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Home My WebLink AboutAGENDA REPORT 2016 0601 CC REG ITEM 09B ITEM 9.B. rRV OP MOORPARK,CALIFORNIA City Council Meeting of -/010/6, AC710r�� Aa MOORPARK CITY COUNCILS `n° aoz/ AGENDA REPORT Br. a ' -- To: Honorable City Council From: Ron Ahlers, Finance Director By: Irmina Lumbad, Deputy Finance Director .ti Date: May 24, 2016 (CC Meeting of 06/01116) Subject: Consider Equipment Replacement Fund (4003) Projected Status as of June 30, 2016 and Consider Resolution Amending Fiscal Year 2015/16 Budget by Appropriating $328,414 and Authorizing the Transfers from Various Sources to the Equipment Replacement Fund (4003) and Authorizing the Designation of Fund Balance for Equipment Replacement Obligation in Certain Restricted Funds Summary: At June 30, 2016, the projected total book value of the City's active machineries and equipment is $9,101,293 (Attachment 1), including two transit buses with aggregate book value of $349,115 and five items worth $78,998 that have already been replaced, but retained in inventory. The equipment replacement obligation is estimated to be $4,245,772. Of this obligation, the shares of Local Transit Programs 8c Fund (5000) of $753,532 and Successor Agency to the Moorpark Redevelopment Agency (9101) of $221,373 have been deferred. At June 30, 2016, the estimated balance of monies set- aside for equipment replacement in various funds will total $2,846,983. The projected shortfall for equipment replacement across various funds is $423,884. Discussion: In FY 1985/86, the Equipment Replacement Fund (ERF) was established to set-aside funds to replace various machineries and equipment as they age and/or as the asset's useful life has exhausted. The annual contribution to the ERF is allocated to various sources that originally financed the acquisition of the asset, subject to availability of unreserved fund balance. The ERF fund balance should equal the accumulated depreciation of capital asset plus the replacement cost of non-capital assets due for replacement less the estimated revenue from investment earnings and proceeds from asset disposal. 35 Honorable City Council June 1, 2016 Page 2 of 4 On May 21, 2014, the City Council approved staffs recommendation to bring the ERF funding to current and adopted Resolution No. 2014-3292 to transfer $2,036,216 into ERF from various sources and to designate a reserve amount in certain restricted Special Revenue Funds. At that time, the average annual contribution was about $354,000 excluding assets that have already been replaced but are retained in inventory. There was no money transferred to the ERF in FY 2014/15. The City has five (5) transit buses that are depreciated over twelve (12) years. Three (3) units were purchased in September 2010 for $1,230,350 (Local Transit 8c Fund 5000) and two (2) buses were replaced in the current year for $906,610 (Prop 1B PTMISEA Grant Fund 2611 — $774,000 and Local Transit 8c Fund 5000 - $132,610). The 2010 buses will be due for replacement in FY 2020/21 with estimated cost of $1,531,800. Staff is proposing to set-aside 20% local match or $306,360 in the Traffic System Management Fund (2001). Over the remaining six-year period starting FY 2015/16, the required annual provision is $51,060. For FY 2015/16, $165,999 has been appropriated from the ERF for computer replacements ($6,000), call accounting upgrade ($5,000), phone system upgrades at EOC and MPSF ($28,600), replacement of AnimalNector Control vehicles ($71,399), and replacement motorcycles ($55,000). In addition, staff will be requesting appropriation of $30,000 to replace the server and exterior camera equipment at the Police Services Center. Assuming no other activities through the current year, the estimated City-wide obligation and funding status are as follows: Table 1.0 Distribution by Fund TOTAL ERF Gas Tax LMD" Transit SARA (deferred)m (deferred) Obligation,Projected 6/30/16 $4,245,772 $2,812,936 $301,204 $105,667 $804,592 $221,373 (Accumulated Depreciation) Funds Reserved for Equipment $2,846,983 $2,535,582 $246,674 $64,727 $0 $0 Replacement, Projected 6/30/16 FY 2015/16 Projected Shortfall $1,398,789 $277,354 $54,530 $40,940 $804,592 $221,373 less: Deferred Amounts ($974,905) $0 $0 $0 ($753,532) ($221,373) FY2015/16 Proposed Contribution $423,884 $277,354 $54,530 $40,940 $51,060 ($0) Landscape Maintenance Districts m Traffic System Management Fund 36 Honorable City Council June 1, 2016 Page 3 of 4 The FY 2016/17 recommended budget includes appropriations totaling $62,500 for the following items: • MPSF phone upgrade (rebudgeted) $9,000 • Client Access licenses $12,500 • Parks replacement truck for VEH043 $41,000 If no funding will be set-aside in the current year and all appropriations (FY 2015/16 - $40,239 and FY 2016/17 - $62,500) are expended by June 30, 2017, the shortfall will increase by $563,725 to $987,609. Fiscal Impact: The adopted FY 2015/16 operating budget does not include transfers to the ERF. The $423,884 shortfall is recommended to be funded as follows: 1. Approve the funding of the Gas Tax (2605) equipment replacement obligation of $54,530 and direct the Finance Department to process the necessary accounting entries to designate an additional $54,530 in the Reserve for Equipment Replacement account (5301) within the fund. Reserve for Equipment Replacement(5301) Projected Balance @ Obligation FY15/16 Set- 6/30/2015 6/30/2016 Aside Gas Tax 2605 301,204 246,674 54,530 The projected fund balance at 6/30/2016 after this provision is $702,312. The estimated fund balance at 6/30/2017 is $133,555. In a year or so, this fund will not have enough money to cover its obligation and future contributions will have to come from the General Fund. 2. Approve the funding of the various Landscape Maintenance Districts equipment replacement obligation of $40,940 and direct the Finance Department to process the necessary accounting entries to designate an additional $40,940 in the Reserve for Equipment Replacement account (5301) in the following amounts: 37 Honorable City Council June 1, 2016 Page 4 of 4 Reserve for Equipment Replacement(5301) Projected Balance @ Obligation FY15/16 Set- 6/30/2015 6/30/2016 Aside 2302: 84-2 Steeple Hill 12865 $16,280 $9,658 $6,622 2312 84-2 Carlsberg $16,946 $10,052 $6,894 2315 Country Club Estates $30,452 $18,065 $12,387 2322 Moorpark Highlands $41,989 $26,952 $15,037 TOTAL $40,940 3. Approve a budget amendment with an aggregate appropriation of $328,414 - Library Facilities Fund (2154) -$17,115; Traffic System Management Fund (2001) - $54,037; and General Fund (1000) - $257,262. The General Fund's portion is proposed to be funded by a transfer from the Special Projects Fund (4004). Authorize the transfer of$328,414 to the Equipment Replacement Fund (4003). STAFF RECOMMENDATION: (ROLL CALL VOTE) 1. Adopt Resolution No. 2016- amending the FY 2015/16 Budget by appropriating $328,414 and authorizing the transfers from various sources to the Equipment Replacement Fund (4003); and 2. Authorizing the additional designation of fund balance for Equipment Replacement Obligation in certain restricted funds Attachments: 1) Summary of Covered Equipment & Machineries by Category (Unadjusted Book Value) 2) Resolution No. 2016- 38 Attachment 1 CITY OF MOORPARK Book Value of Active Equip_ment _ As of 06/30/2016 Projected CapAsset Cat Category Title ^ EXCLUDED COVERED TOTAL ITEMS Inventory Only COMPUTER COMPUTER EQUIPMENT $119,239.42 $343,645.29 $462,884.71 LICVEH OTHER LICENSED VEHICLES $2,523.58 $2,523.58 MACH MACHINERY AND TOOLS R $33,552.67 $33,552.67 OFFEQUIP OFFICE EQUIPMENT _ $32,350.25 $32,350.25 OFFFURN OFFICE FURNITURE $53,876.47 $53,876.47 OTHEQUIP OTHER EQUIPMENT $354,235.81 $354,235.81 OTHVEH OTHER VEHICLES $21,882.88 $21,882.88 OUTDOOR OUTDOOR EQUIPMENT $223,222.13 $223,222.13 PLAYEQUP PLAYGROUND EQUIPMENT $41,903.94 $41,903.94 Sub-Total $119,239.42 $1,107,193.02 $1,226,432.44 Capital Assets AUTO AUTOMOBILES $14,036.32 $124,174.52 $138,210.84 COMPUTER COMPUTER EQUIPMENT $59,604.17 $741,788.42 $801,392.59 HVYTRUCK HEAVY TRUCK $319,703.55 $319,703.55 LGTTRUCK LIGHT TRUCKS $292,391.94 $292,391.94 LICVEH OTHER LICENSED VEHICLES $103,357.40 $103,357.40 OFFEQUIP OFFICE EQUIPMENT $5,357.13 $318,958.65 $324,315.78 OFFFURN OFFICE FURNITURE $580,408.75 $580,408.75 OTHEQUIP OTHER EQUIPMENT $868,005.11 _ $868,005.11 OTHVEH OTHER VEHICLES $246,044.07 $246,044.07 OUTDOOR OUTDOOR EQUIPMENT $680,752.38 $680,752.38 PLAYEQUP PLAYGROUND EQUIPMENT $1,139,861.62 $1,139,861.62 TRANSIT BUSES $349,114.72 , $2,150,541.29 $2,499,656.01 Sub-Total $428,112.34 $7,565,987.70 $7,994,100.04 Grand Total $547,351.76 $8,673,180.72 $9,220,532.48 