HomeMy Public PortalAboutCC - RESO - R2023-068RESOLUTION R2023-068
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NAPA, STATE OF CALIFORNIA, APPROVING THE FISCAL
POLICY
WHEREAS, on June 21, 2022, the City Council adopted the Fiscal Policy as
Exhibit "E" of the FY 2022/23 budget; and
WHEREAS, City staff has conducted a full review of the current Fiscal Policy and
revised to add definitions, increase clarity and consistency, and update policy to match
current goals; and
WHEREAS, the City Council has considered all information related to this matter,
as presented at the public meetings of the City Council identified herein, including any
supporting reports by City staff, and any information provided during public meetings.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Napa,
as follows:
1. The City Council hereby finds that the facts set forth in the recitals to this
resolution are true and correct, and establish the factual basis for the City
Council's adoption of this resolution.
2. The City Council hereby approves the Fiscal Policy, attached hereto and
incorporated herein by reference, identified on Exhibit "A."
3. In accordance with Resolution R2016-162, the City Council hereby authorizes
the City Clerk to organize and publish this resolution and Fiscal Policy as a part
of the City Council Policy Resolutions.
4. This Resolution shall take effect immediately upon its adoption.
R2023-068
Page 1 of 2
June 20, 2023
Page 1 of 16
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the City
Council of the City of Napa at a public meeting of said City Council held on the 201h day
of June, 2023, by the following vote:
AYES: Alessio, Luros, Narvaez, Painter, Sedgley
NOES: None
ABSENT: None
ABSTAIN: None
Approved as to form:
Michael W. Barrett
City Attorney
R2023-068
Page 2 of 2
ATTEST: CA
Ti fany CarraiYza
City Clerk
June 20, 2023
Page 2 of 16
EXHIBIT A
Fiscal Policy
INTRODUCTION
Objective
This Fiscal Policy (or "Policy") establishes policy parameters to guide the City's long term fiscal
stability, including parameters for establishing and implementing the City Budget. This Policy is
intended to provide direction for the management of the City's finances to provide for the delivery
of quality services; maintain an enhanced service delivery; ensure a balanced budget; and
establish reserves necessary to meet known and unknown future obligations.
Policy Areas
This Policy addresses the following areas:
1. Fiscal Policy Overview
2. Definitions
3. Budget Creation
4. Budget Priorities
5. Budget Adjustments
6. Accounting, Auditing and Financial Reporting
7. Capital Improvement Projects and Infrastructure
8. Debt
9. General Revenue Policies
10. Enterprise Fund Revenue
11. Investment
12. General Reserve Policies
13. Use of Fund Balance
14. General Fund Reserves
15. Capital Improvement Project (CIP) Fund Reserves
16. Trusts
17. Internal Service Fund Reserves
18. Enterprise Fund Reserves
19. Internal Service Replacement Funds
R2023-068 Page 1 of 14
Page 3of16
EXHIBIT A
Fiscal Policy
Fiscal Policy
1. Overview of Purpose and Scope of this Policy
a. The general financial goal is to maintain and enhance the sound fiscal condition
of the City.
b. Applicability. This Policy applies to all funds for the City of Napa, as well as
funds managed by the City of Napa on behalf of other entities such as the
Housing Authority of the City of Napa, the Napa Enhanced Infrastructure
Financing District, and Napa County.
2. Definitions. The definitions set forth below shall apply to this Policy. Unless otherwise
defined in this Policy, the definitions and interpretations set forth in the Budget shall
apply to this Policy.
a. "Balanced Budget": In each fund, budgeted revenues plus fund balance are
greater than budgeted expenditures.
b. 'Budget': An annual plan approved by the City Council of financial activity including
anticipated expenditures and the estimated means to finance those expenditures.
