City Council Agenda and Packet 2017 09 26 SP

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SUBJECT: 2018 RECOMMENDED BUDGET AND 2018-2021 LONG-TERM PLAN DATE: SEPTEMBER 26, 2017 PAGE 16 OF 24 at the end of 2018. This equates to 18% of operating expenditures and is in compliance with the minimum fund balance as defined in the Reserve Policy. Targeted Fund Balance for the Open Space & Parks Fund As stated, the Reserve Policy for the Open Space & Parks Fund defines targeted fund balance as the minimum fund balance plus "an amount sufficient to cover the City's share (considering other likely joint partners) of the total projected cost of acquiring the three highest priority candidate open space properties". The City Council has asked to revisit the definition of targeted fund balance. Specifically, the Council has questioned whether the target of covering the cost of acquiring the three highest priority candidate open space properties is still appropriate. The Finance Committee has recently discussed three possible alternatives for defining the targeted fund balance: Alternative 1: The targeted fund balance is defined as the minimum fund balance plus cost of acquiring the three highest priority parcels (current policy). This calculation defines the current target at $1.3 million. Alternative 2: The targeted fund balance is defined as the minimum fund balance plus cost of acquiring the largest remaining priority candidate parcel. This calculation defines the current target at $2.2 million. Alternative 3: The concept of a targeted fund balance is removed altogether and the Open Space & Parks Fund operates only under a minimum fund balance policy. The minimum fund balance is approximately $365,000 for 2018. There is no specific recommendation from staff and these three alternatives are presented to facilitate initial discussions. Capital Projects Fund Long -Term Forecast Incorporating the revenue projections, the operating expenditure targets, the interfund transfer projections, and the updated C -I -P projections outlined in the preceding discussion, the following graph summarizes a history and projection of revenue, expenditures, and fund balances for the Capital Projects Fund. CITY COUNCIL COMMUNICATION 17