HomeMy WebLinkAboutORDINANCE 1770-1998Suggested by: Administration
CITY OF KENAI
ORDINANCE N0.1770-98
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA
ESTABLISHING AN EQUIPMENT REPLACEMENT FUND.
WHEREAS, the City owns a fleet of heavy equipment; and
WHEREAS, the City administration keeps a schedule of replacement dates for each piece of
equipment; and
WHEREAS, an Equipment Replacement Fund would provide the financing mechanism for
such replacements; and
WHEREAS, the Equipment Replacement Fund would eliminate large spikes in the General
Fund budget; and
WHEREAS, the capitalization of the Equipment Replacement Fund will come from General
Fund reserve for equipment replacement and from other appropriations.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Kenai, Alaska that
KMC 7.25.110 is enacted as follows:
(1) A fund entitled Equipment Replacement Fund is hereby
created. The fund shall be an internal service fund as defined by generally
accepted accounting principles. The purpose of the fund is to provide
financing for heavy equipment which is anticipated to cost in excess of
$50,000 and which would otherwise be financed by the General Fund.
(2) The Equipment Replacement Fund is not required to have
an annual budget; however, any cash outlay for equipment purchases
from the Equipment Replacement Fund shall be approved by resolution
of the City Council.
(3) The Equipment Replacement Fund shall be allocated
interest earnings on all cash balances in the fund. Proceeds from the sale
of surplus heavy equipment will be deposited in the Equipment
Replacement Fund if the fund will be financing the replacement of the
equipment, or if the equipment was purchased with fund assets. Any
transfer of Equipment Replacement Fund assets to another fund shall be
accomplished by ordinance.
Ordinance No.1770-98
Pa e 2 of 2
g
(4) The City Manager will maintain a schedule of all
equipment owned by the Equipment Replacement Fund and shall make
recommendations to the City Council when equipment is to be
purchased by the fund.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, the a/~~' day of
January, 1998.
ATTEST:
v
Carol L. Freas, City Clerk
Approved by Finance:
Introduced: January 7,1998
Adopted: January 21,1998
Effective: February 21,1998
December 22, 1997 (sp)
Purchases
A'~
De t YEAR DESCRIPTIQN Re .Year R~e .Cost
Fire 1971 SEAGRAVES ENGINE 1998 X85,000
Streets 1993 ELGIN SWEEPER FROM AIRPORT 1998 50,000
1998 Total 335,000
Fire
Streets
Streets 1980
1972
1980
~~
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'~ ul~i'. t P y~„~ ~ `a ~ p ,~~~~A ~~kp"~ ~ ~~ q'.q
CAT 966 C DUBBER TIRE ~.OADER
~~ ~ ~ ,
~~~ ~~
.. _ ,.
" . ~,~. ~ ~ ~; ~~
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2002
2002 85 000
1
260,000
119,000
2002 Total 464,000
Streets 1981 GMC 10 -12 YARD DUMP TRUCK 2003 121,000
2003 Total 121,000
Fire 1988
;; ..
... ~,
.. ~ ~
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04
05 000
Streets 1982 GMC SANDER 2004 120,000
Streets 1983 FORD FLATBEd 2004 60,OQ0
2004 Total. 2$5,000
Streets 198 ATHEY MOBILE SWEEPER 2005 100,000
Streets 1978 CAT 14G MOTOR GRADER WIWING 2005 220,000
Streets 1983 BUCKET TRUCK ~ ~ X005 60,000
treets
X996
~ ~~ ~ ~ ~ ,~~~~ .P . ~~,.
.~ ~ , . ~~ ~ ,~ .~. ~ ..1~ ~ ~ . ~~ ;~~ .~. r 2005 Total
2006 380,000
11
200fi Total , 110,000
Streets 1987 CAT IT-28 LOADERfINTEGRALToOL CARRIER 2007 140,000
2007 Total 140,OQ0
Fite 1983 SPARTA~J PUMPER 2009 262,500
Streets 1991 WHITE/GMC SANDER 2009 19Q,000
2009 Total 452 500
Streets 1988 CAT 966C RUBBER TIRE LOADER 2010 300,000
` 2010 Total 300,000
Fire 1997 ~FREI~HTLINER AMBULANCE 2013 127,50D
Streets 1988 CAT 120G MOTOR GRADER WIVrIING, PLOW 2013 290,000
2013 'fatal 417,500
Streets 1993 CAT 140G MOTOR GRADER WMIiNG & V-PLOW 2018 325,000
Streets 1993 ELGIN SWEEPER 2018 215,00
2018 Total 540,000
Fire 199 ENGINE 3 2021 375,000
Streets 1996 CAT 160H MOTOR GRADER WNVING & V-PLOW 2021 346,000
2021 Total 721,000
Fire 1993 HURRICANE AERIAL 2024
~. ^ 562,500
~ww aww
~lVL4IOT~1 ao~y~uv
Grand Total 4,828,500
Fire Dept. equipment figures assume 25% grant funding.
Equipment highlighted above is scheduled to be replaced #wice during this period of time, The
cash flow schedule reflects the additional cost of these replacements in 2016, 2020, +& 2024.
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CITY OF KENAI
-, Gil o~ ~q~C~~ --
~ 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794
~ TELEPHONE 907-283-7535
.~ _ _ FAX 907-283-3014
1~II~1
1992
MEMORANDUM
TO: City of Kenai Mayor and Council
FROM: Larry Semmens, Finance Director
THRU: Rick Ross, City Manager
DATE: December 31,1997
SUBJ: Equipment Replacement Fund
Ordinances 1770-98 and 1771-98 establish and capitalize the equipment
replacement fund. The purpose of the fund is to provide financing for
re lacement of General Fund equipment expected to cost in excess of $50,000.
p
Currently there are 23 pieces of equipment that meet this cr~terla.
One of the benefits of this approach to financing equipment is that the General
Fund wi11 not have large variations in expenditures due to equipment purchases.
The u front capitalization of the fund will reduce fund balance in the General
p
Fund this year, but in future years there will not be large expenditures in the
General Fund for equipment. The plan is to have the General Fund make
a ments to the Equipment Replacement Fund over the expected life of the new
pY
e ui ment purchased. These payments, along with interest earnings and
qp
roceeds of surplus equipment sales, will provide financing for replacement
p
equipment when the time comes. The estimates of replacement cost were
derived b applying a 3% inflation rate to current costs of equipment. The
Y
interest rate used is 5.25%.
The schedule titled `Purchases' provides the anticipated year that individual
e ui ment items will be replaced and the estimated cost of replacement. For fire
qp
emer enc apparatus we are expecting that 25% of the cost will come from
g y
rants. Therefore, the numbers on the schedule are the cost to the fund, which
9
is l5% of total cost.
Equipment Replacement Fund Memorandum, page 2
The Cash Flow Schedule provides the details of cash in and out aver the next 26
years. The cash out is for purchases of equipment and the cash in is from
payments, surplus sales and interest. The schedule indicates that there will be a
modest cash balance in the year ~0~4 which is at the end of the first round of
equipment replacement. The actual cash balance at that time will depend on a
number of variables. I believe the fund will be adequately capitalized throughout
the period. As long as payments are made according fio the plan, the fund will
likely have sufficient resources available to finance equipment purchases for a
much longer period.
This fund will bean internal service fund which is accounted for like a business.
Therefore the only expense that will be recorded in the fund is depreciation
expense. This fact makes it unnecessary to adopt an annual budget. Control
over equipment purchases will be maintained by the requirement to pass a
council resolution for all purchases.
Please feel free to call me if you have any questions on the equipment
replacement fund.