working draft of 2020-2024 CIP for discussion at the 07 11 19 CIP Committee meeting�1 ,
SCANDIA
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City of Scandia
Capital Improvement Program
2020 —2024 •�ww�'
cp
Gti4
Recommendations from Ca pitklq?n prove ment Committee
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xxxxxxxxxxxxxxxxx,2019
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Committee Members:
Terry Gorham,
Perry Rynders
Dominic Mitchell
Mark Lofstrom
0
Adam Hawkinson, Public Works Director
Mike Hinz, Fire Chief
Steve Kronmiller, City Council
CONTENTS
Introduction
Whatis a CIP?.................................................................................................................. 1
Scopeof the Draft CIP..................................................................................................... 1
FundingSources.............................................................................................................. 2
ProjectPriorities.............................................................................................................. 3
2020-2024 CIP Overview................................................................................................��
2020-2024 CIP b Fund
Y 0
Capital Improvement Fund.............................................................................ve,......... 5
Equipment Replacement Fund.................................................................... �,............... 6
Park Improvement Fund......................................................................................... 7
Local Road Improvement Fund.............................................................. 8-9
201 Sewer Fund................................................................................/a................................10-11
Uptown Sewer Fund....................................................................... 12
CIP Summary Data G
Project Listing by Department (All Years) ............... 6
Projects by Year, 2020 thru 2024.......................'..................................................... 8
Sources and Departments Summary, 2020 thr�2024.................................................... 10
Projects by Year, 2021 thru 2025 .............. \...✓................................................................ 11
Sources and Departments Summary, 201 thru 2025 .................................................... 12
Projects by Department, 2020 thrb 2025....................................................................... 13
Projects by Source, 2020 thru 2025:............................................................................... 15
Equipment Replacement Fund, Replacements by Department ..................................... 18
Equipment Replacement Fund Cash Flow, 2020-2025 ................................................... 19
Appendix
Project Detail/s, All'*�rojects............................................................................................. 20
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The Capital Improvement Program (CIP) for the five-year period of 2020 through 2024 is the ninth such
document prepared by the City of Scandia. It would amend the CIP included in the Comprehensive Plan
replacing Appendix F of the plan in its entirety.
What is a CIP?
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A capital improvement plan (CIP) is a multi-year plan identifying capital projects to be funded during the
planning period. The CIP identifies each proposed capital project to be undertaken, the year the assets
will be acquired or the project started, the amount of funds expected to be expended in each year of the
CIP and the means of funding the expenditures. A CIP is not a static document. It should be reviewed at
an appropriate cycle to reflect changing priorities, unexpected events and opportunities. The CIP should
include the maintenance, repair and rehabilitation of existing infrastructure as well as the construction
of new infrastructure. Including a project in a CIP does not commit the city to that project. The City
Council must specifically authorize each project and the associated funding before any project may
proceed. The basic function of a CIP is to provide a formal mechanism for decision making, a link to long
range plans, a financial management tool and a reporting document.
The Minnesota Land Planning Act requires that the implementation plan portion of the Comprehensive
Plan include a CIP for major infrastructure needs (transportation, wastewater, water supply, parks and
open space) for a five-year time period. Cities often expand the scope of their CIPS to include other
capital needs (major equipment replacements, for example) and sometimes look beyond the five-year
time period, up to 20 years in the future for some projects. Such projects represent more of a "wish -
list" that can be evaluated each time the plan is updated.
^\
As a part of the Comprehensive Plan, the CIP has some legal standing. Minnesota Statutes Chapter
473.865 provides that "a local governmental unit shall not adopt any official control or fiscal device
which is in conflict with its comprehensive plan." A fiscal device includes a budget or bond issue; so it is
important that the plan and CIP be kept up to date and in synch with city budgets. Once the CIP has
been completed, it will be reviewed by the Planning Commission for consistency with the
Comprehensive Plan ti
SCJ
Scope of the CIP
Scandia's CIP includes all capital projects that cost at least $10,000 and have a useful life span of five
years or longer. Projects include all capital needs including major repairs to buildings and equipment
purchases and replacements. Any projects not meeting these parameters would be reviewed as part of
the annual operating budget, but would not be included in the CIP.
