HomeMy WebLinkAbout20110103 - VI-08
City Council Memorandum
To: Mayor Hicks & City Councilmembers
From: Charlene Stark, Finance Director
Date: 12/27/2010
Item: Transfer and set up of interfund receivable/payable for 2010.
Council Action Requested:
Approve the requested transfer from the water fund to cover the deficit in the construction fund.
A $800,000 transfer is requested. An interfund receivable/payable betweent the water fund and
the road construction capital fund will be recorded.
Background Information:
Late this fall the City issued bonds for the 2010 construction project. At the time of closing it
was discovered there was a calculation error on the spreadsheet given to Springsted for the
issuance of the bonds. This error resulted in the City not issuing enough bonds to cover the cost
of the project. It has been decided to wait until the 2011 project to issue additional debt to cover
the deficit. The primary reason being the cost of issuance outweighs the cost of covering the
deficit in the fund for nine months. In the meantime for reporting purposes the fund for the
construction project has negative cash and at the end of the year the deficit needs to be amended.
The water fund has significant cash to do this at the end of the year. A one day reporting
interfund receivable will be recorded and cash transferred to the road construction project fund.
This will be reversed in the 2011 accounting year.
Financial Impact:
The water fund will show an interfund receivable due to the water fund by the construction fund.
This is for reporting at year end. The fund's cash will be reestablished at the beginning of the
year.
Advisory Commission Discussion:
NA
Council Committee Discussion:
NA
Attachments:
NA