cmo_budget_cover

Memorandum

City of Lawrence

City Manager’s Office

DATE:	September 12, 2013
TO:	David L. Corliss, City Manager
FROM:	Casey Toomay, Budget Manager
CC:	Cynthia Wagner, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager / City Clerk
RE:	Loan to Lawrence Community Shelter and Amendment to the 2013 Budget

Please place the following item on the City Commission agenda for consideration at their September 17 meeting:

Provide direction on draft agreement with Lawrence Community Shelter regarding loan of $725,000 and if appropriate, authorize the publication of the proposed amendment to the 2013 Budget and set October 8, 2013 as the public hearing date.

Background

As part of the 2014 budget process, the City Commission received a request for a loan from the Lawrence Community Shelter. The loan would be repaid over time at a lower interest rate than the Shelter was currently receiving from their bank, reducing their expenses.

A draft agreement is attached, outlining the terms for the loan, which are summarized below:

· The loan would be for $725,000 to be used to repay People Bank and to repair the roof at the new facility;

· The first $225,000 of the loan would be interest free, provided it is paid back by October 31, 2014;

· The remaining $500,000 plus 2% interest, would be paid back in 180 equal payments of $1,848, with a balloon payment due in January of 2029.

Funding

Rather than fund the entire $725,000 loan from the City’s General Operating Fund, staff recommends paying $425,000 from the General Fund and $300,000 from the Special Alcohol Fund. There is sufficient budget authority for this expenditure in the 2013 adopted general fund budget. However, there is insufficient budget authority for this expenditure in the 2013 adopted special alcohol fund budget.

The Special Alcohol Fund had a larger beginning fund balance in 2013 than was budgeted. In order to spend the additional resources, it is necessary to amend the 2013 Operating and Capital Improvement Budget.

Process to Amend the Budget

K.S.A. 79-2929a authorizes the governing body of a municipality to amend its adopted current budget in certain circumstances. The statute allows the budget to be amended during the year in which such budget is in effect subject to the same publication, notice and public hearing requirements as required by K.S.A. 79-2929, and amendments thereto, for the adoption of the original budget.

The statute requires any proposed increase in expenditures to be balanced by previously unbudgeted increases in revenue other than ad valorem property taxes. In the present situation the actual beginning balance of the Special Alcohol Fund exceeded the estimated beginning balance. Therefore, a budget amendment is necessary and appropriate to authorize the Governing Body to use the excess balance.

Action Item