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�&t' is <br />TO: Mayor 6 Council <br />FROM: Finance Director-'Preasurer <br />BATE: February 15, 1984 <br />RE: REFUND Or MEZZENGA SECURITY DEPOSIT <br />It has come to my attention that at the February 13, 1984 Council <br />Meeting a discussion took place regarding whether or not the City <br />was obligated to refund the security deposit of John Mezzenga with <br />interest from the date that the deposit was originally made. Reso- <br />lution No. 777 Establishing A Development Escrow Fund, states that <br />all security deposits made in connection with Development Agreements <br />which are paid in the form of cash shall be deposited in an interest <br />bearing savings account and that upon satisfactory fulfillment of <br />the terms of the Development Agreement, as determined by the Council, <br />payment of the security deposit plus interest accrued thereon shall <br />be made. It is my understanding from past discussions with our <br />former auditing firm that this resolution was adopted in response <br />to a change in.State laws governing deposits which requires that <br />interest be paid on all deposits made to municipalities. The theory <br />is that since anyone requiring a deposit is depriving the depositor <br />of the use of his money interest should be paid on that deposit. <br />Mr. Mezzenga's deposit was picked in the Development Escrow Fund <br />and the monies in the Development Escrow Fund have been deposited <br />in a savings account at the First State Bank of New Brighton. As <br />of Decemher 31, 1983 interest on Mr. Mezzenga's deposit of $1,000.00 <br />amounts to $433.74. Mr. Mezzenga will be entitled to additional <br />interest for the period January 1, 1984 until the release of his <br />security as authorized by the Council. The savings account in which <br />the monies of the Development Escrow Fund are deposited is an account <br />on which the interest rate varies with the ninety-one day treasury <br />bill rate. Therefore, we will not know the exact interest rate or <br />amount of interest earned on the deposit until the end of the calendar <br />quarter or March 31, 1984 at which time we will receive a statement <br />of interest earned on the account from the First State Bank of New <br />Brighton. At that time a refund of additional interest would be due <br />Mr. Mezzenga. <br />Should you have any questions on this matter do not hesitate to contact <br />me. <br />DB/ds <br />Attachment <br />