Finance Committee Agenda and Packet 2017 10 16

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City Council Finance Committee Meeting Minutes 09/18/17 Page 9 of 13 Finance Director Kevin Watson presented analysis of two fund balance options for Finance Committee consideration in setting a reserve policy for the Open Space & Parks Fund. Specifically the City Council and Finance Committee have questioned whether the targeted fund balance that would cover the cost of acquiring the three highest priority candidate open space properties is appropriate. Director Watson stated that the Open Space & Parks Fund has spent down its reserves to minimum levels and its revenues are no longer able to fund its recurring expenditures or capital needs. While it was planned that the General Fund would subsidize the shortfall, this places a burden on the General Fund in providing ongoing government services. Director Watson stated that staff recommends an annual transfer to the Open Space & Parks Fund from the General Fund to cover operation expenses as a calculated amount explained in the communication; and that the Capital Project Fund make an additional annual transfer also as a calculated amount. Director Watson stated that this concept will prevent management from having to restrict General Fund revenue in order to be prepared to cover large capital project purchases, provides structure and smooths transfers needed from the General Fund, and places the funding and competition for capital projects into the Capital Projects Fund. Mayor Muckle stated that he agreed with Director Watson's proposal in theory, but that perhaps the reserve amount differs. Mayor Muckle stated he was in favor of building reserves to the cost of the largest open space property in lieu of the cost of the three highest priority parcels, which is a lesser amount. Finance Committee Member Dennis Maloney stated that setting a principled approach towards the reserve level of the Open Space & Parks Fund is important and that whatever calculations are decided upon must be based on something justified. Council Member Lipton stated that people believe all the revenue in the Open Space & Parks Fund is for the acquisition of open space. Member Stolzmann stated that the response needs to be that the sales and use tax revenue does not relate to the whole fund. Member Lipton and Director Stevens stated the tax revenue needs to be separated from the fund and maybe reserved for open space acquisitions. Director Watson stated the annual open space sales and use tax is approximately $2M. Council Member Lipton stated that the City does not have infinite resources to buy an infinite number of open space properties. Chairperson Stolzmann suggested General Fund transfers to the Open Space & Parks Fund be based on Parks operations from 2004-2006, inflated to 2018. 10