Funding Sources
The CIP identifies a possible funding source(s) for each project listed. The various funding sources are as
follows:
Capital Improvement Fund
The City has been levying $30,000 per year in property
tax to fund these general capital projects.
Equipment Replacement
Most major equipment purchases are funded through
Fund
the issuance off debt which is then repaid with
property taxes. Other sources of funding include the
sale of unused assets and transfers from General Fund
operating budgets.
General Fund
Annual operating budget, primarily funded by property
tax revenues.
Park Improvement Fund
The primary sources of funds are from park dedication
fees paid by developers as a part of any subdivision,
revenues generated by the park facilities, such as
advertising revenues, and grant revenues.
Local Road Improvement
This fund was established in 2014 to segregate funds
Fund
for major road improvement projects. The property
taxes levy is the primary source of funds with a base
levy in 2016 of $581,000. Pursuant to the City's fund
balance policy any general fund balance in excess of
50% of budgeted expenditures can be transferred to
this fund. The 2017 transfer to this fund totaled
$523,200. Additionally any special assessments on
the 2007 road improvement projects received after the
associated debt was retired are transferred to this
fund.
201 Sewer
Funds come from fees paid by users on the 201
Wastewater System which serves the Anderson
`
Erickson and Bliss subdivisions.
Uptown Sewer •�G>
Funds come from fees paid by users on the Uptown
Wastewater System
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In addition to these sources, it is possible that future projects could be funded from donations, grants,
user fees or other sources not listed. Projects benefiting the utility funds, which are intended to
operate as stand-alone businesses supported by user fees, would be paid from the appropriate fund.
2
Project Priorities
Capital improvement projects should be prioritized in some way so that limited funding can be allocated to
those which are most important. This is difficult because the varying nature of the projects and their benefits
and objectives are so disparate as to be essentially not comparable. Some public agencies have developed
elaborate rating and ranking systems to try to set priorities. Complicated scoring systems may have some
disadvantages because they may give a false sense of objectivity or precision to the priority setting process.
Others use simpler systems, or simply do not try to compare projects that are like "apples and oranges."
There is no accepted system or "industry standard" for prioritizing projects.
n,
The following priority rating system was identified in 2008 and have been used in subsequent updates.
1 Critical or urgent, high-priority projects that should be done if at all
possible; a special effort should be made to find sufficient funding for all
of the projects in this group.
2 Very important, high-priority projects that should be done as funding
becomes available.
3 Important and worthwhile projects to be considered if funding is
available; may be deferred to a subsequent year.
4 Less important, low -priority projects; desirable but not essential.
N/A Used for replacements of existing equipment.
In reviewing the 2020 — 2024 plan the Committee identified a scored evaluation criteria to be used if
evaluating projects if sufficient funding is not available:
,N, N
• Does the project help meet the goals of the Comprehensive Plan or City Priorities?
• Does the project eliminate or prevent an existing health, environmental, or safety hazard?
• Does the project protect and preserve the City's infrastructure?
• Does the project will have a positive, neutral, or negative impact on the City's operational Finances?
• Does the project leverage outside funding?
• Does the project tie into other projects?
• Can the project be completed in partnership with another organization?
• Is the project mandated to comply with environmental standards?
• Does the project support the City's Green Cities efforts?
• Project directly the allows the City to meet environmental compliance standards or meet sustainability
goals, where applicable?
• Does the project help stimulate development or redevelopment of properties and/or encourage
economic development in the City corridors?
Does the project improve and/or increase the level of service provided by the City?
2020-2024 CIP OVERVIEW
For 2020 through 2024, the draft CIP includes projects with a total estimated cost of $6,827,900. All cost
estimates are preliminary and based on current dollars. No assumptions have been made about inflation. Project
costs will need to be updated annually, especially for projects in the first year or two of the plan. The decision
whether or not to replace a particular piece of equipment, and what to replace it with, will need to be made by
the City Council at the time of the purchase. The City could decide to keep some equipment longer than planned.
Or, equipment could wear out more quickly than expected. It is likely that some items will not be replaced, or
that new technology or equipment could alter plans to replace a particular item.
