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File #: 2019-7010   
Type: Consent Calendar Item
Body: City Council
On agenda: 7/2/2019
Title: Recommendation to Approve an Interfund Loan of Up to $1,200,000 from the General Fund to the Development Impact Fees (DIF) Parks Fund for the Repayment of the Parks DIF for the Cross Alameda Trail - Jean Sweeney Improvement Project and the Estuary Park Improvements. (Finance 2410)
Attachments: 1. Exhibit 1 - Promissory Note

Title

 

Recommendation to Approve an Interfund Loan of Up to $1,200,000 from the General Fund to the Development Impact Fees (DIF) Parks Fund for the Repayment of the Parks DIF for the Cross Alameda Trail - Jean Sweeney Improvement Project and the Estuary Park Improvements. (Finance 2410)

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To:  Honorable Mayor and Members of the City Council

 

EXECUTIVE SUMMARY

 

Authorize an interfund loan in an amount of up to $1.2 million from the General Fund to the Parks Development Impact Fees (DIF).  The terms of the loan include a repayment over a 10 year period with no pre-payment penalty and zero percent interest.

 

BACKGROUND

 

In June 2017, the City Council approved two interfund loans to the Parks Development Impact Fees Fund.  One loan was for $900,000, funded by the Transportation Development Impact Fee Fund and used to finance construction of the Cross Alameda Trail - Jean Sweeney Improvement project.  The second loan was for $1.4 million, funded equally by the General Fund and the FISC Fund and used to finance the Estuary Park Improvements project.

On June 4, 2019, the City Council approved a settlement agreement with CP VI Admirals Cove, LLC to refund $1,473,300 of Parks DIF.  The developer originally paid the fee to the City in October 2018 conditioned with the outcome of litigation.  The funds received were used to fully repay the previously approved interfund loan made by the Transportation DIF and make a partial payment on the General Fund/FISC loan.  The developer provided a written protest because they did not think the Parks DIF fees were relevant to their project since it is a renovation rather than a new development. 

DISCUSSION

 

In June 2017, the City Council approved two interfund loans to the Parks Development Impact Fees Fund.  One loan was for $900,000 funded by the Transportation Development Impact Fee Fund and used to finance construction of the Cross Alameda Trail - Jean Sweeney Improvement project.  The second loan for $1.4 million was funded equally by the General Fund and the FISC Fund and used to finance the Estuary Park Improvements project.

Both of the loans were to be repaid with future DIF revenue collected.  In September 2018, the developer for the Admiral Cove project paid Parks DIF, which was used to fully repay the $900,000 loan from the Transportation DIF and make a partial payment on the second interfund loan.  Finance and Parks staff were not aware that the developer made the payment of the fees under the protest.

 

On June 4, 2019, the City Council approved a settlement agreement with CP VI Admirals Cove, LLC to refund $1,473,300 of Parks DIF.  Because money originally collected has been used to repay prior loans, there is no sufficient cash in the Parks DIF to refund the fees. 

 

Staff recommends the City Council approve the Promissory Note (Exhibit 1) necessary to authorize the interfund loan and to allow Finance staff to record a loan in the City’s financial system as of June 30, 2018.  The loan to be made from the General Fund is in the amount of up to $1.2 million to be repaid over a ten-year period.  The loan bears zero interest and there is no pre-payment penalty.  Staff is evaluating other eligible sources to cover the cost paid for the projects originally funded by the above mentioned interfund loans to free up cash to refund the DIF. 

 

ALTERNATIVES

 

                     As an alternative to approving an interfund loan, the City Council may choose to provide a permanent transfer to fund the shortage of cash in the Parks DIF Fund created as a result of construction of Estuary Park Improvements and Cross Alameda Trail - Jean Sweeney Improvement projects.

 

FINANCIAL IMPACT

 

Upon approval of the Interfund Loan, Finance staff will record the loan in the City’s financial system as of June 30, 2018.  The loan bears zero interest rate.  The loan is set to be repaid over a ten-year period and is due in full by June 30, 2029.  The first loan payment is expected in Fiscal Year 2019-20.  However, it is anticipated that the loan will 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.

CLIMATE IMPACT

There are no climate impacts from the approval of the interfund loan. 

RECOMMENDATION

 

Approve an Interfund Loan of up to $1,200,000 from the General Fund to the Development Impact Fees (DIF) Parks Fund.

 

CITY MANAGER RECOMMENDATION

 

The City Manager recommends approval of the Interfund Loan.  The projects that created the deficit were both valuable Parks projects.  The money will be paid back through future Parks DIF revenues.

 

Respectfully submitted,

Elena Adair, Finance Director

 

Exhibit:

1.                     Promissory Note

 

cc: Eric Levitt