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RESOLUTION R-1516-32: A RESOLUTION OF CITY COUNCIL OF THE CITY OF NORMAN, OKLAHOMA APPROPRIATING $340,440 FROM THE PUBLIC SAFETY SALES TAX FUND BALANCE; $46,871 FROM THE SPECIAL GRANT FUND BALANCE; $5,807 FROM THE ROOM TAX FUND BALANCE; $4,361,674 FROM THE WATER RECLAMATION FUND BALANCE; $18,000 FROM CAPITAL FUND BALANCE; $234,335 FROM THE UNIVERSITY NORTH PARK TAX INCREMENT FINANCE FUND BALANCE; $149,858 FROM THE DEBT SERVICE FUND BALANCE; AND $33,212 FROM THE SEWER LINE MAINTENANCE FUND BALANCE TO CLOSE OUT YEAR END ACCOUNTING ENTRIES FOR FYE 2015.
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BACKGROUND: At the end of each fiscal year (June 30th), the Finance Department posts all year-end accounting entries. In order to help with this process, some division’s categories of expenses require a transfer to cover negative balances in line-item accounts. Oklahoma statutes require that each fund be balanced at the object category of expenditures, which include: salaries and benefits; materials and supplies; services and maintenance; and capital equipment. City of Norman policy requires the City Manager’s approval for transfers within a City fund, or of funds between departments; from salary and benefit category accounts; and transfers from operating accounts to capital equipment accounts. The City Manager has already approved needed year-end transfers under his authority on recommendation from Finance Department staff (see attached memorandum). In some cases, however, some expenses cannot be covered from available allocations within the same fund and require an appropriation of fund balance. Oklahoma Statutes require that all appropriations of fund balance be approved by the City Council (governing body).
DISCUSSION: At fiscal year-end (FYE) 2015 several funds lacked the needed funds within existing appropriations to cover expenses made during the year, for varying reasons. These include the Public Safety Sales Tax Fund, Special Grants Fund, Room Tax Fund, Water Reclamation Fund, Capital Fund, University North Park Tax Increment Finance District Fund; Debt Service Fund, and the Sewer Maintenance Fund. Adequate fund balance exists in each fund to cover the recommended appropriations.
In the Public Safety Sales Tax (PSST) Fund an additional $340,440 needs to be appropriated due to two unbudgeted expenses: salary and benefit increases resulting from union contract settlements of $114,367 which could not be absorbed within existing allocations during FYE 2015, and revenue bond issuance costs (for the financing of the PSST Critical Capital Needs) of $226,073.
In the Special Grants Fund, an additional $46,871 needs to be appropriated due to the Federal Storm Shelter Rebate program and paid back (transferred) to the Capital Fund for up-fronting the expenses.
In the Room Tax Fund, an additional $1,250 is needed to cover a higher-than-expected payment for debt service on the outstanding loan for improvements to the Westwood Golf Course (the parks capital improvement portion of the Room Tax pays debt service for the 2002 golf course improvements). An additional $4,557 appropriation is needed to cover room tax administration cost allocation charges, based on the higher-than-budget Room Tax revenues (cost allocation charges to the Room Tax Fund are based on a percentage of actual revenues received). A total appropriation of $5,807 is requested from the Room Tax Fund.
In the Water Reclamation Fund, an additional $4,361,674 needs to be appropriated from fund balance for a transfer to the Sewer Maintenance Fund related to sewer project costs that were budgeted in the Water Reclamation Fund but paid from the Sewer Maintenance Fund.
In the Capital Fund, an additional $18,000 needs to be appropriated and transferred to the General Fund related to two capital outlay invoices that were paid after July 1, 2015 but for Fiscal Year 2015 services.
An appropriation out of the University North Park Tax Increment Finance District Fund balance needs to be made in the amount of $234,335 related to debt service payments on behalf of the Norman Economic Development Coalition for their land purchases. On September 21, 2010 the Norman Tax Increment Finance Authority (NTIFA) and City Council approved Resolution R-1011-39 concurring in NEDC’s purchase of the thirty (30) acres contained in the plat for University North Park Corporate Center Section 1 and providing accumulated UNP TIF Economic Development revenues that had accumulated between July 1, 2010 and June 30, 2011 as security for a loan from Republic Bank (the “Lender”).
