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HomeMy WebLinkAboutInformation Update 0726221 AGENDA INFORMATION UPDATE July 26, 2022 5:00 PM, I.INFORMATION UPDATE I.A.Intrafund Advances I.B.Asset Workplan Follow Up 1 INFORMATION ONLY MEMORANDUM TO:Mayor and City Council FROM:Pete Strecker, Finance Director THROUGH:Sara Ott, City Manager MEETING DATE: July 25, 2022 RE:Intrafund Advances HIGH LEVEL SUMMARY: Staff continues to monitor the level of internal borrowing between funds to assess these arrangements, specifically around their continued need and/or if they can be retired as previously present financial challenges diminish. Based upon a recent assessment, the Finance Department has determined that a number of arrangements can be concluded this year and anticipates incorporating into the 2022 Fall Supplemental. BACKGROUND: The City has a handful of intrafund advances coordinated between funds over the years. There are three explicit agreements currently and are noted below. Given the limited financial pressures placed on the General Fund, Water Fund and the Golf Course Fund after a robust 2021 year, it is believed that these arrangements are no longer needed and can be retired early. Golf Course: The golf program was advanced $200,000 from the Parks and Open Space Fund in December 2009 to assist with the start-up of the golf pro shop operation. This advance was structured with a 4% interest rate and had a duration initially of ten years but was “refinanced” to a longer term through 2028. There is $72,015.24 principal outstanding as of January 1, 2022. General Fund: Included in the emergency ordinance adopted in 2020 to address the impacts of COVID on the local economy, City Council approved an intrafund advance of $3,500,000 from the Wheeler Opera House Fund to the General Fund. Prior to any payoff of this loan, the City subsequently received federal funds through the CARES program and these funds were applied as a partial payoff of this intrafund advance, bringing the loan balance down to $2,283,220. This amount is outstanding as of January 1, 2022 and was scheduled to be repaid over seven years, including interest at a rate of 1.33% per year. Water Fund: In 2017, City Council authorized a $2,515,000 intrafund loan between the Wheeler Opera House Fund and the Water Utility Fund, to assist with the purchase of the Woody Creek parcel as a future location for a water storage reservoir site. This agreement was established with a repayment term of ten years, with an interest rate for borrowing equal to 2.33%. Currently, an outstanding balance of $1,577,755 remains on this repayment obligation. STAFF RECOMMENDATION: Given the strong financials of the City at the conclusion of 2021, staff is planning for these three intrafund advances to be dissolved through early re-payment of the remaining principal amounts. By making early repayments, the financial resources will be returned to both the Parks and Open Space Fund and the Wheeler Opera House Fund early and will also reduce the interest expenses currently being incurred unnecessarily. Interest avoidance on these loans can be substantial for those that still 2 have long durations remaining: the General Fund interest avoidance would be roughly $120K, the Water Fund around $100K, and the Golf Course Fund avoidance would roughly $10K. In addition to the interest expense avoidance, the early payoff from the General Fund and Water Fund would equate to $2,283,220 and $1,577,754 and would increase the fund balance then held in the Wheeler Opera House Fund by the combined amount. Similarly, the payoff from the Golf Course Fund would equate to $72,015 and would increase the Parks and Open Space Fund by a like amount. These payoffs would only occur earlier than the previously defined payback schedules than were set in place when the arrangements were made and are otherwise still owed regardless. It is staff’s plan to incorporate the early retirement of these interfund advances as part of the 2022 Fall Supplemental, removing unnecessary burdens on the financial positions in these funds, and simplifying future financial planning for the 2023 Budget process and beyond. 3 1 FOLLOW-UP MEMORANDUM CITY COUNCIL WORK SESSION MEETING DATE:June 20, 2022 FOLLOW-UP MEMO DATE:June 21, 2022 AGENDA TOPIC:Asset Department Workplan PRESENTED BY:Robert Schober, Asset Director COUNCIL MEMBERS PRESENT:Mayor Torre and Council Members Richards, Hauenstein, and Doyle. Council member Meisrow was absent. _______________________________________________________________________ WORK SESSION DISCUSSION SUMMARY: Staff presented priority capital projects to be completed by the Asset Department and requested Council feedback on prioritization of the projects at hand. 1. Topic:Rio Grande Building Restaurant RFP Council majority consensus – Yes, the Asset department is to move forward with RFP Process. 2. Topic: Old Powerhouse Preservation Project Council majority consensus: Yes, Council requests that the Asset Department prioritize this project and move forward while Armory funding sources are identified. Mayor Torre is not in favor as he believes this space is better utilized as public. 3. Topic: Main Street Cabin Housing Council majority consensus: Yes, Council requests that the Asset Department prioritize this project and move forward. Council did request additional information as outlined below. NEXT STEPS: 1. Rio Grande Building Restaurant RFP – Council requests that it be clear in the RFP language that potential operators are aware of the location near the park and how the restaurant serves the teen population. The menu should be non-gourmet, family friendly and “affordable” for working class and locals. The Asset Department will draft RFP and solicit responses with input from supporting departments. 4 2 Deadline – The target date for publishing the RFP on bidnet is mid-August. This would allow time to solicit responses and evaluate potential operators with an award in the Fall of 2022. 2. Old Powerhouse Preservation Project – Council supports the Asset department prioritization of this project. The Finance department will move funding forward in LRP with target construction spring of 2023. The renovation needs to fulfil the facilities masterplan and verified programming. Councilmember Richards mentioned the use of the yard for events/gatherings and the needs for the bathrooms to be able to service those items. The future location of ACRA needs to be determined. Perhaps there is a potential to lease Armory space. A question was posed asking what is interim use of Armory? Council member Richards wanted to explore potential for bonding of the Armory as a ballot measure. Another question posed is can ACRA/other uses occupy before full remodel of the space? Deadline – Target Spring 2023 construction of Old Powerhouse 3. Main Street Cabin Housing – Council supports Asset department prioritization of this project. Finance to move forward in the long-range plan. More information is requested by Council specifically how many units will we be able to be built at this location? Staff needs to determine the best use of this Asset. What would sale price be and how much housing would that purchase elsewhere? With emphasis of retail/business on Main Street does this make more sense? Council member Doyle stated that the City should never sell assets. Deadline – Target late summer early fall work session with additional information requested 4. Armory – Council requests potential interim use options for the Armory while funding sources are identified for a major remodel based upon community feedback and Council direction. Deadline – Target late summer early fall work session with additional information requested CITY MANAGER NOTES: __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ 5