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Replacement Funds In 1991, the City began a process of formally establishing replacement funds. Replacement funds are funds set aside to provide funding for infrastructure, equipment, buildings, and specific maintenance. Such funds set aside and properly managed, are to provide for a stable funding source and to assure a reasonable replacement schedule to meet needs and depreciation and ordinary wear and tear occur. Methodology Each asset owned by the city, with the exception of land, is considered to have a life of a given number of years. Annual depreciation is computed on each asset and recorded in the fixed asset system. Current governmental accounting rules do not allow depreciation to be booked, however, the City does provide for an accounting on an annual basis. Included in the various budgets, are depreciation amounts which are generally recomputed each year. At the end of each fiscal year, those depreciation amounts are transferred to the respective replacement fund. In addition, each replacement fund earns interest on any fund balances it may have. The objective is to at least maintain a funding level equal to the accumulated depreciation for each class of asset. It is improbable that a 100% level is practical since the City does not intend to replace all assets at once or necessarily when they are fully depreciated. The following annual depreciation life followed: • General Vehicles 5 -10 years • Fire Vehicles 20 Years • Plant and Equipment 3-15 years • Land Improvements and Buildings 20 -40 years • Street and Bridge Infrastructure 20 -80 years Over the past several years, the City Council has fully endorsed the concept of increasing such replacement funds where appropriate. The existing replacement funds include • General Vehicle Replacement Fund • Fire Vehicle Replacement Fund • Plant Equipment Replacement Fund • Building Replacement Fund • Parks Infrastructure Maintenance Fund III -52