HomeMy WebLinkAbout12-29-08 Common Council Mintues
SPECIAL MEETING DECEMBER 29, 2008
Be it remembered that the Common Council of the City of South Bend, Indiana met in
the Council Chambers of the County-City Building on Monday, December 29, 2008 at
12:00 p.m. The meeting was called to order by Council President Rouse and the
Invocation and Pledge to the Flag were given.
ROLL CALL
COUNCILMEMBERS:
Present: Derek D. Dieter 1st District, Chairperson Committee of the Whole
Henry Davis, Jr. 2nd District
Ann Puzzello 4th District
Oliver Davis 6th District Vice-President
Timothy Rouse At-Large President
Al “Buddy” Kirsits At-Large
Karen L. White At-Large
Absent: Thomas LaFountain 3rd District
David Varner 5th District
OTHERS PRESENT:
John Voorde City Clerk
Mary Beth Wisniewski Chief Deputy
Janice I. Talboom Deputy City Clerk
Aladean DeRose Chief Assistant City Attorney
RESOLUTIONS
RESOLUTION NO. 3932-08 A RESOLUTION OF THE COMMON
COUNCIL OF THE CITY OF SOUTH
BEND, INDIANA, LOANING MONIES
FROM VARIOUS FUNDS TO OTHER
FUNDS TO PAY OFF PREVIOUSLY
ISSUED TAX ANTICIPATION TIME
WARRANTS
WHEREAS, on June 9, 2008 due to property tax reassessment and anticipated
delays in the timing of receipt of tax revenues by the City of South Bend, the Common
Council enacted Ordinance No. 9846-08 authorizing the Mayor and/or the Controller to
make temporary loans to meet certain current operating expenses out of various funds of
the City in anticipation of and not in excess of current taxes levied in the year 2007 and
collectible in the year 2008. Ordinance No. 9846-08 further authorized the issuance of
temporary loan Tax Anticipation Time Warrants to evidence such loans and the sale of
such warrants; and
WHEREAS, the City expected that by December 30, 2008 it would have received
property tax revenues; however, it is unlikely the City will receive sufficient property tax
revenues prior to December 30, 2008 to (i) pay off the Tax Anticipation Time Warrants
issued pursuant to Ordinance 9846-08 which tax warrants mature and are payable in full
with interest on December 30, 2008, and (ii) meet current operating expenses of various
funds of the City. This Ordinance authorizes the loan of monies from various Funds
within the City to pay off the Tax Anticipation Time Warrants issued pursuant to
Ordinance 9846-08; and
WHEREAS, the loan of funds under the City’s present financial circumstances is
an emergency caused by the delay in receiving tax revenues levied in 2007 and payable
in 2008 which have yet to be paid to the City. Without such inter-fund loans, the City
cannot meet its ongoing payroll and other operating expense without incurring
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SPECIAL MEETING DECEMBER 29, 2008
substantially greater debt. Therefore, due to emergency, the repayment of temporarily
transferred funds must be delayed as authorized by Ind. Code 36-1-8-4; and
WHEREAS, all Funds from which loans are to be made have sufficient monies on
deposit to make the temporary loans specified in this Resolution.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
South Bend, Indiana:
Section I. The aggregate sum of Eight Million Eight Hundred Fifty One
Thousand Dollars ($8,851,000) shall be temporarily borrowed from certain City funds
and loaned to other City funds as follows:
Borrowed From:
Health Insurance Fund (#711) $5,000,000
Liability Self Insurance Fund (#226) $2,651,000
Rainy Day Fund (#102) $1,200,000
Total $8,851,000
Loaned To:
General Fund (#101) $6,103,000
Parks and Recreation Fund (#201) $2,035,000
Hall of Fame Bond Fund (#313) $ 713,000
Total $8,851,000
Section II. An emergency exists which necessitates the borrowing of monies
from Funds 711, 226, and 102 and the loaning of those monies to Funds 101, 201, and
313, so that, pursuant to I.C. 36-1-8-4(b), repayment of such loans by the borrowing Fund
of these monies is extended until June 30, 2009.
