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process of setting rental rates while performing its statutory oversight responsibility. <br />Public Works uses a monthly rental rate for all equipment. For work outside the Road <br />Fund (106) equipment is tracked by actual usage and current FEMA hourly equipment <br />rental rates apply. <br />ER&R Fund rental rate structure includes the following costs: <br />A. EXPENSES DUE TO OPERATION AND MAINTENANCE —Accounts payable <br />invoices are coded to specific equipment numbers. Payroll labor is also coded to <br />specific equipment numbers when maintenance work is involved. <br />B. DEPRECIATION- depreciation is charged out monthly based on the purchase <br />price of the equipment and the equipment life cycle. Equipment costing under <br />$5000 is valuated separately. <br />C. SURCHARGE FOR REPLACEMENT- the current inflation rate is reviewed and a <br />surcharge percentage is decided on by management. <br />D. CORRECTIONS FROM PRIOR YEAR CHARGES- for equipment that was either <br />overly profitable or took a loss, the additional gain/loss will be calculated into the <br />following years rental rates. <br />Annual Basis of Rate: All costs are calculated based on the above criteria. The <br />revenue gained through charging rental rates is then compared against the costs to <br />validate whether the equipment rental rates are set appropriately. Adjustments to <br />the rates are made as needed in order to work toward an equitable status, as one <br />fund should not make a profit over another fund. Equipment under $5000 purchase <br />price will be bucketed into an annual rent amount. <br />ER&R Fund Deposits: The Road Fund shall pay 100 percent of new equipment <br />costs by transferring funds from the Road Fund (106) to the ER&R Fund (501). The <br />ER&R Fund purchases the new equipment and sets the monthly rate for the <br />equipment rental. Proceeds from the sale of the equipment that is not being <br />replaced is transferred back to the Road Fund (106). <br />Accumulated Monies: Annually, the Finance Manager reviews the monies <br />accumulated in the ER&R Fund (501). The fund maintains an annually replacement <br />reserve of two million dollars ($2,000,000). The reserve is maintained so as not to <br />reduce below one million dollars ($1,000,000). From time to time the ER&R Fund <br />may elect to create additional reserve accounts to cover assets other than <br />equipment such as building replacements or repair. <br />Page 2 of 4 <br />