Discussion:
The Park Asset Internal Service (Park Asset) Fund was created in 2008. From that time until 2012, this fund accounted for only specific assets within city parks. In 2012, the community center (CC), ice arena (IA) and SandVenture (SV) were moved from the Building Internal Service Fund (Building Fund) and added to the Park Asset Fund. We couldn't find a rational as to why this move was made other than a change in management oversight.
Staff has been working diligently on the Capital Improvement Plan (CIP) this spring and early summer. In conjunction with the CIP, the park master plan is also playing a major role in identifying park related projects within the CIP. With this focus on parks, finance staff dove into the details of the Park Asset fund performing an in-depth analysis recreating the history of the fund. This included reviewing the rents collected for the four categories (parks, CC, IA, SV) and offsetting these categories with project costs to come up with running balances for each of these categories.
A main goal of all the internal service funds includes ensuring a stable tax impact to residents for the replacement of major assets. To ensure this stable tax impact the internal service funds need to accumulate sufficient reserves to pay for the replacement of assets.
What we discovered is that as of December 31, 2018 the Park Asset Fund had a cash balance of $2,902,259.27 of which $2,084,504.30 is attributed to the CC ($715,659.01), IA (686,411.70) and SV (682,433.59), leaving a balance of $817,754.97 for park assets. The CC, IA and SV are city buildings/facilities that should be accounted for just like other city buildings and not be lumped into the Park Asset fund.
In addition, we performed this same exercise on all the facilities within the Building Fund and discovered that when the CC, IA & SV were moved to the Park Asset fund their specific accumulated balances did not move with them. The Building Fund has accumulated approximately $2.5 million in reserves that is directly attributed to these three facilities.
Transferring these facilities back to the Building Fund also provides more transparency as to what is available for park asset projects. Historically, this fund was funded by just a small tax levy that was not assigned to specific assets. In just the last couple years, we began charging rents on specific assets within the parks such as shelters, playgrounds and field lights. In 2020, we will begin charging rents on park trails and parking lots.
Now that we have recreated the history and have running balances for the Park Asset Fund and all the buildings within the Building Fund, we will better be able to ensure sufficient funds are being accumulated for future park asset and building replacements/refurbishments.
Attached to this memo is summary of both the Park Asset and Building Funds indicating the cash balances for the asset types within each fund.