MEMORANDUM 06-102

TO: Mayor Hornaday / Homer City Council

FROM: Walt Wrede

DATE: June 6, 2006

SUBJECT: Ordinance 06-38

Ordinance 06- 38 contains a budget amendment for two construction projects (Animal Shelter and Karen Hornaday Park). The final construction costs are now tabulated for these projects and we have experienced modest to small cost overruns in both projects. We are bringing this ordinance to you in an attempt to account for and track the true costs of these projects and to ask the Council to formally appropriate the additional money needed to cover the final costs.

Animal Shelter: The authorized construction budget for the animal shelter was $1,039,875. Our actual expenditures were $1,035,310.44. So, we actually spent less than the approved budget. The problem is that we only ended up raising 1,004,239.40 in project revenue. In short, we raised slightly less money than the approved budget. This leaves a deficit of $31,071.04.

We just completed the punch list and final project acceptance. The final project costs have been tabulated and they exceed what we have in available funding by $31,071.04. Although this is technically not a cost overrun, the effect is the same. While cost overruns are never good, this one amounted to around 3% of the budget, a figure most construction managers can easily live with today. This ordinance transfers $31,071.04 from the Police / Animal Shelter GF Budget to the Animal Shelter Construction Account. While this creates an artificial deficit in the animal shelter budget, the money will eventually be replaced with money from the GF fund balance. The auditors have advised us that it is not appropriate to simply transfer money directly from the fund balance.

Karen Hornaday Park: The approved budget for this project was $ 26,847. Our expenditures are $30,952.49. We ended up exceeding the budget by $4,105.49 in part because we had to rent some equipment. This ordinance transfers $4,105.49 from the Parks Reserves account to the Karen Hornaday Park construction account.