Loading...
2012-071-1666 - CITT Alocation 1 City of Miami Gardens Agenda Cover Memo Council Meeting Date: May 9, 2012 Item Type: (Enter X in box) Resolution Ordinance Other X Fiscal Impact: (Enter X in box) Yes No Ordinance Reading: (Enter X in box) 1st Reading 2nd Reading X Public Hearing: (Enter X in box) Yes No Yes No X Funding Source: C.I.T.T. Funds (Settlement) Advertising Requirement: (Enter X in box) Yes No X Contract/P.O. Required: (Enter X in box) Yes No RFP/RFQ/Bid #: X N/A Strategic Plan Related (Enter X in box) Yes No Strategic Plan Priority Area: Enhance Organizational Bus. & Economic Dev. Public Safety Quality of Education Qual. of Life & City Image Communication Strategic Plan Obj./Strategy: (list the specific objective/strategy this item will address) X Sponsor Name Dr. Danny Crew, City Manager Department: City Manager Short Title: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, AUTHORIZING THE ALLOCATION OF CITT FUNDING RECEIVED IN ACCORDANCE WITH THE SETTLEMENT AGREEMENT WITH MIAMI-DADE COUNTY IN REFERENCED REFERENCED TO THE CITY’S TRANSPORTATION SURTAX FUNDS; PROVIDING FOR THE ADOPTION OF REPRESENTATIONS; PROVIDING FOR AN EFFECTIVE DATE. Staff Summary: Background The City has finally settled its legal issues with Miami-Dade County regarding CITT funding. As a result, it now becomes necessary to determine how the funding will be used. As you know, the City will be receiving $10,056,888 in a one-time payment from the CITT Trust. While the City does not have to follow Miami-Dade CITT rules and regulations regarding the use of these funds, ITEM K-4) CONSENT AGENDA RESOLUTION CITT Funding Allocation 2 State Statutes regarding the use of the surtax dollars would need to be followed. These Statutes require that these funds be used for transportation purposes. However, the State definition of transportation use is broader than the County’s. As part of the settlement, the County recognized that the City has made a number of expenditures over the past eight (8) years for transportation-related purposes from non-transportation funds such as the City’s General Fund, the Capital Improvements Fund and the Stormwater Fund. Had the City been receiving CITT funds, these expenditures could have been paid for by these revenues instead. Attached in Exhibit #1 is a breakdown of mostly capital transportation-related expenditures over the past eight (8) years. The breakdown shows that approximately 65% of the expenditures made for transportation expenses were made from non-transportation funds. Applying this percentage to the $10,056,888 means that the General Fund would receive $6,536,977 and the Transportation Fund would receive $3,519,911. Like any receipt of one-time revenue, the CITT funds should not be used to establish or to maintain any on-going enterprise or activity. To do so would be to build a structural deficit into the budget. Thus, the appropriate use of these funds is either to improve the City’s financial position through the bolstering of the reserve, or for one-time expenditures. An additional unique use of these funds would be to retire outstanding bond issues with a one-time payment, thus freeing up debt service for other continuing obligations. Current Situation The approach that is being recommended provides a combination of these alternatives that concurrently 1) improves the City’s financial condition, 2) pays down some of the City’s debt, and 3) provides funding of the new City Hall debt service that will begin next fiscal year. 1. When the City Council approved the City Hall Bond, it was understood that in lieu of a tax increase, expiring bond issue debt service would be repurposed to pay the new new debt service. In order to do this, the City must first have to retire five (5) outstanding bond issues. It is being recommended that $3,727,166 of the CITT Funds be used to do this as outlined in Table 1 below. Not only will this free-up recurring debt service funds to be re-purposed to pay the City Hall debt service, but it will enable the City to lower its outstanding debt and improve the City’s debt-to-budget and debt-to-population ratio metrics in the annual financial report. TABLE 1 -PROPOSED USE OF GENERAL FUND CITT ALLOCATION FOR CITY HALL PAYMENT CITT Funds Paid From CITT