Budget appropriations are authorized by formal City Council action with any budget
adjustments approved in accordance with the provisions of this Fiscal Policy.
c. "Capital Improvement Program (CIP) Project Budget': The Budget includes a
listing of all planned capital improvement projects by category.
d. "Deficit': The excess of fund expenses over fund revenues at the close of a fiscal
year.
e. "Department Director": the chief executive appointive officer (as defined by City
Charter Section 75 and Napa Municipal Code Title 2) of each Department identified
in the Budget, or the authorized designee of the Department Director or City
Manager.
f. "Fund": An independent fiscal and accounting entity with a self -balancing set of
accounts recording cash and/or other resources together with all related liabilities,
obligations, reserves, and equities.
g. "Fund Balance": The difference between assets and liabilities reported in a
governmental fund.
h. "Fund Balance Categories" per current governmental accounting standards
(GASB 54):
i. "Non -Spendable": Cannot be readily converted to cash or cannot legally be
spent
ii. "Restricted": External imposed (by granting agencies, governmental
entities, etc.) restrictions on spending
iii. "Committed": City Council formally -imposed (by resolution or other action)
restrictions on spending
Page 2 of 14
Page 4 of 16
EXHIBIT A
Fiscal Policy
iv. "Assigned": Funds reserved by Council direction or City Manager for
designated purposes
v. "Unassigned": Residual balance not classified in any of the above
categories
i. "General Fund Operating Budget": total General Fund expenditure budget less
transfers to other funds and reserves.
j. "Non -Recurring": Revenues or expenditures not expected to recur on a regular
basis; not to be included in the regular operating budget.
k. "Object Code": Object codes are used in the City's financial system to differentiate
between different types of revenues, expenditures, and balance sheet accounts.
3. Budget Creation
a. The City Council will adopt a balanced two-year budget by June 30 of every other
year. As a part of the biennial budget process, prior to the end of the first year of
the two-year budget cycle, the City Council will adopt a budget for the second year
(in compliance with City Charter Sections 87 — 91) which will incorporate any
amendments for the second year of the two-year budget cycle. When considering
each budget, or any amendments to a budget recommended by the City Manager,
the City Council will consider the following policy goals:
i. A biennial base operating budget will be developed by verifying or
conservatively projecting revenues and expenditures for the forthcoming
two fiscal years.
ii. The City will maintain a level of expenditures which will provide for the
public well-being and safety of the residents, property owners, businesses,
and visitors of the community.
iii. Projected revenues will be sufficient to support projected operating
expenditures. The City will estimate its annual revenues by an objective,
analytical process utilizing trend, judgmental, and statistical analysis as
appropriate. Revenue estimates adopted by the City Council must be
conservative.
iv. The City shall contract with outside consultants or utilize limited term City
staff positions for peaks in workload, when a project is limited in term and/or
scope, or when specialized expertise is necessary and it is more cost-
effective to hire a consultant than add a full-time staff position. Any
appointment to a limited -term employment position shall be made in
accordance with Council Policy (R1999-247, as may be amended).
Conversely, for longer -term needs (at least 3 to 5 years), or when the City
Manager determines it is more cost-effective, the City Council may
consider adding full-time staff.
Page 3 of 14
Page 5 of 16
EXHIBIT A
Fiscal Policy
V. The City will project its equipment replacement and maintenance needs for
the next ten years and will update this projection each year. From this
projection a maintenance and replacement schedule will be developed and
followed.
A. The Non -Recurring General Fund will be used to budget for non -recurring
items.
b. Each Department Director may request additional funds for new positions,
equipment, or programs during the budget creation process. Requests are
submitted as Budget Packages and include a description of what the requested
funding will be used for and the estimated financial impact.
c. Compensated Absence annual appropriations are budgeted in the General Fund
for payment of various accrued leave balances (non -Enterprise Fund only). The
three appropriations are for payment of accrued leave for separating employees,
leave payouts for continuing employees, and annual cashouts of management
leave. The appropriation amounts shall be based on historical trends, salary
growth, and anticipated usage of leave cashout policies.
4. Budget Priorities
When considering each budget, or any amendments to a budget recommended by the
City Manager, the City Council will consider the following policy goals:
a. Maintenance and replacement funding will be prioritized each year to ensure that
capital facilities and equipment are sufficiently maintained to avoid service
disruptions.
b. Projects or programs to improve City business processes and/or increase
efficiency will be prioritized over the addition of new full-time staff.
c. If funding is not available for operations and maintenance costs of proposed new
facilities, the City will delay construction of these facilities.
