Translate[Archived] Question # 31: The proposed budget indicates that we will switch back to cash financing of fire apparatus yet proposes a decade of bond-financed investment in fire apparatus.
Question:
The proposed budget indicates that we will switch back to cash financing of fire apparatus yet proposes a decade of bond-financed investment in fire apparatus. What is the rationale and timing for this planned transition? (Mayor Wilson)
Response:
In FY 2012, the City approved a plan to begin replacing the Fire Department's fleet through the use of debt financing. The plan was designed as a 10-year plan and accelerated vehicle purchases through debt financing and then repaying the costs from the vehicle and equipment replacement fund. As a result of this plan, the City was able to catch up on its equipment replacement needs.
The City is now nearing the end of this 10-year plan to accelerate replacements, and is reviewing options to convert back to a cash financing plan for fire equipment replacements; long-term use of debt financing vehicle replacement is not considered a best practice. Staff are currently developing options for this conversion, along with associated costs, and plan to present options to the City Manager later this spring. The City Manager’s recommendation for this conversion to a cash financing plan may likely be presented to City Council this fall, and included in the City Manager’s Proposed FY 2022 Budget.
This strategy would require no additional funding in FY 2021 but could require an increase in General Fund cash capital in for FY 2022. Based on emerging COVID-19 related economic conditions, staff will likely re-evaluate this option as part of the FY 2022 budget and CIP development. The Proposed FY 2021 – FY 2030 CIP maintains a bond financing plan for Fire Vehicle and Heavy Apparatus replacement, to ensure adequate borrowing capacity is held in reserve for these vehicle purchases, until the bond-to-cash financing plan is finalized.