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insurance, and to supplement the reserve fund established to ensure <br />adequate funding for retirees' medical insurance. <br />Operating Contingencv <br />The 10~ Operating Contingency, is a reserve to meet unexpected <br />emergencies and economic uncertainties, in accordance with the <br />City's Financial Policies which were adopted in 1990. Staff is <br />recommending that an additional $113,000 be added to this reserve <br />to bring it to the 1991-92 level (10$ of 1991-92 expenditures) as <br />an extra cushion against the recession in the 1991-92 and 1992-93 <br />years. <br />Capital Project Reserve <br />The Reserve for~Capital Projects represents the balance of the <br />available funds in the General Fund. $754,873 has been designated <br />for the Senior Center construction and COP payments. Staff is <br />recommending that $1,037,000 from the 1990-91 General Fund's net <br />income be added to the General Fund Capital Reserve. <br />Harvest Park G <br />From the money added to the General Fund Reserve, $1 million could <br />be used to make construction payments on the Harvest Park gym. <br />However, when the 1991 COPS were issued, it was stated that if <br />other funding sources were found for the Senior Center, the <br />equivalent dollars could be redirected from the 1991 COP proceeds <br />for the Harvest Park gym. Therefore, as an alternative to using <br />the $1 million for gym construction payments, the $1 million could <br />be used for the Senior Center, freeing $1 million from the 1991 COP <br />proceeds for the gym. <br />While the net result of the two alternatives is the same in terms <br />of getting the projects done, the second alternative could be more <br />beneficial financially because it could result in more interest <br />earnings. This is because it may be better to spend the 1991 COP <br />proceeds (which have investment limitations), before we spend the <br />General Fund Reserves (which have less restrictions). <br />For example, it may be better to use the $1 million in the General <br />Fund Reserve for the ast construction payments on the Senior <br />Center, and redirect $1 million from the 1991 COPs for the first <br />construction payments on the gym. This could result in the 1991 <br />COP proceeds being fully expended before the General Fund Reserve. <br />Therefore, staff is recommending that up to $1 million be expended <br />for construction payments on the Harvest Park Gym, and that the <br />Director of Finance, with the concurrence of the City Manager, be <br />SR 91:448 <br />6 <br />