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<br />Item No: 6 <br />Meeting Date: May 4, 2015 <br />Type of Business: Work Session <br />City of Mounds View Staff Report <br /> <br />To: Honorable Mayor and City Council <br />From: James Ericson, City Administrator <br />Item Title/Subject: Review Levy Reduction Fund Balance and Consider <br />Possibility to Draw from Fund for Capital Projects <br /> <br />Introduction: <br /> <br />At a recent Council meeting, members discussed the possibility of repurposing dollars from <br />the Levy Reduction Fund to support capital projects that might otherwise be unfunded or <br />would require levying an additional amount to cover the anticipated costs of desired capital <br />projects. <br /> <br />Discussion: <br /> <br />The Levy Reduction Fund (LRF) was created with proceeds from the sale of the former golf <br />course land to Medtronic for the construction of their 1.2 million square foot cardiac disease <br />rhythm management (CRDM) headquarters. As of December 31, 2014, the LRF balance <br />was $6,000,280. Finance Director Beer created a spreadsheet (attached) that illustrates <br />the planned annual drawdowns through 2033, the year the Medtronic TIF District is planned <br />to decertify. The spreadsheet demonstrates a capacity to annually repurpose additional <br />amounts from the LRF to support other projects, however it would be beneficial to have an <br />excess balance beyond 2033 to gradually phase in the additional levy required to make up <br />for the future absence of the LRF transfers. In 2034, the levy would need to be increased <br />by 3.38% just to make up for what the LRF would have added to the general fund, not <br />counting any additional levy increase to keep pace with inflation, rising personnel costs and <br />other planned expenses. <br /> <br />Recommendation: <br /> <br />While it would appear possible to repurpose amounts from the LRF to support other capital <br />projects and one-time expenditures, the Council should be aware that any excess <br />drawdown approved would reduce the ending balance by the amount of the drawdown plus <br />the lost compounded interest that would have accrued over time. <br /> <br />Respectfully submitted, <br /> <br /> <br /> <br />________________________ <br />James Ericson <br />City Administrator <br /> <br />Attachment: <br />1. Levy Reduction Fund Spreadsheet