The breakdown of recommended projects is shown by fund below:
Fund
2020 Budget
2021 Budget
Capital Improvement
$
260,000
$
1,275,000
Park Improvement
$
73,800
$
135,400
Equipment Replacement
$
223,000
$
169,500
Local Road Improvement
$
637,000
$
895,000
2022 Budget 2023 Budget 2024 Budget
$ 180,000
$
- $
148,000
$ 130,900
$
18,840 $
64,960
$ 273,500
$
250,000 $
30,000
$ 643,000
$
715,000 $
705,000
Total $ 1,193, 800 $ 2,474,900 $ 1,227,400 $ 983,840 $ 947,960
The revenue sources for the
projects shown
below do not include the use of accumulated
fund balances:
Revenue Source
2020 Budget
2021 Budget
2022
Budget
2023 Budget
2024
Budget
Property
Taxes
$
496,516
$
553,039
$
604,469
$
661,464
$
713,366
Issuance
of debt
$
-
$
600,000
$
200,000
$
250,000
$
-
Park Dedication
Fees
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
Grants &
Donations
$
64,680
$
472,180
$
74,680
$
25,000
$
25,000
Other
$
16,600
$
9,600
$
31,600
$
25,600
$
5,600
Total
$
583,796
$
1,640,819
$
916,749
$
968,064
$
749,966
The table below summarized the revenue and expenditures and shows the impact on the cumulative fund balance
in the four capital project funds. The impact in each individual fund is shown later in this report.
2020 Budget 2021 Budget 2022 Budget 2023 Budget 2024 Budget
Revenue $ 583,796 $ 1,640,819 $ 916,749 $ 968,064 $ 749,966
Expenditures $ 1,193,800 $ 2,474,900 $ 1,227,400 $ 983,840 $ 947,960
Fund Balance $ 2,181,988 $ 1,347,907 $ 1,037,255 $ 1,021,479 $ 779,725
Note that the cumulative fund balance in the capital project funds is projected to decrease from $2,791,992 at
12/31/2019 to $7779,725 at 12/31/2024 of which $511,153 will be in the Local Road Improvement Fund.
A primary consideration in the review of the projects is the impact on the property tax levy. A breakdown of the
property tax levy needed to finance the recommended program and to service the debt issued to fund capital
projects in prior years is shown below:
M
Fund
Debt Service Fund
Capital Improvement Fund
Park Capital Improvement
Equipment Replacement
Local Road Improvement
Total levy for capital projects
Levy/ $100,000 of 2019 taxable value
2020 Budget 2021 Budget 2022 Budget 2023 Budget 2024 Budget
$ 498,730 $ 449,028 $ 527,531 $ 513,054 $ 479,748
$ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000
$ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000
$ 436,516 $ 493,039 $ 544,469 $ 601,464 $ 653,366
$ 995,246 $ 1,002,067 $ 1,131,999 $ 1,174,518 $ 1,193,115
$ 151.72 $ 152.76 $ 172.57 $ 179.05 $ 181.89
For perspective the 2019 levy for the capital project purposes of $910,280 or $138.77 / $100,000 of valuation
and the 2019 levy for the General Fund, which is the operating fund for the City, is $1,342,592 and would have
been higher if the Council had not elected to use the surplus in the General Fund to keep the levy the same as
the previous 2 years..
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The Capital Improvement Fund is utilized to fund projects that are not equipment related, do not have a
dedicated funding source, or rely on donations or grants to be funded.
