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4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: SEPTEMBER 18, 2017
AGENDA #: 5L
PREPARED BY: JASON ETTER, ACCOUNTING MANAGER
PRESENTED BY: CATHY ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF RESOLUTION TO CLOSE DEBT SERVICE FUNDS
550 AND 553
DISCUSSION: Introduction
The purpose of this agenda item is to seek approval for closing Debt Service
Funds 550 and 553 and transfer all residual balances.
History
Debt Service Fund 550 was established in 2004 in conjunction with the issuance
of $2,700,000 of General Obligation Improvement Bonds, Series 2004. These
bonds were issued for the 2004 street improvement project.
Debt Service Fund 553 was established in 2006 in conjunction with the issuance
of $1,225,000 of General Obligation Improvement Bonds, Series 2006A. These
bonds were issued for the 2006 CSAH 82 improvement project.
Current Circumstances
The final debt service payment for Fund 550 was made on December 1, 2014.
The final debt service payment for Fund 553 was made on February 1, 2017. The
debt service funds can now be closed. There are residual balances in each fund
for cash, market value adjustment for investments, and interest receivable.
Minnesota State Statute 475.61, subd. (4a) addresses surplus funds arising from
taxes levied to pay municipal debt:
Subd. 4.Surplus funds.
(a) All such taxes shall be collected and remitted to the munici-
pality by the county treasurer as other taxes are collected and remit-
ted, 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 appropri-
ated to any other general purpose by the municipality. (emphasis
mine)
Staff is recommending that that these balances be transferred to Fund 557 which
is the debt service fund that was established to pay the G.O. Improvement Bond,
2
Series 2010A and matures on 12/15/2020. The rationale for transferring the re-
maining balances to another debt service fund (versus the General Fund) is that
the original purpose of the funding sources (tax levies and special assessments)
was for debt service repayment and, therefore, would continue to be used for the
same purpose. The amount being considered for transfer is minimal but will be
taken into consideration when evaluating the tax levy needs for this debt service
fund for 2018.
Conclusion
The Council should approve the resolution to close the debt service funds and
transfer all residual balances.
FINANCIAL
IMPACT:
Fund 550 has approximately $32k in net assets, including cash, market value ad-
justment for investments, and interest receivable.
Fund 553 will have approximately $18k in net assets, including cash, market value
adjustment for investments, and interest receivable.
Staff is recommending that all residual balances be transferred as of 9/18/2017 to
Fund 557.
The 2017 financial reports will reflect all the revenue and expenditure activity in
Funds 550 and 553 but will show that the funds were closed during the year ended
12/31/2017.
ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve of a Resolution
to Close Debt Service Funds 550 and 553 and transfer all residual balances.
2. Motion and second to remove this item from the consent agenda for additional
discussion.
RECOMMENDED
MOTION:
Alternative #1.
C:\Users\aschroeder\Desktop\Close Debt Service Fund 550 and 553 - Resolution - 2017.9.18.docx
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 17-___
A RESOLUTION TO CLOSE DEBT SERVICE FUNDS 550 AND 553
Motion By: Second By:
WHEREAS, Debt Service Fund 550 was established in 2004 in conjunction with the
issuance of $2,700,000 of General Obligation Improvement Bonds, Series
2004. These bonds were issued for the 2004 street improvement project; and
WHEREAS, Debt Service Fund 553 was established in 2006 in conjunction with the
issuance of $1,225,000 of General Obligation Improvement Bonds, Series
2006A. These bonds were issued for the 2006 CSAH 82 improvement
project; and
WHEREAS, The G.O. Improvement Bond, Series 2004 bond was refunded with the G.O.
Improvement Refunding Bonds, Series 2011A; and
WHEREAS, The final debt service payments were made on December 1, 2014 and
February 1, 2017; and
WHEREAS, There are residual balances in cash, market value adjustment for investments,
and interest receivable; and
WHEREAS,
Minnesota State Statute 475.61, subd. (4a) 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 municipali ty.
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. Debt Service Funds 550 and 553 are closed and all residual balances transferred to Debt
Service Fund 557, effective September 18, 2017.
PASSED AND ADOPTED THIS 18th DAY OF SEPTEMBER 2017.
VOTE Briggs McGuire Thompson Braid Burkart
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager