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Ms. Lund stated that currently, the City of Ramsey does not have a capitalization threshold policy in place. It has been previous practice to depreciate any and all fixed assets no matter how small their monetary value. Practice has demonstrated that this attempt to incorporate data on "all" fixed assets is omen very time consuming and thus can be costly and difficult to maintain. Councilmember Anderson asked if it might encourage items to disappear by not including them as fixed assets. Ms. Lund answered that each department would be responsible for their small equipment assets, but also need to be trustworthy of employees. Councilmember Hendriksen stated that it is a good idea to keep track of small items, but Finance Officer Lund is trying to keep track for accounting purposes not theft of property and that should be viewed as separate issues. Ms. Lund suggested that a list of all small tools and equipment could be kept and periodic inventory could be done to make sure all items still exist Motion by Councilmember Anderson and seconded by Councilmember Hendriksen to recommend that Council direct staff to apply the guidelines established by the Government Finance Officers Association and create a policy for the capitalization threshold of fixed assets for the City of Ramsey. Motion carried. Voting Yes: Mayor Gamec, Councilmembers Anderson, Hendriksen, and Zimmerman. Voting No: None. Case #2: Increase of Sewer Rates Finance Officer Lund stated that at the June 21, 1999, City Council Worksession, it was requested that the City of Ramsey's sewer rate be increased by 2%. This increase was recommended based on the findings of the 1998 Comprehensive Annual Financial Report, which stated that the Sewer Fund's revenue was minimally exceeding the actual expenses of the Fund. The Sewer Fund has seen large sewer service charges from the Metropolitan Council in the past year, in that the Met Council has been completing a "catch up" in its billing for actual usage. Whereas, in the past, the bill that was submitted was based on estimates, now actual figures are being used; thus, the reason for only a slight increase in revenues. This slight increase does not leave a "cushion" for any emergency expenditures. Ms. Lund explained that the City currently charges a flat rate of $55.81 for residential usage and $55.81 + $2.54 per 1,000 gallons in excess of 20,000 gallons for commercial properties. The proposed 2% increase would bring these rates to $56.93 and $56.93 + $2.54/1000 gallons, respectively. In comparison, the Metropolitan Council was charging $27,276 for the first quarter of 1999, and $23,225 for each quarter thereafter. The proposed rate increase would affect approximately 1,700 residential customers Finance Committee/July 13, 1999 Page 3 of 9