INTRODUCTION
Objective
To establish a set of fiscal policies which will assist in ensuring the City’s long term fiscal stability. These policies are intended to provide direction so that the City’s finances are managed in a manner that will continue to provide for the delivery of quality services; maintain an enhanced service delivery; ensure a balanced budget; and establish reserves necessary to meet known and unknown future obligations.
Policy Areas
This policy addresses the following areas:
1. Fiscal Policy Overview
2. Definitions
3. Budget Creation
4. Budget Priorities
5. Budget Adjustments
6. Accounting, Auditing and Financial Reporting
7. Capital Improvement Projects and Infrastructure
8. Debt
9. General Revenue Policies
10. Enterprise Fund Revenue
11. Investment
12. General Reserve Policies
13. Use of Fund Balance
14. General Fund Reserves
15. Capital Improvement Project (CIP) Fund Reserves
16. Trusts
17. Tourism Improvement District Fund Reserve
18. Internal Service Fund Reserves
19. Enterprise Fund Reserves
20. Internal Service Replacement Funds
The following table provides a brief explanation of the policies currently out of compliance and the action plan to return to target levels.
Policy
Explanation
Action Plan
Operating Budget Policies
: The City will project its
equipment replacement and maintenance needs for
the next six years and will update this projection
each year. From this projection a maintenance and
replacement schedule will be developed and
followed.
The City is in
compliance with the
policy for Fleet
equipment but is out of
compliance for the large
equipment (e.g. HVAC).
An inventory of other
capital equipment is
anticipated within the
next budget cycle.
Reserve / Fund Balance Policy
: The City will
establish an Equipment Replacement Fund for
capital equipment as it becomes unserviceable,
obsolete or reach a predetermined service life. The
fund will be maintained at a level adequate to
replace all capital equipment per the pre-
determined replacement schedule.
The Equipment
Replacement Fund was
established in FY
2014/15, and has a
current balance of about
$443,000.
An inventory of Capital
Equipment, and
replacement schedule
anticipated within the
next budget cycle.
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Fiscal Policy
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Fiscal Policy
1. Overview of Purpose and Scope of this Policy
a.
The general financial goal is to maintain and enhance the sound fiscal condition of the City.
b.
Applicability.
This policy applies to all funds for the City of Napa.
2. Definitions.
The following definitions shall apply to this Policy:
a.
"Balanced Budget": In each fund budgeted revenues plus unreserved/ undesignated fund balance are greater than budgeted expenditures. b.
“Capital Improvement Project (CIP) Budget”: The adopted budget includes a 5- year CIP budget, listing all planned CIP projects, their budgets, and their various funding sources.
c.
“City Charge”: Any tax, assessment, fee, or fine imposed by the City, in accordance with the policies established by City Council pursuant to Napa Municipal Code Section 3.04.040, and the “Policies and Procedures for the Establishment, Implementation, and Enforcement of City Fees, Fines, and Charges” (Resolution Nos. R2018-046 and R2018-047, as they may be updated by City Council).
d.
“Deficit”: The excess of fund expenses over fund revenues at the close of a fiscal year.
e.
“Department Director”: the chief executive appointive officer (as defined by City Charter Section 75 and Napa Municipal Code Title 2) of each Department identified in the Budget, or the authorized designee of the Department Director or City Manager.
f.
"Fund": An independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, reserves and equities.
g.
"Fund Balance": The difference between assets and liabilities reported in a governmental fund.
h.
"Fund Balance Categories" per current governmental accounting standards (GASB 54):
i.
“Non-Spendable”: Cannot be readily converted to cash or cannot legally be spent
ii.
“Restricted”: External imposed (by granting agencies, governmental entities, etc.) restrictions on spending
iii.
“Committed”: City Council formally-imposed (by resolution or other action) restrictions on spending
iv.
“Assigned”: Funds reserved by Council direction or City Manager for designated purposes
v.
“Unassigned”: Residual balance not classified in any of the above categories
i.
