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HomeMy WebLinkAbout1997-084 CCR• I • 0 Member kd4leen bPrywd I introduced the following resolution and moved its adoption: RESOLUTION NO. -- 4 RESOLUTION ADOPTING THE CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY, THE CAPITAL RESERVE FUND POLICY, CREATING THE CAPITAL RESERVE FUND, AND TRANSFERRING MONEYS FROM THE CAPITAL IMPROVEMENTS FUND TO THE CAPITAL RESERVE FUND WHEREAS, The Financial Commission has recommended a Capital Improvements Fund Expenditure Policy and a Capital Reserve Fund Policy to the City Council; and WHEREAS, Section 7.11 of the City Charter provides the City Council with the authority to order the creation of such funds as may be needed to properly account for the financial activities of the City; and WHEREAS, there now exists the need for a Capital Reserve Fund to account for moneys to be held in reserve for catastrophic losses; and WHEREAS, there is a balance of $1,000,000 in the Capital Improvements Fund which is available to transfer to the Capital Reserve Fund. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center, Minnesota, as follows: I . That the Capital Improvements Fund Expenditure Policy and the Capital Reserve Fund Policy are adopted. 2. That the classification of funds shall be expanded to include a Capital Reserve Fund. 3. Funds in the amount of $1,000,000 will be transferred from the Capital Improvements Fund to the Capital Expenditure Fund as of January 1, 1997 to provide initial funding. 51 ia1)19-7 Date ATTEST: —bAZ-3� City Clerk Mayor RESOLUTION NO. qi s4 • The motion for the adoption of the foregoing resolution was duly seconded by member 1ebrA i ls�M ,, and upon vote being taken thereon, the following voted in favor thereof: Myrna YYNAj tress, �a Wen 0ar,Mxl j, Debra 4i1s+ro v%, 41 LArmAn, 9P 6r+- I?Ppe and the following voted against the same: None. whereupon said resolution was declared duly passed and adopted. C: 0 fmcommlcapolgl • CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY ROMWALIn L The City of Brooklyn Center makes unrestricted capital expenditures through one of two funds. Generally, small capital expenditures are funded through the general fund and planned for as part of the annual budgeted process for the general fund. Large unrestricted capital expenditures are funded through the capital improvements fund based on resolution 68-246, which was approved in 1968. Capital expenditures are also made through other funds such as the M.S.A. construction fund, the special assessment construction fund, the water fund, the sanitary sewer fund, and the storm drainage fund. These funds each have restrictions in place to guide their expenditures. The objective of this policy is to clarify funding for all unrestricted capital expenditures by specifically defining which capital expenditures are eligible for funding through the capital improvements fund. Unrestricted capital expenditures not meeting the criteria for the capital improvements fund must be made from the general fund operating budget. Specifically excluded from this policy are capital expenditures that are to be reimbursed by insurance proceeds. These may be accounted for through the capital improvements fund at the • discretion of the Director of Finance. SOURCE OF FUNDS: The sources are ad -valorem taxes, issuance of bonds, state and federal grants, transfers of unrestricted balances from other funds and investment earnings. USE OF FUNDS: The Capital Improvements Fund may be used, pursuant to this policy, for expenditures on capital equipment, infrastructure improvements and construction, and similar projects having an aggregate value in excess of $50,000. The types of expenditures contemplated by this policy include projects such as: - building construction, repair, reconstruction, and remodeling, including component systems for heating, ventilation, and air conditioning - equipment and furnishings, including furniture, lights, and communications cabling - street repair, replacement and construction • - park landscaping, shelters, and improvements computer, radio, and telephone systems The expenditures from the Capital Improvements Fund are to be used for general governmental • capital needs and not for enterprise fund capital needs, except as the general governmental portion of a joint project for both general and enterprise purposes. Additionally, the capital improvements fund may be used to provide loans to other funds maintained by the City. However, loans from the capital improvement fund may only be made to proprietary funds which have the ability to generate revenue and repay the loan within 10 years at prevailing interest rates. AUTHORITY TO SPEND: Expenditures meeting the above criteria may be funded through the capital improvements fund based on the following authority limits: A.) Expenditures from $0 to $50,000: Not eligible for funding from the capital improvements fund. Funding is required through the general fund operating budget. B.) Expenditures from $50,001 to $300,000: The City Council may, through simple majority, approve these expenditures. C.) Expenditures over $300,001: Following a public hearing, City Council may, • through a 4/5th's majority, approve expenditures in this category. SPENDING-L-IMITATION/FUND BALANCE REQUIREMENT: The objective as described above and previously defined in Resolution 68-246 requires the capital improvements fund to be a permanent.source of funding for planned major expenditures. As such, the following criteria is established to comply with that intent: Planned Expenditures: If the proposed capital expenditure is in excess of $300,000 it must have been included in the five year capital improvements plan for at least two years. Additionally, the five year capital improvements plan must be approved by the City Council at a public hearing on an annual basis. ROLE OF THE FINANCE COMMISSION: If a review of an expenditure is requested by the City Council from the Finance Commission, the Finance Commission will respond on the basis of the following questions: A) Does the expenditure comply with the Capital Improvements Fund Expenditure Policy? • B.) Is the expenditure appropriate considering the financial condition of the City? CITY OF BROOKLYN CENTER • CAPITAL RESERVE FUND POLICY POLICY OBJECT The objective of this policy is to provide funds to meet emergency needs for capital expenditures that may arise from time to time. While the City carries property and casualty insurance, the City may need additional funds beyond insurance proceeds in the event of natural or other disaster impacting its buildings and their contents, as well as other improvements to real