Source of Freed-up Funds New Funds Available for City Hall Pmt Available to Retire Debt FY-13 FY-14 FY-15 FY-16 FY-17 n/a n/a Built into Prior Year Budget (Continuing funds) $2,790,259 $3,491,264 $3,491,514 $3,495,402 n/a n/a Sale of Bunche Park Church $500,000 $0 $0 $0 $0 n/a n/a Savings in Normal rent Payment $170,000 $500,000 $0 $0 $0 $6,536,977 ($1,009,416) Retire $4.7m Vehicle & Equipment Bond, 2007 $1,009,416 $0 $0 $0 $0 3 2. Even using $3.7 million for debt retirement, the City would still be able to add $2.8 million to the City's emergency reserve, bringing the total in the reserve to $9.6 million. This will again put the City’s reserve within the recommended percentage of reserves that is set out in Council’s adopted financial policies (16%-25%) and recommended by the national bond rating agencies (See Table 2). This will also improve the City’s reserve-to-budget and cash-tobudget metric ratios. TABLE 2 -PROPOSED USE OF GENERAL FUND CITT ALLOCATION FOR THE GENERAL FUND ENERGENCY RESERVE Unrestricted Emergency Reserve Actual Actual Actual Estimated Estimated FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13 Year-End Reverted Funds $403,885 ($2,766,736) ($1,147,238) $0 $0 One time Tax Increase $0 $0 $0 $1,500,000 $0 CITT Allocation to Reserve $0 $0 $0 $2,809,811 $0 Total Unreserved Funds in the Reserve $9,214,386 $6,447,650 $5,300,412 $9,610,223 $9,610,223 Total General Fund Expenses (Net Transfers) $59,464,079 $56,266,009 $53,043,518 $50,601,285 $52,500,000 % Emergency Reserve 15.50% 11.46% 9.99% 18.99% 18.31% 3. This approach also provides $3.5 million to the City's Transportation Fund and allow the City to re-start some critical road projects that have been deferred due to lack of funding. These include repaving, sidewalks, and the construction of the new City Hall entrance roads and rights-of-ways. o Construction of NW 185 Terrace (City Hall Entrance Roads) $500,000 o Relocating utilities in the ROW of NW 185th Terrace underground $500,000 o Construction of NW 25th Avenue (Behind City Hall to NW 191st) $500,000 o Resurfacing (various) $1,200,000 o Sidewalks (various) $350,000 o Transportation Emergency Reserve (Currently $0) $500,000 The County is now in the process of revising its standard CITT inter-local agreement for the future distribution of funds (FY 13 and beyond). The City of Miami Gardens will be a part of that allocation. This will ensure that the City receives approximately $3 million per year for transportation projects. As the amount of the future allocation becomes clearer, recommendations $5,527,561 ($1,072,765) Retire $2m Equipment Bonds, Series 2009 $536,383 $0 $0 $0 $0 $4,454,796 ($574,862) Retire $2.5m Equipment Bond, Series 2005 $156,812 $0 $0 $0 $0 $3,879,934 ($703,660) Retire $3.5m County Loan $351,830 $0 $0 $0 $0 $3,176,274 ($366,463) Retire $5.6m Public Safety Equipt. Bond, 2007 $366,463 $0 $0 $0 $0 $2,809,811 ($3,727,166) FUNDS AVAILABLE FOR DEBT SERVICE $3,090,904 $3,290,259 $3,491,264 $3,491,514 $3,495,402 City Hall Debt Service Payment $3,290,259 $3,491,264 $3,491,514 $3,495,402 $3,493,680 Budget Surplus/(Shortage) ($199,355) ($201,005) ($250) ($3,638) $5,360 4 for the use of those funds will be prepared. The recommendations will include a possible city transit component, assumption of the County’s street sign program, and additional paving and sidewalk construction. There are several minor disadvantages to this allocation recommendation; at least minor in comparison to the advantages. First, this would be putting less into the General Fund emergency reserve ($2.8 million versus $6.5 million). The latter would put the City at the top end of the recommended funding level. While this would be enjoyable and reflect improved ratio metrics, the lesser amount ($2.8M) will accomplish the same thing, only to a lesser scale and at the same time improve the City’s indebtedness metrics. A potential second disadvantage of this approach is that by paying off the bond issues early, we may be subject to a small pre-payment penalty. This too is negligible compared to the advantage of using the freed-up funds for the City Hall debt service payment. Recommendation: That City Council approve the attached resolution. Attachment: List of Transportation Projects: 2003-2012 5 6 7