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HomeMy WebLinkAboutOrdinance No. 01-2008ORDINANCE NO. 01-2008 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CAPE CANAVERAL, FLORIDA; AMENDING CHAPTER 2, ARTICLE V., OF THE CODE OF ORDINANCES RELATED TO FINANCE TO ESTABLISH A FUND BALANCE/RETAINED EARNINGS RESERVE POLICY; PROVIDING FOR THE REPEAL OF PRIOR INCONSISTENT ORDINANCES AND RESOLUTIONS; INCORPORATION INTO THE CODE; SEVERABILITY; AND AN EFFECTIVE DATE. WHEREAS, the City is granted the authority, under Section 2(b), Article VIII, of the State Constitution, to exercise any power for municipal purposes, except when expressly prohibited by law; and WHEREAS, the City Council endorses sound financial policies and practices; and WHEREAS, the City Council has determined that a fund balance/retained earnings reserve policy tailored to the particular needs of the City is the most responsible way to insure against unanticipated events which would adversely affect the financial condition of the City and j eopardize the continuation of necessary public services; and WHEREAS, it is essential that the City Council maintain adequate fund balances /retained earnings and reserves in its various operating funds to provide the capacity to: (1) provide sufficient cash flow for daily financial needs; (2) secure and maintain investment grade bond ratings; (3) offset significant economic downturns or revenue shortfalls, and (4) provide funds for unforeseen expenditures related to emergencies; and WHEREAS, the City Council desires to adopt a fund balance/retained earnings reserve policy as set forth herein; and WHEREAS, the City Council of the City of Cape Canaveral, Florida, hereby finds this Ordinance to be in the best interests of the public health, safety, and welfare of the citizens of Cape Canaveral. BE IT ORDAINED by the City Council of the City of Cape Canaveral, Brevard County, Florida, as follows: Section 1. Recitals. The foregoing recitals are hereby fully incorporated herein by this reference as legislative findings and the intent and purpose of the City Council of the City of Cape Canaveral. City of Cape Canaveral Ordinance No, 01 -2008 Page 1 of 4 Section 2. Code Amendment. Chapter 2, Administration, of the Code of ordinances City of Cape Canaveral, Florida, is hereby amended as follows ( underlined type indicates additions . Yp and type indicates deletions, , while asterisks (* * *) indicate a deletion from this ordinance of text existing in Chapter 2. It is intended that the text in Chapter 2 denoted b the asterisks and Y set forth in this ordinance shall remain unchanged from the language existing prior p rior to adoption of this ordinance): CHAPTER 2. ADMINISTRATION ARTICLE V. FINANCE DIVISION L GENERALLY Sec. 2 -208. Creation of Fund Balance /Retained Earnings Reserves. There is hereby created, in each of the various governmental fund type ( general fund s ep cial revenue funds, debt service funds and capital projects funds) and pro Urietar y fund type (enterprise funds) of the Citv, a reservation of fund balance or retained earnings equal to the following_ � General Fund. In the general fund there shall be created a reservation of fund balance equal to 20% of the current fiscal year budget for the fund For the purposes of this calculation, the current fiscal year budget shall be the budget as on ig'nally adopted by ordinance in September. This reserve shall be in addition to all other reserves or designations of fund balance, including but not limited to reservations for uncollected receivables and reservations of funds which have expenditure authority limited to specific puraoses. In any fiscal year when the City is unable to create the reservation of fund balance required by this section. the City shall not bud eg t any amount of appropriated fund balance for the purpose of balancing the buds Special Revenue Funds. By definition special revenue funds are created to account for the proceeds of specific revenue sources (other than expendable trusts or for major capital projects) that are legally restricted to expenditure for specified purposes As such no specific reservation of fund balance is created by virtue of enactment of this ordinance: rather the amount of any reservation of fund balance shall be governed by the legal authority underlying the creation of the individual fund Lcl Debt Service Fund. Debt service funds are typically subjected to the creation of very specific reserve amounts as a part of the ordinance or resolution which authorizes the issuance of the bonds which are being repaid. Therefore this policy does not create any specific reservation of fund balance within the debt service fund rather- reserve requirements City of Cape Canaveral Ordinance No. 01-2008 Page 2 of 4 for any outstanding