S-1358 - 12/11/2012 - BUDGET- SPORTS CORE - Ordinances Supporting DocumentsITEM 7A 1)
yy�y��. �4• � C n � � !l � � a {� i �' f 6l
�'/c� .lw �'yii�'�F`����" � U._:.ii.F�:r�� �.t �1 ✓3 �i.�i �i1� e� �� "..i� �.�
AGENDA ITEM
Regular Board of Trustees of
December 11, 2012
SUBJECT: Interfund Loan to the Sports Core Fund
FROM: Sharon Dangles
Finance Director
BUDGET SOURCE/BUDGET IMPACT: N/A
RECOMMENDED MOTION: I move that the Village Board approve Ordinance 2012 -
BU -S -1358, an Ordinance Authorizing a Loan to the Sports Core Fund.
Background/History:
The ordinance authorizing loans from the General Corporate Fund to the Sports Core Fund will
expire on January 31, 2013. The General Fund stopped subsidizing Sports Core in the amount of
$157,800 in 2008. The prior ordinance authorized a consolidated loan of up to $1,290,000 in
order to fund capital and operating needs of the Sports Core dating from 1996 -2003. In 2009, an
interfund loan of $205,000 was required in order to finance Sports Core operations due to the
decline in the economy, bad weather, severance and benefit payouts relating to the reduction in
work force. In 2010, an interfund loan of $422,000 was required and $170,000 was needed in
2011 to finance Sports Core operations both due to the weather related issues affecting the golf
course and overall economic factors. This brought the consolidated loan balance to $2,087,000
which will remain unpaid in 2012 due to the weather related issues, and reduction in revenues
since 2008 from the clubhouse.
The cash balance in the Sports Core Fund as of January 1, 2012 was in a negative cash position
of $1,090 which is low compared to prior years. In the first quarter of 2012, the General Fund
provided the Sports Core with a working cash loan of $250,000 to help cover the expenses until
the season starts. This working cash loan occurs every year and is typically paid back to the
General Fund by August of the same year. The financial statement review is monitored on a
monthly basis by the Sports Core Director and Finance Director. During the year, the working
cash loan was paid back. After a recent review of the Sports Core Operations through
�1m
November, it's estimated that they will need a total of $275,000 for the 2012 season, which
would bring the consolidated loan balance to $2,362,000.
It's important to know that cash flow and profit are different. You can have a profit and still
have negative cash flow. For example, monies owed by customers are recognized as revenue but
we have not received the cash yet. The projected loss for Sports Core consolidated at 12/31/12 is
($162,215) compared to the 2012 Budget of $5,950. This includes Golf Surcharge revenues of
$102,250, which is not used in the day to day operations of the Village. Surcharge monies are
used for golf course improvements and restoration of flood damage. The projected loss for
Sports Core, excluding Golf Surcharge at 12/31/12 is ($265,805) compared to the 2012 Budget
of ($114,550). Below are some of the reasons for the shortfalls:
Polo started this year and was not able to break even as had been projected. The Polo program
needed $22,767 from the General Fund.
Overall, the Golf Operations is expected to make a profit and helps support other Sports Core
programs. For 2012, Golf Operations is expected to be below revenue projections by
approximately $85,000. The floods in 2008 and 2010 have convinced many traditional golf
members to pay as they go instead of buying the season membership. Also, due to hot weather
this summer, it lead to less golf green fees, less golf cart revenues, less golf food and beverage
revenues.
The Food and Beverage operations needs $250,000 from the General Corporate Fund. The Food
and Beverage operations projected loss through 12/31/12 is ($253,160) compared to the 2012
budgeted loss of ($233,285). Part of this includes the last debt service payment of $129,000.
The Golf operations have supported these losses for many years and since golf has experienced
declines in its revenues, this has affected the support that Food and Beverage Operations had
received in past years.
In 2008, the Sports Core received a subsidy from the General Fund in the amount of $157,800
compared to no subsidy in 2012. A subsidy is money given to help the operations function,
which differs from a loan that is expected to be paid back.
As of November 30, 2012 the Sports Core has a negative cash balance of approximately
$260,000. The loan is necessary in order to pay help pay for the expenses as noted above for its
operations as well as the December expenses. Every January 3151 the attached ordinance expires
and requires board approval to extend it for another year. Seeing that the loan is not expected to
be paid back in 2012 we would authorize a consolidated loan of up to $2,362,000 that will expire
on January 31, 2013. The board would then need to reauthorize in January 2013. If funds
become available next year in 2013, we would start to pay down the loan.
Recommendation:
I recommend approval of the attached ordinance which extends the loan authorization to the
Sports Core Fund for an extension of January 31, 2013.
ORDINANCE 2012- BU -SC -S -1358
AN ORDINANCE AUTHORIZING A LOAN
TO THE SPORTS CORE FUND
WHEREAS, Ordinance 2011 -BU -S -1325 authorized a consolidated loan of not more than
$2,087,000 from the General Corporate Fund to the Sports Core Fund in order to fund capital projects
and operating needs of the Sports Core; and
WHEREAS, an amount up to $275,000 be loaned from the General Fund to the Sports Core
Fund to fund the operating needs of the Sports Core for the calendar year 2012. The consolidated loan
of $2,362,000 authorized would remain outstanding requiring an extension to January 31, 2014.
NOW, THEREFORE BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows:
Section 1: That the preamble hereinabove set forth is hereby adopted as though fully set forth
herein.
Section 2: That a consolidated loan of not more than $2,362,000 from the General Corporate
Fund to the Sports Core Fund is hereby authorized in order to fund capital projects and operating needs
of the Sports Core.
Section 3: That the loan authorized in Section 2 hereof shall be treated as revolving loans. The
Finance Director is hereby authorized to draw on the principal amounts on an as- needed basis and to
repay the outstanding balances as funds are made available.
Section 4: That any unpaid balance on these loans will be due and payable on January 31, 2014.
Section 5: That all ordinances or resolutions, or parts thereof, in conflict with the provisions of
this ordinance be and are hereby repealed.
Section 6: That this ordinance shall be in full force and effect from and after passage and
approval pursuant to law.
Ayes:
Nays:
Absent:
APPROVED THIS 11th of December, 2012.
Gopal G. Lalmalani
Village President
PASSED THIS 11th day of December, 2012.
ATTEST:
Ordinance 2012 -BU -S -1358
Authorizing Loan to
Sports Core Fund, Page 2 of 2
Charlotte K. Pruss
Village Clerk