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HomeMy WebLinkAbout27- Finance CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: BARBARA PACHON Subject: AUTHORIZE EXTENSION OF LOAN TO THE SAN BERNARDINO Dept: FINANCE INTERNATIONAL AIRPORT Date: APRIL 24 1998 ORIGINAL AUTHORITY Synopsis of Previous Council action: 2/2/98 Mayor and Council approved issuance of a loan to the SBIAA not to exceed$124,000, from the City's Storm Drain Construction Fund, for the purposes of payment of the City's proportionate share SBIAA operating expenses through March, 1998. Recommended motion: Approve the extension of the loan to the SBIAA not to exceed an additional amount of$120,000, from the City's Storm Drain Construction Fund, for the purposes of payment of the City's proportionate share of SBIAA operating expenses through July 1998. ignature Contact person: Barbara Pachon,Director of Finance Phone: ext. 5242 Supporting data attached: Ward: N/A FUNDING REQUIREMENTS: Amount: $120,000 (Principal only) Source: (Acct.No.) 248-000-1047 Acct.Description) Storm Drain Construction Fund Finance:Y Council Notes: Agenda Item No. s/J1 9g CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION STAFF REPORT Background In May of 1992, the San Bernardino International Airport Authority (SBIAA) was created by a Joint Powers Agreement(JPA) among the County of San Bernardino and the cities of Colton, Loma Linda, Highland, and San Bernardino. According to Section 11 of the JPA Agreement, each member agency must pay a proportionate share of the operating deficits and other debt of the SBIAA(Attachment A). In October of 1996, the Community Development Commission approved a line of credit for SBIAA which was not to exceed $2 million. As of November 1997,the SBIAA had borrowed the full amount of funds available from this line of credit. The County of San Bernardino has also loaned an additional $1 million to the Airport Authority. In December 1997,the SBIAA staff presented to the Board of Directors a summary of the Authority's current fiscal position. The Board was advised that up to an additional $800,000 may be necessary to fund SBIAA operations through March, 1998. In response to the report, the Board took action for the cities of Highland, Colton, and Loma Linda to reimburse the Airport Authority and bring their financial support up to parity with the County and the City of San Bernardino. The Board also directed that each member agency be invoiced for the monthly operating expenses of the SBIAA, which is an accordance with the JPA Agreement. Additionally, the Board heard a presentation regarding plans for repayment of funds borrowed from the member agencies. Agency Counsel Tim Sabo is exploring the issuance of lease revenue bonds, or a lease-lease back financing arrangement, to generate funds for repayment of the outstanding loans. The Board voted to repay member agencies upon completion of the proposed financing package, which was originally estimated to occur in April, 1998. Analysis To date, the City of San Bernardino has loaned SBIAA a total of$90,039.03. This loaned amount covered the City of San Bernardino's proportionate share of the SBIAA operating deficits for the period December 1997 through March 1998. According to the most recent update from Tim Sabo, the proposed financing package will not be completed until July. Since the completion of the financing package has been delayed, SBIAA needs to borrow additional funds from the City of San Bernardino. It is estimated the City's proportionate share of the operating deficit for the period April 1998 through July 1998 will not exceed $120,000($30,000 per month x 4 months). It is recommended that the Mayor and Common Council extend the loan from the City's Storm Drain Construction Fund for an additional principal amount not to exceed $120,000 for the period April - July 1998. Interest will accrue on the loan at the LAW rate plus 2% and the loan will continue to be guaranteed by the City's General Fund. Recommendations Approve the extension of the loan to the SBIAA not to exceed an additional amount of $120,000, from the City's Storm Drain Construction Fund, for the purposes of payment of the City's proportionate share of SBIAA operating expenses through July 1998. Attachment A The Authority may invest any money in the treasury that is not required for immediate necessities of the Authority, as the Authority determines is advisable, in the same manner and upon the same conditions as local agencies pursuant to Section 53601 of the Government Code. Section 10. Non-Assignability of Participating Interests. The rights, titles and interests of any Party herein shall not be assignable or transferable unless such assignment or transfer is required by law and is not within the control of the Party making the assignment or transfer. Section 11. Budgets: Party Loans. All Parties shall loan to the Authority any and all of the necessary annual budgeted expenditures of the Authority. The principal amount of such Party loans shall bear interest at a rate