HomeMy WebLinkAbout5O 2017 Year End Transfers Report
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4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: MARCH 19, 2018
AGENDA #: 5O
PREPARED BY: CATHY ERICKSON, FINANCE DIRECTOR
PRESENTED BY: CATHY ERICKSON
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING 2017
YEAR END TRANSFERS
DISCUSSION: Introduction
During the process of closing the financial records for 2017, transfers are
necessary to account for construction fund project balances that are no
longer needed or to transfer of residual balances in debt service funds.
Such transfers need to be approved by the City Council before the
proceeds can be transferred to another fund. The city has two year end
transfers to be made as detailed below.
Transfer from the construction fund to the debt service fund for the
Crest Avenue Rehab project:
History
Bonds were issued in 2014 for the Crest Avenue Rehab Street
Reconstruction Project. The 2014A bond resolution No. 14-127 indicates
that, if upon completion of the Street Reconstruction Improvements there
shall remain any unexpended balance in the Construction Fund, the
balance may be transferred by the Council to the Debt Service Fund for the
Crest Avenue Rehab Street Reconstruction Project.
Current Circumstances
The Crest Ave Rehab project (Fund 501-Project TRN14-000002) has bond
proceeds in excess of project costs. This excess project balance of $5,000
is due to project costs coming in under budgeted projections. The
construction contract included savings of approximately $11,000, the
remainder of the savings were in project support costs.
Conclusion
Staff recommends the transfer of the excess project balance in the
Construction Fund for the 2014A (Crest Avenue Rehab) Debt Service Fund
561. Transferring the funds to the Debt Service Fund is in accordance with
the 2014A bond resolution No. 14-127.
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Transfer of proceeds received in Debt Service Fund 551 to the
Construction Fund (F501):
History
Upon sale of the Bolger property, the city received payment of a deferred
assessment of $379,665.60 for 1987 and 1991 street improvement
projects. The debt associated with the street projects has been fully paid.
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
municipality by the county treasurer as other taxes are
collected and remitted, and shall be used onl y 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 a ny other general purpose by
the municipality
Current Circumstances
Since there was no outstanding debt for the street project related to the
deferred assessment,, the funds can be appropriated for any other general
purpose by the City Council. Use of the funds to date is shown below:
Conclusion
Staff is recommending transfer of the remaining funds of $194,358 to the
Construction Fund, as a funding source for current or future projects. The
use of the funds would be brought to Council for approval and called out as
a funding source in a resolution for final project closeout (such as the
TH13/150th or Duluth/TH13 project) or called out as a funding source in a
resolution for any future project. Transferring the funds to the Construction
Fund is in accordance with Minnesota State Statute 475.61, subd (4a).
There is no longer debt service, so it is appropriate to maintain the funds in
the Construction Fund instead of a Debt Service Fund.
ISSUES: The transfers need to be approved by the City Council before the proceeds
can be transferred to the specific Fund.
FINANCIAL
IMPACT:
In general, transfers of excess funds to debt service funds help keep the
debt service component of the City’s tax levy flat. Transfer of excess funds
Total proceeds 379,665.60
Funds allocated to Rolling Oaks Project (Res 17-174)(185,308.00)
Outstanding funds to be allocated 194,357.60
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to the construction fund will minimize future tax levy impact. Actual
expenditure of transferred funds requires city council approval.
ALTERNATIVES:
1. Motion and second as part of the consent agenda to approve a
resolution authorizing a) the transfer of the remaining fund balance
($5,000) from the Crest Avenue Rehab project (Fund 501- Project
TRN14-000002) Construction Fund to the Crest Avenue Rehab
2014A Bond Debt Service Fund 561 and b) the transfer of funds of
$194,358 from Debt Service Fund 551 to Construction Fund (F501).
2. Motion and second to remove this item from the consent agenda for
additional discussion.
RECOMMENDED
MOTION:
Staff recommends Alternative #1.
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 18-___
A RESOLUTION TO TRANSFER FUNDS AS PART OF THE 2017 YEAR-END CLOSING
PROCESS
Motion By: Second By:
WHEREAS, The Crest Ave Rehab project (Fund 501-Project TRN14-000002) has bond
proceeds in excess of project costs OF $5,000. The 2014A bond resolution
No. 14-127 indicates that, if upon completion of the Street Reconstruction
Improvements there shall remain any unexpended balance in the Construction
Fund, the balance may be transferred by the Council to the Debt Service Fund
for the Crest Avenue Rehab Street Reconstruction Project.; and
WHEREAS, The City has proceeds from a deferred assessment of $194,357.60 for 1987
and 1991 street improvement projects. The debt associated with the street
projects has been fully paid. 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 municipality.
WHEREAS, Transfers of excess funds to debt service funds help keep the debt service
component of the City’s tax levy flat. Transfer of excess funds to the
construction fund will minimize future tax levy impact.
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.The transfer of funds of $5,000 is hereby authorized to be made from the Construction Fund
(501-43500.00 project TRN14-000002) to the 2014A (Crest Avenue Rehab) Bond Debt
Service Fund 561 effective as of January 1, 2017.
3.The transfer of funds of $194,357.60 is hereby authorized to be made from the Debt Service
Fund 551 to the Construction Fund 501 effective December 31, 2017.
PASSED AND ADOPTED THIS 19th DAY OF MARCH 2018
VOTE Briggs McGuire Thompson Braid Burkart
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Absent ☐☐ ☐ ☐ ☐
Abstain ☐☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager