CC PACKET 01241989 - Laserfiche WebLink

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ESTABLISHMENT OF A DEVELOPMENT ACCOUNT • QUESTION #1 - What is a development account? ANSWER: A development account is a revolving fund maintained by the city for the purpose of financing public development costs to accomplish any of the policies, goals, purposes, projects or programs of the city as a part of its municipal development program. The development account is a separate identifiable account which may be broken into a number of subaccounts. Funds within the subaccounts will have varying limitations on the use or investment of funds, depending on statutory and local constraints. QUESTION #2 - What are the general purposes for use of the funds within the--- development account? ANSWER: The development account provides an on-going source of funding that can be used to reduce the need for or extent of long-term debt issued in support of the city's development program. For example, it would be possible to issue bonds.for several projects through a single financing, thereby cutting down bond issuance and capitalized interest costs, allowing funds to be invested up to the maximum period of time available. The development account provides a fund that allows the city to respond quickly when -potential or existing projects require unanticipated, interim or immediate public financial assistance. The development account can serve as a centralized accounting system to give financial overview and control to assisted projects and programs. The source of funds within the account could include proceeds from repayment of loans, other project revenues including payment received from the sale of property, recycled federal and state grants and other funds as designated to the development account by the council. The 'development account provides for the establishment of subaccounts that may be used for funding of a reserve fund system (securing IDBs) or to be used in conjunction with a reserve fund program. The development account provides for an accounting system that readily identifies existing funds and allows their transfer to cover needed development costs or bond issuance payments elsewhere in the development area. To the extent realistically and legally possible, the city should maintain the development account as an on-going active fund which is systematically replenished from funds available from existing projects or to be available in the future from such projects. QUESTION #3 - How is a development account established? ANSWER: A development account may be established by resolution of the council or the council may wish to establish the development account and guidelines for the use of the funds by ordinance in order to assure that maximum public notice and consideration is given to the use of the funds in the development account.