The projects recommended from 2020 — 2024 are as follows:
I 2020 2021 2022 2023 2024
General
Bliss Addition Stormwater construction; $ 500,000
MNDOT entry monuments; $ 50,000 ; n�
Cold storage building $ 75,000 I
Information Technology I
Broadband Implementation
Community Building 1
HVAC & furnace replacement $ 30,000
Community Center $ 100,000 $ 600,000 I
Fire
Emergency Generator $ 60,000
HVAC repl a cement $ 25,000 I
Parking I of $ 75,000
Second fire station $ 175,000
Roof replacement $ 100,000 j
Weather siren additional $ 25,000
Exhaust remova I system $ 48,000 I
Well pump
$ 260,000 r$1,275,000 $ 180,000 r$ - $ 148,000
X
The projected balance in the fund as of December 31, 2019 is $1,088,904. The balance is largely attributable to
the transfers from the General Fund of excess balances pursuant to the City's fund balance policy. Similar
transfers of this magnitude are not anticipated in the fund. It is recommended that grant funding be obtained for
at a minimum 50% of the emergency generator and 87.5% of the bliss addition stormwater construction. For
projection purposes it is anticipated that the construction work associated with the Community=Cente
swill be funded through the issuance of debt. If approved as recommended the fund balance is
projected to decrease to $310,904 by December 31, 2024.
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CAPITAL IMPROVEMENT FUND
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
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2020 Budget
2021 Budget
2022 Budget
2023 Budget
2024 Budget
MFund Balance
$862,404
$628,404
$451,904
$455,404
$310,904
■ Revenue
$33,500
$1,041,000
$3,500
$3,500
$3,500
■ Expenditures
$260,000
$1,275,000
$180,000
$-
$148,000
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EQUIPMENT REPLACEMENT FUND
The City created the Equipment Replacement Fund in 2007 to set aside funds on an annual basis for planned
replacement of vehicles and major pieces of operating equipment. Any revenues from the sale of old equipment
being replaced are also deposited into the fund. Beginning in 2015, the revenue to the fund was reduced to
reflect a new City policy of borrowing for equipment costing over $100,000 with the balance able to meet the
projected smaller equipment needs for 10 years. Beginning in 2017 $30,000 of property tax, which was previously
levied for the Capital improvement Fund, be allocated to the Equipment Replacement Fund.
The projects recommended from 2020 — 2024 are as follows:
2020 2021 2022 2023 2024
Public Works
mower w broom & blower
$ 30,000 I
Pagers
$ 30
Add loader to fleet
$
95,000
$ 25,000 I
Tractor
$
98,000
I $ 250,000 ;
mower
; $
- ; $
16,000 ;
boom mower
$
- $
17,000
plow
$
35,500
F-250 plow assembly
;
$
8,000 ;
skid loader and trailer
-
truck & plow
$ 208,500
Fire
Zol I monitor/ defi b
$ 30,000 I
Pagers
$ 18,000
Radio replacement
$ 75,000
Lund boat
$ 25,000 I
1995 Ford - Grass Rig #5175
- kept in service in 2018 $ 40,000
Tanker - #5178
I $ 250,000 ;
Pumper truck - #5176
I i
Portable radios - 3
I ;
Lucas CPR device
Hnlmatro cutter
Thermal Imaging Camera
'$ 223,000 '$ 169,500 '$ 273,500 '$ 250,000 '$ 30,000
The projected balance in the fund at 12/31/2019 is $242,779. INOTE THE THERE IS A NEGATIVE FUND BALAN
FOR YEARS 2021— 2024. Either additional revenue will need to be provided or recommendation eliminated.
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$(50,000)
$(100,000)
EQUIPMENT REPLACEMENT FUND
$(150,000)
2020 Budget
2021 Budget 2022 Budget
2023 Budget 2024 Budget
0Fund Balance $60,779
$(74,721) $(92,221)
$(42,221) $[42,221]
■ Revenue $41,000
$34,000 $256,000
$300,000 $30,000
■ Expenditures $223,000
$169,500 $273,500
$250,000 $30,000
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PARK IMPROVEMENT FUND
The Parks Improvement Fund is set up to use park dedication fees as the primary funding source. In 2019 a vacant
parcel of City property was sold and the proceeds allocated to the Park Improvement Fund. Also in 2019 the City
obtained a grant for habitat restoration at Lilleskogen Park. The grant is reimbursable based on expenditures.
The 2019 budget provided for $10,000 of the fund balance as the local share of this project which is anticipated to
be completed in 2022. At 12/31/2018 the Fund had a balance of $12,000 due to the Capital improvement Fund
from an advance for the parking lot construction at Lilleskogen Park.