5. Budget Adjustments
a. The City Manager is authorized to establish administrative regulations to document
the procedures for Department Directors to submit requests for budget
adjustments using the City's financial system.
b. Any proposed amendment to the Budget requires approval by the City Council,
except that the City Manager is authorized to approve an amendment to the
Budget upon making a written determination in accordance with any of the
following circumstances:
i. When the increased expenditure is completely offset by new matching
revenue under either of the following circumstances:
1. To the extent the City receives donations (including grants) for a
specified purpose, the City Manager is authorized to increase
Page 4 of 14
Page 6 of 16
EXHIBIT A
Fiscal Policy
appropriations for that department and that fiscal year in an
amount not to exceed the amount of the donation. Adjustments
shall be reported to the City Council as part of the next regular
financial report.
2. To the extent that a department projects revenues above that fiscal
year's budgeted revenues, the City Manager is authorized to
increase appropriations for that department and that fiscal year in
an amount not to exceed 15% of the department's total revenue
budget for that fund and object code. Adjustments shall be reported
to the City Council as part of the next regular financial report.
ii. Any budget transfer within the same fund involving: (a) salaries and
benefits budgets, or (b) transfers between departments, or (c) accounts
within a department as necessary to meet department objectives.
c. The City Council hereby authorizes the City Manager, for all funds except the
General Fund, to carry forward a revenue or an expenditure appropriation from a
prior fiscal year to the next fiscal year, based on departmental request and in an
amount not to exceed not yet expended appropriations from that fund for the prior
fiscal year. For the General Fund, the City Manager is authorized to carry forward
an expenditure appropriation from a prior fiscal year to the next fiscal year,
provided the amount is for an encumbrance that will carry forward to the next fiscal
year and does not exceed not yet expended appropriations from the fund for the
prior fiscal year.
i. The amount of the increased appropriations for the next fiscal year, due to
unexpended encumbrances, department requests, and available
appropriations from the prior fiscal year, will be reported to the City Council
as a part of the annual financial audit for the prior fiscal year.
6. Accounting, Auditing and Financial Reporting
a. The City's accounting and financial reporting systems will be maintained in
conformance with generally accepted accounting principles and standards of the
Government Accounting Standards Board.
b. Financial reports will be submitted to the City Council and will be made available
to the public at least twice each fiscal year.
c. Full and continuing disclosure will be provided in the general financial statements
and bond representations.
d. The City will maintain a good credit rating in the financial community.
e. The City will maintain a liquidity ratio of at least 1:1.
f. An annual audit will be performed by an independent public accounting firm with
the subsequent issue of an official Annual Comprehensive Financial Report
(ACFR), including an audit opinion.
Page 5 of 14
Page 7 of 16
EXHIBIT A
Fiscal Policy
g. In accordance with City Charter section 58, the Finance Director will, at least once
a month, provide a written report to the City Council of the cash in the Treasury.
h. In accordance with Napa Municipal Code section 2.32.050, the Finance Director
shall deliver to the City Manager and to the City Council at a regularly scheduled
Council meeting, a budget report showing the budget status at the end of the
preceding month.
i. The Long -Term Financial Forecast shall be prepared annually projecting revenues
and expenditures for the General Fund. This forecast shall be used as a planning
tool in developing the following year's operating budget.
7. Capital Improvement Projects and Infrastructure
When considering each Budget, or any amendments to a Budget recommended by the
City Manager, the City Council will consider the following policy goals:
a. The City will plan for the design, construction, implementation, operation, and
maintenance of capital improvements in accordance with an adopted Capital
Improvement Program.
b. The City will develop an annual plan for capital improvements, including project
design, construction, implementation, and operating and maintenance costs ("CIP
Project Budget").
d. The City will use intergovernmental assistance to finance only those capital
improvements that are consistent with the Capital Improvement Program and City
priorities and for which operating and maintenance costs have been included in
the Budget.
e. To cover the costs of CIP projects planned for the Water Enterprise Fund and the
Solid Waste and Recycling Enterprise Fund, the City will seek non -General Fund
sources of revenue (including grants from other agencies), and the City will
otherwise cover the costs through the establishment and regular updating of fees
and charges that are equitably imposed on users of the services.
