Fund. Paved Wor hard surfaces such as parking lots, trails, tennis courts, and skate parks have been reclassed from Non-Fleet to the Pavement Management Plan, a new internal service fund. This approach centralizes the efforts of the Public Works Department in conjunction with the other departments. There was no overall financial impact to establish this new fund. Financial Impact: The proposed long-term financial plan for the City's Capital Replacement Plans includes a number of various financing sources. These sources include the following: 1. Annual Installments: Annual charges are included in the applicable operating budget appropriations and set aside to replace existing capital assets. The intent is to have cash in the amount of the projected replacement cost on hand at the end of the year prior to the replacement purchase. A "straight-line" approach is used to calculate the installment. The amount required to make the replacement divided by the number of years remaining prior to the year of projected purchase equals that individual item's installment. 2. General Fund - Fund Balance Target Surplus (FBTS): The General Fund ended 2009 with a fund balance in excess of the City policy's targeted amount. The amount available to be redirected in excess of existing encumbrances is $1,100,000. It is recommended that $1,100,000 be transferred from the General Fund to the Fleet and Non-Fleet Funds. See Exhibit 1, a schedule calculating the FBTS and Exhibit 2, the calculation of the allocations of the FBTS. Redirection of a Component of the Debt Service Tax Levy: The General Fund has annual budget appropriations to transfer monies to applicable debt service funds. This amount of the tax levy is earmarked for retirement of debt. The City Manager's Recommended 2011 General Fund Budget proposes $951,600 to be transferred to debt service funds. Included in the $951,600 is $393,000 for the Public Safety Center debt. The last year this component of the tax levy is required is 2015. Beginning in year 2016, it is recommended the tax levy not be reduced, but instead $393,000 be redirected to the Fleet and Non-Fleet Capital Replacement Plans. The net impact is zero to the total tax levy amount. 4. Available Resources in the Capital Projects Fund # 422: This Capital Project Fund includes a "non-project" specific balance currently in excess of $840,000. This amount is available as a source of financing for street reconstruction projects and for unassessable improvement project costs. The Public Works Director feels confident that some of these monies can be used to assist in providing financing to the Pavement Management Plan without creating potential future financing problems for the street Page 2 of 3