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HomeMy WebLinkAbout03/19/2013 12 Interfund Loan Program; YMC Chapter 3.123 Enactment k . BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. j For Meeting of: March 192013 1 ITEM TITLE: Ordinance creating an Interfund Loan Program SUBMITTED BY: Finance Department CONTACT Cindy Epperson, Director of Finance and Budget 576 -6771 PERSON /TELEPHONE: Tara Lewis, Financial Services Manager 576 -6639 SUMMARY EXPLANATION: This ordinance, if passed by Council, authorizes the Director of Finance and Budget to administer interfund loans as appropriate to maintain positive cash balances in the City's various funds. The City's revenues are not steady and fluctuate throughout the year. For example, property taxes are primarily received in April and October, and most grant - related expenditures are required to be spent before we can be reimbused. An Interfund Loan Program would allow the Director of Finance and Budget to manage the loan processes on a daily basis and to tailor such loans for repayment and to meet the revenue needs and expense obligations of the City. The term of repayment will be set based on each situation, and may be short term, as in the case of a grant reimbursement, or longer term, in the case of a capital purchase that may need up to 3 years to reimburse. We would anticipate using this program for the newly acquired airport operation, as they have a $250,000 SEID loan that is due in June which will likely exceed available cash at that point in time. Historically, we have used the Equipment Rental and Replacement reserve fund to make interfund loans, and that practice will likely continue, although any fund with excess reserves can be used as the lending fund. The use of this new interfund loan program will keep the different funds of the City solvent and will be subject to regular quarterly reporting to the City Council. Resolution Ordinance X Other (specify) Contract: Mail to: Contract Term: Amount: Expiration Date: Insurance Required? No Funding Source: Phone: APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Pass Ordinance establishing the program. BOARD/COMMISSION RECOMMENDATION: ATTACHMENTS: Click to download interfund Loan Ordinance ORDINANCE NO. 2013 - AN ORDINANCE relating to funds management and accounts; creating an Interfund Loan Program, and enacting Chapter 3.123 as a new chapter and Sections 3.123.010, 3.123.020, and 3.1232.030 thereof all of the City of Yakima Municpal Code. WHEREAS, the cash flows to and from the various funds of the City fluctuate throughout the budget year, and WHEREAS, the needs of the City are such that normal operations may require temporary loans between various funds of the City to maintain positive cash balances, and WHEREAS, such loans are within the statutory authority of the City Council to approve, and WHEREAS, the City Council wishes to provide an orderly process for such loans by authorizing the Director of Finance and Budget, an individual bonded and insured, to manage such loan processes on a daily basis, without regard to the City Council's meeting schedule in order to minimize interest expense and to carefully tailor such loans and repayment to the revenue needs and expense obligations of the City, and WHEREAS, the City Council deems it appropriate to authorize the Director of Finance and Budget to administer an interfund loan program, subject to regular reporting to the City Council, on an "as needed" basis to keep the different funds of the City solvent, NOW THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1: Chapter 3.123 is herby enacted as a new chapter and sections thereof the City of Yakima Municipal Code to read as follows "Chapter 3.123 INTERFUND LOANS PROGRAM Sections: 3.123.010 Interfund loan authorized 3.123.020 Reports to the City Council 3.123.303 Repayment directed. 3.123.010 Interfund Loan authorized. The Director of Finance and Budget is hereby authorized to administer an interfund loan program. The Director of Finance and Budget shall make interfund loans as needed to keep the funds of the City solvent. In conjunction with interfund loans, the Director of Finance and Budget shall prepare a planned schedule of repayment of the loan principal plus applicable interest. The monthly rate of interest will be the 30 day LIBOR rate plus 1.0% and shall be charged by the lending fund, unless the borrowing fund has no other source of revenue other than the lending fund, or is normally funded by the lending fund. In addition, the borrowing fund must anticipate sufficient revenues to be in a position over the period of the loan to make the specified principal and interest payments. Interfund loans for brief periods up to a calendar quarter will not be subject to interest. 3.123.020 Report to the City Council. The Director of Finance and Budget shall include a report within the regular Treasury Services Quarterly Report to the Council of any such loans and subsequent repayments. The Director of Finance and Budget will make such additional reports as may be necessary to fully inform the City Council of any interfund loan activity. 3.122.030 Repayment directed. The Director of Finance and Budget is directed and authorized to repay such loans, in whole or in part, when sufficient revenues are received. Section 2. Severability. If any section, sentence, clause or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this ordinance. Section 3. Effective Date. This ordinance, being an exercise of a power specifically delegated to the City legislative body, is an administrative and legislative act not subject to referendum, and shall take effect thirty (30) days after its passage, approval and publication as provided by law and the City Charter. PASSED BY THE CITY COUNCIL, signed and approved this day of March, 2013. Micah Cawley, Mayor ATTEST: City Clerk Ordinance No.: Publication Date: Effective Date: