Agenda Packets - 1983/02/14 - Laserfiche WebLink

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q4511t� 3 TO: Mayor & Council fllzROM: Finance Director -Treasurer I:rager DATE: February 16, 1983 RE: RECLASSIFICATION OF PROCEEDS OF IMPROVEMENT BONDS OF 1981 While preparing 1982 Financial Statements I noticed that the Silver Lake Woods Construction Fund had a deficit cash balance. That fact greatly surprised me because I knew that total project costs were under budget. Upon further investigation I discovered that the bond proceeds had been improperly allocated between the Debt Service and Construction Funds when received in 1981; thus causing the deficit in the Construction Fund. The financial consultant in establishing the budget for the project indicated that $329,906 should be placed in the Debt Service Fund for capitalized interest (payment of interest on the bonds until we begin receiving payments of special assessments). This amount was allocated to the Debt Service Fund. A review of the bond agreement, which was prepared by the bonding attorney, indicates that only $188,325 should have been placed in the Debt Service Fund. The allocation of bond proceeds to the Construction Fund was thus $141,582 less than it should have been. I have discussed this matter with our auditors and they agree that the bond proceeds were improperly classified and should be re- classified pursuant to the bond agreement. The auditors recommend that the Council authorize this reclassification of bond proceeds since the previous classification was, in effect, authorized by Council acceptance of the 1981 Financial Statements. The reclassification would have the effect of increasing cash in the Construction Fund by $141,582, thus eliminating the cash deficit in the fund. The reclassification is necessary from an accounting stand- point so that the Construction Fund will have a positive cash balance when the project is finalized. our ability to make debt service pay- ments will in no way be impaired because any residual funds in the Construction Fund after the project is completed would be available, if needed, to make bond principal and interest payments. A proposed bond proceeds is any questions do DB/ds resolution authorizing the reclassification of the attached for your consideration. Should you have not hesitate to contact me.