HomeMy WebLinkAboutWATER DEBT SURCHARGE 01-07-85DATE:
January 2, 1985
Inter- Corn
TO: William A
FROM: Ronald A.
SUBJECT: Water Deb
t~uSrtctOn, City Manager
, Finance Director
barge Fund Cash Flow Analysis
Attached is a cash flow analysis of the water debt surcharge fund
for the ten quarters from January 1983, the inception of the
fund, through the projected fund balance as of June 30, 1985.
As you can see the projected fund balance at 6-30-85 is
($32,000). Based on the concerns raised by Council at the last
meeting, I estimate that a loan of approximately $75,000 may be
made to the debt surcharge fund for a period of six months; It
appears that by the end of the second quarter of fiscal 85-86 the
fund should be in a positive cash position in excess of $100,000.
As to the source of the loan, I would suggest that the water
enterprise itself provide the cash necessary as it is currently
in a positive cash situation and appears it will be for the
foreseeable future. From a purely accounting standpoint it would
not be necessary to formally write a note from the water
enterprise fund to the debt surcharge fund establishing a pay
back period, interest note, etc. Based on generally accepted
accounting principals and governmental accounting and Financial
Reporting guidelines, the two funds are generically the same.
The fact that we have identified two funds internally is a
convenience only and completely disregarded for financial
· reporting purposes. ~.
Due to the nature of financial reporting the recording of a debt
between these two homogeneous funds would have no effect on the
balance sheet. The recording of a revenue in the one fund will
be equally and totally offset by the recorded expense in the
other fund, a total wash. From a practical standpoint the cost
to the debt surcharge fund to cover a short term loan of this
nature would be $1,000 or less.
I might suggest that as an alternative to preparing formal loan
documents, that Council formally acknowledge at a regular
meeting, that due to additional appropriations of $206,000 to
this fund, to augment the balance of Bond proceeds to repay
$300,000 to the general fund, during fiscal 83-84 the Council
recognizes that for a short period of time the fund balance
posture will be negative and that during this time resources of
the water enterprise fund will be made available as needed.
RAN:skr
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