8. Debt
a. The City Council may authorize the use of short-term debt to cover temporary or
emergency cash flow shortages of less than one fiscal year.
b. The City Council may issue inter -fund loans rather than outside debt instruments
to meet short-term cash flow needs. Inter -fund loans must be repaid consistent
with terms approved by a Council resolution.
c. The City will confine long-term borrowing to fund capital improvements that cannot
be funded from current revenues.
d. The City will use special assessment revenue, inter -fund loans or other self-
supporting bonds instead of general obligation bonds when feasible.
Page 6 of 14
Page 8 of 16
EXHIBIT A
Fiscal Policy
9. General Revenue Policies
The City will strive to maintain a diversified and stable revenue base to shelter it
from short-term fluctuations in any one revenue source.
b. The objective of the revenue policies is to ensure that funding is derived from a
fair, equitable, and adequate resource base. When establishing new or amended
sources of revenue: (i) the City Council will use General Fund revenue sources
generated from a broad base (such as property taxes, transient occupancy taxes,
sales taxes, and business license taxes) to pay for City services that provide a
citywide benefit; and (ii) services that provide a particular benefit to a customer or
user shall primarily be financed with user fees, charges, or assessments based
on the level of service provided (in accordance with State law, including
California Constitution Articles XIII C and XIII D, known as "Prop 26" and "Prop
218"). The City's goal is to recover from the recipient of City services the full cost
of services provided, subject to the limitations of law, unless the City Council
determines that public policy or market factors warrant a lesser fee amount.
c. Subject to approval by the City Council, and in accordance with limitations of State
law, fees for City services will be adjusted on a recurring schedule to address
changed circumstances, including cost of living adjustments.
d. Non -recurring revenues will be used for non -recurring expenditures only. This
includes all non -recurring funds, including capital and reserves.
i. Non -recurring general revenues will be deposited into the Non -Recurring
General Fund.
10. Enterprise Fund Revenue
a. The City will set fees and user charges for each utility fund at a level that fully
supports the total direct and indirect cost of the activity and that supports capital
investment in the system including the costs of annual depreciation of the system
assets. Indirect costs include the cost of annual debt service used for capital assets
and overhead charges.
11. Investment
a. The City Treasurer will annually submit an investment policy to the City Council for
review and adoption.
b. The City Treasurer will invest the City's monies in accordance with applicable laws
and adopted investment policies and direct the investment of bond or note monies
on deposit with a trustee or fiscal agent in accordance with the applicable indenture
or issuance document.
12. General Reserve Policies
Page 7 of 14
Page 9 of 16
EXHIBIT A
Fiscal Policy
a. It is the intent of the City to establish and maintain reserve funds to ensure the
continued delivery of City services to address emergencies, address a temporary
revenue shortfall or provide stability during economic cycles. Sufficient reserve
funds will be managed to provide adequate cash flow, stabilize the City's interest
rates and provide continuity in service delivery. The City shall maintain adequate
cash reserves in each fund to maintain a positive cash position at any time during
a fiscal year and at year-end.
b. If fiscal changes require staff to recommend funding reserves that differ from the
amounts identified in this Policy, staff will bring this recommendation to Council
as a specific action for approval.
13. Use of Fund Balance
a. The City shall reduce committed or assigned fund balance first only if the
expenditures incurred are for the purpose for which the funds were originally
committed or assigned. Otherwise, unassigned fund balance shall be reduced first,
followed by assigned, and then committed.
b. Fund Balance amounts that are constrained by the government's intent to be used
for specific purposes, but are neither restricted nor committed, are to be reported
as Assigned Fund Balance. The Finance Director is authorized to designate fund
balances that are "assigned" to be used for specific purposes. Those amounts are
to be reported in the financial statements as "Assigned Fund Balance" in
compliance with GASB Statement 54.
c. After the end of each fiscal year, and upon completion of the annual financial audit,
the City Council shall take action to transfer any available unassigned fund balance
in the General Fund to the CIP Facilities Reserve or appropriate for other priority
expenditures.