Section III. This Resolution shall be in full force and effect as of December 30, 2008.
Timothy A. Rouse
s/
Member of the Common Council
th
Catherine Fanello, City Controller, 12 Floor County-City Building, 227 W. Jefferson
Blvd., South Bend, Indiana, made the presentation for this bill.
Ms. Fanello advised that this bill temporarily loans Five Million Dollars ($5,000,000.00)
from the Health Insurance Fund (No. 711), Two Million Six Hundred Eighty-One Dollars
($2,681,000.00) from the Liability Self Insurance Fund (No. 226) and One Million Two
Hundred Thousand Dollars ($1,200,000.00) from the Rainy Day Fund (No. 102) to repay
the Tax Anticipation Time warrants due December 30, 2008 under Ordinance 9846-08
from General Fund (No. 101), Parks and Recreation Fund (No. 201) and Hall of Fame
Bond (No. 313). These temporary loans in the aggregate total Eight Million Eight
Hundred Fifty-One Thousand Dollars ($8,851,000.)
A Public Hearing was held on the Resolution at this time.
There being no one present wishing to speak to the Council either in favor of or in
opposition to this Resolution, Councilmember White made a motion to adopt this
Resolution. Councilmember Dieter seconded the motion which carried and the
Resolution was adopted by a roll call vote of seven (7) ayes.
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SPECIAL MEETING DECEMBER 29, 2008
RESOLUTION NO. 3933-08 A RESOLUTION OF THE COMMON
COUNCIL OF THE CITY OF SOUTH
BEND, INDIANA, AUTHORIZING A
TEMPORARY LOAN OF MONIES FROM
THE RAINY DAY FUND (#102), THE
LOSS RECOVERY FUND (#227), THE
COUNTY OPTION INCOME TAX FUND
(#404), THE AIRPORT TIF FUND (#324),
AND THE HEALTH INSURANCE FUND
(#711) TO THE GENERAL FUND (#101),
THE PARKS AND RECREATION FUND
(#201), AND HALL OF FAME BOND
FUND (#313) FOR THE PURPOSE OF
MEETING OPERATIONAL NEEDS OF
THE CITY
WHEREAS, the City expected that by December 30, 2008 it would have received
property tax revenues for 2008 levied in 2007; however, it is unlikely the City will
receive sufficient property tax revenues prior to December 30, 2008 to meet the current
operating expenses of various funds of the City; and
WHEREAS, because the City of South Bend has not yet received its 2008
distribution of property tax revenue, an emergency exists requiring a loan from various
funds within the City to other funds in order to meet payroll and other regular operating
expenses of the City; and
WHEREAS, this emergency justifies an extension of the deadline for repayment
of the interfund loans, that is, to June 30, 2009; and
WHEREAS, all Funds from which loans are to be made have sufficient monies on
deposit to make the temporary loans specified in this Resolution.
NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF
THE CITY OF SOUTH BEND, INDIANA, as follows:
Section I. The aggregate sum of Fourteen Million Nine Hundred Fifty Thousand
Dollars ($14,950,000) shall be temporarily borrowed from certain City funds and loaned
to other City funds as follows:
Borrowed From:
Rainy Day Fund (#102) $4,500,000
Loss Recovery Fund (#227) $4,460,000
County Option Income Tax Fund (#404) $2,480,000
Airport TIF Fund (#324) $2,810,000
Health Insurance Fund (#711) $700,000
Total $14,950,000
Loan To:
General Fund (#101) $12,000,000
Parks and Recreation Fund (#201) $2,500,000
Hall of Fame Bond Fund (#313) $450,000
Total $14,950,000
Section II. Because an emergency exists due to the City’s non-receipt of its 2008
distribution of property taxes, the above listed loans shall be repaid from the borrowing
Fund to the lending Fund promptly upon and from the City’s receipt of tax revenues
levied in 2007 payable in 2008, or by June 30, 2009, whichever is earlier, pursuant to I.C.
