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122 123 Introduction 124 The City Council recently received estimates to replace the Ice Arena refrigeration system using 125 either a conventional refrigeration system or a geothermal system. The estimated replacement 126 costs ranged from $,625,000 to over $,I million. 127 128 The City maintains an existing Building Replacement Fund that is designed to finance capital 129 replacements and renovations of general City facilities such as the Ice Arena. However, this 130 Fund has been used extensively over the past few years to finance facility renovations at the City 131 Hall and Public Works Buildings, and for roof replacement at the Skating Center. It has a 132 current balance of $,400,,000,, all of which is currently earmarked for the replacement of the 133 Arena refrigeration system. 134 135 To finance the installation of a new Arena refrigeration system, the City will need to identify 136 other funding sources to supplement monies available in the Building Replacement Fund. 137 Depending on which replacement system is used, the additional amounts needed range from 138 $,225,,000 to $,600,,000. This could either come from a reallocation of monies from the 2008 139 Operating Budget or reserve funds. Each of these options is discussed further below. 14O 141 Financing Option #1: 2008 Operating Budget 142 Although the Council has not yet adopted a final 2008 Budget, it could conceivably redirect 143 monies for the Arena refrigeration system. However, this would have an immediate impact in 144 the City's ability to replace city assets at their scheduled time and/or inhibit our ability to 145 maintain current service levels. For example, the Council could redirect the $,215,000 currently 146 earmarked for the 2008 Park Improvement Program, and use it for the Arena. However, 147 scheduled park improvements would be delayed at least one full year and the park system overall 148 would fall even further behind than it already is. 149 150 Financing Option #2: Cash Reserves 151 The City could also tap existing reserves from the General Fund or Recreation Fund. However, 152 both of these funds are currently below target reserve levels. Using reserves from these Funds 153 would be contrary to the Council's Cash Reserve Policy adopted earlier this year. 154 M95