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Prior Lake, MN 55372
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CITY COUNCIL AGENDA REPORT
MEETING DATE: NOVEMBER 10, 2014
AGENDA#: 5F
PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR
PRESENTED BY: JERILYN ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION TO TRANSFER RESIDUAL
BALANCES FROM DEBT SERVICE FUND 551
DISCUSSION: Introduction
The purpose of this agenda item is to seek approval for transferring residual bal-
ances (excluding deferred special assessments for green acres) from Debt Service
Fund #551 to Debt Service Fund #560.
History
Debt Service Fund 551 was established in 2005 in conjunction with the issuance of
$2,500,000 of General Obligation Improvement Bonds, Series 2005C. These bonds
were issued to finance improvements associated with the Fish Point Road/Fairlawn
Shores Trail/Candy Cove Trail street reconstruction project and Centennial Street
improvements.
Current Circumstances
The G.O. Improvement Series 2005C bond was called and paid on January 15,
2013. There are residual balances in cash, market value adjustment for invest-
ments, and receivables for special assessments and interest. The receivable for
special assessments includes those assessments that were deferred for green
acres. Staff is NOT recommending the transfer of the assessments that were de-
ferred for green acres.
Minnesota State Statute 475.61, subd. 4(a) addresses surplus funds arising from
taxes levied to pay municipal debt:
Subd. 4.Surolus funds.
(a) All such taxes shall be collected and remitted to the municipality by
the county treasurer as other taxes are collected and remitted, and shall be
used only for payment of the obligations on account of which levied or to
repay advances from other funds used for such payments, except that any
surplus remaining in the debt service fund when the obligations and interest
thereon are paid may be appropriated to any other general purpose by the
municipality.
Staff is recommending that that these balances be transferred to Fund 560 which is
the debt service fund that was established to pay the G.O. Improvement Refunding
Bond, Series 2013A and matures on 12/15/2023. The rationale for transferring the
remaining balances to another debt service fund is that the original purpose of the
funding sources (tax levies and special assessments) was for debt service repay-
ment and, therefore, would continue to be used for the same purpose.
The amount being considered for transfer is material and was taken into considera-
tion when adopting the preliminary tax levy for this debt service fund for 2015.
Debt Service Fund #551 includes approximately $723,000 in receivables for de-
ferred special assessments for green acres. The City Council will be holding a work-
shop in early 2015 to establish a policy on the appropriate use of these funds when
they are paid off. The $723,000 will remain in the Debt Service Fund #551 until the
policy is established.
Conclusion
The Council should approve the resolution to transfer all residual balances (exclud-
ing the deferred special assessments for green acres).
FINANCIAL Fund 551 has approximately $113k in restricted assets, including cash ($85k), mar-
IMPACT: ket value adjustment for investments, and receivables for interest. In addition, Fund
551 has approximately $790k in receivables for special assessments, of which
$723k is for deferred special assessments for green acres.
Staff is recommending that all residual balances (except the deferred special as-
sessments for green acres) be transferred as of 11/10/2014 to Debt Service Fund
560 (G.O. Improvement Bond, Series 2013A, matures 12/15/2023). The 2013A
bonds were issued for the Welcome Avenue/CR12/Sunset Avenue/Ridgemont &
TH13 projects. The City has received several appeals related to the Welcome Ave-
nue assessments. In the event that the appeals result in lower assessments, the
funding for repayment of the 2013A bonds would have to be provided from another
source such as tax levy. The transfer of residual balances from Fund 551 to Fund
560 will provide some cushion from the potential impact of lower assessments.
ALTERNATIVES: 1. Approval of a resolution to transfer residual balances from Debt Service Fund
551.
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:
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4646 Dakota Street SE
'�INxsso1P Prior Lake,MN 55372
RESOLUTION 14-xxx
A RESOLUTION TO TRANSFER RESIDUAL BALANCES FROM DEBT SERVICE FUND 551
Motion By: Second By:
WHEREAS, Debt Service Fund 551 was established in 2005 in conjunction with the issuance of
$2,500,000 of General Obligation Improvement Bonds,Series 2005C.These bonds were
issued to finance improvements associated with the Fish Point Road/Fairlawn Shores
Trail/Candy Cove Trail street reconstruction project and Centennial Street improvements;
and
WHEREAS, The G.O. Improvement Series 2005C bond was called and paid on January 15, 2013;
and
WHEREAS, There are residual balances in cash, market value adjustment for investments,
receivables for special assessments and interest; and
WHEREAS, There are approximately$723,000 in deferred special assessments for green acres; and
WHEREAS, Minnesota State Statute 475.61, subd. 4(a) provides that any surplus remaining in a
debt service fund when the obligations and interest thereon are paid may be
appropriated to any other general purpose by the municipality.
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. All residual balances (excluding deferred special assessments for green acres) are hereby transferred
to the Debt Service Fund 560.
PASSED AND ADOPTED THIS 10th DAY OF NOVEMBER 2014.
VOTE Hedberg Keeney McGuire Morton Soukup
Aye ❑ ❑ ❑ ❑ ❑
Nay ❑ ❑ ❑ ❑ ❑
Absent ❑ ❑ ❑ ❑ ❑
Abstain ❑ ❑ ❑ ❑ ❑
Frank Boyles, City Manager