HomeMy WebLinkAbout7318_CCv0001.pdf RESOLUTION NO. 7318
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDLANDS
ESTABLISHING AN ENTERPRISE FUND POLICY
WHEREAS, the City maintains and operates over 20 enterprise funds that function in a
proprietary manner similar to private business entities; and
WHEREAS, as part of City staffs continuing effort to enhance the fiscal and operational
practices of the City's enterprise activities, an Enterprise Fund Policy has been developed and
submitted to the City Council for review; and
WHEREAS, the purpose for establishing an Enterprise Fund Policy is to provide
accountability for, and to efficiently and economically operate and maintain control over, the
City's enterprise hands;
NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Redlands as
follows:
Section 1. The City Council hereby adopts the Enterprise Fund Policy attached
hereto as Exhibit"A."
ADOPTED, SIGNED AND APPROVED this 3rd day of September,2013.
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Pete Aguilay, Mayor
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ATTEST:
�–aSam—Irwin-ACityK e—rk
1,Sam Irwin, City Clerk of the City of Redlands,hereby certify that the foregoing resolution was
adopted by the City Council at a regular meeting thereof held on the 3d day of September, 2013,
by the following vote:
AYES: Councilmembers Harrison,Foster, Gardner, Gilbreath; Mayor Aguilar
NOES: None
ABSTAIN: None
ABSENT: None
Sam Irwin, City CW
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Uwclerk\Rcsolufionses 73W7399\7318-Adoption of Enterprise Fund Policy.doc
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City of Redlands
POLICY& PROCEDURES
Subject: Enterprise Fund Policy Department: Finance
Policy No. 1-2013 Effective Date- /03/201
Ordinance/Resolution No. 731 ppr tva l ater / �/�f
OVERVIEW
Enterprise Funds are a sub-classification of the proprietary fund type and are used to report any
activity for which a fee is charged to external users for goods or services- Enterprise funds are
used to account for operations-
(a)
at ors-(a) that are financed and operated in a manner similar to private business enterprise — There the
intent of the governing body is that the cost(expenses, including depreciation)of providing goods
or services to the general public on a continuing basis be recovered primarily through user
charges;or,
(b) where the governing body has decided that:periodic determinations of revenues earned, expenses
incurred, and/or net income is appropriate for capital maintenance, public policy, management
control,accountability or ether purposes,
POLICY
1.1 In accordance writh Governmental Accounting Standards Board Sitatement Number'54(GASB-34),
Basic Financial Statements—and Management's Discussion and rutlsi --for SUle and Local
Governments, activities are required to be reported as enterprise funds if any one of the following
criteria,is met.
(a) The activity is financed v pith debt that is secured solely by a pledge of the net revenues from
fees and charges of the activity. Debt that is secured by a pledge of net revenuesfrom fees d
charges and the full faith and credit of a related primary gove m nt or componentmit is not
payable solely from fees and charges of the activity. (Some debt may be secured, in part, by a
portion of its own proceeds but should be considered as payable "solely"from the revenues of
theactivity.)
(b) laws and regulations rewire that the activity's costs of providing services, including capital
costs- such as depreciation or deet services, be recovered with fes and charges, rather
with taxes or similar revenues.
(c) The pricing policies of the activity establish fees d charges designed to recover its costs,
including capital costs (such as depreciation or debt service).
L2 The City Council should approve rates for goods and services so as to recover total cosas for an
enterprise fund.
1.3 Individual enterprise funds are used to account:for individual services, Such segregation is required
to.
(a) Determine the total cost of providing a service,and
(b) Ensure that the resources generated by one service are not improperly or illegally utilized by
another.
1.4 If the operations of an enterprise fund produce significant fund net assets that are beyond a reserve
requirement(if any),rates should be adjusted periodically.
1.5 If the operations of an enterprise fund produce significant negative fund net as-sets, the negative
position should be eliminated by:
(a) increasing rates;
(b) making transfers or loans from the appropriate fund(s);and/or
(c) any other appropriate action(s)
These actions may extend beyond one year if a plan acceptable to the City Council is
established and followed.
1.6 Enterprise funds may be subsidized from general governmental sources. Generally this takes the
form of a contribution at a stipulated maximum, to offset a deficit in fund net assets. Such support
should be recorded in the budget as an inter-fund transfer. Actual payment is recorded as a
transfer-in.
1.7 Sound financial management requires the preparation and adoption of a comprehensive annual
operating budget for the entire City including each of its enterprise funds. Budgets are necessary to
help assure that:
(a) Service objectives are attained;
(b) Expenses are properly controlled; and,
(c) Adequate resources will be available to finance current operations, repay long-term liabilities,
and meet capital outlay requirements.
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