36-1-8-4 (b).
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SPECIAL MEETING DECEMBER 29, 2008
Section III. This Resolution shall be in full force and effect on December 30,
2008.
s/Timothy A. Rouse
Member of the Common Council
th
Catherine Fanello, City Controller, 12 Floor County-City Building, 227 W. Jefferson
Blvd., South Bend, Indiana, made the presentation for this bill.
Ms. Fanello advised that this bill addresses the unusual current financial circumstances of
the City. These circumstances were caused by non-receipt as yet of City property tax
revenues levied in 2007 payable in 2008. This resolution temporarily loans Five Million
Dollars ($5,000,000.00) from the Health Insurance Fund (No. 711), Two Million Six
Hundred eight-One Dollars ($2,681,000.00) from the Liability Self Insurance Fund (No.
226) and One Million Two Hundred Thousand Dollars ($1,200,000.00) from the Rainy
Day Fund (No. 102) to repay the Tax Anticipation Time Warrants due December 30,
2008 under Ordinance 9846-08 from general Fund (No. 101), Parks and Recreation Fund
(o. 201) and Hall of Fame Bond Fund (No. 313). These temporary loans in the aggregate
total Eight Million Eight Hundred Fifty-One Thousand Dollars ($8,851,000.)
A Public Hearing was held on the Resolution at this time.
There being no one present wishing to speak to the Council either in favor of or in
opposition to this Resolution, Councilmember Oliver Davis made a motion to adopt this
Resolution. Councilmember Dieter seconded the motion which carried and the
Resolution was adopted by a roll call vote of seven (7) ayes.
RESOLUTION NO. 3934-08 A RESOLUTION OF THE COMMON
COUNCIL OF THE CITY OF SOUTH
BEND, INDIANA, APPROPRIATING
MONIES FROM THE GENERAL FUND
(NO. 101), THE PARKS AND
RECREATION FUND (NO. 201), THE
HALL OF FAME BOND FUND (NO. 313)
IN THE AGGREGATE SUM OF ONE
HUNDRED FIFTY ONE THOUSAND
DOLLARS ($151,000) TO PAY OFF
INTEREST DUE AND OWING ON THE
TAX ANTICIPATION TIME WARRANTS
ISSUED PURSUANT TO ORDINANCE
NO. 9846-08
WHEREAS, on June 9, 2008 due to property tax reassessment and anticipated
delays in the timing of receipt of tax revenues by the City of South Bend, the Common
Council enacted Ordinance No. 9846-08 authorizing the Mayor and/or the Controller to
make temporary loans to meet certain current operating expenses out of various funds of
the City in anticipation of and not in excess of current taxes levied in the year 2007 and
collectible in the year 2008. Ordinance No. 9846-08 further authorized the issuance of
temporary loan Tax Anticipation Time Warrants to evidence such loans and the sale of
such warrants.
WHEREAS, the City expected that by December 30, 2008 it would have received
property tax revenues; however, it is unlikely the City will receive sufficient property tax
revenues prior to December 30, 2008 to (i) pay off the Tax Anticipation Time Warrants
issued pursuant to Ordinance 9846-08 which mature and are payable in full with interest
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SPECIAL MEETING DECEMBER 29, 2008
on December 30, 2008, and (ii) meet current operating expenses of various funds of the
City.
WHEREAS, this Resolution authorizes appropriation of monies from various
Funds within the City to pay off interest due and payable December 30, 2008 on the Tax
Anticipation Time Warrants issued pursuant to Ordinance 9846-08.
NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF
THE CITY OF SOUTH BEND, INDIANA, as follows:
Section I. The sum of One Hundred Three Thousand Dollars ($103,000) is set
aside within and appropriated from General Fund (Fund No.101) to pay interest due and
owing as of December 30, 2008 on Tax Anticipation Time Warrants issued previously in
calendar year 2008 pursuant to Ordinance No. 9846-08.
