CC PACKET 10081996 - Laserfiche WebLink

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a� MEMORANDUM DATE: September 24, 1996 TO: Mike Mornson, City Manager FROM: Roger Larson, Finance Director ITEM: LIQUOR INVENTORY CONTROL SYSTEM Per your request, I performed an analysis of the cash on hand and reserves for the Liquor Operation to determine if adequate reserves were present to purchase an inventory control system. Based on my review, it is evident that there is no excess reserves or cash on hand to fund this expenditure. Available reserves/investments total approximately$227,000. However, $100,000 is designated as reserve funding for the Liquor Revenue Bonds and is unavailable for use until February of 1998. The remaining balance is used to fund periods when cash flows are not sufficient to meet expenditures and should not be reduced lower than they are presently at. To accomplish the goal of revitalizing our Liquor Operation, I feel it critical we upgrade and modernize our current equipment. The purchase of these inventory control computers and related furnishings will provide aOundation for improving profitability. Also, I researched other funding possibilities and am comfortable with recommending the City internally fund the expenditure with use of reserves. The Liquor Operation would become obligated to repay the debt over a five year payment plan. I have attached a payment schedule which indicates principle and interest payments due each year. The amount of interest charged is equal to the amount earned on a money market savings account. In addition, if the Liquor Operation is turning profit exceeding the general fund transfer in 1999 my recommendation at that time would be repay the amount owing in full. The last year of the Liquor Revenue Bonds debt is due in 1998 which annually totals $90,000. If conditions are favorable and profit projections are improving, the $30,000 principle owing cound be expended from the same line item as the debt.