14. General Fund Reserves
a. The City Council hereby authorizes the City Manager to maintain a General Fund
Emergency Reserve in accordance with this Policy. Each fiscal year, the City will
include in the Budget a transfer to the General Fund Emergency Reserve to bring
the reserve balance to at least 14 percent of that year's General Fund Operating
Budget. However, this transfer may be excluded from the Budget to the extent
necessary to avoid a budgeted deficit.
i. The primary purpose of this General Fund Emergency Reserve is to protect
the City's essential service programs and funding requirements during
significant events such as (but not limited to) economic
downturns/recessions that impact City revenues, natural disasters,
declared emergencies (as defined by Napa Municipal Code Chapter 2.89),
Page 8 of 14
Page 10 of 16
EXHIBIT A
Fiscal Policy
state government reductions or takeaways of City revenues, or other
situations that could not be reasonably foreseen during preparation of the
budget.
1. In the event the City Manager declares that action is needed to be
taken to resolve an emergency, in accordance with Napa Municipal
Code Section 2.91.040, the City Manager is authorized to
encumber and spend the General Fund Emergency Reserve to pay
the costs of the action to resolve the emergency. These actions
shall be reported to the City Council at their next meeting after the
declaration of the emergency, and during the duration of the
declared emergency in accordance with Napa Municipal Code
Section 2.91.040.
ii. In the case of natural disasters, the General Fund Emergency Reserve
should be used to pay for FEMA-approved projects. The project total
amount shall be transferred from the Emergency Reserve and deposited
into the appropriate project fund.
1. The City Manager is authorized to deposit any reimbursement funds
received from FEMA and CalOES, into the Emergency Reserve to
replenish the fund.
2. The City Manager is authorized to initially fund the City's portion of
FEMA projects from the General Fund Emergency Reserve. The
proposed timing of repayment will be included in the City's Long -
Term Financial Forecast.
iii. The use of the General Fund Emergency Reserve must be approved by
the City Council. As an exception, in the situations described in 14.a.i and
14.a.ii above, the City Manager is authorized to use the General Fund
Emergency Reserve and then report to the City Council. All other situations
require advance approval from the City Council.
iv. Approved use of General Fund Emergency Reserve funds may cause the
balance of the reserve to drop below the required 14 percent level. The City
will begin to restore reserves used under this Policy within 24 months after
their first use. The proposed timing of repayment of reserves will be subject
to approval by the City Council and will be included in the City's Long -Term
Financial Forecast.
b. The City Council hereby authorizes the City Manager to maintain a General Fund
Operating Reserve in accordance with this Policy. Each fiscal year, the City will
include in the Budget a transfer to the General Fund Operating Reserve to bring
the reserve balance to at least 5 percent of that year's General Fund Operating
Budget. However, this transfer may be excluded from the Budget to the extent
necessary to avoid a budgeted deficit. The primary purpose of this General Fund
Page 9 of 14
Page 11 of 16
EXHIBIT A
Fiscal Policy
Operating Reserve is to make up for temporarily decreased revenues or to provide
temporary resources in the event of an economic downturn while expenditure
reductions are implemented.
i. The use of the General Fund Operating Reserve must be approved by
the City Council.
ii. Approved use of General Fund Operating Reserve funds may cause
the balance of the reserve to drop below the required 5 percent level.
