HomeMy WebLinkAboutOrdinance No. 2485-2010the tyof
KENAL ALASKA
CITY OF KENAI
ORDINANCE NO. 2485 -2010
Suggested by: Administration
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING
ESTIMATED REVENUES AND APPROPRIATIONS BY S591,268 IN THE AIRPORT LAND
SALES PERMANENT FUND AND BOTH INCREASING AND DECREASING ESTIMATED
REVENUES IN THE AIRPORT FUND FOR FUNDS RECEIVED FROM THE AIRPORT
LAND SALES PERMANENT FUND.
WHEREAS, Ordinance No. 2326 -2008, KMC 7.30.020, changed the investment
methodology for the Airport Land Sales Permanent Fund; and,
WHEREAS, Ordinance No. 2326 -2008, KMC 7.30.020, requires all investment
earnings to be reported in the Airport Land Sales Permanent Fund and then allows for
a percent of market value of the fund to be transferred annually to the Airport Fund
for operations; and,
WHEREAS, the allowable transfer amount for the policy's second year (FY10) is
restricted to 5% of the funds market value at December 31, 2008 (5% of $17,825,369
5891,268) or the increase in the market value of the fund from the effective date of
Ordinance No. 2326 -2008 to May 31, 2010, less appropriated transfer amount for
FY09 (5283,044.08), which ever is less; and,
WHEREAS, the increase in market value since adoption of Ordinance No. 2326 -2008
of $3,305,567 less $283,044.08, the amount appropriated in FY09, is $3,022,522.92;
and,
WHEREAS, as $891,268 is the lesser of the calculated amount, and is the maximum
allowable transfer for FY10 requiring an increase to the budget of 5591,268.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, that estimated revenues and appropriations be increased as follows:
Airport Land Sales Permanent Fund
Increase Estimated Revenues:
Investment Earnings
Increase Appropriations
Transfer to Airport Fund
New Text Underlined; [DELETED TEXT BRACKETED]
591,268
591,268
Ordinance No. 2485 -2010
Page 2 of 2
Airport Fund
Increase Estimated Revenues:
Transfer From Airport Land Sales Permanent Fund
Decrease Estimated Revenues:
Appropriation of Fund Balance
PASSED BY THE COUNCIL OF THE CITY OF .ENA
June, 2010.
ATTEST:
Carol L. Freas, City Clerk
Approved by Finance:
New Text Underlined' [DELETED TEXT BRACKETED]
$591,268
$591,268
is second day of
PAT POR'I ER, MAYOR
Introduced: May 19, 2010
Adopted: June 2, 2010
Effective: June 2, 2010
then of
KENAI, ALASKA
To: Rick Koch, City Manager
7 From: Terry Eubank, Finance Director
Date: May 11, 2010
Re: Ordinance 2485 -2010
"t llaye with a Past, Ci y with a Future ll
FINANCE DEPARTMENT
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: 907 283 -7535 ext 221 FAX: 907 283 -3014
Ordinance 2326 -2008 modified the investment parameters (KMC 7.30.020) for the Airport
Permanent Fund with the expectation of generating higher returns on a long -term basis and to
provide more consistent cash flows to the Airport.
Ordinance 2326 -2008 established a percent of market value method for determining the amount
of Airport Land Sales Permanent Funds balance to be made available annually to fund airport
operations. The policy allows 5% of the Airport Land Sales Permanent Fund balance to be made
available for Airport operations regardless of investment performance. To protect the funds
initial investment from unexpected investment losses in the first two years after conversion,
transfer in FY10 is restricted to 5% of the funds market value at December 31, 2008 (5% of
$17,825,369 $891,268) or the increase in the market value of the fund from the effective date
of Ordinance No. 2326 -2008 to May 31, 2010, less the amount appropriated for FY09
($283,044), which ever is less.
The market value of the fund on May 10, 2010 was $20,993,280.18. The increase in market
value since adoption of Ordinance 2326 -2008 has been $3,871,918.26. FY09 transfers were
$283,044.08. KMC limits the transfer to the lesser of $891,268 and $3,588,874. Absent
significant declines in the market value of the portfolio in the remainder of May 2010, the
transfer amount for FY10 will be $891,268. The FY10 Budget estimated earning of the fund
would be $300,000 requiring a budget amendment of $591,268.
Blanks have been inserted in the Ordinance as the actual fund value at May 31, 2010 will not be
available until just prior to the June 2 Council Meeting. A suggested amendment will be
prepared for the June 2 Council Meeting to fill in the two blanks. The suggested amendment is
not anticipated to include any change to the appropriation amount.