"General Fund Operating Budget": total General Fund expenditure budget less transfers to other funds and reserves.
j.
"Non-Recurring": Revenues or expenditures not expected to recur on a regular basis; not to be included in the regular operating budget.
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k.
"Surplus": The excess of fund revenues over fund expenses at the close of a fiscal year.
3. Budget Creation
a.
The City will adopt a balanced two-year budget by June 30 of every other year.
As a part of the bi-annual review, prior to the end of the two-year budget, the City Council will adopt the budget for the second year of the two-year budget. i.
A bi-annual base operating budget will be developed by verifying or conservatively projecting revenues and expenditures for the current and forthcoming fiscal year.
ii.
The City will maintain a level of expenditures which will provide for the public well-being and safety of the residents, property owners, businesses, and visitors of the community.
iii.
Current revenues will be sufficient to support current operating expenditures.
iv.
The City shall contract with outside consultants or utilize limited term City staff positions for peaks in workload, when a project is limited in term and/ or scope, or when specialized expertise is necessary and it is more cost- effective to hire a consultant than add a full-time staff position. Any appointment to a limited-term employment position shall be made in accordance with Council Policy (R1999-247, as may be amended).
Conversely, for longer term needs (at least 3 to 5 years), or when the City Manager determines it is more cost-effective, the City Council may consider adding full-time staff.
v.
The City will project its equipment replacement and maintenance needs for the next six years and will update this projection each year. From this projection a maintenance and replacement schedule will be developed and followed.
vi.
The Non-Recurring General Fund will be used to budget for non-recurring items.
b.
Each Department Director may request additional funds for new positions, equipment, or programs during the budget creation process. Requests are submitted as Decision Packages and include a description of what the funds will be used for and estimated financial impact.
c.
Compensated Absence annual appropriations are budgeted in the General Fund for payment of various accrued leave balances (non-Enterprise Fund only). The three appropriations are for payment of accrued leave for separating employees, leave payouts for continuing employees, and annual cashouts of management leave. The appropriation amounts shall be based on historical trends, salary growth, and anticipated usage of leave cashout policies. d.
The Public Safety Overhire annual appropriation is budgeted in the Non- Recurring General Fund. This appropriation can be used to pay for Public Safety staffing when the department has a reasonable and necessary reason for temporarily overfilling a position. Use of this appropriation is subject to City Manager approval. The annual appropriation amount shall be $200,000.
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4. Budget Priorities
a.
Maintenance and replacement funding will be prioritized each year to ensure that capital facilities and equipment are sufficiently maintained to avoid service disruptions.
b.
Projects or programs to improve City business processes and/or increase efficiency will be prioritized over the addition of new full-time staff. c.
If funding is not available for operations and maintenance costs of proposed new facilities, the City will delay construction of these facilities.
5. Budget Adjustments
a.
Budget adjustments should be requested through the Finance Department using the City’s Budget Adjustment Form (BAF)
i.
Each Department Director should manage their budget by object category (Salaries and Wages, Services, Materials and Supplies, etc.). Generally, the Finance Department will not process budget adjustments that transfer funds between objects within the same key and category unless needed for contract or purchase order approval.
ii.
The Budget Adjustment Form requires the signature of the Department Director.
b.
All budget adjustments require signature approval by the appropriate authority:
i.
Any budget adjustment for a CIP project, any transfer between City funds, or any appropriation of fund reserves requires Council approval. ii.
Any budget transfer involving salaries and benefits budgets or a transfer between departments requires approval by the Department Director and the City Manager.
iii.
Additional budget appropriations may be approved by the City Manager when the increased expenditure is completely offset by new matching revenue. The Department Director also must sign off on the budget request.
1. To the extent an operation receives donations for a specified purpose, the City Manager is authorized to increase
appropriations for that operation and that fiscal year in an amount not to exceed the amount of the donation. Adjustments shall be reported to City Council as part of the next regular financial report.
2. To the extent an operation relies on estimated fee revenue as its source of revenue, and the revenue received during the fiscal year exceeds the estimated revenue identified in the budget, the City Manager is authorized to increase appropriations for that operation and that fiscal year in an amount not to exceed the lesser of: (a) amount of the estimated fee revenue or (b) 15% of the budgeted fund fee revenue estimate. Adjustments shall be reported to City Council as part of the next regular financial report. iv.
A Department Director may transfer funds between accounts not restricted above within the department as necessary to meet department objectives.
c.
Budgets may be carried forward from a prior year based on the following criteria:
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i.
The City Manager is authorized to increase appropriations for each fund in each fiscal year, in an amount not to exceed the amount encumbered but not yet expended from that fund for the previous fiscal year. The actual amount of these increased appropriations due to unexpended encumbrances will be reported to City Council as a part of the annual financial audit for the previous fiscal year.
ii.
The City Manager is authorized to increase appropriations for each fund in each fiscal year, in an amount not to exceed not yet expended appropriations from that fund for the previous fiscal year for continuing nonrecurring projects.
6. Accounting, Auditing & Financial Reporting
a.
The City's accounting and financial reporting systems will be maintained in conformance with generally accepted accounting principles and standards of the Government Accounting Standards Board.
b.
Financial reports will be submitted to the City Council and will be made available to the public at least twice each fiscal year.
c.
Full and continuing disclosure will be provided in the general financial statements and bond representations.
d.
The City will maintain a good credit rating in the financial community. e.
The City will maintain a liquidity ratio of at least 1:1. f.
An annual audit will be performed by an independent public accounting firm with the subsequent issue of an official Comprehensive Annual Financial Report (CAFR), including an audit opinion.
g.
In accordance with City Charter section 58, the Finance Director will, at least once a month, provide a report of the cash in the Treasury to the City Council in writing.
h.
In accordance with Napa Municipal Code section 2.32.050, the Finance Director shall deliver to the City Manager and to the City Council at a regularly scheduled Council meeting, a budget report showing the budget status at the end of the preceding month.
i.
The Long-Term Financial Forecast shall be prepared annually projecting revenues and expenditures for the General Fund. This forecast shall be used as a planning tool in developing the following year’s operating budget.
7. Capital Improvement Projects and Infrastructure
a.
The City will plan for the design, construction, implementation, operation, and maintenance of capital improvements in accordance with an adopted capital improvement program.
b.
The City will develop an annual five-year plan for capital improvements, including CIP design, construction, implementation, and operating and maintenance costs (“CIP Budget”).
c.
The purchase of new or replacement capital equipment with a value of $25,000 or more and with a minimum useful life of two years will require City Council approval.
d.
The City will use intergovernmental assistance to finance only those capital improvements that are consistent with the Capital Improvement Plan and City Appendix D
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priorities and for which operating and maintenance costs have been included in the budget.
e.
To cover the costs of CIP projects planned for the Water Enterprise Fund and the Solid Waste / Materials Diversion (Recycling) Enterprise Fund, the City will seek non-General Fund sources of revenue (including grants from other agencies), and the City will otherwise cover the costs through the establishment and regular updating of City Charges that are equitably imposed on users of the services. f.
The Water Fund shall propose a budget that includes a minimum investment in infrastructure of $3 million annually for five years starting in FY 2012-13 to be funded by rate based revenue and connection fees from development.
8. Debt
a.
The City Council may authorize the use short-term debt to cover temporary or emergency cash flow shortages of less than one fiscal year.
All short-term
borrowing will be approved in writing by the City Manager, filed with the Finance Director, and taken to City Council for approval.
b.
The City Council may issue inter-fund loans rather than outside debt instruments to meet short-term cash flow needs. Inter-fund loans must be repaid consistent with terms established in a written agreement.
c.
The City will confine long-term borrowing to fund capital improvements that cannot be funded from current revenues.
d.
The City will use special assessment revenue, inter-fund loans or other self- supporting bonds instead of general obligation bonds when feasible.
9. General Revenue Policies
a.
