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<br />. <br /> <br />. <br /> <br />. <br /> <br />~ <br />~~HILLS <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />AGENDA ITEM: 2.C <br /> <br />May 10, 2006 <br /> <br />TO: Honorable Mayor and City Council <br /> <br />FROM: Murtuza Siddiqui, ChiefFinancial Officer/Treasurer '''>S <br /> <br />SUBJECT: 2006 - 20 I 0 Draft ClP (Fiscal Impact on Working Capital- Fund Balance) <br /> <br />BACKGROUND: <br />The engineering staff has drafted a proposed 2006 - 2010 CIP for City of Arden Hills. Attached <br />is a spreadsheet that summarizes the projects, including the estimated cost and its impact on the <br />City's Working Capital (fund balance). <br /> <br />DISCUSSION: <br />The attached spreadsheet is organized in a manner so it demonstrate how each CIP item will be <br />funded. In addition, it also demonstrates the impact each CIP item has on the Working Capital <br />(fund balance), by fiscal year. <br /> <br />The State -Aid funds are applied either towards street construction or towards storm water <br />(storm sewer). When funds are received from the state, they are deposited either under the stonn <br />water fund or the general capital fund, depending upon the project. During 2005, one of the <br />eligible projects for the state-aid was Red Fox-Grey Fox. Originally, the state-aid portion was <br />estimated to be $175,000, but due to excess drainage costs, the revised number for draw down is <br />$225,000. The spreadsheet reflects this adjustment. The adjustment is accounted for under both <br />the state-aid fund as well as the storm water fund. <br /> <br />It should be noted that any variances in constructions costs or in operating revenues and <br />expenditures, from the projections, will have a direct impact on the Working Capital. Under <br />each of the Utility Funds, an estimated contribution amount is listed. This estimated amount is <br />derived from taking the difference between the operating revenues and operating expenditures. <br />If the City desires to maintain a higher Working Capital balance in these funds, the City would <br />have to consider a number of options. Option 1 is to defer projects into the future years or delete <br />projects or purchases, allowing the funds to build a healthier fund balance. Option 2 is to <br />consider re-evaluating the utility rates. Option 3 is to consider bond issuance. <br />