RES 2011-09 AMEND RESOLUTION NO. 2010-17, PROVIDING FOR AN EXTENSION OF REPAYMENTRESOLUTION NO. 2011-09
A RESOLUTION of the City Council of the City of Bainbridge
Island, Washington, amending Resolution No. 2010-17, providing
for an extension of the scheduled repayment date to the short-term
borrowing from the Water Fund to the Sewer Fund of the
Consolidated Waterworks Utility.
WHEREAS, the City of Bainbridge Island (the "City") has by Resolution No. 2005-14
pertaining to "Purposes and Uses of Debt" established Policy 15 - Short-term Borrowing which
states; "Except for LIDs and similar situations, the use of short-term borrowing, such as bond
anticipation notes (BANs) and tax-exempt commercial paper will be undertaken only if the
transaction costs plus interest of the debt are less than the cost of an interfund loan, or available
cash is insufficient to meet working capital requirements"; and
WHEREAS, the City, pursuant to Resolution No. 2009-13 and Resolution' No. 2010-17, has
reviewed the City's financial position and its cash flow analysis for the Sewer and Water Funds
of the Consolidated Waterworks Utility and determined it prudent for the Sewer Fund to engage
in short-term borrowing of an amount not to exceed a principal amount of $3,000,000 from the
Water Fund within the Consolidated Waterworks Utility of the City, with a scheduled repayment
date of May 13, 2011 (the "Loan"), in order to continue the construction and related expenses of
the Wastewater Treatment Plant Upgrade project and to address legal challenges brought. forth
by the Bainbridge Ratepayers Alliance; and
WHEREAS, the City, pursuant to ordinance No. 2009-39, set Sewer Rates for 2010 through
2014 in accordance with the recommendations of the FCS Croup Rate Study and the Utility
Advisory Committee with a deferral of the repayment of the Loan in order to mitigate the effect
of necessary rate changes; and
WHEREAS, the City has determined that in order to be consistent with the recommendations of
Ordinance No. 2009-39, Resolution No. 2009-13, and Resolution No. 2010-17 and the
recommendations of the Utility Advisory Commission, it will be necessary to extend the
scheduled repayment date to December 1, 2011; and
WHEREAS, the use of an interfund loan continues to allow considerably greater flexibility and
timeliness than commercial paper or a note to a third -party lender, and thereby permits the City
to reduce the interest cost to the Sewer Fund; and
WHEREAS, the City Council continues to find that it has exercised due regard for the
maintenance and operation expense of the Water System and finds that the Water Fund revenues
and 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 funds available to maintain the Loan balance as previously
authorized; and
WHEREAS, the Water Fund of the Consolidated Waterworks Utility will be benefited by the
interest rates of the Loan; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAINBRIDGE
ISLAND, WASHINGTON, AS FOLLOWS:
Section 1. Extension of the Scheduled Repayment Date. The City's Director of Finance is
authorized and directed to extend the scheduled repayment date of the Loan to December 1,
2011, and this interfund lending authorization shall terminate on that date.
Section 2. Interest Payable to Water Fund. Interest shall continue to be computed monthly on
the amounts outstanding on the basis of a 360 -day year for the actual number of days at an
annual rate equal to 25 basis points, plus the higher of the monthly net earnings rate for the
preceding calendar month on investments in either (a) the Washington State Local Government
Investment Pool, or (b) the K.itsap County Local -Government Investment Pool. 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 3. Effective Date. This resolution shall be in full force and effect from and after its
approval by the City Council until December 1, 2011.
PASSED by the City Council this 131h day of April, 2011.
APPROVED by the Mayor this 131h day of April, 2011.
/irg'tein'i"Hytopoulos, Mayor
ATTEST:
UL
Rosalind D. Lassoff, City Jerk
FILED WITH THE CITY CLERK: April S, 2011
PASSEL] BY THE CITY COUNCIL-: April 13, 2011
RESOLUTION NO. 2011-09