The projects recommended from 2020 - 2024 are as follows:
2020 1 2021 2022
Lilleskogen
Picnic shelter
Woodland plantings and fencing
culvert drainage ditch E. side
Li I I es kogen - wetl a nd restorati on
Other improvements
Wayne Erickson
2023 I 2024
$
- ; $
; $
30,000 $
- ; $ -
$
5,000 ; $
; $
- $
- ; $ -
$
- $
$
10,000 $
- $ -
$
9,680 ; $
9,680 ; $
9,680 ; $
- ; $ - I
$
2,500 ; $
2,500 ; $
2,500 ; $
- $ -
$
17,180 $
12,180 $
52,180 $
- $ -
Bleacher/ Concession improvement $
- $
$
- $
15,000 ; $
Playground replacement $
- $
; $
75,000 $
- $
Ballfield fence $
- $
$
- $
- $ 26,000
$
- $
- $
75,000 ; $
15,000 ; $ 26,000
Wojtowicz Ice Rink V
Zamboni $ 45,000 ;
$ 45,000 ' $-
X 71
Undesignated N
Community Ctr playground - $ 115,000 $ - $ - ; $ -
Wind in the Pines sign $ 3,000 ; $ - ; $ - $ - ; $
Lions Park shelter '--�v'- $ 5,000 ; $ 4,500 ; $ - $ - $ -
Amphithetre $ - $ - $ - $ - $ 35,000
$ 8,000 $ 119,500 ; $ - $ - $ 35,000
The projected balance in the fund at 12/31/2019 is a negative $93,509. The projections assume an increase in the
property tax levy of $30,000 be added to fund along with the assumption that funding from grants and donations
will provide an additional $25,000 per year. 1113ased on the increased levy funding and the grants and donation
projected fund balance at 12/31/2024 will be a negative $110. There should be discussion on whic
are subject to funding with grants or do
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PARK CAPITAL FUND
$160,000 —
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,ODa
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2020 Budget
2021 Budget
2022 Budget
2023 Budget
2024 Budget
0Fund Balance
$83,990
$20,870
$2,250
$46,010
$(110)
■ Revenue
$72,280
$72,280
$112,280
$62,600
$62,600
■ Expenditures
$73,800
$135,400
$130,900
$18,840
$64,960
✓�
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LOCAL ROAD IMPROVEMENT FUND
In 2008 the City adopted a Pavement Management Plan to extend the life of city streets and to reduce the
lifecycle costs for maintaining them in good condition. The City has endeavored to increase the budget for
contractual road maintenance and repairs. In 2014 the Local Road Improvement Fund was established to address
major repairs (reconstruction, mill and overlays, etc.) and is funded by the general tax levy. Regardless of these
efforts the PASER rating of City streets by the City engineer indicated that over 18% of the City streets were rated
very poor or poor and 37% rated fair. The 2018 — 2022 Capital Improvement Plan recommended that the City
issue debt to fund a program to address all roads that were in very poor or poor condition. Due to a favorable bid
the City was able to address over 15 miles of roads. In order to conserve the available resources the asphalt on
the roads that were in the 2018 program was reclaimed in place and the based amended as necessary before
paving. The cost for this work averaged $ per mile of road.
The roads that were previously rated fair or good will continue to deteriorate. The Committee -has recommended
that for the years 2020 — 2024 an additional $55,000 be levied each year in order to fund road improvements.
The impact of the levy is shown on the chart below.
Description
2020 I
2021
2022
2023
2024 I
Base
Increase in base
Sealcoatfunds from General Fund
Debt Service on bonds
$
610,050
$ 665,050 $
720,050 $
775,050 $
830,050
$ 55,000 $ 55,000 $ 55,000 $ 55,000 $
55,000
$ 115,000 $ 115,000 ; $ 115,000 $ 115,000 $
115,000
$ (343,534) $ (342,011)1 $ (345,581): $ (343,586): $
(346,684);
! S 436.516 S 493.039 : S 544.469 : S 601.464 : S
653.366
Based on an estimated 12/31/2019 fund balance of $1,374,799 and with the increased levy amount and the
proposed construction the balance at 12/31/2024 is projected to be $511,153.
