HomeMy WebLinkAbout05(K) - Approve Resolution Authorizing 2021 Year End Transfers Report
City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372
CITY COUNCIL AGENDA REPORT
ITEM: 5K
MEETING DATE: March 21, 2022
PREPARED BY: Cathy Erickson, Finance Director
PRESENTED BY: Cathy Erickson
AGENDA ITEM: Adopt Resolution Authorizing 2021 Year End Transfers
GOAL AREA
OBJECTIVE:
High-Value City Services
1. Establish financial stability for all funds.
RECOMMENDED ACTION:
Approval of 2021 year-end transfers
BACKGROUND:
During the process of closing the financial records for 2021, transfers may become necessary to
account for project balances in the construction fund that have partial funding from the utility funds,
balances that can be transferred to a debt service fund or another project in accordance with the
applicable bond resolution. Transfers may also be necessary to close debt service funds after
final debt service payment has been made. Such transfers need to be approved by the City
Council through resolution. The details of the recommended year-end transfers are shown below.
Building Inspections vehicle replacement:
A building inspections department vehicle was purchased as part of the Capital Improvement
Program. The purchase was budgeted/funded from the Equipment Replacement Fund (F410).
However, staff has determined that the General Fund is the appropriate funding source as the
vehicle is funded from building permit revenue. Staff is requesting council approval to record the
vehicle purchase expenditure in the General Fund instead of the Equipment Replacement Fund.
Plan Review Funding:
The city has incurred development plan review expenditures for work performed by WSB. Staff
is requesting council approval to transfer revenue from the General Fund as the revenue source
for these expenditures. This is an appropriate use of the funds as the developer administration
fee for such projects is collected and recorded in the General Fund.
Close Debt Service Fund 558: The final transfer is to close Debt Service Fund 558 and transfer
all residual balances. The final debt service payment was made in December 2021. The debt
Project
Expenditure -
Current Fund Amount
Expenditure - Proposed
Fund Description
Building Inspections
Vehicle
F410 -Equipment
Replacement Fund 33,276.02 F101 -General Fund
Modify funding source from Equipment Replacement Fund
to General Fund (matching revenue source with
expenditures)
Project
Transfer From
Fund Amount Transfer to Fund Description
Funding development plan
review expenditures
F101 -General
Fund 59,122.25
F260 - Developer
Agreement Fund Transfer in to fund Development Plan Review Expenditures
Item 5K
Page | 2
service fund can now be closed. There are residual balances in cash of $27,113.04, as well as
market value adjustment for investments, receivables for interest, special assessments, and
taxes. A transfer of $20,342.81 will close out all residual balances.
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 c ollected 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 intere st
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 562 which is the debt
service fund that was established to pay the GESP energy savings capital lease that matures on
6/30/2025. The rationale for transferring the remaining 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 will be taken into consideration
when evaluating the tax levy needs for this debt service fund for 2022.
Water Storage Fund:
This transfer is to close the Water Storage Fund 505 and transfer all balances to the Trunk
Reserve Fund 502. The city eliminated the water tower storage fee as part of the approval of the
2021 fee schedule. This fee was removed as fees are now captured in trunk area and the water
access charges (WAC). The water storage fund can now be closed, and the fund balance will be
transferred to the Trunk Reserve Fund which is used for water and sewer infrastructure. The
funds will be dedicated to future water storage infrastructure. When the expansion of the SMSC
joint water treatment plan occurs, these funds can be used toward the city’s portion of the future
project cost. There are balances in cash of $645,309.53, as well as market value adjustment for
investments, receivables for interest, and special assessments. A transfer of $642,076.10 will
close out all balances.
Conclusion
Staff recommends the transfers shown in the tables above that are necessary to close the
financial records for 2021
Project Transfer From Fund Amount Transfer to Fund Description
Debt Service - Boudin 1 2011
Reconstruction
F558 - Street Recon
2011A.1 20,342.81 F562 - GESP Lease
The final debt service payment for Fund 558 was made on
December 15, 2021. Close Fund 558 and transfer all residual
balances to F562
Close the Water Storage Fund
and transfer to Trunk Reserve
Fund used for water and sewer
infrastructure F505-Water Storage $644,446.78 F502-Trunk Reserve Fund
The water storage fund can be closed, and the fund
balance will be transferred to the Trunk Reserve Fund
which is used for water and sewer infrastructure. The funds
will be dedicated to future water storage infrastructure.
Item 5K
Page | 3
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. The other transfers appropriately match revenue with related
expenditures.
ALTERNATIVES:
1. Motion and second as part of the consent agenda to approve the resolution approving the
2021 Year End Transfers.
2. Remove this item from the consent agenda for additional discussion
ATTACHMENTS:
1. Resolution - Adopt Resolution Authorizing 2021 Year End Transfers
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 22-
ADOPT RESOLUTION AUTHORIZING 2021 YEAR END TRANSFERS
Motion By: Second By:
WHEREAS, During the process of closing the financial records for 2021, transfers may be
necessary to account for project balances in the construction fund that have
partial funding from the utility funds, balances that can be transferred to a debt
service fund or another project in accordance with the applicable bond
resolution. etc. Transfers may also be necessary to close debt service funds
after final debt service payment has been made, or to consolidate funds.
WHEREAS, A building inspections department vehicle was funded from the Equipment
Replacement Fund (F410). However, staff has determined that the General
Fund is the appropriate funding source as the vehicle is funded from building
permit revenue.
WHEREAS, Development plan review expenditures were incurred in the Developer
Agreement Fund (F260). A transfer from the General is necessary as such
expenditures should be funded by developer administration fee that is collected
and recorded in the General Fund.
WHEREAS, Close Debt Service Fund 558: The final debt service payment was made in
December 2020 for F557 (Debt Service Fund for 2010 Street Project Bond
Issue). The debt service fund can now be closed. Staff is recommending that
these balances be transferred to Fund 562 which is the debt service fund that
was established to pay the GESP capital lease and matures on 6/30/2025.
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 within the
construction fund will minimize future tax levy impact.
WHEREAS, Close the Water Storage Fund 505 and transfer all balances to the Trunk
Reserve Fund 502. The funds will be dedicated to future water storage
infrastructure.
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 is hereby authorized and effective as outlined in the tables below,
ProjectExpenditure - Transfer From FundExpenditure - Proposed AmountTransfer to FundDescription
ProjectCurrent FundAmountFundDescription
The final debt service payment for Fund 558 was made on
Modify funding source from Equipment Replacement Fund
Debt Service - Boudin 1 2011 F558 - Street Recon December 15, 2021. Close Fund 558 and transfer all residual
Building Inspections F410 -Equipment to General Fund (matching revenue source with
Reconstruction2011A.1 20,342.81 F562 - GESP Leasebalances to F562
VehicleReplacement Fund 33,276.02F101 -General Fundexpenditures)
Building Inspections vehicle expenditure from General Fund Reserves as of 9/8/2021:
Funding of development plan review expenditures as of 12/31/2021:
Close Debt Service Fund effective as of 12/31/2021:
Close the Water Storage Fund effective as of 12/31/2021:
Passed and adopted by the Prior Lake City Council this 21st day of March 2022.
VOTE Briggs Thompson Burkart Braid Churchill
Aye
☐
☐ ☐ ☐ ☐
Nay
☐ ☐ ☐ ☐ ☐
Abstain
☐ ☐ ☐ ☐ ☐
Absent
☐ ☐ ☐ ☐ ☐
______________________________
Jason Wedel, City Manager
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2021 Year End Transfers.docx 2