2013 2:00:00 PM

Tuesday, May 28, 2013 2:00 PM
City Council Chambers, Legislative Building, 745 Fourth St, Sparks, NV

Item Number: 5

Title: Consideration and approval of Resolution No. 128, a Resolution authorizing the Chief Financial Officer to request advance distributions of property taxes apportioned to the Redevelopment Agency of the City of Sparks, Areas 1 and 2, in an amount allowed by Nevada Administrative Code (NAC) 354.280 as necessary.

Petitioner/Presenter: Jeff Cronk, Financial Services Director/Debi Kinder, Accounting Manager

Recommendation: That the Chairman and Agency Members approve the resolution authorizing the Chief Financial Officer to request advance distributions of property taxes as necessary.

Financial Impact: None - this will impact cash flow only.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: Advance distributions of property taxes may be needed to improve cash flow situations. NAC 354.280 requires that an advance apportionment be requested of the county treasurer by the Agency Board. As payment outflows cannot always be predicted accurately, cash needs may not allow sufficient time to request Board approval for each event. This resolution will allow the Chief Financial Officer to manage the cash flow in a more efficient manner. Requests for advances will be made as needed. Upon request the County Treasurer will send up to 75% of the undistributed tax receipts on hand in the county treasury to be distributed to the Redevelopment Agency of the City of Sparks, Areas 1 and 2, effective until rescinded.

Background: Property tax revenues in the Redevelopment Agency of the City of Sparks, Areas 1 and 2, are used to improve and develop the areas within the Redevelopment Agency areas. Since the inception of the Redevelopment Agency areas, debt has been issued and refunded in order to make those improvements. Five years ago, 78% of the revenue collected within the areas was required to make debt payments. Today, due to declining tax increment of property within the areas, 118% of property tax revenues are needed to make debt payments. Existing fund balance and contributions from the General Fund of the City are expected to cover the shortage until increment values increase, debt is extinguished, or the area expires, whichever comes first. The majority of property tax revenues are from real property assessments which are collected by the County in four installments and distributed to the Redevelopment Agency, Areas 1 and 2, after the installment due date. Typically, the first installment is the largest distribution of the year. Distributions are made to the Redevelopment Agency after the end of the ten-day grace period annually in September, October, January and March. Historically, January has been the month in which the Redevelopment Agency has the highest likelihood of having cash flow challenges.

Analysis: Principal and Interest payments on existing debt of the Redevelopment Agency are required to be paid on dates that do not coincide with County property tax distribution dates. As a result, shortages of cash may occur. Due to this timing discrepancy, the Chief Financial Officer of the Redevelopment Agency monitors the Agency’s cash flow needs closely to ensure there is sufficient cash available to make, payroll, vendor, and other payments that become due prior to receiving the next installment of property taxes. Per NAC 354.280, a request for advance tax apportionment must be made by the Redevelopment Agency Board. When the need arises to request an advance distribution, there may not be sufficient time for staff to obtain Board authorization. Without the cash on hand to make payroll, vendor, or other payments, the Redevelopment Agency would be forced to ‘borrow’ from another fund. Any interfund borrowing that is not approved via a public hearing process would lead to a violation of Nevada Revised Statute (NRS) 354.6118. By approving the attached resolution, the Agency Board would be authorizing the Chief Financial Officer to request an advance distribution of property taxes as necessary. The advance would influence the timing, not the amount, of the real property taxes received in the Redevelopment Agency Funds.

Alternatives: The Board could request to take action each year as needed to authorize the Chief Financial Officer to request an advance of apportioned taxes. If the timing is not sufficient, the Redevelopment Agency Funds may be forced to accept an interfund loan without public notice and therefore violate Nevada Revised Statute 354.6118.

Recommended Motion: I move approve Resolution No. 128 to authorize the Chief Financial Officer to request advance distributions of property taxes apportioned to the Redevelopment Agency of the City of Sparks, Areas 1 and 2, in an amount allowed by Nevada Administrative Code (NAC) 354.280 as necessary.

Attached Files:

Cash Management via Property Tax Advance Resolution.pdf

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