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A strong reserve level can also produce a better bond rating. Currently, the City enjoys an `Aaa'
<br />rating from Moody's, and an `AAA' rating from Standard & Poor's, which places the City in the
<br />upper 3% nationally. If our bond rating should fall, it would translate into higher borrowing
<br />costs. A bond rating that is reduced by just one tier from `Aaa' to Aal' could result in an
<br />additional $25,000-$35,000 in interest costs for each $1 million issued in today's markets.
<br />Restricted vs. Unrestricted
<br />As noted above, all municipalities must clistinguish between �est�icted and unr^est�icted cash
<br />reserves. Rest�icted reserves are monies that have constraints placed on them by either external
<br />entities such as debt covenants, grantors, or laws and regulations of another government; or by
<br />laws through constitutional provisions or enabling legislation.
<br />Exarnples of Rest�icted Funds include:
<br />a) Community Development (building permit fees)
<br />b) Communications (franchise fees)
<br />c) Water, Sanitary Sewer, Storm Sewer (fees)
<br />Because these funds are restricted, they are unavailable for general purposes such as police, fire,
<br />streets, etc. They can only be used for the purpose in which the fees were imposed.
<br />In contrast, unr�estNicted cash reserves such as those held in the General Fund can be used for any
<br />public purpose. It should be noted however that these funds are oftentimes segregated or
<br />earmarked for specific programs and services. Re-purposing these funds will likely have an
<br />impact on service levels.
<br />Current Cash Reserve Levels
<br />The following table depicts the City's current cash reserve levels as of 12/31/13 (the last year for
<br />which audited financial statements are available) for key operatin� funds:
<br />. ___ . . __ _ _
<br />� 2014 �� 12/31/2013 ; Target; Actual $$ Ov�
<br />Fund Bud�et Reserves ; Pct. ; Pct. Undei
<br />General �unrestricted) ; $13,429,235 ' $ 5,766,481 ; 40%0; 43%. $ 394,'
<br />Parks & Recreation 4,134,050 l,ll 1,161 25% 27%: 77,�
<br />CoimnunityDevelopinent 1,190,995 595,148 35%; 50%0; 17$;;
<br />Communications 420,195 ' S84,645 20% 139% SOOx�
<br />_
<br />InformationTechnology 1,639,000 359,115 : 20%'; 22% '�1,:
<br />. .. _
<br />License Center 1,310,075 ' 925,567 ; 20%; 71% ` 6b3,'
<br />.
<br />! $ 9,342,117 ''
<br />_.__ __. __; _._ __ _
<br />As indicated in the chart, the City has approximately $9.3 million in cash reserves in its key
<br />operating funds which generally provide for day-to-day activities. It should be noted that some
<br />of these reserves; including the amounts in the Communications, Information Technology, and
<br />License Center funds are also set aside for future capital replacements. In addition, the 2014
<br />General Fund Budget relied on the use of $346,000 of cash reserves to close a funding gap, so
<br />the reserve levels shown above are expected to decline this year.
<br />Some of these reserves are unrestricted and could potentially be re-purposed. However, doing so
<br />could come at great expense to existing programs and service levels.
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