agreed upon by and among the Parties and the Authority for each Fiscal Year which rate of interest shall be applied to all principal amounts loaned in such Fiscal Year until repaid in full and shall be repaid proportionately to each Party from legally available surplus revenues as shall be determined from time-to-time by the Commission. Each Party shall be responsible for its respective percentage of all annual expenses of the Authority in an amount equal to the percentage produced when dividing (i) the number of Members allocated to a Party under this Agreement, by (ii) the total number of Members then in the membership under this Agreement. All such loan funds shall be advanced by each Party on a monthly basis not later than the first business day of each calendar month. Any Party that is then in arrears by three (3) monthly loan advances, shall have the rights of its Member or Members to vote and participate in Commission meetings suspended until such time as all arrearages are then made current by such Party in whole, plus interest thereon, and the Authority shall not accept any partial payments of said amounts. During any period of time that a Party has not advanced its proportionate share of the annual expenses on a monthly basis, the other Parties shall each increase their percentage monthly advances commencing as of the month in which a default occurs by such Party by an amount equal to the dollar amount attributable to the defaulting Party's previously calculated percentage in the manner as provided above multiplied by the percentage produced when dividing (i) the number of Members allocated to a Party under this Agreement, by (ii) the total number of non-defaulting Members then in the membership under this Agreement. Each monthly payment not timely paid by a Party and received by the Authority by the date set forth above shall bear interest at a rate equal to one percent (1%) per calendar month (or such other maximum interest rate as may be permitted by applicable California law) , or any portion thereof, accruing from the date CS800012U3=1 -14- 4117192 1130 that the payment should have been made by such Party until the date that said Party remits the total balance of monthly payments then in arrears, plus applicable interest thereon. upon payment of such arrearages in whole, plus interest thereon, the Authority shall distribute proportionately such amounts to the non-defaulting Parties. upon any Party accumulating arrears on twelve (12) monthly loan advances, such Party shall be automatically expelled as a Party to this Agreement without any further action by the Authority, the Commission or any other Party. Such expelled Party may be subsequently readmitted as a Party to this Agreement only upon the approval of the legislative body to each Party that is then a Party to this Agreement upon such terms and conditions as the then remaining Parties may impose upon such readmittance. During any period of time that a Party has been either suspended or expelled and there exists on the Commission voting Members of Parties in a number less than the numbers set forth in (Section ha 11 2.B.be hereof, (i) the quorum requirement under Section 2.C. reduced, if applicable, to be a majority of the Parties not suspended or expelled who are represented by a majority of the Members then on the Commission, and (ii) the voting requirement under Section 2.C. (5) shall be reduced, if applicable, to a lesser number that continues to be represented by a majority of Members then on the Commission. It is anticipated that such funding by the Parties may continue for an extended period of time which cannot now be determined both prior to and subsequent to the when the Authority accepts epts the transfer of the Airport Facility or accepts the operational responsibility therefor. Prior to the time or times when the Parties adopt their annual budgets, such funding will be required to be made by the Parties from any legally available funds that may be allocated for such pure The Airport Manager shall prepare the Authority budget for whatever period of time is involved and submit it to the Commission for consideration and approval, and thereafter such Authority approved budget shall be submitted to the Parties for such action as they deem appropriate under the circumstances. The budgeting process required by this Section for each party to advance funds to the Authority shall be required of the Authority both prior to and subsequent to accepting the operational responsibility of the Airport Facility and until such time as the Authority is able to be financially self-supporting from Airport Facility derived revenue sources. section 12. Term Amendments Termination. (a) This Agreement shall be effective when executed by all of the Parties designated on the signature pages hereof; may be amended by unanimous consent of the Parties to include other municipal corporations or for any other lawful purpose; and shall continue for so long as necessary to carry out the purposes of any cseowizwocv -15- 4XtM uao