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City Council Regular Meeting —12/05/05 <br />DRAFT Minutes - Page 4 <br />of endowment fund for the purpose of utilizing interest earnings <br />as a funding source for the City's General Fund, and to buy <br />down the annual General Fund tax Levy. <br />Councilmember Kough sought staff clarification on the purpose <br />and status of the Equipment Replacement Fund. <br />Mr. Miller advised that the City utilized existing funding <br />mechanisms for replacement of "rolling stock" in all <br />departments, including street and infrastructure replacements. <br />Mr. Miller noted the exception being for performing major <br />repairs, maintenance or replacement for city facilities; cautioning <br />that this fund, currently at approximately $1 million, had been <br />spent down in recent years, with no additional monies or plans <br />for replacement of those funds. <br />Councilmember Kough sought additional staff response related <br />to Reserve Fund status and amounts. <br />Mr. Miller responded that the City currently had approximately <br />$35 million in cash reserves, substantially reduced from $50 <br />million in 2000; representing recent capital improvements at City <br />Hall and the Public Works building; and early debt reduction and <br />pay-off. Mr. Miller cautioned that these reserves generated <br />approximately $1.7 million in annual interest earnings to fund <br />current operations; doing double-duty in boosting the financial <br />bond rating authority of the City and their subsequent interest <br />rates for bond issues. <br />Mayor Klausing asked that Mr. Miller review the City's bond <br />rating, impacts and how it relates to the City's ability to borrow <br />money and the interest rates obtained. <br />Mr. Miller used several graphs to illustrate the City's city-wide <br />cash reserves from 2000 to present for the General Fund and the <br />negative trend that may cause reservations by bonding <br />companies as to how the City provides for their core functions <br />(i.e., public safety; streets; and asset reserves for buildings, parks <br />and vehicles). Mr. Miller noted that the bonding companies <br />consider how the City can respond to contingencies and general <br />operations, among other factors to determine financial health of <br />