City bond issues will be as derived from the ordinance or resolution authorizing the issuance of the bonds (L Capital Proiects Fund The capital projects fund was created to account for resources designated to construct or acquire general fixed assets and major im provements Occasionally, these vrojects may extend beyond a sin fiscal veax Therefore althouph no specific reserve requirement is established for the capital proj fund at a minimum the fiscal year end unreserved undesi=ated fund balance cou with estimated revenues for the ensuma fiscal year, must be sufficient to fund all outstanding fund obligations Ue Enterprise Funds. The City has created a total of two (2) enterprise funds to account for wastewater treatment and stormwater treatment services. In each of the ente rise funds now or hereafter created by the Council there shall be created a reservation of retained earnings equal to 20% of the current fiscal vear budget for that fund For the purposes of this calculation, the current fiscal vear budget shall be the total bud as ori jzinall v ado pted by ordinance m September. This budget shall be prepared on the modified accrual basis of accountmR and therefore includes such items as capital outlay and o eratiniz transfers out This reserve shall be in addition to all other reservations of retained earnings, including but not limited to amounts reserved for debt service and/or amounts reserved for renewal and replacement of long lived assets Section 2 -209. Utilization of Surplus Reserves. In the event that the unreserved undesiQnated fund balance or unreserved retained earnings balance exceeds the amounts set forth above, the excess may be utilized for an lawful p urvose . Nevertheless, it is recommended that first priority be given to utilizin the excess within the fund in which it was generated In order to minimize the long term effect of such use it is also recommended that any such excess be used to fund one time expenditures or expenses which do not result in recumne operating costs or other one time costs including the establishment of or increase m legitimate reservations or designations of fund balance or reservations of retained earnings Section 2 -210. Replenishment of Reserve Deficits If, at the end of any fiscal vear the actual amount of unreserved undesi fund balance or unreserved retained earnings falls below the required levels set forth herein the City Manager shall prepare and submit a plan for expenditure or expense reductions and /or revenue increases to the City Council. As a part of the annual budget review the Cit Council shall review and amend the plan submitted by the City Manager for restoring the amount of unreserved undesianated fund balance, or unreserved retained earnings to the required levels Any deficit in the required amount must be restored no later than the end of the second fiscal year following its occurrence Section 2 -211. Annual Review. Compliance with the provisions of this ordinance shall be reviewed as a part of the annual City of Cape Canaveral Ordinance No. 01-2008 Page 3 of 4 bud et adoption_ process. Section 3. Repeal of Prior Inconsistent ordinances and Resolutions. All prior inconsistent ordinances and resolutions adopted by the City Council, or parts of prior ordinances and resolutions in conflict herewith, are hereby repealed to the extent of the conflict. Section 4. Incorporation Into Code. This ordinance shall be incorporated into the Cape Canaveral City Code and any section or paragraph, number or letter, and any heading may be changed or modified as necessary to effectuate the foregoing. Grammatical, typographical, and like errors may be corrected and additions, alterations, and omissions, not affecting the construction or meaning of this ordinance and the City Code may be freely made. Section 5. Severability. If any section, subsection, sentence, clause, phrase, word or provision of this ordinance is for any reason held invalid or unconstitutional by any court of competent jurisdiction, whether for substantive, procedural, or any other reason, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions of this ordinance. Section 6. Effective Date. This Ordinance shall become effective immediately upon adoption by the City Council of the City of Cape Canaveral, Florida. ADOPTED by the City Council of the City of Cape Canaveral, Florida, this 18 th da of March 2008. ROCKY RAND S, Mayor ATTEST: a SUSAN STILLS, City Clerk Bob Hoog Leo Nicholas Buzz Petsos Rocky Randels C. Shannon Roberts For Against X Second Motion X X First Reading: 03/04/08 Legal Ad published: 03/08/08 Second Reading: 03/18/08 Approved as to legal form and sufficiency for the City of Cape Canaveral only: ANTHONY A. GARGANESE, City Attorney City of Cape Canaveral Ordinance No. 01 -2008 Page 4 of 4