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HomeMy WebLinkAbout4. A. & B. Telecommunication Fund and Recreation Fund Balance Transfer . 4A.iD ( City of Shako pee MEMORANDUM TO: Mayor and City Council Mark McN eill, City Administrator FROM: Kris Wilson, Assistant City Administrator SUBJECT: Telecommunications Fund and Recreation Fund Fund Balances DATE: August 5, 2009 Introduction With the 2010 budget, the City will be merging the Telecommunications Fund and the Recreation Fund into the General Fund in order to comply with the latest rules issued by the Government Accounting Standards Board (GASB). Both Funds are expected to have a positive fund balance as of December 31, 2009. Therefore the Council will need to decide what to do with this money in order to allow the funds to be closed out. Background The Telecommunications Fund has two primary and two secondary sources of revenue. The primary sources are the franchise fees paid by the current cable company and the PEG fee, which is a pass-thru collected by the cable company on behalf of the City. The secondary sources of income for this fund are interest earnings on the substantial fund balance and revenue from the sale ofDVD copies of Government and Public Access programming. At this time, the fund has a balance of$843,000. Ofthis amount, approximately $25,000 will need to be retained in a separate fund reflecting PEG fees collected but not yet spent on eligible expenses. The remaining $818,000 is money that the Council can spend - or save - as it sees fit. Similarly, the Recreation Fund currently has a fund balance of approximately $340,000. Jamie Polley, Director of Parks, Recreation and Natural Resources, has presented the Council with several small improvement projects at the Aquatic Park and Community Center that total just over $40,000. If Council were to approve those projects that would still leave a remaining balance of nearly $300,000 which the Council can again spend - or save - as it sees fit. Staffhas identified several options for these funds for Council's consideration: 1. The money could simply be merged into the fund balance for the City's General Fund. At the end of 2008, the City's General Fund fund balance was 47% of the adopted 2009 operating budget. It is projected to total 44% at the end ofthe 2009 budget year. The City's policy is to maintain a fund balance of 40 - 45% for both cash flow and emergency purposes. 2. The money could be merged into the General Fund fund balance, but earmarked or allocated for a specific purpose or type of expenditure in the future. For example, at the March 24 , ~ workshop between the Telecommunications Advisory Commission and the City Council, there was some discussion of allocating a portion of the telecom balance ($100,000 was suggested) for future telecommunicationsl technology needs. 3. As noted above, this is a one-time opportunity and the money may be spent as the Council sees fit (subject, as always, to the state's definition of a "public purpose.") Therefore, the Council may wish to evaluate those areas or projects with the greatest unmet need at the moment and view this as a unique opportunity to address that need despite these difficult economic times. One significant example that comes to mind is the current state ofthe Park Reserve Fund. Specifically, the City has two sizeable parks in already developed or developing areas of the City that have been left with no amenities as a result of the rapid fall off of development activity to generate revenue for the Park Reserve Fund. These are the Greenfield East I Park Meadows park and the Riverside Bluffs park. The Council could consider transferring approximately $700,000 from the telecom fund balance and the remaining $300,000 from the recreation fund balance to the Park Reserve Fund for the purpose of developing these two parks in 2010. With a $1 million budget to be divided between the two parks, staff estimates that much of the site work could be completed, playgrounds installed and possiblyball fields or the hard surface for an outdoor ice rink could be built. For comparison purposes, Westminster Park was recently constructed for slightly over $600,000 and that included site work, playgrounds, two baseball diamonds and the hard surface for outdoor hockey in the winter; basketball, rollerblading and other activities in the summer. There are certainly other projects included in the Park CIP as well as needs in other areas ofthe City, so this is just one example of how the opportunity presented by the merger of these two funds into the General Fund might play out. However, with its ongoing obligation to repay the Sewer Fund loan for Huber Park, and little to no quantifiable development activity on the horizon to yield new revenue for the Park Reserve Fund, this may be the City's best opportunity to move forward with these two parks, which are in high demand by the surrounding residents. Requested Action The Council is asked to discuss and provide direction on what it wants to do with the remaining balances of the Telecommunications Fund and the Recreation Fund, when those funds are closed out at the end of2009. < , Telecom Fund Recreation Fund $843,000 $340,000 $25,000 to $718,000 $298,400 $41,600 PEG fund $100,000 remammg remammg . Replace counter Telecom / tops and railing Technology at Aquatic Park Reserve within General Fund . Repair/Replace Water Damaged Posts in Front of Community Cen- ter . Finish remodel of former Public Access Studio . Signage for Parks & Rec Department in- side the Commu- nity Center $1,016,400 to Park Reserve Fund? Greenfield East I Riverside Bluffs Park Other Park Priorities? Park Meadows Park -