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Recommendation to Approve Revisions to an Interfund Loan for the Financing of Fire Station #3 and to Transfer Remaining Balance of the Loan to the General Fund. (Finance 2410)
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To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
Revise repayment term for the Equipment Replacement Fund interfund loan and transfer loan balance to the General Fund.
BACKGROUND
In July 2014, City Council approved an interfund loan in the amount of $809,000. The proceeds from the interfund loan were used as one of the financing mechanisms for the construction of the new Fire Station #3. The interfund loan is from the Equipment Replacement Internal Service Fund to the Emergency Operations Center/Fire Station #3 Capital Project Fund. However, the repayment of the loan is secured by the General Fund. The original terms of the loan provide for a repayment over a 20-year period, bearing a simple annual rate of 3%.
In June 2018, City Council approved an Ordinance for the sale of the former Fire Station #3 located at 1703 Grand Street, Alameda, for a total price of $800,000. At the same time, staff recommended and Council approved using the proceeds from the sale of this property, net of prior $450,000 budget allocation and closing transaction costs, for partial repayment of the Equipment Replacement Internal Service Fund Loan.
DISCUSSION
The sale of the property was finalized on September 17, 2018. The net proceeds from the sale of the property available for partial repayment of the interfund loan are $307,315 (sale price less closing costs and less $450,000 prior budget allocation). This balance will be applied to partially repay the interfund loan. After the partial repayment, the loan balance will be $408,626. There are two options on how to repay the remaining balance of the loan:
1. Continue making annual payments of the same amount of $54,378 as approved in the original loan with the final payment o...
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