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Public Works Superintendent Riemer stated it was purchased in 2004 and is 8 years old. <br />Councilmember Elvig stated he supports looking at the lease option. <br />Public Works Superintendent Riemer recommended a six -year lease because of the high <br />maintenance experienced during the past two years. <br />Councilmember Elvig noted it will probably be a seasonal lease. <br />Finance Director Lund presented the Equipment Revolving Fund and noted if $200,000 /year is <br />expended, it would last six years. She stated equipment certificates can be considered and would <br />go out ten years. In 2013, it would add about $60,000 to the levy if funded through equipment <br />certificates. She advised that when considering the City's bond rating, Moody's looks at the <br />City's reserves to assure the City is able to pay down its debt. <br />The consensus of the Council was to direct staff to research lease options and to keep the plow in <br />the budget. <br />Councilmember Elvig stated he supports buying down during lean times and thinking about <br />leasing on occasion. But, if doing capital expenditures or bonds, he questioned at what point <br />does the City's financial position tip from being cash rich to debt/obligation ridden when pooling <br />of funds goes down. <br />Mayor Ramsey asked what are the unrestricted/unreserved fund balances that can be used for <br />funding. <br />Finance Director Lund stated it would be the Landfill Fund and this fund but a lot of this has <br />been pledged to Sunwood Drive. These two funds are used to cover shortages. <br />Councilmember Elvig agreed this fund is already pledged for a lot of things and asked again, at <br />what point the City tips from being flush to being in an obligation or debt position. <br />City Administrator Ulrich suggested staff project out ten years to provide that information. He <br />stated staff can determine constant averages and levy based on balances. <br />Councilmember McGlone stated he often hears from staff that equipment, when sold, is <br />valueless. The City now has a mower that has to be fixed every time it is used and the City bears <br />the costs of equipment, maintenance /repairs, and service loss. Councilmember McGlone stated <br />if the City has a lease program, it can return the equipment while it still has value. Then, instead <br />of having to fund the costs of the entire equipment and downtime, the City can get rid of the <br />equipment while it still has value. He believed there were more advantages to looking at leasing, <br />noting it also would reduce the City's outlay today and still gets the job done, making it a <br />budgetable approach. <br />Mayor Ramsey agreed. <br />City Council Work Session / August 28, 2012 <br />Page 3 of 10 <br />