The City will strive to maintain a diversified and stable revenue base to shelter it from short-term fluctuations in any one revenue source. b.
The objective of the revenue policies is to ensure that funding is derived from a fair, equitable, and adequate resource base, while minimizing tax differential burdens. Services having a citywide benefit shall be financed with General Fund revenue sources generated from a broad base, such as property taxes, transient occupancy taxes, sales taxes, and business license taxes. Services that provide a particular benefit to a customer or user shall primarily be financed with user fees, charges, or assessments based on the level of service provided (in accordance with California Constitution Article XII C, Section 1(e), known as “Prop 26”).
c.
The City will estimate its annual revenues by an objective, analytical process utilizing trend, judgmental, and statistical analysis as appropriate. Revenue estimates adopted by the City Council must be conservative. d.
Fees for City services will be adjusted at least annually to recover the full cost of services provided, unless when it is determined that policy, legal, or market factors require lower fees and it is in the public interest. e.
Non-recurring revenues will be used for non-recurring expenditures only. (Including capital and reserves.)
i.
Non-recurring general revenues will be deposited into the Non-Recurring General Fund.
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10. Enterprise Fund Revenue
a.
The City will set fees and user charges for each utility fund at a level that fully supports the total direct and indirect cost of the activity. Indirect costs include the cost of annual debt service used for capital assets and overhead charges. b.
Water rates shall be established at a level that supports operating costs as well as capital investment in the system equal to or greater than the level of annual depreciation of the system assets based on the average of the previous five years.
11. Investment
a.
The City Treasurer will annually submit an investment policy to the City Council for review and adoption.
b.
The City Treasurer will invest the City’s monies in accordance with applicable laws and adopted investment policies and direct the investment of bond or note monies on deposit with a trustee or fiscal agent in accordance with the applicable indenture or issuance document.
12. General Reserve Policies
a.
It is the intent of the City to establish and maintain reserve funds to ensure the continued delivery of City services to address emergencies, address a temporary revenue shortfall or provide stability during economic cycles. Sufficient reserve funds will be managed to provide adequate cash flow, stabilize the City's interest rates and provide continuity in service delivery. The City shall maintain adequate cash reserves in each fund to maintain a positive cash position at any time during a fiscal year and at year-end.
b.
If fiscal changes require staff to recommend funding reserves above the policy minimums, staff will bring this recommendation to Council as a specific action for approval.
13. Use of Fund Balance
a.
The City shall reduce committed or assigned fund balance first only if the expenditures incurred are for the purpose for which the funds were originally committed or assigned. Otherwise, unassigned fund balance shall be reduced first, followed by assigned, and then committed.
b.
Fund Balance amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed, are to be reported as Assigned Fund Balance. The Finance Director is designated the authority to “assign” amounts to be used for specific purposes. Those amounts are to be reported in the financial statements as “Assigned Fund Balance” in compliance with GASB Statement 54.
c.
At the end of each fiscal year, any available fund balance in the General Fund shall be transferred to the CIP Facilities Reserve.
d.
At the end of each fiscal year, any undesignated fund balance, net of planned spending in future budgets, in the Non-Recurring General Fund in excess of 2% of that year's General Fund Operating Budget shall be transferred to the CIP Facilities Reserve.
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14. General Fund Reserves
a.
The City shall establish and maintain a General Fund Emergency Reserve. Each fiscal year, the City will include in its adopted budget a transfer to the Emergency Reserve to bring the reserve balance to at least 14% of that year’s General Fund Operating Budget. This transfer may be excluded from the adopted budget if there is a budgeted deficit.
i.
The primary purpose of this reserve is to protect the City’s essential service programs and funding requirements during significant events such as (but not limited to) economic downturns/recessions that impact City revenues, natural disasters, declared emergencies (as defined by Napa Municipal Code Chapter 2.89), state government reductions or takeaways of City revenues, or other situations that could not be reasonably foreseen during preparation of the budget.
