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HomeMy WebLinkAbout2023-06-13; Public Financing Authority; Resolution 94RESOLUTION NO. 94 A RESOLUTION OF THE BOARD OF DIRECTO�S OF THE CARLSBAD PUBLIC FINANCING AUTHORITY OF THE CITY OF CARLSBAD, CALIFORNIA, ADOPTING A GOLF COURSE RESERVE POLICY WHEREAS, the Carlsbad Public Financing Authority built The Crossings at Carlsbad Golf Course (Golf Course) using funds from both revenue bonds and the City of Carlsbad's General Fund; and WHEREAS, the city has contributed funds from the General Fund to the authority's Golf Course Enterprise Fund numerous times over the years since the Golf Course's initial construction as both loans and transfers; WHEREAS, based on several factors, including audit recommendations, on September 28, 2021, the City Council of the City of Carlsbad authorized a transfer of the current amount of the advances from the city's General Fund to the authority's Golf Course Enterprise Fund with the expectation that in doing so, the city will not have formally forgiven the advances or interest and the advances will be disclosed annually in accordance with accounting rules; and WHEREAS, a primary goal of the Board of Directors of the Carlsbad Public Financing Authority is to ensure the financial self-sufficiency of the Golf Course; and WHEREAS, the Board of Directors of the Carlsbad Public Financing Authority wishes to adopt a reserve policy for the Golf Course Enterprise Fund to further this goal; and WHEREAS, adopting a reserve policy for the Golf Course Enterprise Fund is an important step to maintain service levels, manage resources and prioritize operating and capital needs on a long-term basis in line with the City of Carlsbad's management of its other enterprise funds; and WHEREAS, adopting a reserve policy furthers these goals by providing a funding source for long­ term, large value capital purchases and demonstrating continued prudent financial management; and WHEREAS, adopting a reserve policy also furthers these goals by providing a mechanism for repayment of the transfer of the advances the authority's Golf Course Enterprise Fund received from the city's General Fund for the construction and operation of the Golf Course. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Public Financing Authority as follow: 1.That the above recitations are true and correct. 2.That the Golf Course Reserve Policy shown in Attachment A is adopted. CARLSBAD PUBLIC FINANCIAL AUTHORITY Effective Date: The Crossings at Carlsbad Golf Course Reserve Policy Purpose The purpose of this document is to establish a reserve procedure for the Golf Course Enterprise Fund to: •Ensure needs of the golf course are met •Provide a funding source for long-term, large value capital purchases •Demonstrate continued prudent fiscal management The Golf Course Enterprise Fund maintains adequate levels of reserves to enhance the long- term financial viability and mitigate risks. A primary goal of the Golf Course Enterprise Fund is to ensure the golf course is financially self-sufficient and does not require support from the City of Carlsbad's General Fund. Background The Crossings at Carlsbad Golf Course (golf course) was built in 2007. The 18-hole championship course includes a driving range, golf shop, restaurant and banquet facilities and golf cart fleet. The golf course was built using funds from both revenue bonds and loans from the City of Carlsbad’s General Fund. Additionally, the city has historically contributed funds from the General Fund to the Golf Course Enterprise Fund as needed since the golf course’s initial construction either by advance or transfer. Statement of policy The Crossings at Carlsbad Golf Course shall actively and responsibly manage its annual surplus and reserve balances in a manner that prioritizes both short-term and long-term operating and capital needs prior to considering the transfer of funds to the General Fund for repayment of prior loans or advances. Procedure A ten-year financial plan will be utilized to establish and maintain an adequate level of reserves. The Capital Reserve is established to fund both short-term and long-term capital improvements to the golf course. Any amounts remaining at the end of each fiscal year shall carryover to the next fiscal year for any short-term capital expense needs. All capital spending must be approved by the Executive Director of the golf course as part of the budget in the Annual Plan. Uses of the fund’s reserve and priority of uses are in order from highest to lowest as outlined below: Attachment A Page 2 1.Operation and Maintenance: Operation and maintenance costs (excluding depreciation) are the first priority of the Golf Course Enterprise Fund. 2.Capital Reserve: On an annual basis, 10% of gross revenues shall be reserved to fund future short-term and long-term capital expenses. 3.Capital Reserve Replenishment: In any fiscal year, if the golf course’s excess net revenues are insufficient to make the full contribution to the Capital Reserve, the golf course shall replenish the shortfall in subsequent years where there are excess golf course net revenues remaining. In no event shall the look-back period extend to a deficiency occurring more than five fiscal years. Replenishments shall be applied to the oldest shortfall first. 4.General Fund Repayment: Any funds remaining will be recommended for transfer to the City of Carlsbad’s General Fund and at the authorization of the Carlsbad Public Financing Authority Board of Directors. The amount transferred shall not exceed 3% of Gross Revenues for the respective fiscal year. 5.Remaining Excess: Any funds remaining thereafter will be retained in the Golf Course’s Capital Reserve.