HomeMy WebLinkAbout13.F.5. Capital Improvement Fund Levy ,3.
CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Capital Improvement Fund Levy
DATE: July 14, 2010
Introduction
Staff has been reviewing the role and use of the Capital Improvement Fund (CIF) versus issuing
debt for street projects.
Background
The CIF has been used only for street projects (no buildings) for over three decades. Shakopee
has normally issued bonds for projects and levied taxes for debt service to pay off part of the
bonds along with special assessments.
Currently it is more expensive to finance projects by issuing bonds. It would be advantageous to
maximize and increase the operating levy this year and in near future years when levy limits
come off and before limits are imposed again.
Shakopee has been and continues to move forward with annual street overlay and
reconstruction projects. Moving the levy for those projects from debt levy to operating levy is
favorable and Council has been doing that is a roundabout fashion to maximize the limited levy.
Since these are annual projects, implementing a stable operating levy instead of a varying debt
levy contributes to total tax levy stability and forecasting.
The role of the CIF in such a process is that the CIF would receive the operating levy and pay for
the projects. It would absorb the yearly fluctuations in the amount spent on the projects versus
the amount of the tax levy. This would reduce the debt outstanding for the city and thereby
improve the financial position of the city.
In the event that conditions change, the city could always revert back to issuing debt for those
projects.
Action
No action needed — information and discussion for budget purposes.
Gregg Voxland
Finance Director
H: \Finance\