The City will begin to restore reserves used under this Policy within 24
months after their first use. The proposed timing of repayment of
reserves will be subject to approval by the City Council and will be
included in the City's Long -Term Financial Forecast.
c. The City Council hereby authorizes the City Manager to maintain a General Fund
Contingency Reserve in accordance with this Policy. Each fiscal year, the City will
include in the Budget a transfer to the General Fund Contingency Reserve to bring
the reserve balance to at least 1 percent of that year's General Fund Operating
Budget. However, this transfer may be excluded from the Budget to the extent
necessary to avoid a budgeted deficit. The primary purpose of this General Fund
Contingency Reserve is to provide funding for non -recurring unanticipated
expenditures or to set aside funds to cover known contingencies with unknown
costs.
i. The use of the General Fund Contingency Reserve must be approved
by the City Council.
ii. Approved use of Contingency Reserve funds may cause the balance
of the reserve to drop below the required 1 percent level. The City will
begin to restore reserves used under this Policy within 24 months after
their first use. The proposed timing of repayment of reserves will be
subject to approval by the City Council and will be included in the City's
Long -Term Financial Forecast.
d. In the event that budgeted revenue is not enough to fully fund all reserves, they
shall receive funding in the following priority order:
i. First, repay any reserves as outlined in the City's Long -Term Financial
Forecast. If multiple reserves require replenishment, they should receive
funds in the following order: first the Emergency Reserve, then the
Operating Reserve, then the Contingency Reserve.
ii. Next, bring the reserve funds up to their prescribed percentage amounts in
the following order: first the Emergency Reserve, then the Operating
Reserve, then the Contingency Reserve.
W. If the City experiences two consecutive years where the reserves could not
be fully funded, the next Long -Term financial forecast shall identify a plan
Page 10 of 14
Page 12 of 16
EXHIBIT A
Fiscal Policy
to bring the reserves up to the correct balances and maintain annual
contributions at the required level.
15. Capital Improvement Program (CIP) Fund Reserves
a. The City Council hereby authorizes the City Manager to maintain a CIP Facilities
Reserve in accordance with this Policy. Each fiscal year, the City will include in the
Budget a transfer from the General Fund to the CIP Facilities Reserve, in an
amount ranging from 0.5 percent to 3.0 percent of that year's General Fund
Operating Budget.
i. The primary purpose of this CIP Facilities Reserve is to provide funding for
the expansion or maintenance of existing City facilities or the
creation/renovation/acquisition of new facilities that meet the workforce
needs of City services.
ii. The use of the CIP Facilities Reserve must be approved by City Council,
generally through the CIP Budget adoption.
b. The City Council hereby authorizes the City Manager to maintain a CIP General
Reserve in accordance with this Policy. Each fiscal year, the City will include in the
Budget a transfer from the General Fund to the CIP General Reserve, in an amount
of ranging from 0.5 percent to 3.0 percent of the year's General Fund Operating
Budget.
i. The primary purpose of this CIP General Reserve is to provide funding for
ongoing and future Capital Improvement Projects.
ii. The use of the CIP General Reserve must be approved by the City Council,
generally through the CIP Budget adoption.
iii. The CIP Budget shall not program out the use of more than 90 percent of
the expected CIP General Reserve or CIP Facilities Reserve balance in the
Capital Improvement Program (CIP) Project Budget.
c. The City Council hereby authorizes the City Manager to maintain a General Plan
Update Reserve in the CIP Fund to accumulate funds necessary to update the
General Plan every 20 years. The General Fund adopted budget shall include a
transfer to the General Plan Update Reserve of $100,000 per year.
i. The use of the General Plan Update Reserve must be approved by the City
Council, generally through the CIP Budget adoption.
16. Trusts
a. The City has established an irrevocable trust to fund future retiree medical costs.
The Trust will be funded through bi-weekly charges to departments equal to the
Annual Required Contribution (ARC) as a percentage of payroll based on the most
recent Other Postemployment Benefits (OPEB) Actuarial Report.
Page 11 of 14
Page 13 of 16
EXHIBIT A
Fiscal Policy
b. The City has established an irrevocable Section 115 trust to help mitigate
increases in future pension costs. Deposits to the Trust shall be authorized by the
City Council as funds are available.
17. Internal Service Fund Reserves
a. Fleet Fund
i. The City Council hereby authorizes the City Manager to maintain a Fleet
Operating Reserve within the Fleet Fund. The target minimum reserve
balance is $100,000.
