Title
Recommendation to Approve an Interfund Loan of $700,000 from the General Fund to the Development Impact Fees (DIF) Parks Fund and $700,000 from the Fleet Industrial Supply Center (FISC) Lease Revenue Fund to the DIF Parks Fund for the Financing of the Estuary Park Improvements Project. (Finance 2410)
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To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Approve an Interfund Loan of $700,000 from the General Fund to the DIF Parks Fund and $700,000 from the FISC Lease Revenue Fund to the DIF Parks Fund for the Financing of the Estuary Park Improvements Project
BACKGROUND
In July 2016, the City Council awarded a contract to Goodland Landscape Construction, Inc., for Estuary Park Site Improvements, Phase 1. The project was originally planned to be funded by a combination of grants, private donations, General Fund, Recreation Fund and Parks Development Impact fees (DIF Parks).
DISCUSSION
Estuary Park project design and construction costs are accounted for in the Capital Improvement Program Project 91311. The project is currently funded by a combination of grants, private donations, General Fund and Development Impact Fees (DIF). The total project budget is $5,186,000, of which $1.732 million is funded by the DIF Parks.
At the time the City Council awarded a contract, staff anticipated several large development projects would take place in FY 2016-17, resulting in the collection of approximately $2.0 million of permit and impact fees. However, construction of Estuary Park has outpaced collection of all the DIF Parks revenue resulting in a cash flow deficiency. In order to retain the State of California grant of $201,000, ARPD staff pursued moving forward with the project. Due to cash flow constraints, staff recommends the approval of long-term loans from the General Fund to the DIF Parks Fund and from the FISC Lease Revenue Fund to the DIF Parks Fund to ensure the project gets completed and grant funds are protected.
The original estimate of the loan amount was $1.7 million. Based on the current revenue collection, the DIF Fund total loan balance is estimated not exceed $1.4 million and will be equally funded by the General Fund and the FISC Lease Revenue Fund. The loans are expected to be fully repaid as soon as DIF revenue is collected, which is anticipated by 6/30/2018.
Staff recommends the City Council approve the Promissory Note (Exhibit 1) necessary to authorize the interfund loan and to allow Finance staff to record these loans in the City’s financial system.
FINANCIAL IMPACT
Upon approval of the Interfund Loan Finance staff will record these loans in the City’s financial system. The loan bears interest rate equivalent to Local Agency Investment Fund (LAIF) in effect at the end of the fiscal year. As of March 2017, the LAIF interest rate was 0.884%. The loan is set to be repaid over a four-year period and is due in full by June 30, 2020. However, it is anticipated that sufficient DIF Parks will be collected within next fiscal year and, as a result, the loan is expected to be repaid sooner.
MUNICIPAL CODE
This action is in conformance with the Alameda Municipal Code and Budget Resolution.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines. It does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Approve an Interfund Loan of $700,000 from the General Fund to the DIF Parks Fund and $700,000 from the FISC Lease Revenue Fund to the DIF Parks Fund for the Financing of the Estuary Park Improvements Project.
Respectfully submitted,
Elena Adair, Finance Director
Exhibit:
1. Interfund Loan Promissory Note