HomeMy WebLinkAboutOrd2022-012 - SCC 5.01 & 5.02 Sponsored by: Bower
Introduction: August 22, 2022
Public Hearing: September 12,2022
Enactment: September 12, 2022
CITY OF SEWARD,ALASKA
ORDINANCE 2022-012
AN ORDINANCE OF THE SEWARD CITY COUNCIL, AMENDING
SEWARD CITY CODE CHAPTER 5.01 GENERAL PROVISIONS AND
ENACTING CHAPTER 5.02 FUND BALANCE AND NET POSITION
WHEREAS, administration desires to amend Chapter 5.01 to update to current processes
and appropriate terminology; and
WHEREAS,administration desires to enact Chapter 5.02 to document city fund balances
and expected net position for enhanced financial transparency and consistency.
NOW,THEREFORE,THE CITY OF SEWARD ORDAINS that:
Section 1. Seward City Code Chapter 5.01 is hereby amended to read as follows (new
language is in bolded italics and underlined and deleted language is stricken):
Chapter 5.01 General Provisions
5.01.010 Fiscal year.
The fiscal year of the city shall begin on January 1 of each year.
5.01.015 Creation of debts.
Neither the council nor any officer or employee of the city shall create, audit, allow or permit to
accrue any debt or liability for any purpose in excess of available money in the treasury legally
apportioned or appropriated for that purpose.
5.01.020 Examination of claims.
The finance director shall examine all payrolls, bills, claims and other demands of the city, and
shall issue no warrant for payment unless the claim is in proper form correctly computed and
approved, and is legally due and payable and appropriation has been made thereof which has not
been exhausted, and unless there is sufficient money in the city treasury to make payment.
5.01.025 Deposit of money.
All money collected by agencies of the city shall be deposited with the city-treasurer finance
department within three days after collection.
5.01.030 Deposit of securities.
All securities shall be deposited in a saf deposit box i a bank w approved by the council,
to which access shall be had only upon the signature of the city manager and the city clerk er-his
deputies,.
CITY OF SEWARD,ALASKA
ORDINANCE 2022-012
5.01.035 Collection of revenues and proceeds from securities.
All revenues and proceeds from securities owned by the city shall be collected by the finance
director promptly when due and reported immediately to the city manager.
5.01.040 Cancellation Write off of accounts receivable; refunds of erroneous payments.
A. The city actively pursues collection of all revenues and debts owed to the city, reviews the
status of past-due accounts, and writes off amounts determined to be uncollectible.
B. The city manager has the authority to determine when accounts receivable of the city are
uncollectible, except for property liens.
C. The finance director may, on approval of the city manager, write off all or a portion of the
uncollectable receivable amount.
D. Any receivable amount written off in this manner must be reported to the city council within
one month. Accounts written off, in part or whole, do not constitute forgiveness of the debt
nor a gift of public funds.
E. Bills which may become a lien against property may be canceled only upon written formal
claim by the owner when supported by substantial evidence of its propriety and approved by
the city council.
except bills which may become a lien against property for taxes, but shall report such
(b)-Any refunds of over-payments or erroneous payments may be made by the finance director,
with the approval of the city manager;provided, that utility customers'deposits is refunded in
accordance to 14.01.030.
manager.
5.01.045 Payrolls.
A. Payrolls shall be submitted to the city manager for approval, and upon approval, the city
finance director shall issue warrants in payment thereof when due.
B. It shall not be necessary for the city finance director to encumber in advance or to certify as to
the availability of funds appropriated for personnel services, except those obtained on a
contractual basis; provided, that upon issuance of such the warrants, the city finance director
shall immediately cause the appropriate funds to be encumbered to the extent of the warrants
issued.
5.01.050 Capital assets.
A. Capital assets will be capitalized and depreciated for financial statement purposes. Capital
assets are defined as a unit of property that:
1. Has an economic useful life that extends beyond one year;
2. Must be acquired for use in operations and not be held for sale; and
CITY OF SEWARD,ALASKA
ORDINANCE 2022-012
3. Was acquired or produced for a cost as established by the city council in the biennial
budget Any items costing below this amount should be expensed.
B. Tangible assets that do not meet the requirements of a capital asset will be recorded as an
expense regardless of acquisition or production cost.
C. Renewals and betterments are capitalized. These expenditures include the cost for
renovations, betterments, or improvements that add to the permanent value of the asset,
make the asset better than it was when purchased, or materially extend its life beyond the
original useful life. To capitalize these costs, the improvements must fulfill at least one of
the following three criteria:
1. The useful life of the asset is materially increased;
2. The productive capacity of the asset is improved, or
3. The quality of units/services produced from the asset is enhanced. The total project cost
must also exceed the amount established by the city council in the biennial budget.
D. The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets'lives are not capitalized.
Section 2. Seward City Code Chapter 5.02 is a new section to read as follows:
Chapter 5.02 Fund Balance and Net Position
5.02.010 General Fund.
A. Minimum general fund balance.
1. The city council shall establish a minimum general fund balance for the city to assure the
financial stability and provide adequate financial reserves capable of preserving city
operations in the event of economic stress or unforeseen financial events.
2. The general fund balance shall be established in each biennial budget ordinance.
3. The minimum level of the general fund unassigned fund balance should be equal to three
to six months expected city expenditures,plus transfers-out.
B. Unassigned fund balance.
1. The unassigned fund balance does include amounts externally restricted or internally
committed or assigned for specific purposes.
2. The city council has the authority to commit funds for specific purposes while the finance
director or city manager can internally assign fund balance.
C. When both restricted and unrestricted sources of funding are available for use,the city will use
externally restricted resources first, then internally committed and assigned resources before
using unassigned fund balance.
