Operation, Maintenance, Repair & Replacement

I read in The Connection where we ran an ad saying we're in fine financial condition. It's my sense we need a couple pieces of data before we can make statements to the community that go that far. (I'm not going to raise a ruckus or anything, I just think we need to think about two more items.)

Item #1: We need to think about what it costs us to:

a) Operate
b) Maintain
c) Repair
d) and in some cases Replace our assets over time. O, M, R & R.

I don't have any notion of what the assets of the City are worth. I was told Doug recently mentioned three hundred million dollars. I don't know. Certainly our assets could take a number of forms, and there is likely not one approach that covers every item. But let's use streets as one example.

a) We operate our streets. That means we keep them open and available for use. There are some costs attached to operating this asset. That could include police patrols or other factors.

b) We maintain our streets. This include plowing, sweeping, striping, or keeping traffic signals in good order. Minor items such as pot hole repair could be called a maintenance item. We have a surface management plan.

c) We may have to repair curbs, or parts of the street impacted by erosion.

d) At some point simply repairing parts of the street may not work, or may not be cost effective. At that point we may have to replace a large segment of the street. For example, a portion of Monarch just north of The Ridge has been replaced twice in the past twenty-five years. We realize all of our assets have a useful life. As we approach the useful life of the asset, repairs should be expected to increase, and at some point we may have to replace some assets.

In order to determine which assets should be placed on a regular maintenance schedule, and which items should be replaced as they approach their useful life, we should initiate a study of the assets we own. We should start with an inventory, and then a best management practices approach to classifying our assets, and putting together a financial illustration of what O, M, R & R looks like. We can then determine how much money, if any, should be put aside not just to operate and maintain, but also repair and replace our assets (not just our streets).

Item #2: As we approach a retreat, we should think about a three to five year capital spending budget. There may be some items we would like to see added to our community. Some items could carry price tags worthy of attention. A budgeting process could give an idea of how much the items we desire may cost. We can then think about how to raise the revenue needed to fund the items. Examples could include another traffic signal, or roundabout, or more efficient landscape treatments on parcels owned by the City.

When we know what it costs to fulfill O, M, R&R, and when we know how much we desire to spend on capital items, we can then determine how these two costs impact our budget and our balance sheet. At that time we can then make a determination that all is good, or that we need to start putting aside a little bit of money, or uh oh, we've got to begin finding ways to fund a substantial obligation. In the wake of understanding the implications of these studies we can make informed pronouncements regarding the financial health of the City.

I do not want to raise any alarm where none is appropriate, but with this note I ask you to undertake the task of determining these missing data points for #1 replacement reserves fund study and #2 capital budget study

When may we expect to have these studies underway at CoCPN?