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HomeMy WebLinkAboutMinutes - Finance Committee - 05/20/2013 -r C .Finance AdministrationI0Foi1t_CoLLins E!E;080522 ____________________97Oc22L6782~fax Council Audit &Finance Committee Minutes 5/20/13 10:00 to 12:00 CIC Room Council Attendees:Mayor Karen Weitkunat,Ross Cunniff,Bob Overbeck Staff:Darin Atteberry,Mike Beckstead,Carrie Daggett, lngrid Decker,Chris Donegon,Harold Hall,John Voss, Katie Wiggett Others:Jim Manire,Joel Stewart Approval of the Minutes of March 18,2013 Ross Cunniff moved to approve the minutes for the March 18,2013 meeting.Bob Overbeck seconded the motion.Minutes were approved unanimously. Election of Officers Ross Cunniff nominated the Mayor as chair of the Council Audit and Finance Committee.Bob Overbeck seconded the nomination. Other Business Mike Beckstead announced an additional item on the Agenda.The item “Funding for the Murphy Center”was added. URA North College Refinance John Voss presented the URA’s plan to refinance approximately $11.2 million of the debt it originally borrowed from the City in relation to the North College area.Because an established revenue stream can be shown to investors,private money can be used to replace City money.The 2013 bonds require the URA to establish a debt reserve fund.To better enhance the credit rating on the replacement debt, the City must pledge to replenish the URA’s debt reserve fund if the URA ever uses the funds to make debt payments.With the City’s pledge,the new URA debt is expected to have an effective interest rate of 2.98%and a credit rating of Aa3.Without the City’s pledge,the interest rate would likely be 5%or higher.The refinancing of this debt will improve the cash flows of the URA and is expected to save $922,000 through 2029. The City’s pledge includes a commitment to maintain an unrestricted fund balance in the General Fund in an amount at least equal to the Reserve Fund Requirement,estimated at $961,000.The General Fund can easily meet that requirement:at the end of 2012,the collective unrestricted fund balances in o 0 the General Fund totaled $37 million.Property tax revenue in the North College IJRA plan area is unlikely to decline enough to trigger the use of the Debt Service Reserve Fund. Ross Cunniff asked how this restriction in the General Fund would be noted if a special reserve fund were not created.John Voss said that there will be a note within the general fund,setting aside the reserve fund money.A future CFC topic on Fund Balance will explain this further. Council Finance Committee reviewed and tentatively approved the refinancing and the concept of a debt reserve replenishment pledge at their meeting on December 17,2012.Staff recommends that this topic be brought to council on June 4 because it is a time sensitive issue. Projected Timeline — May 16 Send rating documents to Moody’s May29 Receive credit rating from Moody’s June 4 City Council and URA Board approve refinancing actions June 6 Publish Preliminary Official Statement on internet sites June 18-19 Market Bonds July 9 Closing Actuary Annual Pension Valuation Report (GERP)(Milliman) Joel Stewart of Milliman presented the January 1,2013 Actuary Annual Pension Valuation.Highlights of the Report: •The Market Value of Assets is $39,489,447 for 2013,which is an increase from $37,015,380 in 2012 •The Actuarial Value of Assets is $38,940,438 for 2013,which is a decrease from $39,973,803. The reason for this decrease is the deferred loss from 2008.We deferred the 2008 loss of $15,153,315,recognizing 20%each year for five years to smooth out the effect of the loss. This year will be the last year affected by that loss. •The Funded Percentage from an Actuarial basis is down from 74.3%in 2012 to 71.2%in 2013. •However,the Funded Percentage from the Market Value of Assets basis is up from 68.8%in 2012 to 72.2%in 2013. As of January 1,2013,there are a total of 454 plan members,140 of which are active,129 of which are term vested and 185 of which are retired.The total numbers of members is lower than last years 462. Because this is a closed group,the numbers can be expected to steadily decrease. Joel presented Milliman’s forty year projection of contributions,benefit payments,and market value of assets,a projection in which supplemental contributions end in 2033.The projection assumes Market Value of Assets earns 6.8%per annum,and contributions are 10.5%of compensation.It includes supplemental contributions of $1,120,000 for 2013-2033.Under the current projection assumptions the ending asset value in year 2052 should be zero. Ross asked to see the most recent report on the Plan’s Investments.Harold Hall will provide the Quarterly Report to Council.Ross also asked whether it was possible to shift existing employees over to the current retirement plan.John Voss replied that case law doesn’t allow members to be changed after C’ City of~flCçjfln~ins retirement age,meaning only 30 GERP members would be eligible for change.John noted that in 2012 Steve Roy prepared a report on the City’s options with the Plan.Staff will send Council the report. Funding for the Murphy Center When the Sister Mary Alice Murphy Center of Hope opened in 2009,United Way committed to owning/funding/operating the Center for 3 years.Now that 3 years have passed,Serve6.8 intends to take ownership and operation of the Center.Serve 6.8 is the “community service”arm of the Timberline Church.It has 501.c.3 status.The United Way of Larimer County is requesting City funding in the amount of $45,000 for the operation of the Murphy Center,from January to July,2013 (six months) to help keep the nonprofit open during the transition. Other funding partners include United Way ($58,000),Bohemian Foundation ($45,000)and Serve6.8 ($35,000).The Murphy Center is the one-stop center in Fort Collins for homeless and near homeless persons;approximately 23 agencies provide services at the Center. Since 2004,the City has contributed approximately $90,000 in CDBG and General Fund dollars to build the facility,and as such has a legal and financial interest.In addition,the City has funded several of the agencies that occupy the Center.The City’s goal in funding the transition would be to smooth the transition on executing new legal documents and to ensure that parameters for property use tied to federal funding are clear. Staff are interested in ensuring that the Murphy Center continues to play a critical role in care for the homeless and near homeless.The City’s donation will come from the General Fund Reserves.Providing financial assistance to the Murphy Center can be seen as a long term investment in the community. Ingrid Decker of the City’s Attorney Office shared the legal context for making the donation.According to the City Charter,the City cannot appropriate funds for private businesses.However there is a public purpose exception which Council has used in the past.The Murphy Center,touching several programs the City already helps through HUD and touching a public need,may qualify for this exception. However,Council may want to clearly define the use of this exception to avoid future conflicts. Ross Cunniff agreed that Council may want to define its policy on funding with the Public Purpose exception,noting that this is a question of “can we?”and “should we?”Council Finance will bring this policy up as a future agenda topic. Council Direction I Next Steps The Council Finance supports the URA Refinance and recommends that it be brought to Council on June 4. Staff will sent Council the GERP Quarterly Report as well as the legal report from Steve Roy.