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of fixed assets. For purposes of this reporting, cities are establishing/and or updating fixed asset thresholds so that they are not too low, such as the $1,000 currently in place at Ramsey. The attditor has recommended, and other cities are using a threshold of $5,000 per fixed asset. She explained all the capital assets under $5,000 right now will be taken as a lump sum and offset the capital items. The City is looking at several vehicles being purchased in 2005, and this will be used to offset the cost. They had depreciated that money that had come from the general fund into the equipment replacement fund and it is to be used for capital items at a later date. Chairperson Elvig questioned how this would change the revolving fund. Finance Officer Lund explained any items included in the $5,000 would become like a small tool. Nothing will be transferred into the equipment revolving fund at that time. It would be looked at with the life being that year. Chairperson Elvig questioned what that might do to the impact of the general fund. He noted there has been a lot of small funding put in to match that will not be seen anymore. He questioned if the equipment would come out the general budget. Finance Officer Lund explained the equipment would come from the general fund. Cun'ently purchases have been done through the capital equipment certificates, and are normally an expenditure of the general fund budget. She explained if a squad car is $15,000 and it is depreciated over two years, the $15,000 is listed under the line item of capital equipment in the general fund, and under transfers to the equipment revolving fund is the first year depreciation of $7,500. That $7,500 is still being paid by the general fund levy and is transferred over to the equipment replacement fund. After two years when the squad has to be replaced the $15,000 is transferred back to the general fund. With the smaller items the general fund will front the cost, but there will not be the expense to go with it. Motion by Councilmember Zimmennan, seconded by Councilmember Strommen, to recommend that the City Council approve the Capitalization Threshold for Fixed Asset Policy in the amount of $5,000 and adopt a resolution adopting the threshold policy. Motion carried. Voting Yes: Chairperson Elvig, and Councilmembers Zimmerman and Strommen. VotingNo: None. Case #2: Introduce Ordinance Amending Chapter 3 and Repealing and Replacing Section 3.40 Entitled "City Funds" Finance Office Lund explained this ordinance would amend Chapter 3, Section 3.40 Entitled "City Funds" to add the Park Maintenance Fund. The changes are updates or deletions to outdated items. Councilmember Strommen expressed concern that if another fund is created that has a limited use they will be recreating the problem from a different angle. Eventually at build-out there will not be park dedication fees going into that park fund. She questioned what would be used for Finance Committee/May 25, 2004 Page 3 of 6