Audit and Finance Committee

REGULAR MEETING OF THE AUDIT AND FINANCE COMMITTEE DATE: MONDAY, April 19, 2021 – 5:30 p.m. to 7:00 p.m. Zoom Meeting AGENDA 1. Call to Order: 2. Roll Call and Statement of Quorum 3. Establishment of Order of Items on the Agenda A. Approval of the February 16, 2021 Minutes B. Three Month Unaudited Financial Report through March 31, 2021 C. 2021 Approved Budget Amendment a. Correcting accounts-net zero adjustment b. Related to Commerce Bank Building purchase, loan and construction costs D. Verbal update on Purchase of Commerce Bank Building E. Next meeting a. June 21, 2021 Stopp & Vanhoy Audit presentation b. Discussion of in person meetings. 4. Adjournment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 C-a Budget Amendment 2021 Budget Adjustment for Part-time Salaries and Parks Revenue BA0000027 January 4, 2021 Fund/ 2021 2021 Department/ Account Account Description Adopted Adjustment Amended General Fund Expense Administration 10-420-4110 Salaries 290,960 (65,200) 225,760 10-420-4112 Part-time Salaries 17,000 65,200 82,200 Finance 10-430-4110 Salaries 215,025 (32,500) 182,525 10-430-4112 Part-time Salaries - 32,500 32,500 Police 10-440-4110 Salaries 2,569,430 (41,200) 2,528,230 10-440-4112 Part-time Salaries - 41,200 41,200 Parks 10-460-4110 Salaries 519,410 (63,010) 456,400 10-460-4112 Part-time Salaries 32,500 63,010 95,510 Expense Totals 3,644,325 - 3,644,325 Revenue Parks 10-561-5601 Camp (40,000) 4,000 (36,000) 10-561-5602 Camp - Arts - (4,000) (4,000) 10-561-5632 Classes - Resident (13,000) 4,000 (9,000) 10-561-5633 Classes Arts - (4,000) (4,000) Revenue Totals (53,000) - (53,000) 23 C-b Budget Amendment Budget Amend-04 05 2021 Related to Purchase, Loan and Construction costs of new City Hall 2021 2021 Department/ Account Account Description Adopted Adjustment Amended General Fund Revenue 10-600-6002 Transfer in (500,000) 500,000 - Expense 10-600-6003 Transfer out 360,000 600,000 960,000 Net Total General Fund (140,000) 1,100,000 960,000 Debt Service Fund 20-420-4712 Loan Payment - 200,000 200,000 20-600-6002 Transfer in - (200,000) (200,000) Net Total Debt Service Fund - - - Capital Projects Fund 50-470-6212 Bidg & Site-New City Hall - 2,600,000 2,600,000 50-550-5760 Proceeds from Loan - (1,700,000) (1,700,000) 50-600-6002 Transfer in - (600,000) (600,000) 50-600-6003 Transfer out 500,000 (300,000) 200,000 Net Total Capital Projects Fund 500,000 (2,600,000) (2,100,000) 24 To: Mayor and Board of Aldermen From: Lawrence Perney, City Administrator Date: March 10, 2021 Re: Commerce Bank Building Costs/ 2021 Budget Amendment We are close to completing due diligence and will be setting a closing date in the near future. When the 2021 budget was completed, we did not have the purchase nor the renovation cost of the building in the budget. To get financing for the purchase of the building, we have to show in our budget how we plan to pay for it. This memo is an explanation of the proposed budget changes that will be presented to you at the Board of Aldermen Meeting on Monday, March 15. I have broken it down into three parts Building Purchase, Building Renovation and Fund Offset. Capital Improvement Fund (Fund 50) is the appropriate fund to manage purchases and renovation costs for the new City Hall. Building Purchase Purchase price - $1,700,000 (10-year lease purchase, annual debt service of approximately $200,000) For the purchase, we need to show a revenue increase of $1,700,00, (the amount borrowed) and an expense increase of $1,700,00 for the lease purchase for the building. The following changes need to be made in the Fund 50: Capital Improvement Fund: 2021 Budget Fund 50: Capital Improvement Fund 2021 Budget Amendment Description Revenue 1,932,000 + 1,700,000 Loan for Lease Purchase Expense 1,799,130 + 1,700,000 Lease Purchase Annual debt service payment - $200,000 (10-year lease purchase, with an annual debt service due every year for the next 10-years (including this year) of approximately $200,000. For the purchase, we need to show a revenue increase of + $200,000 (transfer from Fund 50: Capital Improvement Fund) to Fund 20: Debt Service Fund and an expense increase of + $200,000 - this will be for the annual debt service payment. The following changes need to be made in the Fund 20: Debt Service Fund and Fund 50: Capital Improvement Fund: 2021 Budget Fund 50: Capital Improvement Fund 2021 Budget Amendment Description Expense 1,799,130 + 200,000 Transfer to Debt Service Fund 25  2021 Budget Fund 20: Debt Service Fund 2021 Budget Amendment Description Revenue 1,163,000 + 200,000 Transfer from Capital Improvement Expense 1,075,915 + 200,000 Debt Service Payment Building Renovation The architect firm Archimages has done a preliminary summary of the expected costs to renovate the building. They are as follows: Construction - 686,175 Architect and Engineering - 68,617 Decorative Panels - 30,000 (optional) Furniture & Fixtures - 150,000 (optional) Security/Cameras - 50,000 Closing/Other costs 50,208 Subtotal construction 900,000 For the building renovation, we need to show an expense increase of $900,00 (costs associated with the building renovation) in the Fund 50: Capital Improvement Fund. 2021 Budget Fund 50: Capital Improvement Fund 2021 Budget Amendment Description Expense 1,799,130 + 900,000 Building Renovation Costs Fund Offset The above changes will increase Fund 50: Capital Improvement Fund expenses by $1,100,00 ($200,000 debt service payment and $900,000 renovation costs). To offset the +1,100,000 expense, transfer the $600,000 from the General Fund to the Capital Improvement Fund and do not make normal $500,000 transfer to CIF to General Fund. The following changes need to be made in the Fund 20: Debt Service Fund and Fund 50: Capital Improvement Fund: 2021 Budget Fund 10: General Fund 2021 Budget Amendment Description Revenue 10,420,805 (500,000) No transfer from Capital Improvement Expense 10,716,208 + 600,000 Transfer to Capital Improvement 2021 Budget Fund 50: Capital Improvement Fund 2021 Budget Amendment Description Revenue 1,932,000 + 600,000 Transfer from Capital Improvement Expense 1,799,130 (500,000) No transfer to General Fund 26 The net effect will be a general fund balance decrease of $1,100,000 and no change in the fund balance of the Capital Improvement Fund. End of the year fund balances will be a General fund balance of $3,440,350 (32% of budgeted expenses) and a Capital Improvement fund balance of $671,656. Action Requested To implement these recommended changes, the Board of Aldermen will need to amend the 2021 Budget. The Board of Aldermen can amend the 2021 Budget by ordinance. 27