Item No: 5G.

Meeting Date: September 24, 2012

From: Bill Spinelli, Finance Director, CPA

Subject: Resolution approving a Special Transfer from the Gas Utility to the Magnolia Townhomes Fund in the amount of $966,820 for debt service associated with the Kristen Court property

Staff Recommendation:

Staff recommends approval of a Special Transfer from the Gas Utility to the Magnolia Townhomes Fund in the amount of $966,820 for debt services associated with the Kristen Court property.

Analysis:

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. Approve the special transfer from the Gas Utility to the Magnolia Townhomes Fund in the amount 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: 9/24/2012 3:34 PM____

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. _042-2088-581-9151___ Project No. ___________________ WF No. ______________________ Budget ______________________ Available _____________________

RESOLUTION NO._______________

RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, AUTHORIZING A SPECIAL TRANSFER FROM THE GAS UTILITY TO THE MAGNOLIA TOWNHOMES FUND IN THE AMOUNT 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 authorizes the Special Transfer of $966,820 from the Gas Utility to the Magnolia Townhomes 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 _24^th ____ day of _September________ 2012.

________________________________

Mayor

ATTEST:

________________________________

City Clerk