2019-08-28 CC Packet - Laserfiche WebLink

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However, rather than making the interest payments out of the General Fund, beginning in 2013 as the schedule lays out, the city has, instead, simply applied interest to the loan, at the prescribed 1.5%, growing the balance to $1,211,876.17. A few other transactions to and from this account, outside of interest accrual, have been logged since 2010. They include the purchase of the Gaga Ball Pit ($1,948) and deposits from PDFs paid by Ruffridge-Johnson ($10,875) and Midwest Best Water ($5,002.50), respectively. The cash balance in the fund ($68,303.98) is the result of excess loan funds after contractor payments had been made, an accumulation of PDFs not applied to the principal amount of the loan, and accrued interest on this balance. A few small capital projects such as the construction of sand volleyball courts and other miscellaneous purchases have come from the operating budget of the Park Fund, not the Park Capital Project Fund. Since there have been no new residential plats since 2010, we have not had the expected income from PDFs. The practice of applying the interest to the inter -fund loan, rather than paying it out of the General Fund is not in keeping with the intent of the 2010 resolution and has placed an additional burden on the Park Capital Project Fund. This burden, then, compounds itself with the additional interest accrued on the growing balance. Park & Recreation Committee Recommendation It is the recommendation of the Parks & Recreation Committee to ask the City Council to do the following: • Make a one-time payment from the General Fund balance to the Sewer Fund in the amount of the accrued interest since the 2010 resolution establishing the inter - fund loan ($103,564.29). In 2019 and moving forward, pay the interest on the principal balance for the inter -fund loan from the General Fund, as detailed in the loan resolution, until such time as there are sufficient PDFs to make both principal and interest payments per the schedule. Staff has reflected a $16,625 transfer in the 2020 budget. After applying the recently paid PDFs to the principal on the Sewer Fund loan, leave the remaining balance in the Park Capital Project Fund to be utilized for minor capital projects that may arise prior to the complete repayment of the principal balance of the inter -fund loan. This should leave a balance of around $53,000. The purpose of leaving those funds would be to have a reasonable working balance in the fund so that sensible, modest and timely additions to the park system can be made without adding to the inter -fund loan amount. If capital projects arise that exceed the fund balance in the Park Capital Project Fund, prior to the full repayment of the loan, the Parks and Recreation Committee should simply ask the City Council to consider funding these projects through the general fund budget. Attachments: Financial Information on Fund 402 Resolution Establishing Inter -Fund Loan