08-23-84 Agenda & Packet - Laserfiche WebLink

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• TO: Mayor & Council FROM: Finance Director-Treasurer • DATE : January 12, 1984 RE : PROPOSED ORDINANCE ESTABLISHING A SPECIAL PROJECTS FUND Attached for your consideration is a proposed ordinance establishing a Special Projects Fund. It is proposed that the cash balance, re- maining in the Improvement Bond Redemption Fund after the cash de- feasance of that fund' s bonds, be initially deposited in this Special Projects Fund. Also the special assessments receivable of the Improve- ment Bond Redemption Fund would be transferred to the Special Projects Fund and all future payments of principal and interest on those assess- ments would be deposited in the Fund. Future bonded debt tax levies would have to be cancelled since the cash defeasance will ensure that the bonds will be paid and as a consequence the tax levy will no longer be needed. In drafting this proposed ordinance I kept several considerations in mind. The first consideration was for the cash flow needs of the General Fund. As a result of the cash defeasance the City ' s overall cash and investment balances will be dramatically reduced. Approximate- ly $2. 6 million will be used to purchase investments which will be given to an escrow agent who will use those monies to pay the schedu bond principal and interest payments of the Improvement Bond Redempt Fund as they come due. Those monies will no longer be available to meet the General Fund' s cash flow needs . Therefore, the proposed ordinance allows permanent transfers of monies to the fund balance of the General Fund in order that sufficient cash is available in that fund to pay for current operations from January 1 until the end of July when the tax settlement is received from Ramsey County. The second consideration is that the City continue, as we have in the past, to " live within our means" . We have always limited current operating expenditures to the amount of estimated current revenues and achieved a balanced budget in the General and Forestry Funds . The Water, Sewer and Recreation Activity Funds have been self supporting; their expenditures have been limited to anticipated current revenues. Therefore, the proposed ordinance allows the purchase of equipment and the financing of capital improvement projects only for the General and Forestry Funds. Since the Water, Sewer and Recreation Activity Funds are to be self supporting, only interest bearing loans are to be made to those funds. Current and recurring operating and maintenance expenditures would not be allowed under this proposed ordinance. By limiting this fund' s expenditures to the purchase of equipment and the financing of capital improvements only for the General and Forestry Funds the City will be able to continue its policy of " living within its means' while also providing for •the future purchase of needed equipment and capital improvements at no additional burden to the ta� payer. While it is not in the proposed ordinance, it is strongly re commended that monies be used only for the purchase of those items of