03-27-2000 Council Packet - Laserfiche WebLink

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Request for Council Action continued March 23,2000 Page 2 Adoption of an Ordinance to Create a Community Investment Fund_______________________ Endowment Fund Concept and Long-Term City Needs The basic concept of an endowment fund is to manage the expenditures from the fund, such that the principal amount in the fund will be preserved or increased over the long term to enable the fund to serve as an ongoing source of funding. The City will always have needs that are beyond its ability to fund. It is difficult to project future priority needs and future ability to fund those needs. An endowment fund would ensure a source of funding to assist in meeting long-term needs. Establishment of a Community Investment Fund The attcched ordinance establishes an endowment-type fund called the Community Investment Fund. The key element of the Community Investment Fund is that the principal amount is preserved or increased over the long term by making available only the interest earnings from the fund for expenditure. Because of the existing commitments related to the City facilities debt ser\ ice, the interest earnings in the Community Investment Fund would be primarily reserved for this debt service through 200/. The interest earnings would become available for other projects in 2008. The level of expenditure proposed from the fund on an annual basis is not sufficient to fund large capital projects. Large projects will need funding sources beyond the Community Investment Fund. The Community Investment Fund will provide resources for smaller projects, or can be used to leverage other sources of funds such as grants, or funding from other organizations or jurisdictions for larger projects. The Community investment fund ordinance does provide for expending more than the annual interest earnings in any one year; however, this requires a plan to repay the fund over a multi-year period. In addition to the benefit of providing a long-term funding source to help meet future needs, because the Community Investment Fund uses the endowment fund concept, it could be an attractive option for potential donors who want their donation to pro\ ide a long-term legacy rather than a one-time impact. The City's bond consultant has indicated that the creation of the Community Investment Fund would not have a negative impact on the City's credit rating. She believed the fund would have a positive impact on the City's credit rating. COUNCIL ACTION REQUESTED: Motion to approve the attached ordinance creating the Community Investment Fund.