1. In the event the City Manager declares that action is needed to be taken to resolve an emergency, in accordance with Napa
Municipal Code Section 2.91.040, the City Manager is authorized to encumber and spend the General Fund Emergency Reserve to pay the costs of the action to resolve the emergency. These actions shall be reported to Council at their next meeting after the declaration of the emergency.
ii.
In the case of natural disasters, the Emergency Reserve should be used to pay for FEMA-approved projects. After receiving FEMA approval, the project total amount shall be transferred from the Emergency Reserve and deposited into the appropriate project fund. The transfer of funds and related budget adjustments shall be taken to City Council for review and approval.
1. All reimbursement funds received from FEMA and CalOES will be deposited into the Emergency Reserve to replenish the fund.
2. The City’s portion of FEMA projects will be initially funded by the Emergency Reserve. The proposed timing of repayment will be included in the City’s Long-Term Financial Forecast.
iii.
The use of the General Fund Emergency Reserve must be approved by City Council. In the situations described in 14.1.1a and 14.1.2, the City Manager is authorized to use the General Fund Emergency Reserve and then report to City Council. All other situations require approval from City Council before use.
iv.
Approved use of Emergency Reserve funds may cause the balance of the reserve to drop below the required 14% level. The City will begin to restore reserves used under this policy within 24 months after their first use. The proposed timing of repayment of reserves will be included in the City’s Long-Term Financial Forecast.
v.
The City shall establish and maintain a General Fund Operating Reserve.
Each fiscal year, the City will include in its adopted budget a transfer to the Operating Reserve to bring the reserve balance to at least 6% of that year’s General Fund Operating Budget. This transfer may be excluded from the adopted budget if there is a budgeted deficit. The primary purpose of this reserve is to make up for temporarily decreased revenues Appendix D
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or to provide temporary resources in the event of an economic downtown while expenditure reductions are implemented.
vi.
The use of the General Fund Operating Reserve must be approved by City Council.
vii.
Approved use of Operating Reserve funds may cause the balance of the reserve to drop below the required 5% level. The City will begin to restore reserves used under this policy within 24 months after their first use. The proposed timing of repayment of reserves will be included in the City’s Long-Term Financial Forecast.
viii.
The City shall establish and maintain a General Fund Contingency Reserve. Each fiscal year, the City will include in its adopted budget a transfer to the Contingency Reserve to bring the reserve balance to at least 6% of that year’s General Fund Operating Budget. This transfer may be excluded from the adopted budget if there is a budgeted deficit.The primary purpose of this reserve is to provide funding for non-recurring unanticipated expenditures or to set aside funds to cover known contingencies with unknown costs.
ix.
The use of the General Fund Contingency Reserve must be approved by City Council.
x.
Approved use of Contingency Reserve funds may cause the balance of the reserve to drop below the required 1% level. The City will begin to restore reserves used under this policy within 24 months after their first use. The proposed timing of repayment of reserves will be included in the City’s Long-Term Financial Forecast.
b.
In the event that budgeted revenue is not enough to fully fund all reserves, they shall receive funding in the following priority order:
i.
First, repay any reserves as outlined in the City’s Long-Term Financial Forecast. If multiple reserves require replenishment, they should receive funds in the following order: first the Emergency Reserve, then the Operating Reserve, then the Contingency Reserve.
ii.
Next, bring the reserve funds up to their prescribed percentage amounts in the following order: first the Emergency Reserve, then the Operating Reserve, then the Contingency Reserve.
iii.
If the City experiences two consecutive years where the reserves could not be fully funded, the next Long-term financial forecast shall map out a strategy to bring the reserves up to the correct balances and maintain annual contributions at the required level.
15. Capital Improvement Project (CIP) Fund Reserves
a.
The City shall establish and maintain a CIP Facilities Reserve. Each fiscal year, the City will include in its adopted budget a transfer from the General Fund to the CIP Facilities Reserve, in the amount of 2% of the year’s General Fund Operating Budget.
i.