12
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
LOCAL ROAD IMPROVEMENT FUND
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2020 Budget 2021 Budget
2022 Budget
2023 Budget
2024 Budget
0Fund Balance
$1,174,815 $773,354
$675,323
$562,286
$511,153
■ Revenue
$437,016 $493,539
$544,969
$601,964
$653,866
■ Expenditures
$637,000 $895,000
$643,000
$715,000
$705,000
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201 SEWER SYSTEM
Improvements to the 201 Sewer System are intended to be funded through user fees. The projects
recommended are shown below.
2020 2021 2022 2023 2024
Anderson / Erickson
Dra i nfi el d 1 $ 200,000
AE LS 1 Pump 2 $ 12,000
Bliss
Bliss LS 1 Pump 1 $ 6,300
Bliss LS 1 Pump 2 1 $ 6,300
Bliss LS 2 Pump 1 $ 6,000
Bliss LS 2 Pump 2 $ 6,000
Bliss LS 3 Pump 1 $ 6,000 1
Bliss LS 3 Pump 2 $ 6,000
Bliss LS 4 Pump 1 $ 6,000 1
Bliss LS 4 Pump 2 $ 6,000 1
Stormwater improvements $ 62,500
Nitrate treatment $ 960,000 1
$ $ 98,500 $ 960,000 $ 212,000 $ 12,600
• The Anderson Erickson drainfield improvement would be used to make improvement to the drainfield and
to potentially add capacity.
• The MPCA permit for the Bliss addition requires the City to submit by September, 2019 a plan to address
the high levels of nitrate at one of the test wells. It is anticipated that there will be a time limit placed on
the City in the permit renewal process and the 2024 date is an approximation of when construction is
anticipated.
At the end of 2019 the cash balance in the 201 Sewer Fund is projected to be $38,731. The chart on the
following page reflects a 57% rate increase in 2020 that would increase revenues by $49,100 with increases to
generate an additional $10,000 in each subsequent year as proposed by Adam. With these increases and the
projected expenditures the there would still be a projected shortfall of $825,369 at 12/31/2024. The cvash
flow from the increase would be sufficient to service debt issued for the proposed major projects.
V
There is no immediate need for the A-E drainfield improvements and the amount shown can be a placeholder for
future improvements. The Bliss improvements will be required as a part of the operation permit for the Bliss
system that expires in February 2020. Low interest rate debt and grant assistance may be available for the nitrate
remediation project; however, at current interest rates, the annual cost to service the full amount of debt for the
nitrate radiation project over a 10 -year period would be roughly $72,000 / year, which would require rates to
roughly double the current rates.
14
201 SEWER FUND
$400,000
$200,000
$ I w""
-
2020 Budget 2021 Budget
$(200,000)
$(400,000)
$(600,000)
v -F*,
2022 Budget 2023 Budget a udget
$(800,000) %4w
$(1,000,000)
15
UPTOWN SEWER SYSTEM
Improvements to the Uptown Sewer System are intended to be funded through user fees. The projects
recommended are shown below.
2020 2021 2022 1 2023 2024
Drainfield blower I $ 4,000
Replace Uptown pump 1 I i S 5.800
Replace Uptown pump 2 ;
$ 5,800
Replace Drainfield pump 1 i $ 5,800
2022 Budget
Replace Drainfield pump 2 $ 5,800
2024 Budget
4,000 $ 11,600
$ - $ 1
The replacement of the blower and pumps are schedule replacements at the end of the projected useful life.
The projected cash balance at 12/31/2019 is $6,037. he chart below reflects the recommendation of Publ
Works Director Hawkinson to increase the rate by 5% each year. Based on the increased revenue and the
proposed capital expenditures the cash balance at 12/31/2024 is projected to be $2,722.
UPTOWN SEWER FUND
S30,000
$25,000
$20,000
$15,000
$10,000
$5,000
16
2020 Budget
2021 Budget
2022 Budget
2023 Budget
2024 Budget
■ Cash Balance
$8,918
$8,691
$1,810
$7,534
$2,722
ORevenue
$21,840
$22,932
$24,079
$25,283
$26,547
■ Expenditures
$21,197
$21,397
$21,597
$21,797
$21,997
16