property. Also, unanticipated failure of buildings or improvements to buildings may require immediate expenditure of funds for repair or replacement that are not covered by insurance. The funds placed in the Capital Expenditure Reserve Fund are not to be considered a source for planned or recurring capital needs, but only to deal with emergency needs as described due to damage, loss, or failure of existing buildings and other improvements to real property. Funds may be expended from the Capital Expenditure Reserve Fund for the repair or replacement of buildings or other improvements to real property and their contents where the repair or replacement is necessitated by damage to such buildings or other improvements to real property and their contents due to: • 1) natural disaster such as a tornado, storm, flood, earthquake, or fire 2) fire, vandalism, terrorism, explosion, building or component collapse AUTHORITY TO SPEND: Expenditures meeting the criteria for the use of funds may be funded through the Capital Expenditure Reserve Fund upon Resolution of the City Council finding that the criteria for expenditure have been met and that the use of funds would not otherwise be covered by insurance proceeds, except that the City Council may authorize the use of Capital Expenditure Reserve Funds in anticipation of the receipt of insurance proceeds providing that such funds used in anticipation of insurance proceeds are repaid to the Capital Expenditure Reserve Fund from such insurance proceeds. FUND BALANCE: The Capital Expenditure Reserve Fund shall be established at $1,000,000. Such fund balance shall increase each year by the interest earned on the fund balance. In the event that the fund would drop below $1,000,000, the City Manager shall prepare a plan for restoring the balance to $1,000,000. The fund balance target should reflect an analysis of the City's uninsured exposure to the losses identified in this policy. Such plan, as well as whether the balance should be made higher of lower, shall be reviewed by the Financial Commission and City Council. The • plan adopted by the City Council shall be included in the budgetary process, if the fund's balance is not restored by transfer of existing funds from another fund, such as the Capital Improvement Fund. q1 -0 • fincomm\capdraft Draft March 97 CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY POLICY OBJECTIVE: The City of Brooklyn Center makes unrestricted capital expenditures through one of two funds. Generally, small capital expenditures are funded through the general fund and planned for as part of the annual budgeted process for the general fund. Large unrestricted capital expenditures are funded through the capital improvements fund based on resolution 68-246, which was approved in 1968. Capital expenditures are also made through other funds such as the M.S.A. construction fund, the special assessment construction fund, the water fund, the sanitary sewer fund, and the storm drainage fund. These funds each have restrictions in place to guide their expenditures. The objective of this policy is to clarify funding for all unrestricted capital expenditures by specifically defining which capital expenditures are eligible for funding through the capital improvements fund. Unrestricted capital expenditures not meeting the criteria for the capital improvements fund must be made from the general fund operating budget. Specifically excluded from this policy are capital expenditures that are to be reimbursed by • insurance proceeds. These may be accounted for through the capital improvements fund at the discretion of the Director of Finance. The sources are ad -valorem taxes, issuance of bonds, state and federal grants, transfers of unrestricted balances from other funds and investment earnings. �• :� i.• �__ - T A •� Rte' - _ • • �-• - - - - - - : : - i i ' : i : 9-7-34 • The Capital Improvements Fund may be used, pursuant to this policy, for expenditures on capital equipment, infrastructure improvements and construction, and similar projects having an aggregate value in excess of $50,000. The types of expenditures contemplated by this policy include projects such as: - building construction, repair, reconstruction, and remodeling, including component systems for heating, ventilation, and air conditioning - equipment and furnishings, including furniture, lights, and communications cabling - street repair, replacement and construction - park landscaping, shelters, and improvements - computer, radio, and telephone systems The expenditures from the Capital Improvements Fund are to be used for general governmental capital needs and not for enterprise fund capital needs, except as the general governmental portion of a joint project for both general and enterprise purposes. Additionally, the capital improvements fund may be used to provide loans to other funds O maintained by the City. However, loans from the capital improvement fund may only be made to proprietary funds which have the ability to generate revenue and repay the loan within 10 years at prevailing interest rates. AUTHORITY TO PEND: Expenditures meeting the above criteria may be funded through the capital improvements fund based on the following authority limits: A.) Expenditures from $0 to $25,000 $50,000: Not eligible for funding from the capital improvements fund. Funding is required through the general fund operating budget. B.) Expenditures from $25,001$50,001 to $200,000 $300,000: The City Council may, through simple majority, approve these expenditures. C.) Expenditures over $200,000 $300,001: Following a public hearing, City Council may, through a 4/5th's majority, approve expenditures in this category. 0 q J'S4 • SPENDING LIMITATION/FUND- BALANCE REQUIREMENT: The objective as described above and previously defined in Resolution 68-246 requires the capital improvements fund to be a permanent source of funding for planned major expenditures. As such, the following criteria is established to comply with that intent: A.) Planned Expenditures: If the proposed capital expenditure is in excess of $200-,%9 $300,000 it must have been included in the five year capital improvements plan for at least two years. Additionally, the five year capital improvements plan must be approved by the City Council at a public hearing on an annual basis. ism • ROLE OF THE FINANCE MMI ION: If a review of an expenditure is requested by the City Council from the Finance Commission, the Finance Commission will respond on the basis of the following questions: A) Does the expenditure comply with the Capital Improvements Fund Expenditure Policy? B.) Is the expenditure appropriate considering the fmancial condition of the City? 0