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Case#3: Accept Proposal on Terms of Sale for $830,000 General Obligation <br /> Equipment Certificates of Indebtedness, Series 2001E <br /> <br />Councilmember Kurak stated that after meeting with the Finance Officer to discuss the <br />Equipment Revolving Fund it was discovered that there is extra interest earnings in the Fund and <br />the question was brought up as to why the City would not pay for the equipment by using the <br />excess funds. Staff came to the conclusion that there is a policy in place in regards to the <br />Equipment Revolving Fund that was implemented in 1993, and part of that policy states that <br />"Fund balance shall be increased and maintained at a minimum level equal to one hundred <br />percent of the original cost of all equipment, vehicles, and/or buildings and facilities in the <br />Equipment Revolving Fund." which impacted the utilization of the funds. <br /> <br />Finance Officer Lurid noted that the policy is from a City Ordinance that was adopted on <br />November 29, 1993. <br /> <br />Councilmember Anderson inquired if Councilmember Zimmerman had any recollection as to <br />why the policy was adopted. <br /> <br />Councilmember Zimmemnan replied that prior to 1993, there was not a policy in place regarding <br />the replacement of equipment so the City was faced with raising taxes significantly to cover the <br />costs of replacing necessary equipment. <br /> <br />Councilmember Kurak stated that the overall concept of the policy is good, but because of the <br />way the policy is written the City is prevented from using the interest earnings, which are over a <br />million dollars. She stated that she would like to use the interest money from the Equipment <br />Revolving Fund to pay for the equipment included in the 2002 budget, rather than taxing the <br />citizens for those items. <br /> <br />Finance Officer Lund presented proposed language changes to the policy, which would permit <br />the Council to use up to 50 percent of the interest earnings. <br /> <br />Councilmember Hendriksen inquired if the Council were to approve the language changes would <br />the City be permitted to purchase the equipment from the Equipment Revolving Fund. <br /> <br />Finance Officer Lund replied that the Council would have to go through the proper ordinance <br />procedure, but once that is done then the Council could do so. <br /> <br />Councilmember Kurak stated that 50 percent of the interest earnings would not cover the entire <br />amount needed, but it would cover the cost to purchase the aerial ladder truck and the City will <br />only be required to put a down payment on the truck when it is purchased and then pay the <br />remainder when the truck is received. <br /> <br />Finance Committee/November 13, 2001 <br /> Page 4 of 6 <br /> <br /> <br />