The URL can be used to link to this page

Home My WebLink About5B Close Debt Service Funds 554 to 556 and 555 to 557 Report 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: MARCH 4, 2019 AGENDA #: 5B PREPARED BY: JASON ETTER, ACCOUNTING MANAGER PRESENTED BY: CATHY ERICKSON, FINANCE DIRECTOR AGENDA ITEM: CONSIDER APPROVAL OF RESOLUTION TO CLOSE DEBT SERVICE FUNDS 554 AND 555 GOAL AREA AND OBJEC- TIVE: High-Value City Services 1. Establish financial stability for all funds. DISCUSSION: Introduction The purpose of this agenda item is to seek approval for closing Debt Service Funds 554 and 555 and transfer all residual balances. History Debt Service Fund 554 was established in 2007 in conjunction with the issuance of $1,400,000 of General Obligation Street Reconstruction Bonds, Series 2007B. These bonds were issued for the 2007 street reconstruction project. Debt Service Fund 555 was established in 2008 in conjunction with the issuance of $1,300,000 of General Obligation Improvement Bonds, Series 2008B. These bonds were issued for the Brooksville Hills project. These bonds were refunded in 2014 with the issuance of $495,000 General Obligation Bonds, Series 2014A. Current Circumstances The final debt service payment for Fund 554 was made on December 15, 2017. The final debt service payment for Fund 555 was made on December 15, 2018. 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 c ollected 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 intere st thereon are paid may be appropri- ated to any other general purpose by the municipality. 2 Staff is recommending that that the balances in Funds 554 be transferred to Fund 556 which is the debt service fund that was established to pay the G.O. Improve- ment Bond, Series 2009A and matures on 12/15/2019. Staff is also recommend- ing that that the balance in Fund 555 be transferred to Fund 557 which is the debt service fund that was established to pay the G.O. Improvement Bond, Series 2010A and matures on 12/15/2020. The rationale for transferring the remaining balances to another debt service fund (versus the General Fund) is that the origi- nal 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 2020. Conclusion The Council should approve the resolution to close the debt service funds and transfer all residual balances. FINANCIAL IMPACT: Fund 554 has approximately $22k in net assets, including cash, market value ad- justment for investments, and interest receivable. Fund 555 will have approximately $78k in net assets, including cash, market value adjustment for investments, interest receivable, and deferred assessments. Staff is recommending that all residual balances be transferred as of 12/31/18 to Funds 556 and 557, respectively. The 2018 financial reports will reflect all the revenue and expenditure activity in Funds 554 and 555 but will show that the funds were closed during the year ended 12/31/2018. ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve of a Resolution to Close Debt Service Funds 554 and 555 and transfer all residual balances. 2. Motion and second to remove the Resolution to Close Debt Service Funds 554 and 555 and transfer all residual balances from the consent agenda for addi- tional discussion. RECOMMENDED MOTION: Alternative #1. 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 19-___ A RESOLUTION TO CLOSE DEBT SERVICE FUNDS 554 AND 555 Motion By: Second By: WHEREAS, Debt Service Fund 554 was established in 2007 in conjunction with the issuance of $1,400,000 of General Obligation Street Reconstruction Bonds, Series 2007B. These bonds were issued for the 2007 street reconstruction project; and WHEREAS, Debt Service Fund 555 was established in 2008 in conjunction with the issuance of $1,300,000 of General Obligation Improvement Bonds, Series 2008B. These bonds were issued for the Brooksville Hills project; and WHEREAS, The G.O. Improvement Bond, Series 2008B bond was refunded with the G.O. Bonds, Series 2014A; and WHEREAS, The final debt service payments were made on December 15, 2017 and December 15, 2018; and WHEREAS, There are residual balances in cash, market value adjustment for investments, interest receivable, and deferred assessments; 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 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.Debt Service Funds 554 and 555 are closed and all residual balances transferred to Debt Service Funds 556 and 557, respectively, effective December 31, 2018. PASSED AND ADOPTED THIS 4th DAY OF MARCH 2019. VOTE Briggs Thompson Braid Burkart Erickson Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ Abstain ☐☐ ☐ ☐ ☐ ______________________________ Michael Plante, City Manager