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Infrastructure Replacement Fund The Infrastructure Replacement Fund is designed to provide financing for ma�or street maintenance repairs such as mill and overlays on non-MSA roads. The Fund has a balance of $11.8 million, which allows it to generate appro�mately $700,000 annually in interest earnings. Several years ago, a review of future needs concluded that the City would need appro�mately $700,000 annually to maintain (mill and overlay) non-MSA roads at current levels. Using either the interest earnings or reserves for other activities would reduce the amount available for the above-mentioned purposes, and may jeopardize the long-term funding plan for maintaining streets in their current condition. Other Sources The City has appro�mately $4.5 million in reserves in a number of other funds that although available, are designated for �e�p�dit�eszirmth� �ar fr�ture.0 1 d b e u s e d for other purposes, but would reduce the availability of monies to support the planned replacement needs of the City's fleet and equipment, parks and trail improvements, and housin� initiatives. The City also has appro�mately $4.7 million in reserves in various funds that are also available, but are designated for workin� capital. In other words, these monies are designed to finance current operations in advance of receiving bi-annual tax payments or fees for services. These funds could be used for other purposes, but would reduce the availability of monies to support current, on-going operations including; public safetv, administration and finance, communitv development, and parks and recreation programs. Finally, the City has appro�mately $7.5 million in reserves to support business-type activities, which include; sanitarv sewer, water, storm drainaQe, solid waste recYClin,g, and the city's municipal �olf course. These reserves are designated to provide workin .�ca�ital and infrastructure reulacement. This includes funding to replace sewer and water systems in lieu of assessments to benefiting properties. Funding for these operations is provided by user charges. These funds could be used for other purposes, but would reduce the availability of monies to support on-going operations and would inhibit the City's ability to finance infrastructure replacements when needed. Potential Tax Impact The following information shows the estimated tax impact on residential properties for various changes in the special assessment policy. In preparing the information a number of assumptions have been made. They include: . Any reduction in special assessments will require tax levy to bridge the funding gap. . The impact was determined based on a typical reconstruction project for both MSA streets, and neighborhood streets, using average costs, and assessment rates. These projected costs were applied to those projects that are likely to occur in the next 5-10 years. . The projected impact assumes all other factors are held constant. Attachment B -3-