D. One-time revenues (examples: grant administration fees, sales of fixed assets, etc.) should not
be utilized to fund ongoing expenditures but to fund capital repairs and replacements. To the
extent that the General Fund balance has reached 6 months of expenditures plus transfers-out,
one-time revenues will be allocated annually to the Capital Acquisition Fund.
E. The revenue stabilization,or working capital,account is to maintain a prudent level of financial
resources to protect against the need to reduce service levels or raise taxes or fees due to
CITY OF SEWARD,ALASKA
ORDINANCE 2022-012
temporary shortfalls or unpredicted one-time expenditures. The balance in this account should
be a minimum of equal to 10%of the General Fund's annual revenues.
5.02.020 Enterprise Funds.
A. The city's Enterprise Funds are used to account for operations that are financed and operated
in a manner similar to business-like entities and report net position rather than fund balance.
The city maintains the following enterprise funds:
1. Harbor
2. Seward Marine Industrial Center
3. Parking
4. Electric
5. Water
6. Wastewater
7. Healthcare, and
8. Seward Mountain Haven.
B. The enterprise funds should maintain a minimum unrestricted net position reserve of three
months operating to provide for uninterrupted services and for each fund to cover the costs of
their operations.
C. Net position can be restricted by external parties or legal restrictions. In the event that either
restricted or unrestricted net position can be used for a specific outlay the city will use restricted
net position before unrestricted net position.
5.02.030 Internal Service Funds.
The city has established two internal service funds to account for services provided internally to
city departments and employees.
A. The motor pool fund's net position is unrestricted but allocated for the replacement of city
heavy equipment and vehicles. The motor pool fund has the authority to loan money to other
funds, but all amounts must be repaid with interest considered reasonable at the time of the
loan.
B. The accrued leave fund's net position is unrestricted but allocated to fund the annual liability
of unpaid vacation leave due to all city employees.
5.02.040 Capital Acquisition Projects Funds.
A. The city maintains several capital project funds. These funds maintain fund balance which is
either assigned or committed for specific capital projects.
B. The capital acquisition fund, fund balance is assigned for capital purposes by the city council.
1. The city will designate 50% of the previous fiscal years' General Fund's positive change
in fund balance into the Capital Acquisition Fund in any year where the General Fund
balance is within the band of established fund balance reserves as described in section
5.02.010. The allocation of surplus funds from the General Fund to the Capital Acquisition
Fund will occur only to the point where General Fund unassigned fund balance continues
to exceed 3 months' reserves after the transfer.
CITY OF SEWARD,ALASKA
ORDINANCE 2022-012
2. Capital replacement funds are to be restricted and distributed only for major capital outlay
expenditures,which are defined as those in excess of$20,000.
Section 3. This ordinance shall take effect ten(10) days following its enactment.
ENACTED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA,this
12th day of September, 2022.
TH CI F W SKA
er , ayor i
AYES: Casagranda, Calhoon, DeMoss, Osenga, McClure, Terry
NOES: None
ABSENT: Wells
ABSTAIN: None
ATTEST:
renda J. Ballou, MC
City Clerk
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City Council Agenda Statement
Meeting Date: August 22, 2022
To: City Council
Through: Janette Bower, City Manager
From: Carmen Jackson, CPA, LLC and Deputy Finance Director Sully Jusino
Agenda Item: Ordinance 2022-012: Amending Seward City Code Chapter 5.01 General
Provisions and Enacting Chapter 5.02 Fund Balance and Net Position
Background and justification:
The purpose of this ordinance is to amend Chapter 5.01 to update to current processes and
appropriate terminology. Chapter 5.02 is enacted to document city fund balances and expected net
position for enhanced financial transparency and consistency.
The section has been amended as follows:
Amended Ordinance
code section Page # Amendment
5.01.025 Deposit of Money 1 city treasurer" is struck and replaced with finance
department as the city does not have a city treasurer.
"safe deposit box"is struck because an actual safe deposit
5.01.030 Deposit of Securities 1 box is no longer used. "their designees"added to remain
ender neutral.
5.01.040 Write off of accounts New language utilizing recognized accounting/finance
receivable; refunds of erroneous 2 terminology and clarifying steps to be taken before write-
payments. off of accounts receivable
5.01.045 Payrolls 2 Bulleted
5.01.050 Capital assets 2 New section with language defining capital assets
Chapter 5.02 Fund Balance and New Chapter with language defining various fund balance
Net Position 3 accounts used by the city,the purpose of the fund and the
expected net position.
New section formalizing established finance practices and
5.02.010 General Fund 3 guidelines for fund balance classifications and reserves in
the General Fund.
New section formalizing established finance practices and
5.02.020 Enterprise Funds 3 guidelines for classifications of net position in the City's
enterprise funds.
New section formalizing established finance practices and
5.02.030 Internal Service Funds 4 guidelines for uses of funds in the City's internal service
funds.
New section formalizing established finance practices and
5.02.040 Capital Acquisition Funds 4 guidelines for fund balance classifications and reserves in
the City's capital project funds.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan:
Strategic Plan:
Other:
190
Certification of Funds
Total amount of funds listed in this legislation: $ 0
This legislation (✓):
Creates revenue in the amount of: $
Creates expenditure in amount of: $
Creates a savings in the amount of: $
✓ Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
✓ Not applicable
Unassigned Fund Balance and Available Unrestricted Cash Balance Information
Fund (✓):
General SMIC Electric Wastewater
Boat Harbor Parking F1 Wat F1 Healthcare
Motor Pool Other
Unassigned Fund Balance*: $ *unaudited numbers
Available Unrestricted Cash Balance*: $
Finance Signature:
Attorney Review
e✓ Yes Attorney Signature: �^ ra
Not applicable Comments:
Administration Recommendation
e✓ Adopt Ordinance
Other:
191