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EN HILLS 10 I Did El7.7_1►1 Olga 1 DATE: May 13, 2024 AGENDA ITEM — 3B TO: Honorable Mayor and City Councilmembers Dave Perrault, City Administrator FROM: Joua Yang, Finance Director SUBJECT: Capital Funding Discussion Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A For Council Consideration Council should consider providing direction on next steps regarding Capital Funding. Background At the August 21, 2023 worksession (Attachment A), the City Council discussed the use of franchise fees to help support capital projects for the City. Ehler's, the City's financial advisor, provided an analysis on electric and gas fee structures, in addition to information on other local municipalities who assess a franchise fee onto their residents and business owners. At the September 18, 2023 worksession (Attachment B), the City Council discussed the topic at length and decided that April 2024 would be a good time to have an Open House in order to gauge residents' opinions on capital funding mechanism including franchise fees. Staff held a Capital Funding Update Open House on Saturday, April 201h at City Hall. Staff shared that there is an anticipated future gap in funding for the City, largely due to increased costs for the Lake Johanna Fire Department Station project ($4.1M), the Old Hwy 10 Trail/Lake Valentine to Hwy 96 and Lake Johanna trail projects ($3.6M), and a recently revised equipment needs schedule. Provided are two projected fund balance charts, one that includes the two trail projects and one that excludes them, as the City has not yet secured outside funding sources for the two trail projects. With the exclusion of the two trail projects, Staff anticipates the City will have the largest needs in the Equipment, Building, & Replacement Fund and the Public Safety Fund. If the two trail projects are included, the City would have an additional need in the PIR Fund. Page 1 of 4