HomeMy WebLinkAboutRes2011-099 Sponsored by: Administration
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -099
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROPRIATING $166,000 FROM THE GENERAL FUND TO
THE ELECTRIC ENTERPRISE FUND AS AN EXTRA PAYMENT
TOWARD AN OUTSTANDING LOAN BETWEEN THE FUNDS
WHEREAS, the Seward City Council passed Resolution 2010 -083 on September 13, 2010.
establishing a loan in the amount of $1,889,765 to be repaid by the General Fund to the Electric
Enterprise Fund over a period of approximately 15 years; and
WHEREAS, the purpose of this loan is for the General Fund to repay the Electric Enterprise
Fund for times since 1996 when enterprise fund cash was used to cover costs associated with debt
service payments on the North SMIC Dock and costs associated with closing Seward General
Hospital, which the enterprise fund paid because it was deemed by previous city councils to be in a
better financial position to cover, with the least impact on local taxpayers; and
WHEREAS, numerous City Councils made decisions to tap the electric fund because of the
then -new condition of the electric transmission line (upgraded in 1995), the level of reserves on hand
in the Electric Fund at the time, and the fact that contributions from the General Fund to assist with
the closure of the hospital and the extinguishment of the SMIC debt would have required an increase
in taxes or a decrease in City services which Councils presumably did not feel was in the public's
interest; and
WHEREAS, the Electric Enterprise Fund has not made any such contributions since 2006,
and given the growing list of deferred maintenance needs and the dwindling level of enterprise fund
reserves, the City Council desires to repay this outstanding loan as soon as practicable; and
WHEREAS, the General Fund has made payments of $226,846 leaving an outstanding
balance at November 14, 4011 of $1,662,919 on the loan, and this resolution will reduce the
outstanding loan balance to $1,496,919; and
WHEREAS, the City of Seward will receive an additional $71,000 from the State of Alaska
in the form of State Revenue Sharing funding in November, 2011 which was not anticipated in the
budget, and members of the City Council have requested that the additional revenue sharing plus
$95,000 previously allotted in the budget for construction of covered equipment storage, he
redirected from the General Fund to the Electric Enterprise Fund to be made available to refurbish
transformers, which is a critical capital need of the Electric Enterprise Fund.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
,,,, OF SEWARD, ALASKA, that:
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CITY OF SEWARD, ALASKA
RESOLUTION 2011 -099
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Section 1. The amount of $71,000 is hereby accepted from the State of Alaska as an
additional State Revenue Sharing payment, to account 101- 0000 - 4350 -0140.
Section 2. The 2011 Budget is hereby amended to reduce the roads and streets building
account budget by $95,000 previously available for construction of covered storage, from account
no. 101 -1310 -5920 to General Fund fund balance account no. 101- 0000 -3050.
Section 3. The total amount of $166,000 is hereby appropriated from the General Fund
transfers -out account no. 101- 0000 - 3070 -0501 to the Electric Enterprise Fund transfers -in account
no. 501 - 0000 - 3070 -0101 to be applied to the outstanding loan due from the General Fund to the
Electric Enterprise Fund.
Section 4. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14
day of November, 2011.
THE CITY OF SEWARD ALASKA
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AYES: Valdatta, Bardarson, Shafer, Casagranda, Terry, Seaward
NOES: None
ABSENT: Keil
ABSTAIN: None
ATTEST:
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COUNCIL AGENDA STATEMENT
Meeting Date: November 14, 2011 sett,
Through: James Hunt, City Manager f
From: Kristin E �y�
Erchinger, Finance Director Y AS•
Agenda Item: Additional $166,000 loan repayment to Electric Fund from General Fund
BACKGROUND & JUSTIFICATION:
For approximately the past fifteen years, the Electric Enterprise Fund has contributed $1,889,765 to cover
costs associated with items which were related to debt payments on the North SMIC Dock and costs
associated with closure of the Seward General Hospital. Numerous City Councils made decisions to tap
the electric fund because of the then -new condition of the electric transmission line (upgraded in 1995), the
level of reserves on hand in the Electric Fund at the time, and the fact that contributions from the General
Fund to assist with the closure of the hospital and the extinguishment of the SMIC debt would have
required an increase in taxes or a decrease in City services which Councils presumably did not feel was in
the public's interest.
On September 13, 2010, the Seward City Council passed Resolution 2010 -083, establishing a loan in the
amount of $1,889,765 to be repaid by the General Fund to the Electric Enterprise Fund over a period of
approximately 15 years. Since that time, the Electric Enterprise Fund has not made any such un- related
contributions to the General Fund. In addition, given the growing list of deferred maintenance needs and
the dwindling level of enterprise fund reserves, the City Council desires to repay this outstanding loan as
soon as possible. Since September, 2010, the General Fund has repaid $226,846 of the loan, leaving a
remaining balance at November 14, 4011 of $1,662,919. This resolution will reduce the outstanding loan
balance to $1,496,919.
The City of Seward will receive an additional $71,000 from the State of Alaska for supplemental State
Revenue Sharing in November, 2011. This was not anticipated in the budget. Members of the City
Council have requested that the additional revenue sharing plus $95,000 previously allotted in the budget
for construction of covered equipment storage, be redirected from the General Fund to the Electric
Enterprise Fund to be made available to refurbish transformers, which is a critical capital need of the
Electric Enterprise Fund.
INTENT:
The intent of this resolution is to contribute additional loan repayments from the General Fund to the
Electric Enterprise Fund in order to perform critical capital needs in 2012, related to the refurbishment of
electric utility transformers. When combined with the one -time elimination of $175,000 in contributions
from the electric fund to the motor pool in 2012, the total amount available for the transformer
refurbishment will be $341,000.
RESOLUTION 2011 -
Page Two
CONSISTENCY CHECKLIST:
Where applicable, this agenda statement is consistent with the Seward City Code, Charter, Comprehensive
Plans, Land Use Plans, Strategic Plan, and City Council Rules of Procedures.
ATTORNEY REVIEW: Yes X No
FISCAL NOTE:
This action will redirect $166,000 in cash from the General Fund to the Electric Enterprise Fund in order to
accomplish a critical capital need of the electric utility, the refurbishment of electric transformers.
Approved by Finance Department: 1 91 �.o , ./e.teAg,,p
RECOMMENDATION: c `
Council approve Resolution 2011- , authorizing that supplemental revenue sharing funds in the amount
of $71,000 and $95,000 in funds previously allotted for covered storage, be redirected to partial repayment
of an outstanding loan owed by the General Fund to the Electric Enterprise Fund.
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