[Council Communication]  [Attachments]

Council Communication

Title:	A Resolution Authorizing Interfund Loans to the Community Development Block Grant and Telecommunications funds.
Dept:	Finance
Date:	July 20, 2004
Submitted By:	Lee Tuneberg, Finance Director
Approved By:	Gino Grimaldi, City Administrator

Synopsis:	This resolution permits the City to borrow money from one fund and to transfer to another. The budget for FY 2004-05 identified several loan needs and approval of the attached resolution accomplishes the anticipated loans needed during the year. The Telecommunications Fund will need interim borrowing authority until such time as bonds are sold refinancing all of the AFN debt. The proceeds of the bond sale will be used to pay off the bank loans, internal borrowings, financing costs and any interim or near future debt service related to AFN and this interim borrowing, The amount needed to be borrowed will not exceed $8,500,000 and will be repaid in August. Another anticipated borrowing is the amount that the Community Development Block Grant Fund must pay to the US Department of Housing and Urban Development as part of the Grove conversion to City use. The payment of $214,877.33 was promised by the end of August yet the Strawberry Lane property that is being used to provide funds for repayment will probably not be sold until months later. The CDBG fund will need to borrow $215,000 and the amount will be repaid as soon as the Strawberry property is sold. In both cases, the repayment will be made with interest calculated at the higher rate recorded for the Local Government Investment Pool on the date of borrowing or as of the date repaid. This is consistent with the City's previous borrowing terms.
Recommendation:	Staff recommends approval of the attached resolution.
Fiscal Impact:	Approval of the resolution funds operations in the Telecommunication Fund until bonds are sold and makes good the City's pledge to HUD to repay monies related to the reversion of the Grove to unrestricted use.
Background:	ORS requires the City Council to authorize a loan from one fund to another. If a loan is not repaid by the end of the fiscal year, it must be budgeted and repaid in the following year's budget. The borrowing fund will pay interest based on the Local Government Investment Pool interest rate at the date of the loan, or the date of repayment, whichever is higher. The Telecommunications Fund loan of $8,500,000 will provide cash flow for the accumulated operating losses and for operating costs during a portion of FY 2004-2005 for the Ashland Fiber Network. This amount will be repaid when bonds are sold. In FY 2003-04 the Grove reverted to City unrestricted use and the payment to HUD for the City's ownership, restoring granted monies, is $215,000. A pledge was signed promising payment by August 31, 2004, with the intent to sell surplus Strawberry Lane property to fund the conversion. It is anticipated that the property to will not be sold until after the due date. A loan will allow the city to comply with the pledge. In both cases, no budget change is necessary unless the payback does not occur before June 30, 2005.
Attachments:	•   Resolution •   Letter to HUD from the City of Ashland

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