Section II. The sum of Thirty-Five Thousand Dollars ($35,000) is set aside within
and appropriated from Parks and Recreation Fund (Fund No. 201) to pay interest due and
owing as of December 30, 2008 on Tax Anticipation Time Warrants issued previously in
calendar year 2008 pursuant to Ordinance No. 9846-08.
Section III. The sum of Thirteen Thousand Dollars ($13,000) is set aside within
and appropriated from Hall of Fame Bond Fund (Fund No. 313) to pay interest due and
owing as of December 30, 2008 on Tax Anticipation Time Warrants issued previously in
calendar year 2008 pursuant to Ordinance No. 9846-08.
Section IV. This Resolution shall be in full force and effect on December 30,
2008.
s/Timothy A. Rouse
Member of the Common Council
th
Catherine Fanello, City Controller, 12 Floor County-City Building, 227 W. Jefferson
Blvd., South Bend, Indiana, made the presentation for this bill.
Ms. Fanello advised that this bill authorizes an aggregate temporary loan of Fourteen
Million Nine Hundred Fifty Thousand Dollars ($14,950,000.00) in monies from the
Rainy Day Fund (No. 102), the newly created Loss Recovery Fund (No. 227), the county
Option Income Tax Fund (No. 404), the Airport TIF Fund (No. 324), and the Health
Insurance Fund (#711) to the General Fund (No. 101), the Parks and Recreation Fund
(No. 201), and Hall of Fame Bond Fund (No. 313). These loans from various Funds are
for the purpose of meeting the City’s daily and ongoing expenses pending receipt of 2008
property tax revenues. This will eliminate the need and expense of issuing Temporary
Tax Anticipation Time Warrants to cover the delay in receipt of tax revenues.
A Public Hearing was held on the Resolution at this time.
There being no one present wishing to speak to the Council either in favor of or in
opposition to this Resolution, Councilmember Dieter made a motion to adopt this
Resolution. Councilmember Oliver Davis seconded the motion which carried and the
Resolution was adopted by a roll call vote of seven (7) ayes.
MISCELLANEOUS MATTERS
CLARIFICATION ON UNRESERVED FUND BALANCES
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Catherine Fanello, City Controller, 12 Floor County-City Building, 227 W. Jefferson
Blvd., South Bend, Indiana, read into the record to clarify some confusion that was
reported in the newspaper and on news broadcasts.
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SPECIAL MEETING DECEMBER 29, 2008
Ms. Fanello stated that an unreserved fund balance is simply that portion of a fund’s cash
balance that is not formally budgeted or restricted in some manner. An unreserved fund
balance may contain portions set aside for cash flow, also know as “cash reserves.” In
other words, an unreserved fund balance may be designated which is different that
restricted. Besides cash reserves, it may also contain amounts tentatively scheduled to be
budgeted in the short term (i.e. capital projects, other unanticipated expenditures not
know during the formal budget process.) An unreserved fund balance is calculated by
subtracting the fund’s liabilities from the fund’s net assets.
At 12/31/07, the General Fund’s net assets were $35.6 million. Of this $35.6 million, $9.4
million was in receivables, meaning the City was owed this amount as of 12/31/07.
Subtracting the $11.9 million of liabilities from the $35.6 million dollars in assets left the
City with an unreserved fund balance of $21.5 million. That was one year ago.
The City of South Bend designates 20% of general fund expenditures as a “cash reserve” or
an unreserved (not budgeted) fund balance. This equates to approximately two months of
expenditures for the general fund. During 2007 the targeted fund balance provided for
cash flow purposes was projected at $15.4 million. However, during 2007 this reserve
never materialized in cold hard cash until the last quarter of 2007 because the 2007
property tax revenue that should have been received in early 2007 was not received until
the end of 2007. It would have been impossible to spend cash in 2007 that did not exist.
