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HomeMy WebLinkAbout21493. ., sfrff ia. G r a • 8/ \)/// ORDINANCE NO. e7iol? AN ORDINANCE of the City of Port Angeles establishing the McDougal Street Improvement Fund WHEREAS, the City of Port Angeles is authorized by law to create funds for special purposes; and WHEREAS, the City Council of the City of Port Angeles deems it necessary in the public interest and to protect the pub- lic health, safety and welfare, that McDougal Street within the City of Port Angeles be improved; and WHEREAS, a portion of the necessity for this improvement is due to increased development in those portions of the City served by McDougal Street; and WHEREAS, the City of Port Angeles has, and intends in the future, to require those persons developing within areas served by McDougal Street to contribute to the funds necessary to improve McDougal Street; and WHEREAS, it is necessary for budgeting and accounting purposes that a special fund be established for said contributions from developers and /or applicants for building permits; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PORT ANGELES, as follows: Section 1. There is hereby created the "McDougal Street Improvement Fund." Section 2. All funds received from persons developing within the area served by McDougal Street, which funds may be re- quired as conditions of plat approvals, annexation approvals, building permit approvals, or through other legal means, shall be placed into this fund. Section 3. All monies placed into this fund shall be used solely and exclusively for payment of a portion of the total cost of construction of those improvements to McDougal Street deemed necessary by the Department of Public Works of the City of Port Angeles. to • Section 4. Should, for any reason, McDougal Street not be improved by the City of Port Angeles within a period of seven (7) years from the date of this Ordinance, all monies received by the City of Port Angeles and deposited in this fund shall be returned to the depositors thereof, with accrued interest, less a reasonable management charge. Section 5. This ordinance shall take effect as required by law. PASSED by the City Council of the City of Port Angeles at a regular meeting of the Council held on the .11 /AL day of ATTEST• , 1981. Marian C. Parrish, City Clerk APPROVED AS -TO FORM: Craig L. Miller, Ci y Attorney PUB . SHED: 1r� 17g/ LI/ MEMO: TO: FROM: RE: May 4, 1981 Dave Flodstrom, City Manager Robert Orton, Director of Finance" and Administrative Services Operation of the McDougall "Streetlmprovement Fund a? /7 0 Dave: As you know, an ordinance establishing the McDougall Street Improvement Fund will be considered by the City Council on May 5. • Section four of that ordinance provides that the City will be custodian and fiduciary of the monies deposited in this fund. It also provides that accrued interest from investments will also be deposited into, and accrued to the benefit of the fund. This procedure is a new departure from the "common-law" manner in which we have held deposits. We have never paid interest on any deposit held for future obligations. We have no ordinance or other policy authorizing that. You may also recall that our decision to eliminate utility deposits, was in part prompted by recent court actions affecting other utilities, which conclude that private and public utilities must pay interest on good faith deposits made by their customers when such customers fulfill obligations and terms of the deposit.. In my opinion, one of the justifications for not paying interest on security deposits, is that the City is entitled to a management fee for administering and for becoming custodian of such deposits. The administration of funds is by no means any small matter; and I would offer the following comments for your consideration: 1) The City must provide insurance coverage against loss of the funds through default, mismanagement, theft, etc. The City would be liable if the funds were lost or mishandled. While this poses no immediate direct cost increase for the City, in the case of the McDougall Improvement Fund, it is a risk which the City assumes on behalf of a third party. 2) The investment functions of the City should be compensated as fund managers. These activities include the following: a) purchase and sale of investments on behalf of the fund, . b) daily and weekly postings of accrual interest to the investment portfolio, c) coordination and liaison with investment banks, di accounting and file maintenance for the improvement fund- this would include posting of the May 4, 1981 Dave Flodstrom -2- accrued interest receivable to the general ledger, maintaining the general ledger on a monthly basis,and auditing the postings,and e) preparation of the annual report showing operation of the fund - this is a requirement under the state law for any fund which the City maintains. "3) In addition to direct staff costs, the City can legitimately charge overhead and other incidental expenses to the administration of this fund. Consequently, I think that it is ill advised that interest accrue totally to the benefit of the fund while the City receives no compensation for what promises to be the long -term administration of these monies. Interest should either accrue to the benefit of the City, or the City should be allowed to charge a management fee for the administration of this fund. As you know, not even the revenue sharing fund of the City of Port Angeles is exempt from such a fee. We have since its inception charged approximately $1,200.40 to the revenue sharing fund for our administration costs. As the McDougalllmprovement Fund would be a sharp departure from our past deposit policy, I really think it necessary that the Council adopt a stand on all such deposit arrangements. You know that we have had several disputes over the fact that we have not paid interest on security deposits left towards future obligations. Perhaps now is the time to obtain Council direction on this issue. I do not support the position that the McDougall Fund or any other fund in which the City acts as custodian, should be without fee or compensation for the City's efforts and administration. I would appreciate your thoughts on this matter. cc: Paul Carr, Planning Director Craig Miller, City Attorney Jack Pittis, Director of Public Works Marian Parrish, Personnel Director /City Clerk Pat Rodman, City Treasurer i The amounts required to be paid for the improvement of McDougall Street shall be placed with a depository acceptable to the City of Port Angeles, subject to withdrawl from that depository for a period of seven (7) years only at the signature of the City of Port Angeles. If, at any time during the seven year period, the money in the fund, with interest, if any, is usable by the City of Port Angeles for the construction of McDougall Street, it may be withdrawn by the City. If at the end of the seven year period, the money has not been withdrawn for improvement of the street, it may thereafter be withdrawn by the depositor, with interest, if any, without signature of the City of Port Angeles.