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Replacement Policies PURPOSE 1. To provide a stable source of funding for those areas of expenditure that fluctuate significantly from year to year, i.e., equipment replacement and facility maintenance. 2, To provide a cushion against unexpected revenue problems. 3. To provide working capital to ensure sufficient cash flow to meet the City's needs throughout the year. POLICY T!w City will maintain a general fund reserve between 40-50%percent of the general funds total Dual operating budget, Any surplus beyond the required general fund reserve may be transferred to tether reserve fund with a funding shortfall. The City will establish an equipment replacement fund, and will appropriate funds to it annually to provide for timely replacement of equipment. The amount will be maintained at an amount equal to the accumulated depreciation plus 3 percent to provide for equipment replacement. The City will establish a building maintenance and replacement fund, and will appropriate funds to it annually to provide for timely maintenance of all buildings and plants supported by general governmental funding. The funding should equal the amount of accumulated depreciation recorded on all general governmental buildings. City will establish a plant replacement fund to provide for non-vehicular equipment replacement; i.e., mowers,tools,etc. Funding should equal the amount of accumulated depreciation recorded on all general governmental equipment. The City shall establish a recreational facilities replacement fund for the maintenance and replacement of specialized recreational facilities such as the skating center and park shelters which have been constructed. Funding shall be the annual appropriation of the 5%set out to the tax increment policy as the infrastructure replacement fund. The use of this Bind shall be limited to 60% of the annual interest, until the year 2004,at which time the fund balance will permit the use to become on the basis of the other replacement funds. From time to time the City Council shalt establish additional replacement funds as the need and funding ability becomes available. IMPLEMENTATION ENTATION The City shall use replacement funds to assist in the replacement of equipment,vehicles,and building rnaint=nce. New equipment or buildings are to be funded from new dollars,unless they are designated to replace currently depreciated assets. Funds from the replacement funds may be used up to the amount available from depreciation of the replaced asset. Any additional funding shall be from new sources.