[ Council Communication ]  [ Resolution ]

Council Communication

Title:	A resolution authorizing an interfund loan.
Dept:	Finance Department
Date:	July 2, 2002
Submitted By:	Lee Tuneberg, Finance Director
Reviewed By: ........................	Greg Scoles, City Administrator

Synopsis:	This resolution permits the City to borrow money from one fund to another. The fiscal year 2002-2003 budget includes interfund loans from Water Fund ($2.0 million) and Wastewater Funcd (@4.625 million) to the Telecommunications Fund.
Recommendation:	Staff recommends approval of the attached resolution.
Fiscal Impact:	Approval funds operations in the Telecommunications Fund up to appropriation limits estavlished within the adopted budget.
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 followings 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 budget appropriates for a loan of up to $6,625,000 as necessary by operations and cash flow.  In June 2002 the City borrowed from Key Bank an aditional $2,250,000 for construction purposed that will reduce the actual amount to be borrowed internally.  Through end of year analysis and cash balances, the Finance staff will determine which fund will lend less money. The Telecommunications Fund loan of $6,625,000 will provide cash flow for operations for FY 2002-2003. The fund is projected to operate at a loss for several years and will require an annual operating loan authorization that is consistent with the adopted business plan.

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RESOLUTION NO. 2002-

A RESOLUTION AUTHORIZING AN INTERFUND LOAN TO THE TELECOMMUNICATIONS FUND

RECITALS

A.  ORS 294.46 requires an ordinance or resolution to permit a loan from one fund to another; and

B.  A loan cannot be made from a debt service fund to any other fund, and

C.  If the loan will not be repaid by the end of the fiscal year, it must be a budgeted requirement in the following year's budget.

SECTION 1. The Finance Director is hereby authorized to borrow $2,000,000 from the Water Fund, and $4,625,000 from the Wastewater Fund for the Telecommunications Fund.

SECTION 2. The loan will be made prior to July 31, 2002, and will be repaid with accrued interest prior to July 31, 2003.

SECTION 3. Interest will be charged at the Local Government Investment Pool interest rate at the date of the loan or the date of repayment, whichever is higher. Interest shall be paid quarterly.

SECTION 4. This resolution takes effect upon signed by tyhe Mayor.

This resolution was read by title only in accordance with Ashland Municipal Code '2.04.090 duly PASSED and ADOPTED this _____ day of July, 2002.
Barbara Christensen, City Recorder

SIGNED and APPROVED this _____day of July, 2002.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney

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