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Home My WebLink About03-04-19 City Commission Packet Materials - A2. Res. 5000, Budget Amendment for N. Tracy ReconstructionCommission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director SUBJECT: Commission Resolution No. 5000 – Transferring funds from the Special Improvement District Revolving Fund to the General Fund for the purpose of financing certain local improvements to North Tracy Avenue between Peach Street and Villard Street and amending the City’s Annual Budget to increase appropriations for SID 750 in the Street Reconstruction Fund . MEETING DATE: March 4, 2019 AGENDA ITEM: Action RECOMMENDED MOTION: I hereby move to adopt Resolution 5000, ordering the transfer of $224,500 of the excess amount in the SID Revolving Fund to the General Fund for the purpose of financing certain local improvements to North Tracy Avenue between Peach Street and Villard Street and amending the City’s Annual Budget to increase appropriations for SID 750 in the Street Reconstruction fund. BACKGROUND: The FY19 Approved Budget anticipated the reconstruction of W. Lincoln Street (between Grand and Willson) with a total project cost of $224,011; 25% from the Street Reconstruction Funds ($56,003) and 75% SID financed through the SID ($168,008). Homeowners did not accept this project and the project has been moved to the bottom of the list of local street improvement projects. The North Tracy project was moved forward. The total estimated cost of the street and storm drain improvements is $447,489 With the creation of SID 750 for North Tracy a budget amendment is needed to increase the total appropriation from the Street Reconstruction Fund from $56,003 to $222,989. In addition, to underwrite a loan from the General Fund to the 218 North Tracy SID fund, the Commission must order a transfer of $224,500 from the City’s SID Revolving Fund to the General Fund. The City can commit, per its policy, $223,500 from the Street Reconstruction fund to reduce the costs to the SID, leaving $223,500 to be funded by the SID. In addition, the SID will be responsible for an estimated $1,000 in incidental costs related to the creation of the SID for a total of $224,500. Costs and expenses of construction of the Improvements will be paid for by assessments levied against benefitted properties; we propose to finance the initial construction costs by transferring excess money in the City’s SID Revolving Fund to the General Fund and then loaning these monies to the North Tracy SID. Years ago, the City created an SID Revolving Fund, the purpose of which is to “secure prompt payment of any special improvement district bonds or warrants issued in payment of improvements made.” See 7-12-4221, MCA. State law does not authorize the City to loan money directly from the SID Revolving Fund to a SID construction fund to finance improvements to be paid for by assessments on properties. State law does authorize transferring excess funds of the SID Revolving Fund to the General Fund. See 7-12-4227, MCA. The City’s SID Revolving Fund has cash in excess of the statutorily required amount (10% of outstanding SID debt). Currently, the Revolving Fund has a balance of approximately $3.4M. The minimum amount the City must maintain in the Revolving Fund to comply with statutory requirements is $51,050. This minimum required amount will increase once bonds for the Manley Road are issued. The resolution transfers a portion of this excess in the Revolving Loan fund in an amount equal to the portion of the improvements to be assessed against benefitted property in the SID to the General Fund to be deposited into a new SID fund within the General Fund. The purpose of the transfer is to have the General Fund underwrite the SID’s share of the costs of the Improvements through an “interfund loan” to the SID 750 construction fund with a 20-year repayment term at 2.0% interest. The authorization of this loan and the warrants necessary to secure the loan will be brought before the Commission at a later date. 219 An interfund loan has a number of benefits, including a lower interest rate for the District property owners, and avoidance of the costs and time-consuming work of underwriting a bond sale. The SID Fund within the General Fund will be paid back as property owners make their payments over time, with interest. FISCAL EFFECTS: This resolution will amend the current budget reducing the Revolving Loan fund by $224,500 while increasing the General Fund by $224,500, and increasing the capital projects fund appropriations by $222,989. ALTERNATIVES: None at this time. Report compiled on February 22, 2019 220 Page 1 of 3 COMMISSION RESOLUTION NO. 5000 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, AUTHORIZING THE TRANSFER OF EXCESS FUNDS FROM THE SPECIAL IMPROVEMENT DISTRICT REVOLVING FUND TO THE GENERAL FUND AND AMENDING THE CITY’S ANNUAL BUDGET TO INCLUDE STREET RECONSTRUCTION OF NORTH TRACY TO BE FUNDED WITH FUND RESERVES FOR THE FISCAL YEAR ENDING JUNE 30, 2019. WHEREAS, the City Commission did, on the 26th day of June, 2018, after due and proper legal notice, conduct a public hearing and adopt a municipal budget for Fiscal Year 2018- 2019 (Fiscal Year 2019); and WHEREAS, the City has created a Special Improvement District Revolving Fund (“SID Revolving Fund”) in accordance with Section 7-12-4221, MCA; and WHEREAS, the City Commission is authorized by Section 7-12-4227, MCA, to transfer funds in excess of 10% of the outstanding special improvement district bonds and warrants secured by the revolving fund from the SID Revolving Fund to the general fund; and WHEREAS, the SID Revolving Fund has cash in excess of the statutorily required balance of 10% of the outstanding SID bonds and warrants secured by the revolving fund; and WHEREAS, the City Commission finds the excess amount in the SID Revolving Fund to be greater than the amount necessary for payment or redemption of maturing bonds or warrants secured by the revolving fund or interest on the revolving fund; and 221 Resolution 5000, Budget Amendment for N. Tracy Reconstruction Page 2 of 3 WHEREAS, the City Commission determines use of the funds to be transferred from the SID Revolving Fund to the General Fund to underwrite an inter-fund loan from the General Fund to the North Tracy Special Improvement District (SID) Fund is in the best interests of those to be assessed for the costs of the improvements included in the North Tracy SID; and WHEREAS, the City Commission did, on the 4th day of March, 2019, after due and proper legal notice, conduct a public hearing on the proposed transfer of funds and amendment to the municipal budget. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, to wit: Section 1 – Transfer of Funds from SID Revolving Fund to General Fund The City Commission hereby orders that $224,500 of the excess amount in the SID Revolving Fund be transferred from the SID Revolving Fund to the General Fund to be used for the purpose of underwriteing an inter-fund loan from the General Fund to the North Tracy SID Fund to pay, along with Street Reconstruction Funds, the costs of the improvements for reconstruction of North Tracy Avenue. Section 2 – Appropriation Additions The City Commission hereby authorizes additional expenditures in the Street Reconstruction Fund and also in the General Fund upon transfer of the funds from the SID Revolving Fund to the General Fund as authorized by Section 1 as follows: Street Reconstruction Fund - N. Tracy Construction $222,989 Transfer from SID Revolving Loan fund to the General Fund $224,500 Total Additional Appropriations $447,489 222 Resolution 5000, Budget Amendment for N. Tracy Reconstruction Page 3 of 3 Section 3 – Use of General Fund Cash on Hand The increased appropriation will be funded with cash on hand in the in the Capital Fund and for the General Fund the increased appropriation will be funded with monies transferred to the General Fund from the SID Revolving Fun as stated in Section 1. Section 4 Pursuant to Section 7-6-4030, M.C.A., this resolution, upon its passage, shall be in full force and effect on July 1, 2018. PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 4th day of March, 2019. ___________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: _____________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 223