HomeMy WebLinkAbout2006-212 Council Resolution•
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Council Member 0' Donnellintroduced the following resolution and moved its adoption:
CITY OF LINO LAKES
RESOLUTION NO. 06 -212
RESOLUTION APPROVING A REPAYMENT PLAN FOR INTERFUND LOAN FOR
RECREATION COMPLEX LAND PURCHASE
WHEREAS, in 1999 the City purchased land for the purpose of creating a recreation complex,
and;
WHEREAS, a temporary interfund loan was made from the Area and Unit Fund (406) to the
Dedicated Parks Fund (405) for the purchase of said land, and;
WHEREAS, the interfund loan was intended to be repaid though a successful park improvement
referendum, and;
WHEREAS, such referendum was held in 2001 and did not pass, and;
WHEREAS, it is the intent of the City Council to approve a plan to repay the interfund loan.
NOW, THEREFORE, BE IT RESOLVED, by the Lino Lakes City Council that:
1) The repayment plan as shown on Exhibit A is hereby approved.
2) The source of the repayments shall be 50% from park dedication fees and 50% from the
General Fund. The General Fund contribution shall result from annual budget surpluses,
and shall be dedicated to the repayment of the interfund loan, pending fund balance
reserve requirements, until the loan is satisfied. Should the annual budget surplus be
large enough, in the opinion of the Finance Director, to dedicate a larger General Fund
contribution without impinging upon the integrity of the General Fund, the City Council
may authorize additional contributions on an annual basis.
3) Should the General Fund not experience a surplus in any given year, the General Fund
portion shall not be made, and the repayment schedule will be adjusted accordingly.
4) Should the city divest itself of this property, the proceeds from the sale will flow into the
Dedicated Parks fund to be used toward repaying any unpaid loan balance and /or
completing development in any of the remaining city parks.
Adopted by the Lino Lakes City Council this 18 day of December, 2006.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Reinert
and upon vote being taken thereon, the following voted in favor thereof:
O'Donnell, Reinert, Carlson, Stoltz, Bergeson
The following voted against same:
none
Whereupon said resolution was declared duly passed and adopted.
J ianne Bartell, City
Cler
Berge n, yor
EXHIBIT A
Recreation Facility Land Interfund Loan Repayment Plan
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
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Principal Interest 3% Total
71,287
73,425
75,628
77,897
80,234
82,641
85,120
87,674
90,304
93,013
95,803
44,087
28,713
26,575
24,372
22,103
19,766
17,359
14,880
12,326
9,696
6,987
4,197
1,323
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
45,410
Balance
957,112
885,825
812,400
736,772
658,875
578,642
496,001
410,881
323,207
232,903
139,891
44,087
0
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AGENDA ITEM 2F
STAFF ORIGINATOR Al Rolek
MEETING DATE December 18, 2006
TOPIC
VOTE REQUIRED Simple Majority
In 1999 the City purchased a 67 acre parcel of property on the east side of the city to be
developed into a recreational facility. The purchase was financed through an interfund loan from
the Area and Unit fund to the Dedicated Parks Fund. The loan was to be repaid from the
proceeds of a successful bond referendum for this project. The referendum was held in 2001 and
failed. Since then, the Dedicated Parks Fund has had fund deficit. Our auditors have strongly
recommended that the city cure this deficit through one of the following options: 1) Make the loan
a permanent transfer of funds, 2) develop a repayment schedule for the loan, or 3) sell the
property to repay the loan. The City Council has been holding the property for possible
development, and the property is certainly worth more today than it was purchased for. However,
Council seemed reticent to sell the property at this time.
In Tight of the auditor's recommendation, and interpreting the will of the Council, staff
recommends establishing a repayment plan for the interfund loan. An outright transfer of the
funds would not be an appropriate use of the Area and Use funds, which were collected to
implement trunk sewer and water facilities. The loan can be repaid in installments of $100,000
per year over a 12 year period with a moderate rate of interest of 3% per annum (a copy of the
repayment schedule is attached). The source of the repayments would be 50% from park
dedication fees and 50% from the General Fund. The General Fund has run a budget surplus
over the last several years. Staff recommends that $50,000 of any budget surplus be dedicated
to the repayment of the interfund loan until the loan is satisfied. In most years, should the budget
contingency not be used during the year, a surplus would result. If in any year there is no budget
surplus, the term of the payment plan would be extended accordingly. As a result of this plan,
there may be an impact on the rate of park development over this repayment period; however,
given the projections included in the draft 5 -year plan, this does not appear to be a significant
concern.
If, at some point in the future, it is determined that the city should divest itself of this property, the
proceeds would flow into the Dedicated Parks fund to be used toward repaying any unpaid loan
balance and /or completing development in any of the remaining city parks.
1. Approve Resolution 06 -212.
2. Refer to Staff for further review.
3. Deny Resolution 06 -212.
Option 1