1. The primary purpose of this reserve is to provide temporary
resources in the event of higher than anticipated Fleet Operating
costs.
2. The use of the Fleet Operating Reserve must be approved by the
City Council.
3. Approved use of Fleet Operating Reserve funds may cause the
balance of the reserve to drop below the $100,000 minimum. The
City will begin to restore reserves used under this Policy within 24
months after their first use by collecting additional revenue through
Fleet operations and maintenance rates. The proposed timing of
repayment of reserves will be subject to approval by the City
Council and will be included in the City's Long -Term Financial
Forecast.
b. Risk Management Fund
i. Self-insurance reserves will be maintained at a level which, together with
purchased insurance policies, adequately protects the City. The reserve
funding level goal for each program is no less than the target 80%
confidence level appropriately discounted for investment income.
1. The use of the Risk Management Fund Reserve must be approved
by the City Council.
2. Approved use of the Risk Management Reserve may cause the
balance of the reserve to drop below the target 80% confidence
level. Replenishment of the Risk Management Reserve will be
subject to approval by the City Council.
18. Enterprise Fund Reserves
a. Water Fund and Recycling Fund
i. The City will maintain a prudent level of reserve funds in the Water
Enterprise Fund and the Solid Waste and Recycling Fund as determined
during the periodic rate -setting process.
Page 12 of 14
Page 14 of 16
EXHIBIT A
Fiscal Policy
19. Internal Service Replacement Funds
a. "Fleet Replacement Reserve" and "Fleet Equipment Replacement and Upgrade
Reserve"
i. The City Council hereby authorizes the City Manager to maintain a Fleet
Replacement Reserve for costs associated with the replacement of
vehicles and other rolling stock (such as trailers, compressors or other
equipment on wheels) as they become unserviceable, obsolete or reach a
predetermined service life. The reserve will be maintained at a level
adequate to replace all stock, per the pre -determined replacement
schedule. The reserve will track contributions and replacements based on
the contributing fund (General Fund, Water Enterprise Fund, etc).
ii. The City Council hereby authorizes the City Manager to maintain a Fleet
Equipment Replacement and Upgrade Reserve within the Fleet Fund. The
primary purpose of this reserve is to cover costs associated with the
replacement of specialized tools, Fleet facility/vehicle equipment, as well
as Electric Vehicle (EV) charging stations supporting City EV's/equipment.
This funding can be used to add new equipment and charging stations, as
well as replace existing items throughout the life cycle of the equipment.
The reserve will be maintained at a level adequate to replace equipment,
per the pre -determined replacement schedule.
iii. The use of the Fleet Replacement and Fleet Equipment Replacement and
Upgrade Reserve Funds must be approved by the City Council.
iv. Replenishment of the Fleet Replacement and Fleet Equipment
Replacement and Upgrade Reserves will be subject to approval by the City
Council.
b. Fire Apparatus Replacement Fund
i. The City Council hereby authorizes the City Manager City to maintain a
Fire Apparatus Replacement Fund for costs associated with the
replacement of Fire Apparatus vehicles as they become unserviceable,
obsolete or reach a predetermined service life. The fund will be maintained
at a level adequate to replace all stock, per the pre -determined
replacement schedule.
1. The use of the Fire Apparatus Replacement Fund Reserve must be
approved by the City Council.
2. Replenishment of the Fire Apparatus Replacement Reserve will be
subject to approval by the City Council.
c. Equipment Replacement Fund
i. The City Council hereby authorizes the City Manager to maintain an
Equipment Replacement Fund for capital equipment as it becomes
Page 13 of 14
Page 15 of 16
EXHIBIT A
Fiscal Policy
unserviceable, obsolete or reaches a predetermined service life. The fund
will be maintained at a level adequate to replace all capital equipment per
the pre -determined replacement schedule.
1. The use of the Equipment Replacement Fund Reserve must be
approved by the City Council.
2. Replenishment of the Risk Management Reserve will be subject to
approval by the City Council.
Page 14 of 14
Page 16 of 16