2020 2:00:00 PM

Meeting Link:
Meeting Dial-in #: (669) 900-6833 Meeting ID: 931 6367 1293

Business Items: 6.3

Title: Consideration, discussion, and possible approval to transfer $1,111,580 from the Redevelopment Agency Area #2 Revolving Fund to the City of Sparks General Fund to reimburse advancement of funds received from the City’s General Fund during fiscal years 2012-2013 and 2013-2014.

Petitioner/Presenter: Neil C. Krutz, ICMA-CM, Chief Administrative Officer/Jeff Cronk, CPA, Chief Financial Officer

Recommendation: Redevelopment Agency approve a transfer of $1,111,580 to the City’s General Fund as a repayment of advancements received from the City’s General Fund during fiscal years 2012-2013 and 2013-2014.

Financial Impact: $1,111,580

Total Costs: $1,111,580.00

Fund: R/A 2 Revolving Fund Account: 701005
Program: R/A 2 Revolving Fund (3601)
Amount: $1,111,580.00 Budget Status: Over Budget (See Budget Correction Plan)

Budget Correction Plan:
Transfers from Capital Project Funds such as the Redevelopment Agency Area #2 Revolving Fund are not required to be budgeted or augmented as long as funds are sufficiently available

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

Agenda Item Brief:

During the Great Recession, the Redevelopment Agency had insufficient resources to fully pay the required debt service of bonds that were issued by the City as part of the disposition, development, and financing agreement with RED Development related to the development of the Legends at the Sparks Marina. As a result, the City’s General Fund transferred $1,111,580 to the Redevelopment Agency Area #2 Revolving Fund to subsidize debt service payments during fiscal years 2012-2013 (FY13) and 2013-2014 (FY14). Approval is now being sought to repay those past advancements of funds as the Redevelopment Agency Area #2 Revolving Fund has sufficiently fiscally recovered from the effects of the Great Recession.

Background:

In 2007 the City issued general obligation refunding bonds that refinanced various obligations of the Redevelopment Agency Area #2 in accordance with the disposition, development and financing agreement (DDFA) between the City, Redevelopment Agency, and RED Development regarding the financing needs of the Legends at the Sparks Marina project.

The refunding bonds issued in 2007 were issued as general obligations of the City, but the debt service for those bonds were being paid from property tax revenues generated from within the Redevelopment Agency Area #2 in accordance to the agreement to finance the development of the Legends at the Sparks Marina.

Nearly simultaneously, the Great Recession began and severely impacted the ability of the Redevelopment Agency Area #2 to make the required debt service payments of the 2007 refunding bonds.

By fiscal year 2012-2013 (FY13), the Redevelopment Agency Area #2 was financially unable to make the full debt service payments and the Sparks City Council authorized the transfer of $250,000 from the City’s General Fund to the Sparks Redevelopment Area #2 Revolving Fund to subsidize the required debt service payments. A second transfer of $861,580 was authorized by the Sparks City Council in FY14 to again subsidize the 2007 refunding bond debt service requirements. Thus, a total of $1,111,580 was authorized by the Sparks City Council to be transferred from the City of Sparks General Fund to the Sparks Redevelopment Agency Area #2 Revolving Fund during FY13 and FY14.

Analysis:

Beginning in FY15, the combination of various land sale proceeds and improving property tax revenues within the Redevelopment Agency Area #2 began to stabilize Area #2’s finances and a subsidy of the Redevelopment Agency’s debt service requirements was no longer needed from the City’s General Fund. At the time, the City Council and Redevelopment Agency did not want to return the advancements from the City’s General Fund until the Redevelopment Agency Area #2 was more fiscally stable.

The Redevelopment Agency Area #2 financial condition continued to steadily improve each year as property taxes continued to improve from the impact of the recession.

FY20 revenues within Area #2 are expected to be approximately $1.8M higher than they were in FY14, and the unrestricted fund balance within Area #2’s Revolving Fund is expected to exceed $6.1M (before the proposed transfer of $1.1M back to the City’s General Fund). If the transfer is approved today, the ending fund balance within Area #2’s Revolving Fund is expected to be approximately $5.0M. The return of the FY13 and FY14 advancement of funds was not included in the current FY20 budget, but transfers of this nature are not required to be budgeted as long as sufficient resources are available for the proposed transfer.

Due to vastly improved property tax receipts during the past few years and improvement of the Revolving Fund balance, the Agency’s Chief Administrative Officer and the Chief Financial Officer are recommending that the financial condition of the Redevelopment Agency Area #2 Revolving Fund is now healthy enough to warrant returning the funds to the City’s General Fund which were advanced during FY13 and FY14 to the Redevelopment Agency Area #2 Revolving Fund to help subsidize the debt service requirements of the 2007 refunding bonds.

Alternatives:

1. Agency members may approve the recommendation of returning the full $1,111,580 to the General Fund which was advanced to the Redevelopment Agency Area #2 during FY13 and FY14.

2. Agency members may reject the recommendation of returning the full $1,111,580 to the General Fund which was advanced to the Redevelopment Agency Area #2 during FY13 and FY14 and provide additional direction to the Chief Administrative Officer.

Recommended Motion:

I move to approve transferring $1,111,580 from the Redevelopment Agency Area #2 Revolving Fund to the City of Sparks General Fund as a repayment of the advancements received from the City’s General Fund during FY13 and FY14.

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