RES 2010-06 PROVIDING FOR SHORT-TERM BORROWING FROM THE WATER -FUND TO THE SEWER FUNDRESOLUTION o, 2010-06
A RESOLUTION of the City Council of the City of Bainbridge
Island, Washington, providing for short-term borrowing from the -
Water -Fund to the Sewer Fund of the Consolidated Water ror s
Utility for the first five maths of 2010.
WHEREAS, the City of Bainbridge Island, Washington (the "City's) intends to manage its fiscal
matters in a prudent manner; and
WHEREAS, the City has by Resolution No. 200 8-14 sought -to- "establish conditions for the use
of debt and to create procedures and policies that minimize the City's -cleft service and issuance
costs, retain the highest practical credit rating, and maintain full and complete financial
disclosure and reporting"'; and
WHEREAS, the City has also b .Resolution No. 2008-14 pertaining to "Purposes and Uses of
Debt" established Polis' 1 - Short -term Borrowing which states; "Except for LIDs and
similar situations, the use of short-term borrowing, such as bond anticipation- notes N arra
tax-exempt commercial paper will be undertaken only if the transaction costs plus interest of the
debt are less than the cost of an iaterfand loan, or available Cash is insufficient to meet working
capital requirements"; and
WHEREAS, the City . has previewed the current financial p sition and its cash flow analysis for
the fiscal year of 2010 for the General and the Water Fund of the Consolidated Waterworks
s
Utility and has determined that it would be prudent for the General Fuad to engage in short-term
borrowing in 2010 of an amount not to exceed $600,000 from the Nater Fund within the
Consolidated Waterworks Utility of the City, with a scheduled repayment slate of no later than
May 31, 2010, is order to maintain positive cash balances in the General Fund until the Cit
receives. property tax receipts for the first half of the year and/or the scheduled grant funds
related to the Williams property acquisition and/or proceeds from the sale of surplus property
currently in process; and
WHEREAS, the 2008 GAAP BARS Manual, Volume 1, part 3, chapter 4, page 1, states that
"the legislative body of a municipality must, by ordinance or resolution, approve all interfund
lows, and provide in the authorization a planned schedule of repayment of the loan principal a
well as setting a reasonable rate of interest (based on the external rate available to the
municipality) to be paid to the lending fund"; and
WHEREAS, the City has determined that the combination of transaction costs plus interest for
the City to issue commercial paper or a note to a third party will exceed the costs to the General
Fund of an i terfnd loan, primarily because an interfund loam entails no gird --party transaction
costs; and
WHEREAS, the use of an intend loan allows considerably greater flexibility and timeliness
than commercial paper or a note to a third -party leader, and thereby permits the City to reduce
the interest cost to the General Fund by controlling the draws and prepayments from month to
month to ensure that the interest-bearing balance is not substantially in excess of that month's .:
requirements; and {-
W LEAS, the City Council finds . that it has exercised due regard for the maintenance and
operation expense f the. Water System n ' .t ds t the Water Fun revenues aid cash
balances are expected to be more than sufficient to meet all of the needs of the Water Fund
,through the loan period and has f nds available to male the intend loan authorized herein; and
WHEREAS,, the Fater Frond of the Consolidated Waterworks Utility will be benefited by the
interest rates of the interfund loan; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAINBRIDGE
ISLAND, WAS INGTON,.AS FOLLOWS:
Section I. Authorization of Loan. The City's Director of Finance is authorized and directed,
on and after February 1, 2010, and from month to month thereafter until May 3 1, 2010, to cause
the City's General Fund to borrow cash from the Water Fund of the Consolidated Waterworks
s
Utility in one or more drags, where the outstanding principal amount of the loan shall at no time
exceed $600,000, and which may vary as determined by the said Director based on the Director's
analysis of the cash needs of the General Fund from time to time between February 11, 2010 . and
the scheduled final repayment date In Section 2,
Section 2. Scheduled Repayment. . The Director of Finance shall cause any and all outstanding
balance of the said interfund loan to .be repaid to the Water Fund by the General Fund Within the
Consolidated Waterworks [utility o (and in no event later than) May 3 f, 20 10, and this interfund
lending authorization shall terminate on that date.
Section 3. Interest Payable to Water Fund. Each draw shall bear interest at the interest rate
set forth in this Section 3. which shall accrue from the date of that Draw and be adjusted
monthly. Interest shall be computed monthly on the amounts outstanding on the basis of a 360 -
day year for the actual number of days. Fach Loan draw shall bear interest at an annual rate
equal to 25 basis points, plus the higher of the monthly net earnings nate for the preceding
calendar month on investments- in either a the Washington Mate Local Government Investment
Pool, or b the Kitsap County Local Government investment fool. The City Council finds that
the fixing of the interest rate set forth herein is reasonable and in the Best interest of the City, its
ratepayers and its taxpayers.
Section 4. No Fees or Prepayment Penalties. f'repayments shall be permissible in the
discretion of the Director of Finance, and there shall be no fees or prepayment penalties on inter-
fuse loans and, subject to the $600,000 overall principal limit on outstanding balance as stated in
Section 1, there shall be no advance notice required for any additional interfnd draw or
prepayment.
Section 5. Monthly Reporting to City Council. The Director of Finance shall report monthly
to the City Council from February 2010 through May 2010, the inter -fund loan reporting
information shown on Exhibit A to this Resolution.
Secdon 6. Effective -Y e. This resolution shall be in fall force and effect from and after its
approval by the City Council until the cute stated in Sectioti 2.
PASSED by the City Council this 27t" ' of January 20 10.
APPROVED by. the Mayor this 28"' r of January 20 10.
Bob Scalps, Mayor
ATTEST.
y
da U �5 o
Rosalind D. Lassoff, Cit Cl ri
FILED WITH THE CITY CLERK; January 21, 2 1
PASSED BY THE CITY COUNCIL; January 27, 2010
RESOLUTION N . 2010-06
Exhibit;.
Sample Forms of Repqrtsto Cid a x e .
Rort of Intr Loan' Draws and Repay t