Rec & Parks District 2 (1407) $213,000 augmentation

On March 14, 2016, Council approved a refund of Residential Construction Tax to Corona Land Company, LLC in the amount of $213,000.  This refund resulted in a current year (FY16) expenditure which was not budgeted.  In order to avoid a budget violation as outlined in NRS 354.626, we must augment this fund to cover the unbudgeted expenditure.

Impact Fee Svc Area 1 Fund (1210) $28,000 augmentation

All Public Facility impact fees collected in Impact Fee Service Area 1 are remitted to Red Hawk Land Company as reimbursement for Fire Station #5.  In preparing the FY16 budget we estimated that $120,000 would be collected and remitted and therefore budgeted $120,000 in expenditures to cover the remittance.  As of 5/16/16, $120,978 has been collected, and more will likely come in in the next few weeks.  In order to provide sufficient budget authority for the Red Hawk Land Company remittances, we are seeking to augment the FY16 budget of the Impact Fee Svc Area 1 Fund (1210) by $28,000. 

Development Services Enterprise Fund (2201) $195,000 augmentation

$60,000 is needed to cover the cost of FY16 contractual pay and benefit increases approved after the FY16 budget was filed.

$135,000 is needed to cover an increase in the credit card fees.  Recently, the maximum limit on credit card purchases was removed.  This resulted in the City incurring large credit card fees.  This change was not anticipated in the FY16 budget, which is insufficient to cover the increased cost.  Credit card fees paid by the Development Services Fund increased from $4K in FY14 to $52K in FY15, and are expected to be $139K in FY16.

The provisions of NRS 354.598005(1) govern the procedures and requirements for augmenting or amending a budget; given that anticipated resources available exceed those estimated.  Available resources are defined in NAC 354.410, and include unappropriated ending fund balances of Capital Projects Funds.  As evidenced in the FY15 audited financial statements, sufficient resources are available for this augmentation of the Rec and Parks District 2 Capital Projects Fund.  Available resources also include revenues in excess of those budgeted in a Special Revenue Fund.  Therefore, due to higher than expected revenues collected, sufficient resources are available for this augmentation in the Impact Fee Svc Area 1 Special Revenue Fund.

Per NRS 354.598005(4) and NAC 354.481, an Enterprise Fund may be augmented if “expenses do not cause a deficit in the equity balance of the fund.”  This augmentation will not cause a deficit in the equity balance of the Development Services Enterprise Fund.

To augment the budget, NRS 354.598005 requires the governing board adopt a resolution providing for the augmentation.  This requirement applies to all fund types.  NAC 354.420 requires a “Revised Revenue Schedule” (included as Attachments A and B with this agenda item) be submitted along with the resolution to the State of Nevada Department of Taxation.  This requirement applies only to Governmental Fund Types.  Enterprise fund augmentations, per NRS 354.598005(4), do not require the submission to the Nevada Department of Taxation.   Therefore, there is no “Revised Revenue Schedule” included for the Development Services Enterprise Fund.

Attached is a resolution to augment the City’s Rec & Parks District 2, Impact Fee Svc Area 1, and Development Services Funds. 

The augmentations will be effective upon delivery of an executed copy of the resolution to the Department of Taxation.  Delivery must be before June 30, 2016.

Council could decide not to adopt the resolution to augment the FY16 budget.  This could cause expenditures in the funds to exceed appropriations, and would therefore be a violation of NRS 354.626.  The violation would be noted in the audited financial statements.

Council could decide to adopt the resolution to augment the FY16 budget and provide appropriations to cover the anticipated overages.

I move to adopt resolution No. 3295 to augment the FY16 budgets of the Rec & Parks District 2, Impact Fee Service Area 1, and Development Services Funds.