Adjustments: Excluded items acquired prior to 06/30/2004 ($119,239.42) $0.00 ($119,239.42) x,111134 $11,873.111032 $9,i111,213.a6 39 ATTACHMENT 2 RESOLUTION NO. 2016 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING THE FISCAL YEAR 2015/16 BUDGET BY APPROPRIATING $328,414 AND AUTHORIZING THE TRANSFERS FROM VARIOUS SOURCES TO THE EQUIPMENT REPLACEMENT FUND (4003); AND AUTHORIZING THE DESIGNATION OF FUND BALANCE FOR EQUIPMENT REPLACEMENT OBLIGATION IN CERTAIN RESTRICTED FUNDS WHEREAS, in Fiscal Year (FY) 1985/86 the City established the Equipment Replacement Fund (4003) to set-aside money to replace various machineries and equipment as they age and/or as the asset's useful life has exhausted; and WHEREAS, on June 17, 2015, the City Council adopted the Operating and Capital Improvement Budget for FY 2015/16, and it does not include any transfers to the Equipment Replacement Fund (4003); and WHEREAS, a staff report has been presented to the City Council summarizing the projected unfunded obligation totaling $1,398,789 at June 30, 2016. Of this total, the shares of Local Transit Article 8c Fund (5000) - $753,532 and RDA-SA Economic Development Fund (9101) of$221,373 will continue to be deferred; and WHEREAS, accounting entries totaling $95,470 — $54,530 from the Gas Tax Fund (2605), $6,622 from 84-2 Steeple Hill T2865 (2302), $6,894 from 84-2 Carlsberg (2312), $12,387 from Country Club Estates (2315) and $15,037 from Moorpark Highlands (2322) are required to be designated as additional obligation in Account 5301 — Reserve for Equipment Replacement within the respective funds; and WHEREAS, the Equipment Replacement Fund (4003) accounts for the aggregate city-wide share of the obligation of $328,414. The General Fund's portion of $257,262 is recommended to be funded by a transfer from the Special Projects Fund (4004). A budget amendment is required and the following transfers are recommended from these funds: Library Facilities (2154) - $17,115; Traffic Systems Management (2001) - $54,037; and Special Projects (4004) - $257,262; and WHEREAS, Exhibits "A" and "B", attached hereto and made a part hereof, describes said budget amendments and the resultant impacts to the budget line items. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: 40 Resolution No. 2016- Page 2 SECTION 1. That the deferral of the funding obligation of Local Transit Article 8c Fund (5000) - $753,532 and RDA-SA Economic Development Fund (9101) - $221,373 is hereby approved. SECTION 2. That the accounting entries totaling $95,470 to designate additional fund balance reserve for equipment replacement as more particularly described in Exhibit"A" is hereby approved. SECTION 3. That an aggregate budget amendment and fund transfer of $328;414, as more particularly described in Exhibit"B", is hereby approved. SECTION 4: The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 1s`day of June, 2016. Janice S. Parvin, Mayor ATTEST: Maureen Benson, City Clerk Attachments: Exhibit 'A' Exhibit 'B' 41 Resolution No. 2016- Page 3 Exhibit A Fund Balance Designation for Equipment Replacement Reserve Fund Fund/Account From To Gas Tax 2605-5500 $54,530 2605-5301 $54,530 84-2 Steeple Hill T2865 2302-5500 $6,622 2302-5301 $6,622 84-2 Carlsberg 2312-5500 $6,894 2312-5301 $6,894 Country Club Estates 2315-5500 $12,387 2315-5301 $12,387 Moorpark Highlands 2322-5500 $15,037 2322-5301 $15,037 TOTAL $95,470 $95,470 42 Resolution No. 2016- Page 4 Exhibit B Budget Amendment for Various Funds for Equipment Replacement Obligation 2015/2016 A. Fund Allocation Fund/Account No. Fund Description Amount 2001-5500 Traffic Systems Management $54,037.00 2154-5500 Library Facilities Fund $17,115.00 4004-5500 Special Projects Fund $257,262.00 4003-5500 Equipment Replacement ($328,414.00) Total $0.00 B. Revenue Budget Allocation Fund/Account No. Current Budget Revision Amended Budget 4003-3720 $0.00 $328,414.00 $328,414.00 Total $0.00 $328,414.00 $328,414.00 C. Expenditure Appropriation Budget Number Current Budget Revision Revised Budget 2001-9820 $0.00 $54,037.00 $54,037.00 2154-9820 $0.00 $17,115.00 $17,115.00 4004-9820 $0.00 $257,262.00 $257,262.00 Total $0.00 $328,414.00 $328,414.00 D. Interfund Transfer Transfer TO FROM Fund Fund 4003 2001-9820 $54,037.00 2154-9820 $17,115.00 4004-9820 $257,262.00 Total $328,414.00 Approved as to Form: 43