In October 2012, Council approved Resolution R-1213-64 concurring in NEDC’s purchase of an additional thirty (30) acres contained in the plat for University North Park Corporate Center Section 2. NEDC closed on the second land purchase on December 5, 2013, which actually included 31.67 acres, all at the reduced price of $1.25 per square foot. NTIFA also provided accumulated UNP TIF Economic Development revenues that had accumulated between July 1, 2011 and December 21, 2012 as security for a loan from Republic Bank (the “Lender”). The Lender also agreed to combine the loan for the first thirty acres with the loan for the second thirty acres while reducing the interest rate by one percentage point.
In December 2013, Council approved Resolution R-1314-78 when NEDC was pursuing a financing structure that will combine the financing for the purchase of the land for the UNP Corporate Center with the land for the UNP Advanced Manufacturing Center, while also obtaining financing for the infrastructure improvements. The Lender for the NEDC financing had requested that the revenues previously pledged by the Authority in Resolutions No. R-1011-39 and R-1213-64 also be made available as security for the financing of the infrastructure improvements. These accumulated UNP TIF Economic Development revenues have been on deposit with the Lender, and utilized to pay accruing interest costs for the combined land acquisition and infrastructure loans. NEDC has agreed to reimburse the UNP TIF Economic Development revenues used for this purpose after sufficient land sales have occurred to allow such a reimbursement. During FYE15, interest payments were made from these funds on deposit with the Lender. In order to properly document these interest payments on behalf of NEDC, it is necessary to appropriate the same from the UNP TIF Fund Balance to an the appropriate interest expenditure account.
The over-budget condition in the General Debt Service Fund primarily relates to an under-budget amount for the inter-fund transfer to the Risk Management/Insurance Fund (property tax revenues for the payment of worker’s compensation and tort judgments against the City of Norman are received into the Debt Service Fund and transferred to the Risk Management Fund for payment). A total appropriation of $149,858 is requested in the General Debt Service Fund.
An appropriation of $33,212 is needed in the Sewer Maintenance Fund. $388 is related to unbudgeted salary and benefit increases resulting from union contract settlements during FYE 2015; $25,824 is due to unbudgeted bad debt expense (utility customer write-offs); and the remaining $7,000 is related to capital equipment depreciation costs.
STAFF RECOMMENDATION: Staff recommends the following appropriations from each fund balance and transfers be approved:
$340,440 from Public Safety Sales Tax Fund Balance (account number 015-0000-253.20-00) with $226,073 to be allocated to Debt Service Issuance Costs (account number 015-3050-470.72-03); $25,312 to be allocated to Criminal Investigations Full-Time Salaries (account number 015-6121-421.20-01); and $89,055 to Fire Suppression Full-Time Salaries (account number 015-6543-422.20-01).
$46,871 from Special Grants Fund Balance (account number 022-0000-253.20-00) to Capital Project Fund Inter-fund Transfer (account 022-3094-491.80-50), for deposit to the Capital Fund balance.
$5,807 from Room Tax Fund Balance (account number 023-0000-253.20-00), with $1,250 recommended to be allocated to Westwood Inter-fund Transfers (account number 023-3042-451.80-29); and $4,557 to Management Cost Allocation Charges for Room Tax Administration (account 023-3040-415.49-01).
$4,361,674 from Water Reclamation Fund Balance (account number 032-0000-253.00-00) to Inter-Fund Transfer to Sewer Fund (account number 032-5542-491.80-32) and then transfer to Sewer Line Maintenance Inter-Fund Transfer from Water Reclamation Fund (account number 321-0000-391.19-32).
$18,000 from Capital Fund Balance (account number 050-0000-253.00-00) to Inter-fund Transfer to General Fund (account number 050-5090-491.80-10) and then transfer to Inter-fund Transfer from Capital Fund (account number 010-0000-391.19-50).
$234,335 from University North Park Tax Increment Finance District Fund Balance (account number 057-0000-253.20-00) to Interest - GO Bonds (account 057-3050-470.71-01).
$149,858 from General Debt Service Fund Balance (account number 060-0000-253.20-00), with $146,904 recommended to be allocated to Inter-fund Transfers (account number 060-3050-491.80-43); and $2,954 to Revenue Bond Charges (account number 060-3050-470.72-02).
$33,212 from Sewer Line Maintenance Fund Balance (account number 321-0000-253.00-00) with $388 to Full-Time Salaries (account number 321-5553-432.20-01) and $32,824 to Bad Debt Expense (account number 321-3099-415.90-05).