Council hears recommendation to transfer general‑fund surplus to cover forgiven sewer note; staff warns sewer fund cash shortfall persists

Finance staff and Mr. Felix briefed the council that as part of closing fiscal‑year 2024 the city has an estimated $1,300,000 general‑fund surplus and that staff recommend transferring part of that surplus to the sewer fund to cover the payoff of a note forgiven earlier when council approved acquisition of the golf course.

Felix said the outstanding balance on the Castle and Cooke note was $609,000 after the July payment and that council previously agreed to forgive that balance in connection with accepting the golf course. Staff recommended transferring general‑fund money to make the sewer fund whole because the sewer fund is an enterprise fund and the city needs cash on hand to cover sewer operations and recent capital repairs.

Officials described the sewer fund’s cash problems in detail. Staff said the sewer fund’s cash balance (without the proposed transfer) went from negative $1,300,000 and that two capital sewer‑line repairs cost roughly $1,800,000. Staff said sewer fund revenue for the prior year was about $3,600,000 and that heavy capital spending has strained the fund’s available cash despite the fund’s asset base. The city manager and staff said they will return with further study and recommendations; the meeting record shows staff plan a study of the plant’s operations, dual‑duty and capacity requirements.

Council members asked why staff did not transfer more and whether the transfer would remove the need for rate increases. Staff responded that while the transfer would improve cash flow it would not eliminate the need for a rate increase and that some upcoming resolutions will propose suspending certain development impact fees (parks, infrastructure, police, fire) while increasing sewer connection fees. Staff also said auditors’ interpretations and recent audit work affected final fund balances and the timing of bringing transfers to council for decision.

On a separate agenda item, staff presented a resolution regarding disposition of the pool at the Sierra Vista Golf Center at Pueblo Del Sol. The city manager said he does not recommend approving the disposition request due to uncertain capital costs (including bathrooms) and ongoing operations and maintenance expenses; he said staff had asked Paradigm about operating the pool but Paradigm found it infeasible, and Aquatic Design Group was retained to do a study for council.