AGENDA MEMORANDUM

Meeting Date: October 13, 2008

From:                          Brandy McDaniel, Budget Manager

                                    Jerry Boop, CPA, CGFO Finance Director                                                                

Subject:                      Ordinance reallocating the 2007 Capital Improvement Bond for the Electric Fund

Staff Recommendation:

Staff recommends adoption of the attached ordinance reallocating the 2007 Capital Improvement Bonds for the Electric Fund.

Analysis:

As established in the Budget Policy, adopted September 28, 1998, total appropriations within a fund cannot increase or decrease without formal action by the City Commission.

The following adjustments are required to reallocate the 2007 bond funds among the projects based on actual and projected expenditures (see attached narrative explanation):

Project                                                Current Budget                     Proposed Budget         Difference

Meters                                     $          -0-                               $      120,000               $       120,000

Transformers                                       -0-                                       500,000                        500,000

Distribution Lines                            5,789,520                                        7,257,728                     1,468,208

Lighting Projects                                 -0-                                       200,000                        200,000

Subdivisions                                    1,000,000                                            815,700                       (184,300)

Reconductoring                               2,733,480                                         1,783,480                      (950,000)

Substations                                          -0-                   200,000            200,000 

                                                $      9,523,000                                    $ 10,876,908               $    1,353,908

During discussions regarding the 2007 Bond Issue, the City Commission and City Manager provided the City’s Financial Advisor, D.A. Davidson, a directive not to exceed $50,000,000 for the public offering.  The final offering for the 2007 issue came in at $46,470,000 well below the $50,000,000 directive and yielded an additional $1,000,000 to the Electric Fund for Capital Projects associated with Distribution Lines.  This amount was set aside and not used as a funding source until a need could be identified.  The Electric department has had substantial expenses for Distribution lines that were originally to be funded from current revenue. One major Distribution line project is the ongoing Carver Heights area conversion from overhead to underground which to date totals $249,716.  Any funds spent from current revenue have the effect of reducing cash on hand and the cash reserve.  As a result, the Finance department is requesting that the City use the additional bond proceeds to fund the capital projects associated with the distribution lines.   Reclassifying these funds will improve the liquidity and financial position of the Electric Fund which has had to absorb the increase in the cost of purchased power.  

In addition, the pending agreement with Citigroup regarding the overpayment on the Electric System Revenue Bonds Series 2007A yields an additional $353,908 to the Electric Fund.  Due to ongoing negotiations, this amount was not included as available proceeds from the 2007A issue.  Now that we are nearing a settlement, Citigroup has agreed to relinquish these funds to the city, making the funds available for Electric bondable projects.

Options:

1. Adopt the attached ordinance reallocating the 2007 Capital Improvement Bond for the Electric Fund; or

2.  Such alternative action as the Commission may deem appropriate

Fiscal Impact: 

The only impact on the budget is the additional funds from the Citigroup settlement.  The use of additional bond proceeds ($1,000,000) has no impact on the budget as it is only a change in funding source.  The following funds will change as illustrated below:

FUND	FY 2009 CURRENT	CHANGE	FY 2009 AMENDED
Electric	$  75,953,133	$  353,908	$  76,307,041

Submission Date and Time:    10/24/2008 6:01 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. _________________ Project No. ___________________ WF No. ______________________ Budget  ______________________ Available _____________________

Narrative Explanation- Reallocation of Funds 2007 Electric Fund

Capital Improvement Bond Funded Projects

Meters (+120,000)

Funding to include the cost of installing meters or devices for use in measuring the electricity delivered to users. 

Transformers (+500,000)

Funding to include the cost of installing overhead and underground distribution line transformers, pole-type, and underground voltage regulators for use in transforming electricity to the voltage at which it is to be used by the customer. 

Distribution Lines (+1,468,208)

Funding to include the cost to install poles and fixtures used for supporting overhead conductors and service wires used for distribution purposes.  Additionally, funding for underground conduit, conductors and devices used for distribution purposes. 

Lighting Projects (+200,000)

Funding to include the cost to install public street and highway lighting.

Subdivisions (-184,300)

Funding to include the cost to install overhead or underground distribution specifically for subdivisions.  Due to the slowdown in the economy the funding for this project is being decreased to be used on other pertinent projects.

Reconductoring (-950,000)

Funding to include the cost to replace existing conductors with larger wire to provide additional capacity to meet anticipated future demand within developing areas.  This project is being reduced due replacing wire as it becomes necessary instead of doing a large scale reconductoring project on a specific area.

Substations (+200,000)

Funding to include the cost to install station equipment, including transformer banks, which are used for the purpose of changing the characteristics of electricity with its distribution.

ORDINANCE NO._______________

AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA AMENDING THE FISCAL YEAR 2008-09 BUDGET FOR THE ELECTRIC FUND; REALLOCATING THE 2007 CAPITAL IMPROVEMENT BOND FUNDS; AND PROVIDING AN EFFECTIVE DATE.

WHEREAS, the City Commission of the City of Leesburg adopted a budget for Fiscal

Year 2008-09 on September 22, 2008, which they felt was in the best interest of the citizens of the City of Leesburg and

WHERAS, it is now necessary to amend the current budget for Fiscal Year 2008-09 to provide funds for various projects as adopted at City Commission meetings, and

WHEREAS, such action was not anticipated in the original 2008-09 annual budget;

            NOW THEREFORE, BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA:

SECTION I.

            Pursuant to Section 200.065, Florida Statutes, and all other applicable laws, the following amounts for use by various funds during Fiscal Year 2008-09 as reflected below, including all modifications or amendments made during this meeting, are hereby adopted as increases/decreases to the original budget for Fiscal Year 2008-09 for the City of Leesburg, Florida:

ELECTRIC FUND

ESTIMATED REVENUES AND OTHER RECEIPTS

Other Financing Sources:

    Debt Service                                                                                                            353,908

TOTAL ESTIMATED REVENUES AND OTHER RECEIPTS                353,908

PROPOSED APPROPRIATIONS

Physical Environment                                                                                     353,908

TOTAL PROPOSED APPROPRIATIONS                                                 353,908

ALL FUNDS

ESTIMATED REVENUES AND OTHER RECEIPTS

Other Financing Sources:

     Debt Service                                                                                              353,908

TOTAL ESTIMATED REVENUES AND OTHER RECEIPTS               353,908

ALL FUNDS

PROPOSED APPROPRIATIONS

Physical Environment                                                                                    353,908

TOTAL PROPOSED APPROPRIATIONS                                                353,908

SECTION II.

            This ordinance shall become effective upon its passage and adoption by the Leesburg City Commission in the manner provided by law.

PASSED AND by the City Commission of the City of Leesburg, Florida, at a regular meeting held the __13___ day of __October_______ 2008.

                                                                            __________________________

                                                                             Mayor

ATTEST:

__________________________

City Clerk