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Home My WebLink AboutRes2014-060 Sponsored by: Hunt CITY OF SEWARD, ALASKA him RESOLUTION 2014-060 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, TRANSFERRING$1,321,335 TO THE CAPITAL ACQUISITION FUND, REPRESENTING 50% OF THE GENERAL FUND ANNUAL SURPLUS FOR 2012 AND 2013, AND APPROPRIATING FUNDS WHEREAS,the City of Seward maintains a budget policy which allows for the designation of 50% of the annual General Fund surplus into the Capital Acquisition Fund, for the purpose of financing major capital repairs and replacement,in years when the General Fund's fund balance level falls within prescribed policy band limits; and WHEREAS,as of December 31,2013,the General Fund's fund balance policy band(goal) is between $3,087,023 and $6,174,047, representing between three months' and six months' of General Fund expenditures and transfers-out, and the General Fund's Unassigned Fund Balance is $5,948,459, equal to 5.78 months of reserves; and WHEREAS, for more than a decade, the City has been at the lower end of the policy band limits--and often below prescribed limits--relying solely on periodic State revenue sharing funds to address the repair and/or replacement of governmental fixed assets such as streets, sidewalks, building repairs, flood mitigation, etc., with insufficient resources to address major infrastructure needs; and WHEREAS,the City has no consistent source of funding identified to repair and replace the City's $58.9 Million in governmental fixed assets, and the periodic transfer of annual surplus for capital purposes is intended to encourage conservative annual spending in order to address major infrastructure repair and replacement needs; and WHEREAS,the City of Seward's 2013 annual surplus is$1,265,724(50%of that surplus is $632,862) and the 2012 annual surplus is $1,376,945 (50% of that surplus is $688,473), for a combined total transfer of$1,321,335 to the Capital Acquisition Fund for the purpose of addressing governmental capital needs such as street and sidewalk improvements,city shop relocation,building repairs, and other major infrastructure needs. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The amount of$1,321,335 is hereby transferred from the General Fund to the Capital Acquisition Fund, reducing the General Fund Unassigned Fund Balance to a budgeted balance of$4,627,124,reflecting 4.5 months' of reserves,within the established goal of three to six months' reserves. CITY OF SEWARD RESOLUTION 2014-060 Section 2. City Council approval is required to appropriate funds within the Capital Acquisition Fund for capital purposes. Section 3. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 28th day of July, 2014. THE CITY OF SEWARD,ALASKA d9e° "(3?/4")/P4-ern) can Bardarson, Mayor AYES: Keil, Casagranda, Terry, Squires, Butts, Darling, Bardarson NOES: None ABSENT: None ABSTAIN: None ATTEST: A A A J I hanna Ki ;' C C ty Clerk ...r,,, Z. �4 F�•; I • ( SEAL I • •S -.-e.- J • • ,y ., '•.tPj• ••!HF 1 �° Q. •: •+rrrrrrrr,r, Agenda Statement 'Hof sett, SEA Meeting Date: July 28, 2014 $ "' �� q ASP Through: James Hunt, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Appropriation of Annual Surplus to Capital Acquisition Fund BACKGROUND & JUSTIFICATION: The City of Seward maintains a Capital Acquisition Fund budget policy, as follows: "The City will designate 50% of the previous years' annual surplus (defined as the difference between revenues and transfers-in, and expenditures and transfers-out)into the Capital Acquisition Fund for the purpose of financing major capital maintenance and repairs (defined as items in excess of$20,000), in any year where the General Fund fund balance is within the band of established policy levels. The allocation of surplus funds from the General Fund to the Capital Acquisition Fund should occur only when the General Fund undesignated fund balance will continue to exceed 3 months'reserves after the transfer is made. " The purpose of this policy is to provide a mechanism to fund replacement of the City's$58 Million in governmental fixed assets,since the City has no Major Repair and Replacement Fund in place for the General Fund. In more than a decade, the City's only source of funding for replacement of governmental fixed assets (excluding enterprise fund assets), has been periodic one-time revenues from the State of Alaska's revenue sharing program. Those one-time revenues have been used for capital needs such as repairs to the steps at city hall, repairs to the community center building, sidewalk ADA improvements,council chambers sound system,computer system upgrades,etc. The City has a list of unmet additional needs, including the cost of relocating the city shop, repairs/replacement of the parks warehouse, grant match for the federal earmark for road improvements,relocation of the animal shelter,repairs to the city hall roof and electrical system,etc. In 2013,the General Fund's fund balance policy goal(band)is between$3,087,023 and$6,174,047 representing between three months' and six months' of General Fund expenditures and transfers-out. The General Fund's Unassigned Fund Balance is$5,948,459,equal to 5.78 months of reserves,and the proposed transfer of$1,321,335 will reduce reserve levels to $4,627,124 Million, equal to 4.5 months' reserves. INTENT: To appropriate 50% of annual General Fund surplus into the Capital Acquisition Fund to address Governmental capital infrastructure needs. The periodic transfer of annual surplus for capital purposes is intended to encourage conservative annual spending by departments, in order to providing funding for major infrastructure repair and replacement needs. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan : Continue to Improve the quality of public facilities and services made available to the residents of Seward(p.13); Identify alternative location for city shop (p. 14); Identify an 1. appropriate site for a new site for the animal shelter (p. 20); Support X adequate funding to maintain safe roads year-round and Support forward funding for major road repairs and upgrades (p. 23); Construct heated sidewalks along major pedestrian routes (p. 23); etc. Strategic Plan : Create a financial plan for new services and infrastructure and Revise the Comprehensive Plan to include 2. infrastructure and growth plans (p. 11);Expand and maintain existing X sidewalks and Determine Long-Term sidewalk installation plans (p. 18);etc. 3. Other (list): X FISCAL NOTE: The City's 2013 annual surplus is$1,265,724(50%of that surplus is$632,862)and the 2012 annual surplus is$1,376,945 (50%of that surplus is$688,473),for a combined total transfer of$1,321,335 to the Capital Acquisition Fund. This transfer will reduce the General Fund Unassigned Fund Balance to a budgeted balance of$4,627,124,reflecting 4.5 months' of reserves. This transfer will still be within the established goal of three to six months' reserves. Approved by Finance Department: ATTORNEY REVIEW: Yes No X RECOMMENDATION: Seward City Council adopt Resolution 2014-060,appropriating$1,321,335 from the General Fund to the Capital Acquisition Fund, for repair and replacement of governmental fixed assets.