The primary purpose of this reserve is to provide funding for the expansion of existing City facilities or the creation/renovation/acquisition of new facilities that meet the workforce needs of City services.
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ii.
The use of the CIP Facilities Reserve must be approved by City Council, generally through the CIP Budget adoption.
b.
The City shall establish and maintain a CIP General Reserve. Each fiscal year, the City will include in its adopted budget a transfer from the General Fund to the CIP General Reserve, in the amount of 1% of the year’s General Fund Operating Budget.
i.
The primary purpose of this reserve is to provide funding for ongoing and future Capital Improvement Projects.
ii.
The use of the CIP General Reserve must be approved by City Council, generally through the CIP Budget adoption.
iii.
The CIP Budget shall not program out more than 90% of the expected CIP General Reserve balance in any year of the 5-year plan. This allows for a cushion in case project costs are higher than expected. c.
A General Plan Update Reserve Fund shall be maintained in the CIP Fund to accumulate funds necessary to update the General Plan every 20 years. The General Fund adopted budget shall include a transfer to the General Plan Update Reserve Fund of $100,000 per year.
i.
The use of the General Plan Update Reserve must be approved by City Council, generally through the CIP Budget adoption.
16. Trusts
a.
The City will comply with GASB 45 and establish an irrevocable trust to fund future retiree medical costs. The Trust will be funded through bi-weekly charges to departments equal to the Annual Required Contribution (ARC) as a percentage of payroll based on the most recent OPEB Actuarial Report. b.
The City has established an irrevocable trust to help mitigate increases in future pension costs.
Deposits to the Trust shall be authorized by City Council as funds are available.
17. Tourism Improvement District Fund Reserve
a.
The City will maintain a Contingency Reserve Fund (CRF) for the Napa Tourism Improvement District (Napa TID). The purpose of the CRF is to build and protect reserves for usage during periods of extended economic downturn and uncertainty, unanticipated events that may impact travel and hospitality in the region, or emergency / natural disasters that impact the City of Napa and business community and result in fluctuations of Transient Occupancy Tax revenues. Once approved as part of the Napa TID budget, funds in the CRF will remain unspent until specific findings are made by the Local Governing Committee of the Napa TID that require their usage. The findings will depend on the nature of the emergency or unmet need.
b.
It is the goal of the Napa TID to maintain the CRF so that the CRF balance is at a minimum of 35 percent of the annual budgeted revenues. The CRF will be held in a separate reserve account and will be funded on an annual basis at the end of each fiscal year based on current year revenues. Additional funding of the CRF (above the required 35 percent) shall be determined as a part of the preparation of the annual workplan for the Napa TID, but shall not cause the balance of the CRF to be greater than 100 percent of the annual budgeted revenues.
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c.
The annual funding to the CRF will be equivalent to the budgeted surplus included in the adopted budget. The City of Napa Finance Department shall fund the CRF on June 30 of each year based on actual revenues. d.
Any recommendation to the City Council from the Local Governing Committee of the Napa TID to use the CRF must include a plan for replenishment of the CRF.
18. Internal Service Fund Reserves
a.
Fleet Fund
i.
The City will establish and maintain a Fleet Operating Reserve within the Fleet Fund. The target minimum reserve balance is $100,000.
1. The primary purpose of this reserve is to provide temporary resources in the event of higher than anticipated Fleet Operating costs.
2. The use of the Fleet Operating Reserve must be approved by City Council.
3. Approved use of Fleet Operating Reserve funds may cause the balance of the reserve to drop below the $100,000 minimum. The City will begin to restore reserves used under this policy within 24 months after their first use by collecting additional revenue through Fleet operations and maintenance rates.
b.
Risk Management Fund
i.
Self-insurance reserves will be maintained at a level which, together with purchased insurance policies, adequately protects the City. The reserve funding level goal for each program is no less than the target 80% confidence level appropriately discounted for investment income.
19. Enterprise Fund Reserves
a.
Water Fund
i.
