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Non-General Fund Replacement Reserves Background The Non-General Fund fleet is valued at about $12.4 Million. Non-General Fund vehicles use a `revolving fund' model which means that these departments make continuous monthly payments into their respective vehicle accounts to ensure revenues are available for future purchases. The Non-General Fund vehicle balances are adequate to meet ongoing purchases. Some minor changes were made to adjust for inflation and more efficient life cycles of high maintenance equipment such as street sweepers and sewer cleaning trucks. Like the General Fund, Non-General Fund schedules were based on the initial purchase price alone rather than the projected replacement cost plus in-service preparation. The schedule also did not include costs for vehicle specification, registration and licensing. Fleet has historically covered these associated costs from its O&M budget instead of allocating it to replacement. Fleet is analyzing the cost of vehicle specification, registration, and licensing to provide a `total cost replacement' model for future years. Because of its adequate balances, the Non-General Fund Fleet Reserves has more flexibility to fund acquisition costs due to accident totals or catastrophic damage. The Non-General Fund Fleet Reserve has historically been a short term funding source for other major city programs as well. Summary The attached Fleet Services Replacement Reserve Forecast shows the various Fleet Reserve Fund Balances that Fleet Services maintains for its customers. This is a "snapshot" of the reserve balances at the start of FY04 since expenditures and revenues flow in and out monthly. The Fleet Services Replacement Reserve Forecast estimates the six year future replacement cost by fund. The Fleet Advisory Board has identified FY05 General Fund Fleet Replacement needs at $2,608,077. The General Fund budgeted transfer is $830,000. The attached General Fund Fleet Reserve Analysis provides a more detailed view of the current General Fund Fleet Reserve balance, transfers, interest earnings, sale of assets, and equipment expenditure projections for the next six years. 1. Part one of this analysis shows no change to the existing General Fund transfer which results in negative FY06 balances. 2. Part two of this analysis shows the General Fund transfer set to recover current year expenditures with $100,000 contingency for accident totals/incidentals expenses. In particular, FY06 through FY08 is adjusted to adequately fund peak GF Fleet needs. The General Fund transfer in FY09 and beyond returns to normal transfer limits, which include projected inflation. Recommendation The Fleet Advisory Board (FAB) recommends taking a look at one time funding in FY05 to offset the projected impact of the General Fund fleet transfer need for FY06 and beyond. The FAB also recommends approving the 5-Year Replacement Schedule/Forecast Worksheet based on current projected total life cycle model and the additional FY06 through FY08 General Fund transfer amounts. Attachments: Multi-Year Fleet Replacement Schedule/Forecast Worksheet Fleet Services Replacement Reserve Forecast General Fund Fleet Reserve Analysis Cc: Fleet Advisory Board: Rick Siel, Police" Jeff Narin, Fire Jeff Lankston, P.W. Maintenance Kitty Murdoch, Finance Tim Patrick, LRCS Ron Sutton, Facilities Page 2 of 2 "FY04 Fleet Replacement Forecast"