The City took out a minimum amount of loans in June of 2007 to have enough cash to
pay bills throughout 2007 until property taxes could be received. The loans were paid off
in the last quarter of 2007.
Also, remember, we always have budgeted capital projects at the beginning of the
following year with monies remaining at the end of the previous year. The $21.5 million
in the general fund at 12/31/2007 not only included the targeted cash reserve but
contained leftover dollars that could fund a capital program for 2008 as well. During
2008, additional appropriations of $1.9 million were approved by the Council. Because
we have not received cash during 2008 from property taxes, no further appropriations
were made during 2008. Currently, we have $0 dollars available for appropriation
because we have not received our full tax receipts for 2008. The City does NOT
maintain surpluses. Such a thing doesn’t truly exist in government finance because every
dollar collected is designated in some manner for expenditures or cash flow management.
We are not allowed to collect more than what we need for the budget and an operating
balance. This is reviewed by the DLGF on Form 4B.
The Government Finance Officers Association (GFOA) recommends that, “the adequacy
of unreserved fund balances in the general fund should be assessed based upon a
government’s own specific circumstances…Nevertheless, GFOA recommends a minimum
of no less that 5 to 15 percent of regular fund operating revenues, or of no less than one to
two months of regular general fund operating expenditures.”
The GFOA also notes that “A Government’s particular situation may require levels of
unreserved fund balance in the general fund significantly in excess of these recommended
minimum levels.” The comment in the CAAFR that our reserve was healthy was made by
our office not the State Board. The State Board does not write the City’s Management
and Discussion Analysis section.
Let’s remember that the County has failed to collect property tax revenues on time for the
past five years. This significantly changes our approach and method to cash flow
management. We must be responsible and conservative to ensure that the City does not
overdraw funds. A responsible cash flow policy has saved several hundreds of thousands
of dollars in interest for the taxpayers by not having to borrow until June of 2008. Our
interest is around $150,000 while other entities have spent anywhere from $600-900,000
in interest.
Once again, the tax bills are late and are later than ever. We won’t receive 2008 proeprty
tax revenue until 2009. We are also projecting to receive only 94% of the projected levy
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SPECIAL MEETING DECEMBER 29, 2008
of $53 million. This could result in approximately receiving #3 million dollars less than
expected in the General Fund.
We have received only $10 million dollars of property tax revenue in the general fund
from the voluntary payments requested by the County. A receivable in the General Fund
for property taxes of approximately $43 million will exist at the end of 12/31/08. The
general fund is currently $10 million overdrawn; zero dollars to spend or appropriate.
That is why we are here today to borrow funds from ourselves, once again saving
taxpayers interest.
All other funds mentioned by the governor existed is various funds not available for
general spending. For example, Local Roads and Streets, Major Moves, various TIF
funds, EDIT, COIT, Rainy Day Fund, MVH, Local Road & Street, Human Rights
Federal Funds, Law Enforcement Continuing Education, Studebaker Federal and State
Grants. Most of these are restricted to specific uses and many have cash reserve policies
as well. No surpluses existed in these funds.
Councilmember’s White, Henry Davis, Dieter, Kirsits and Rouse thanked Ms. Fanello for
the clarification. They noted that transparency in government is vital for State, County
and City governments to exist.
ANNOUNCEMENT OF NEXT MEETING DATE
Council President Timothy Rouse announced that the Organizational Meeting of the
Common Council will take place on Monday, January 5, 2009 at 7:30 p.m. in the Council
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Chambers, 4 Floor County-City Building, 227 W. Jefferson Blvd., South Bend, Indiana.
ADJOURNMENT
There being no further business to come before the President Timothy Rouse adjourned
the meeting at 12:40 p.m.
ATTEST: ATTEST:
____________________________ ____________________________
John Voorde, City Clerk Timothy Rouse, President
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