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16 The CIP also represents a projection of when asset replacements are likelyto occur. However, each 17 individual asset is scrutinized prior to replacement to determine whether it’s still needed and if so, whether 18 it truly has reached the end of its useful life. It’s not uncommon to defer the replacement of assets if 19 they’re still in good condition. Conversely, we sometimes determine that the replacement of an asset 20 needs to be expedited because it’s failing sooner than expected. 21 22 Because of these uncertainties, we tend to focus on the long-term sustainability of our asset replacement 23 programs rather than committing to a rigid replacement schedule. The exception are the items listed in 24 the next fiscal year which will likely be included in the following year’s City Manager Recommended 25 Budget. 26 27 Although it’s being discussed separately here, it is suggested that the CIP be considered in conjunction 28 with the City Council’s budget priorities. This is an important consideration given the strong 29 interdependence between the availability of capital assets and program & service outcomes. The 30 remainder of this staff report addresses the following topics in greater detail: 31 32 2023-2042 CIP Summary 33 Analysis of Asset Replacement Funds: Property Tax-Supported 34 Analysis of Asset Replacement Funds: Fee-Supported 35 Funding Strategies and Impacts on Homeowners 36 37 Each of these topics are addressed separately below. For purposes of discussion, the following 38 adjustments to our revenue projections have been incorporated: 39 40 $200,000 increase in levy support for the Police Vehicle and Equipment fund 41 $10,000 increase in levy support for the Administration Equipment Fund 42 $10,000 increase in levy support for the Finance Equipment Fund 43 ($10,000) decrease in levy support for the Central Services Equipment fund 44 ($100,000) decrease in levy support for the IT Equipment fund 45 $200,000 applied Excess Cash Reserve fund resources to the Parks & Rec Vehicle & Equip Fund 46 $500,000 ARPA funds applied to Water CIP projects in 2023 47 Total proposed increase in levy of $110,000 for CIP funds, $500,000 ARPA funds applied and 48 $200,000 of Excess Cash Reserve funds applied 49 50 An analysis of these funds demonstrated that without increased funding, the funds would go into a deficit 51 situation in the next 1 – 5 years. The City previously received federal grant funding for the 6 firefighters 52 starting in 2021. In 2024, the grant will expire and the City must fully fund the 6 firefighters. In order 53 to phase in a levy increase of $600,000 to cover the annual cost of the 6 firefighters, staff proposed to 54 increase levy support for the Police Vehicle & Equipment fund by $200,000 in 2022 and an additional 55 $200,000 in 2023, which the Council endorsed. In 2024 these new levies would transfer over to 56 operations to pay for the 6 firefighters. 57 58 Each fund in the CIP was examined and levy increases are programmed in later years where individual 59 funds were going to be underfunded. These are merely proposed at this time and will be examined in 60 later years. 61 62 2023-2042 CIP Summary 63 The City’s total asset replacement needs over the next 20 years is $206.4 million, an increase of $25.5 64 million or 14.1% from the previous year’s CIP. This is summarized by major City function in the table Page 2 of 13