HomeMy WebLinkAboutResolution No. 14-C81RESOLUTION NO. 14-C81
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA
AUTHORIZING A LOAN FROM THE AZUSA LIGHT & WATER FOR
PURPOSE OF FUNDING THE GENERAL FUND CASH RESERVE
BALANCE
WHEREAS, the City of Azusa's General Fund has suffered the effects of the recent
economic crisis causing to deplete its cash reserve balance; and
WHEREAS, the City of Azusa has taken actions to ensure it has a balanced annual budget
since then; and
WHEREAS, the Azusa Light & Water Water Fund has been advancing the funds to the
General Fund;
WHEREAS, a loan agreement will formalize the advances from the Water Fund to the
General Fund as a loan and establish a repayment schedule;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Azusa does
hereby:
SECTION 1. Approve the Loan Agreement ("Agreement"- Exhibit A) for the purpose of
formalizing the advancement of funds from the Water Fund to the General Fund containing the
following terms:
Loan
Amount
Purpose
Interest
Rate
Term
Borro
wer
Lender
Repayme
nt Source
$4,000,00
Formalize
Variable
Full Payment
General
AL&W
Excess
0
advance
-LAIF
due on June 30,
Fund
Water
cash
to cover
Ave
2021
("GF"),
Fund,
balance
deficit
Annual
No. 10
No. 32
over 10%
cash
Yield
of GF
balance
operating
bud et
SECTION 2. Approve the Promissory Note (Exhibit B) authorizing the repayment of the
loan.
SECTION 3. Authorize and direct the City Manager or his/her designee, on behalf of the
City, to execute the Agreement with the Azusa Light & Water in accordance with Section 1 hereof.
PASSED, APPROVED and ADOPTED this 20 day of November, 2014.
1
osep Romero Rocha
Mayor
ATTEST:
JeffvVLVnee rnejo, Xr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 14-C81 was duly adopted by the
City Council of the City of Azusa at a special meeting thereof, held on the 24'h day of November,
2014, by the following vote of Council:
AYES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE
EXHIBIT A
INTERFUND LOAN AGREEMENT
This Loan Agreement ("Agreement") is executed as of November 24, 2014, between the
City of .Azusa General Fund ('Borrower") and the Azusa Light & Water Water Fund
("Lender"). Lender agrees to lend to Borrower, and Borrower agrees to repay to Lender an
amount not to exceed the Principal Amount and interest accrued on the unpaid loan balance, in
accordance with the following:
1. Purpose of the Loan: To provide funds for use by Borrower or its designee, to fund
Borrower's cash reserve deficit. The Loan shall account for borrowing between the Water
Fund, Fund No. 32 and the General Fund, Fund No. 10 and shall not be available for
appropriation or be considered revenue to the Borrower.
2. Principal Loan Amount: Not to exceed Four Million and no/100 Dollars ($4,000,000).
The loan will be recorded as receivable to the Lender and payable to the Borrower.
3. Term of the Loan: The term of this loan shall begin on .Tune 30, 2014 and the
outstanding loan balance is to be repaid by June 30, 2021.
4. Scheduled Payments: Borrower shall make payments each fiscal year beginning with
FY2015. Such payments are due within thirty (30) days following the final closing of the
Borrower's Financial Books for each fiscal vear. At a minimum, annual Scheduled
Payments shall equal the amount of any accrued interest though June 30 of that fiscal
year plus a principal payment equal one-seventh (I/7) of theoriginal principal amount.
5. Repayment Source: Borrower must maintain positive cash balance of at least 10% of its
operating expense/expenditure budget to be able to repay the loan; excess cash balance
(over the 10%) should be used to make scheduled payments and cateb-up payments.
Missed scheduled payments shall be reported by the Finance Department to the City
Council and the Utility Board,
6. Rate of Interest: Interest shall accrue annually on June 30 on the outstanding loan
balance at the variable rates based on State of California's Local Agency Investment
Fund Pooled Money Investment Account Average Annual Yield, currently at 0.249% for
fiscal year 2013-2014. Loan interest will be recorded as revenue to the Lender and
expenditure to the Borrower.
7. General Provisions: This Agreement constitutes the full Agreement by and between the
parties and no other representations have been made regarding the contents of flus
Agreement. This Agreement shall not be amended, modified, or altered in any respect
unless such amendment, modification or alteration has been reduced to writing and
executed by both parties.
EXHIBIT A
LENDER: Azusa Light & Water,
a municipal utility
Fund N ne: Water Fund, No. 32
�t
George F. Morrow, Director of Utilities
BORROWER: City of Azusa
a municipal corporation and general law city
Fund Name: General Fund, No. 1.0
Donald Penman, Interim City Manager
EXHIBIT B
PROMISSORY NOTE
CITY OF AZUSA
GENERAL FUND
November 24, 2014
For value received, the CITY OF AZUSA, a municipal corporation and a general law city,
promises to pay the AZUSA LIGHT & WATER, a municipal utility organized and existing
under the laws of the State of California, the estimated sum of FOUR MILLION AND NO/] 00
DOLLARS ($4,000,000), revised as necessary to reflect incurred interest thereon from the date
of actual receipt of loan proceeds as evidenced by the transaction date, at the variable annual
interest rate equivalent to the Local Agency Investment Fund Pooled Money Investment Account
Average Annual Yields, currently at 0.249% for FY 2013-2014, per annum. Any unpaid
amounts will accrue annually and be added to the principal. The note is payable from excess
cash balance of at least 10% of its operating expense/expenditure budget to be able to repay the
loan. The balance of the note shall be fully repaid by June 30, 2021, unless extended by mutual
written consent of both parties.
This note is issued in connection with the funding of the General Fund's cash reserve balance.
The Utility Board has authorized the loan for such purpose.
Any unpaid interest shall accrue and be added to the outstanding balance. Principal and interest
shall be payable in lawful money of the United States at Azusa, California. Demand,
presentment for payment, protest and notice of protest are hereby waived.
CITY OF AZUSA
By:.
Joseph R. Rocha, Mayor
EXHIBIT B
WATER FUND LOAN TO GENERAL FUND
FOR CASH RESERVE BALANCE
DATED NOVEMBER 24, 2014
LOAN TERM = FULL PAYMENT DUE ON JUNE 30, 2021
LAIF AVG.
ANNUAL - ENDING
LOAN LOAN PRINCIPAL RATE" INTEREST LOAN
YEAR BALANCE PAYMENT (Changes INTEREST PAYMENT BALANCE
AT Annually)
07/01/14-06130/15
$4,000,000.00
$571,428.57
0.249%
$9,960.00
$9,960.00
$3,428,571.43
07/01/15-06/30/16
$3,428,571.43
$571,428.57
0.249%
$8,537.14
- $8,537.14
$2,857,142.86
07/01/16-06/30/17
$2,857,142.86
$571,428.57
0.249%
$7,114.29
$7,114.29
$2,285,714.29
07/01/17-06/30/18
$2,285,714.29
$571,428.57
0.249%
$5,691.43
$5,691.43
$1,714,285.71
07/01/18-06/30/19
$1,714,285.71
$571,428.57
0.249%
$4,268.57
$4,268.57
$1,142,857.14
07/01/19-06130/20
$1,142,857.14
$571,428.57
0.249%
$2,845.71
$2,845.71
$571,428.57
07/01/20-06130/21
$571,428.57
$571,428.57
0.249%
$1,422.86
$1,422.86
$0.00
TOTALS
$4,000,000.00
$39,840.00
$39,840.00
Note: Payment is due 30 days after close of each fiscal year.
'LA1F Average Annual Interest will change annually, FY 2013-2014 was 0.249%