Item Coversheet

C.1.


Shakopee City Council
February 21, 2017


FROM:Darin Nelson, Finance Director
TO:Mayor and Council Members
Subject:
Shakopee Derby Days Outstanding Receivable for Huber Park Electrical Upgrades
Policy/Action Requested:
Motion to either write-off the $5,000 outstanding receivable with Shakopee Derby Days or proceed with collection efforts.
Recommendation:
From a financial standpoint, it is in the best interest of the city to proceed with collection of the outstanding balance. 
Discussion:

The City Council approved an arrangement May 7, 2013 with Shakopee Derby Days (Derby Days) for the installation and financing of electrical upgrades at Huber Park.  The total project cost was $29,197.25 with the city agreeing to provide approximately one half share of the improvements, and also to front a balance of $10,000 for Derby Days.  Derby Days secured an initial $5,000 donation from the Shakopee Jaycees for their remaining portion.  Derby Days paid installments to the city in 2013, 2014 and 2015 of $3,000, $1,000 and $1,000, respectively, leaving a remaining balance of $5,000.   

 

The only official cost sharing agreement on file is the council memo from May 7, 2013.  In that memo it states, Derby Days will reimburse the city a minimum of $1,000 per year, until the $10,000 is repaid.  This arrangement would continue for as long as Derby Days is in Huber Park, and is in existence as Derby Days (or successor).  This item was moved from the general business part of the agenda to the consent agenda and approved with no discussion.

 

Derby Days was not held in 2016 and is currently in the process of dissolving.  Due to the ambiguity of the language in the memo there is a difference of opinions as whether or not Derby Days remains liable for the outstanding $5,000 balance. 

 

I have attached board minutes from Derby Days leading up to the May 7, 2013 council meeting. It appears Derby Day's intentions were to only be liable for repayment if the organization remained in Huber Park and/or in existence.  Obviously, Derby Days' board minutes are not official actions of the City Council, therefore, the council memo interpretation is crucial in determining the Council's intentions. 

 

No matter the decision made, the electrical improvements remain property of the city and have been beneficial for events outside of Derby Days.   

Budget Impact:
Either decision has minimal budget impact.  The outstanding receivable is not budgeted, so any collection would increase the General Fund's fund balance.  
ATTACHMENTS:
Description
May 7, 2013 Council Memo - Electrical Upgrades
Council Minutes May 7, 2013
Derby Days Board Minutes May 2013
Derby Days Board Minutes April 2013
Derby Days Board Minutes March 2013
Derby Days Invoice & Letter, December 2016