The Working Capital or Undesignated Fund Balance for the Water Enterprise Fund is to be maintained at a minimum 45-90 days of operating expenses or 12.3% to 25% of Operating and Maintenance costs.
ii.
The City will transfer Working Capital or Undesignated Fund Balance of the Water Enterprise Fund that is above 90 days of operating costs or 25% of annual operating and maintenance costs into the Capital Improvement Reserve.
iii.
The City will establish a Water Capital Improvement Reserve to pay for unforeseen cost escalations to CIP projects and future compliance projects. The reserve will be maintained at a minimum level of 10%-20% of annual capital improvements to the Water System.
iv.
The City will establish a Long Term Water Supply Reserve and set aside $200,000 annually from the operating fund.
v.
The City will establish a Water System Renewal and Replacement Reserve for unforeseen and unbudgeted replacements or repairs. The reserve will be maintained at a minimum level of 10%-20% of annual capital improvements to the Water System.
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vi.
The City will establish a Water Fund Emergency Reserve to fund operating or capital expenditures required as a result of unbudgeted financial liability. The reserve will be maintained at a level of 5%-10% of annual operating expenditures excluding debt service.
1. The City Manager (or their designee) has the authority to expend Water Fund Emergency Reserves to address critical needs within the water system. In accordance with NMC 2.91.04, the item will be taken to Council at the first feasible time at a regularly scheduled council meeting.
b.
Solid Waste and Materials Diversion Fund
i.
The City will maintain a Rate Stabilization Reserve in the Solid Waste Fund. This reserve will be funded at a level of 5%-10% of collection revenues to stabilize collection rates to avoid wide swings in rates over time.
ii.
The City will maintain a Solid Waste/Materials Diversion Operating Reserve to cover unforeseen revenue shortfalls, increases in expenses, and potential environmental compliance expenditures. The reserve should be funded at a level of 20% of operating expenditures, which excludes contributions to reserves, the Street Resurfacing Program, capital projects, and debt service.
iii.
The City will maintain a Capital Improvement Projects (CIP) Reserve in the Solid Waste Fund to provide for major renovation, modernization or for planned capital improvement program repairs and maintenance at the Napa MDF. This reserve is for projects that exceed $250,000 in any given year, as set in policy approved by City Council. The annual contribution will equate to the annual depreciation of the MDF facility. iv.
The City will maintain a Liability Reserve in the Solid Waste Fund to fund liabilities of the City for items related to the Solid Waste Fund.
20. Internal Service Replacement Funds
a.
Fleet Fund
i.
The City will maintain a Fleet Replacement Reserve for costs associated with the replacement of vehicles and other rolling stock (such as trailers, compressors or other equipment on wheels) as they become unserviceable, obsolete or reach a predetermined service life. The reserve will be maintained at a level adequate to replace all stock, per the pre-determined replacement schedule. The reserve will track contributions and replacements based on the contributing fund (General Fund, Water Enterprise Fund, etc).
ii.
The City will establish and maintain a Fleet Equipment Replacement and Upgrade Reserve within the Fleet Fund. The primary purpose of this reserve is to cover costs associated with the replacement of specialized tools, Fleet facility/vehicle equipment, as well as Electric Vehicle (EV) charging stations supporting City EV’s/equipment. This funding can be used to add new equipment and charging stations, as well as replace existing items throughout the life cycle of the equipment. The reserve will Appendix D
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be maintained at a level adequate to replace all stock, per the pre- determined replacement schedule.
b.
Fire Apparatus Replacement Fund
i.
The City will maintain a Fire Apparatus Replacement Fund for costs associated with the replacement of Fire Apparatus vehicles as they become unserviceable, obsolete or reach a predetermined service life.
The fund will be maintained at a level adequate to replace all stock, per the pre-determined replacement schedule.
c.
Equipment Replacement Fund
i.
The City will establish and maintain an Equipment Replacement Fund for capital equipment as it becomes unserviceable, obsolete or reaches a predetermined service life. The fund will be maintained at a level adequate to replace all capital equipment per the pre-determined replacement schedule.
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