Item No: 5I.
Meeting Date: September 24, 2012
From: Bill Spinelli, Finance Director, CPA
Subject: Resolution approving a Special Transfer from the Water Utility to the Fleet Internal Service Fund in the amount of $547,688 to fund Fleet Replacement vehicles
Staff recommends approval of a Special Transfer from the Water Utility to the Fleet Internal Service Fund in the amount of $547,688 to fund Fleet Replacement vehicles.
In Fiscal Year 2003, the City established a Fleet operations division and placed it in the General Fund. All vehicles were transferred from their respective funds and owned by the General Fund. Additionally, lease and maintenance fees were charged to the various funds. Since 2003, unspent Fleet lease payments have accumulated in the General Fund and have not been restricted to be available for future fleet replacements. In the proposed budget for Fiscal Year 2014, the City Commission has approved establishing a new Fleet Internal Service Fund. All lease and maintenance payments will come directly into this fund allowing the cash to be restricted and available for fleet replacement purchases.
In accordance with the Utility Transfers Policy, Ordinance 07-81, the General Fund was required to refund the Water utility transfer (dividend payment) of $547,688 in Fiscal Year 2010, due to the fund having a net loss. The Water Utility has since recovered and is now healthy enough to transfer the $547,688 to the new Fleet Internal Service Fund. The funds will be used as “seed” money to start the new Fleet Internal Service fund.
In an effort to improve its cash position, staff updated and the City Commission adopted new cash policies in fiscal year 2007. Ordinance 07-80, Section 2-230 provides for utilization of surplus cash which is defined as cash that exceeds 115% of the minimum acceptable level of cash reserve. Utilization of Surplus Cash can be approved for any one of the following; elimination of shortfalls in related funds, reduction or avoidance of debt, funding of a renewal and replacement program, one time capital needs and for use in funding tax, fee or rate stabilization. In addition to the Surplus Cash test, Ordinance 07-82 provides for a five year pro forma cash flow projection to determine the financial impact if any on the fund from which the transfer is drawn (attached). The following test reflects the amount of Surplus Cash available as of September 30, 2012:
Minimum Cash Reserve Requirement $ 1,759,098
Add 15% Reserve 263,865
Minimum Level of Acceptable Cash Reserve $ 2,022,963
Unaudited Cash Balance as of September 2012 5,345,864
Surplus Cash $ 3,322,901
The calculation as prescribed by ordinance reflects adequate surplus cash to allow for the special transfer.
1. Approve the Special Transfer from the Water Utility to the Fleet Internal Service Fund in the amount of $547,688 to fund Fleet replacement vehicles; Or
2. Such alternative action as the Commission may deem appropriate
The impact on Surplus Cash of the Water Utility would be minimal decreasing the Surplus Cash from $3,322,901 to $2,775,213. In addition, pro forma cash flow projections for the next five years reflect continued growth in cash reserves.
Prepared by: ______________________
Attachments: Yes____ No ______
Advertised: ____Not Required ______
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head ________
Finance Dept. __________________
Deputy C.M. ___________________
City Manager ___________________
Account No. _________________
Project No. ___________________
WF No. ______________________
RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLOIRDA AUTHORIZING A SPECIAL TRANSFER FROM THE WATER UTILITY TO THE FLEET INTERNAL SERVICES FUND NOT TO EXCEED $547,688 TO FUND FLEET REPLACEMENT VEHICLES; AND PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:
THAT the City Commission hereby authorizes the Special Transfer in the amount of $547,688 from the Water Utility to the Fleet Internal Service Fund to fund Fleet replacement vehicles.
THAT this resolution shall become effective immediately.
PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the _24th ____ day of __September_______ 2012.