Item No:                    5J.

Meeting Date:           December 10, 2012

From:                          Bill Spinelli, Finance Director

Subject: Resolution repealing Resolution 9091 adopted September 24, 2012 in its entirety; replacing the Resolution with a special transfer from the Gas Utility to the Debt Service Fund of $966,820 for debt service associated with the Kristen Court Property

Staff Recommendation:

Staff recommends repealing Resolution 9091 adopted on September 24, 2012 in its entirety; and replacing the Resolution with a special transfer from the Gas Utility to the Debt Service Fund of $966,820 for debt service associated with the Kristen Court Property.

Analysis:

The City Commission approved a Special Transfer from the Gas Utility to the Magnolia Townhomes Fund on September 24, 2012.  In preparation for the 2012 audit, staff has determined that the Magnolia Townhomes Fund needs to be closed out and become part of the General Fund.  Since there is only debt service expenses associated with the Kristen Court Apartments, which is now simply a piece of land and there is no source of revenues for this fund, it better suited to be part of the General Fund Assets.  The Debt Service associated with the Kristen Court Property will be paid out the Debt Service Fund which currently accounts for all General Fund debt service.  It is necessary to repeal the original resolution 9091 and replace it with a new Special Transfer Policy which allows the Gas Utility to transfer funds to the Debt Service Fund.

On October 9, 2006, the City Commission passed a resolution authorizing the issuance of a Bond Anticipation Note (BAN) in the amount of $4,000,000 to facilitate the purchase of the Kristen Court Apartments, a high crime and blighted area.   In December of 2009, the BAN was refinanced in the amount of $4,500,000 with a Capital Improvement Promissory Note.

Issue	Year	Principal	Interest	Total
Magnolia Townhomes Capital	2010	0	75,650	75,650
Improvement Promissory Note,	2011	0	153,000	153,000
Series 2009	2012	0	153,000	153,000
Original Issue Amount:  $4,500,000	*2013	840,000	138,720	978,720
Original Issue Date:  November 3, 2009	2014	870,000	109,650	979,650
Final Maturity: November 3, 2016	2015	900,000	79,550	979,550
Interest Rate:  3.40%	2016	930,000	48,450	978,450
	2017	960,000	16,320	976,320
TOTAL		4,500,000	774,340	5,274,340

                  *amounts in table reflect calendar year amounts, not fiscal year amounts

The General Fund has been paying the interest for fiscal years 2010-2012.  In the upcoming budget year 2012-13, the proposed budget has been prepared to have the Gas Utility cover the debt service (principal and interest) associated with this note.

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                         $1,203,621

Add 15% Reserve                                                           180,543

Minimum Level of Acceptable Cash Reserve              $1,384,164

Unaudited Cash Balance as of September  2012           8,979,937

                                                Surplus Cash                $7,595,773

The calculation as prescribed by ordinance reflects adequate surplus cash to allow for the special transfer.

Options:

1.  Repealing Resolution 9091 adopted on September 24, 2012 in its entirety; and replacing the Resolution with a special transfer from the Gas Utility to the Debt Service Fund of $966,820 for debt service associated with the Kristen Court Property; or

2.  Such alternative action as the Commission may deem appropriate

Fiscal Impact: 

The impact on Surplus Cash of the Gas Utility would be minimal decreasing the Surplus cash from $8,979,937 to $8,013,117.  In addition, proforma cash flow projections for the next five years reflect continued growth in cash reserves. Staff anticipates the next four proposed budgets 2014-2017 will include this strategy, but because of policy a special transfer resolution is necessary each year. 

Submission Date and Time:    12/6/2012 8:31 AM____

Department: ______________________ Prepared by:  ______________________                      Attachments:         Yes____   No ______ Advertised:   ____Not Required ______ Dates:   __________________________                      Attorney Review :       Yes___  No ____ _________________________________            Revised 6/10/04

Reviewed by: Dept. Head ________ Finance  Dept. __________________                                    Deputy C.M. ___________________                                          Submitted by: City Manager ___________________

Account No. _________________ Project No. ___________________ WF No. ______________________ Budget  ______________________ Available _____________________

RESOLUTION NO._______________

RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, REPEALING RESOLUTION 9091 ADOPTED SEPTEMBER 24, 2012 IN ITS ENTIRETY; REPLACING THE RESOLUTION WITH A SPECIAL TRANSFER FROM THE GAS UTILITY TO THE DEBT SERVICE FUND OF $966,820 FOR DEBT SERVICE ASSOCIATED WITH THE KRISTEN COURT PROPERTY; AND PROVIDING AN EFFECTIVE DATE.

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

            THAT the City Commission hereby approves repealing Resolution 9091 which was adopted September 24, 2012.

            THAT the City Commission hereby authorizes the Special Transfer of $966,820 from the Gas Utility to the Debt Service Fund for debt service associated with the Kristen Court Property.

 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 _ ____ day of _December________ 2012.

                                                                            ________________________________

                                                                             Mayor

ATTEST:

________________________________

City Clerk