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HomeMy WebLinkAboutAGENDA REPORT 2008 0618 CC REG ITEM 09GrrEM 4.G. City Council !'Meeting of- ACTION: otW-a�� s MOORPARK CITY COUNCIL �y. AGENDA REPORT TO: Honorable City Council FROM: Hugh Riley, Assistant City Manager DATE: June 9, 2008 (City Council Meeting of 6/1812008) SUBJECT: Consider Resolution Establishing a Special Projects Fund and Adopting General Fund Reserve Policy BACKGROUND On May 4, 2007 and June 4, 2008 the Finance, Administration and Public Safety (FAPS) committee (Mayor Hunter and Mayor Pro Tern Parvin) met and discussed the issue of establishing a Special Projects Fund and adopting a General Fund Reserve Policy. DISCUSSION Based on the City's revenue and expenditure trends over the last several fiscal years the General Fund reserve has consistently progressed in an upward trend. This was primarily due to operational savings, modest increases in property tax and sales tax revenues and capital improvement projects that have not yet been completed. By the end of fiscal year 2007/08, we are estimating that the General Fund will have approximately $24 million in fund balance. This is a healthy reserve as long as the State doesn't divert local government revenue sources. With the need to maintain and build new infrastructure (e.g. new Civic Center Complex, Moorpark Library, Facilities (including a pool), Park Projects and Street Capital Improvement Projects (including maintenance) that cannot be funded by "non discretionary funds "), the FAPS committee and staff recommend that the City Council establish a Financial Reserve Policy (please refer to Attachment 1) and set the maximum limit at $3 million (unreserved fund balance) and any excess General Fund monies over $3 million be transferred out to a new fund entitled, "Special Projects Fund" at the end of each fiscal year. This fund will be earmarked for special projects for the City or any other municipal purpose that the City Council deems prudent or necessary. Interest generated from the Special Projects Fund will be posted to the General Fund, as interest income is vital to the City's General Fund operating budget. As the City spends down the money in the Special Projects Fund, we will see a corresponding "" Q. y. / - Honorable City Council Date of Meeting Page 2 decrease in interest income for the General Fund. In addition, at any time, by three affirmative votes, money in the Special Projects Fund can go back to the General Fund. The Finance, Administration and Public Safety Committee has reviewed the recommendations with their approval. FISCAL IMPACT No immediate fiscal impact. However as previously mentioned use of Special Projects Funds will decrease interest income in the General Fund in direct proportion to the City's investment portfolio. STAFF RECOMMENDATION (Roll Call Vote) Adopt Resolution No. 2008 Establishing a Special Projects Fund and General Fund Reserve Policy. ATTACHMENTS Attachment I — Resolution establishing a Special Projects Fund and General Fund Reserve Policy '901-73 8. Attachment I RESOLUTION NO. 2008- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA ESTABLISHING AN SPECIAL PROJECTS FUND AND SETTING GENERAL FUND RESERVE POLICY. WHEREAS, the City Council of the City of Moorpark has a need to maintain and build new infrastructure that cannot be funded by non discretionary funds; and WHEREAS, it is prudent financial planning to establish a separate Special Projects Fund to account for excess General Fund reserves for the purpose of City Council approved new infrastructure expenditures; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That a "Special Projects Fund" is herewith established within the City of Moorpark's Chart of Accounts as a restricted Special Fund. SECTION 2. That the City annually transfers any excess General Fund reserves over 3 million dollars into the said Special Projects fund. SECTION 3. That all of the investment income earned by funds in said Special Projects Fund shall be returned to the City's General Fund. SECTION 4. That the principal balance of the Special Projects Fund may be expended on new infrastructure projects or any other purpose determined by three (3) or more affirmative votes of the City Council. SECTION 5. That the following financial reserve policy will be incorporated into the Council's Policies Resolutions at the next update. 1. Introduction Fiscal stability is an important factor to any city. Sound financial management includes the practice and discipline of maintaining adequate reserve funds for known and unknown contingencies. Such contingencies and occurrences include, but are not limited to: • Cash flow requirements • Economic uncertainties and other financial hardships or downturns in the local, state or national economy • Local disasters or catastrophic events • Loss of major revenue source • Unanticipated operating or capital expenditures tip ll 0,`:3 C, Attachment I • Capital asset and infrastructure repair and replacement The establishment of prudent financial reserve policies is important to ensure the long -term financial health of the City. 2. Applicability This policy will apply to the City General Fund. 3. Unreserved Fund Balance The City will maintain a maximum General Fund unreserved fund balance of $3 million. Any excess General Fund unreserved fund balance will be transferred out to the Special Projects Fund. Interest generated from the Special Projects Fund will be posted to the General Fund as interest income, which is vital to the City's General Fund operating budget. The Special Projects Fund will be used to maintain and build new projects including major rehabilitation of streets, parks and facilities (e.g. Construction of Civic Center Complex, Moorpark Library, Street Capital Improvement Projects, etc.). These funds may also be used for any other purpose as deemed appropriate by the City Council by a separate vote. 4. Annual Adjustment of Reserve Levels Reserve levels will be adjusted annually in accordance with this policy. General Fund unreserved fund balance in excess of the $3 million maximum will be transferred by the Finance Director to the Special Projects Fund in conjunction with the year end analysis and preparation of the City's Comprehensive Annual Financial Report (CAFR) and only after Council action to confirm such action. SECTION 6. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 18th day of June, 2008 Patrick Hunter, Mayor ATTEST: Deborah S. Traffenstedt, City Clerk .�3 D.