HomeMy WebLinkAbout12.A.1. Park Reserve Fund Loan Payback
J;). A. I.
CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Park Reserve Fund Loan Payback
DATE: July 7/2009
Introduction & BackJ!round
The following points are noted.
1. The inter-fund loan from the Sewer Fund to the Park Reserve Fund was originally
presented as a five year loan repayment as reflected in the 2007 and 2008 budgets. A
proposal to extend it to ten years was not accepted by Council.
2. The financial policies adopted by Council with the 2009 budget limit inter-fund loans to
two years.
3. The State Auditors "Statement of Position" on inter-fund loans couches repayment in
terms of days, not years.
4. Extending the repayment from 5 years to 10 years starting in 2010 incurs additional
interest cost to the Park Reserve Fund of $177/000.
5. Extending the repayment from 5 years to 10 years starting in 2009 incurs additional
interest cost to the Park Reserve Fund of $227/000.
6. In the Annual financial Report, the loan is shown as an "advance" rather than a loan,
indicating a term longer than a year.
Recommendation
It is of course a Council task to weigh the merits of the proposal to extend the term of the loan.
From the financial aspect, I would not recommend extending the term of the loan to the Park
Reserve Fund.
Gregg Voxland
Finance Director
H :\Fi na n ce \budget\budget2009