HomeMy WebLinkAbout5D EDA Special Revenue Fundti
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4646 Dakota Street SE
� Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: SEPTEMBER 6, 2011
AGENDA #: 5D
PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR
PRESENTED BY: JERILYN ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF RESOLUTION TO CLOSE AND TRANSFER
ACCOUNT BALANCES TO THE ECONOMIC DEVELOPMENT AUTHORITY
SPECIAL REVENUE FUND
DISCUSSION: Introduction
The purpose of this agenda item is to ask the City Council to consider
approval of a resolution that authorizes Staff to transfer the residual
balances of following three funds to the Economic Development Authority
Special Revenue Fund:
• Economic Development Federal Revolving Loan Fund
• Economic Development Minnesota Revolving Loan Fund
• Downtown Revolving Fund
Hi story
On August 15, 2011, City Staff presented the preliminary 2012 City budget
to the City Council. City Council directed Staff to remove the personnel
costs associated with the Economic Development Director position from the
General Fund and reflect those costs in the EDA Special Revenue Fund
budget. This change is being made with the understanding that the City
Council intends to transfer funds from the following three funds to support
economic development activities:
• Economic Development MN Revolving Loan Fund
• Economic Development Federal Revolving Loan Fund
• Downtown Redevelopment Fund
The Economic Development Federal and Minnesota Revolving Loan Funds
were created to account for the proceeds of economic development grants
received either from the federal government or the State of Minnesota to
provide seed money for a revolving loan account. The purpose was to
provide economic incentive for new business expansion within the
community. The Federal Revolving Loan Fund has had no activity other
than interest earnings since 1999. The Minnesota Revolving Loan Fund
has had no activity other than interest earnings since 2007.
The Downtown Redevelopment Fund was created to provide development
assistance in the context of building facade improvements for downtown
businesses in an effort to revitalize and renew business activity and the
general appearance of the downtown business district. The Downtown
Redevelopment Fund has had no activity other than interest earnings since
2005.
Current Circumstances
As of 01/01/2011, the Economic Development Authority Special Revenue
Fund currently had approximately $102,000 available. The 2011 budget
includes using approximately $38k of fund balance reserves. Assuming
that the EDA spends all funds appropriated for 2011, this would leave a
$64k balance which is insufficient to support the preliminary 2012 budget
As previously mentioned, the City Council intends to transfer funds from
three funds to support future economic development activities. Cash
balances as of 07/31/2011 (before interest allocations) in each of the funds
are as follows:
Economic Development MN Revolving
Loan Fund 17255
$ 84,800
Economic Development Federal
Revolving Loan Fund F250
109,300
Downtown Redevelopment Fund F256
39,800
Total
$ 233,900
The EDA is in the process of establishing a strategic plan for economic
development in the City of Prior Lake. A part of this process will also be
identifying the financial resources and tools that will be necessary to
accomplish their objectives.
ISSUES: Upon transfer of some or all of the residual funds identified above, the
Economic Development Authority would be able to use those funds for
economic development initiatives within the constraints of the budget
established by the EDA and subsequently approved by the City Council.
The EDA must follow the City's purchasing policy guidelines.
The preliminary 2012 budget being considered by the City Council this
evening includes the budget for the EDA Special Revenue Fund. The EDA
budget is developed on the premise that the City Council would be
transferring funds to support the level of expenditures presented. If the
Council does not transfer funds to the ED then it would be inappropriate
to adopt the preliminary 2012 budget for the General Fund and the EDA as
they are currently being presented.
FINANCIAL The preliminary 2012 EDA budget reflects a use of reserves in the amount
IMPACT: of $86,000.
The following table shows the estimated remaining fund balance based on
assumptions regarding the 2011 budget, preliminary 2012 budget and the
potential transfer of residual funds.
01/01/11 Balance
2011 Budget — Use of Reserves
Estimated 12/31/11 Balance
Potential transfer of Residual Funds
Available Balance
Preliminary 2012 Budget— Use of
Reserves
Estimated Remaining Balance
$ 102,000
( 38,000)
$ 64,000
233,900
$ 297,900
86,000)
$ 211,900
The Downtown Tax Increment District 1 -1 (Fund 402) has a balance Of
$178,000 as of 07/31/2011. As part of the TIF Hearing for District 1 -4
scheduled for September 19, it is staff's intent to ask the council to
consider utilizing these funds for acquiring the downtown property to the
west of city hall.
Once the EDA reserves have been spent, they are gone and will need to
be replaced with other funding sources if the EDA anticipates having
ongoing expenses. The availability and sources of future economic
development resources (other than the transfer of residual fund balances of
economic development - related funds) has not been discussed by the City
Council or the Economic Development Authority. Some considerations
may be as follows:
• Transfer of General Fund reserves;
• Transfer from General Fund tax levy;
• Economic Development Authority tax levy, and
• Bonds issued by the Economic Development Authority
All of the above options must also be approved by the City Council.
ALTERNATIVES: 1. Approval of a resolution authorizing the transfer of all account balances
including any remaining fund balance reserves to the Economic
Development Authority.
2. Deny this agenda item for a specific reason and provide staff with
direction.
3. Table this item to a certain date in the future.
RECOMMENDED Alternative 1.
MOTION:
PRI(&
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4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 11 -xxx
A RESOLUTION APPROVING THE CLOSURE AND TRANSFER OF ACCOUNT BALANCES TO THE
ECONOMIC DEVELOPMENT AUTHORITY SPECIAL REVENUE FUND
Motion By:
Second By:
WHEREAS, The City of Prior Lake has determined that economic development is a priority; and
WHEREAS, The City has unrestricted fund balances available in the following funds; and
1, Economic Development Federal Revolving Loan Fund
2. Economic Development Minnesota Revolving Loan Fund
3. Downtown Redevelopment Fund
WHEREAS, The City deems it appropriate to make financial resources available to the Economic
Development Authority in order to achieve its objectives.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. Staff is authorized to close the following funds and transfer all account balances including any
remaining fund balance reserves to the Economic Development Authority Special Revenue Fund
(Fund 240):
Economic Development Federal Revolving Loan Fund (Fund 250)
Economic Development Minnesota Revolving Loan Fund (Fund 255)
Downtown Redevelopment Fund (Fund 256)
PASSED AND ADOPTED THIS 6th DAY OF SEPTEMBER, 2011.
YES
NO
M ser
M ser
Erickson
Erickson
Hedberg
Hedber
Keeney
Keene
Soukup
Souku
Frank Boyles, City Manager