RES 2013-20 SHORT TERM BORROWING FROM THE GENERAL FUNDRESOLUTION NO. 2013-20
A RESOLUTION of the City Council of the City of Bainbridge
Island, Washington, providing for short-term borrowing from the
General Fund by the Capital Construction Fund.
WHEREAS, the City's approved Capital Improvement Plan includes non - utility projects funded
in whole or in part with reimbursable grants; and
WHEREAS, the City uses the Capital Construction Fund to record such non - utility capital
projects; and
WHEREAS, the City must expend funds on these non - utility capital projects before the City
may apply for reimbursement under the grants; and
WHEREAS, the City has by Resolution No. 2008 -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 has reviewed the current financial position and cash flow analysis for the
fiscal years 2013 and 2014 for the General Fund and the Capital Construction Fund and has
determined that it would be prudent for the Capital Construction Fund to engage in short-term
borrowing in an amount not to exceed Five Hundred Thousand Dollars ($500,000) to cover
expenses associated with projects funded in whole or in part by reimbursable grants; and
WHEREAS, the 2013 GAAP BARS Manual, Interfund Transactions and Loans section, states
that "the legislative body of a municipality must, by ordinance or resolution, approve all
interfund loans, indicate the lending fund, and provide in the authorization a planned schedule of
repayment "; 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 Capital
Construction Fund of an interfund loan, primarily because an interfund loan entails no third -party
transaction costs and may exclude interest; and
WHEREAS, the use of an interfund loan allows considerably greater flexibility and timeliness
than commercial paper or a note to a third -party lender, and thereby permits the City to control
the draws and repayments from month to month to ensure that the balance is not in excess of that
month's requirements; and
WHEREAS, the City Council recognizes that this type of interfund borrowing may be required
in the future when non - utility capital projects are funded with reimbursable grants; and
WHEREAS, the City Council finds that it has exercised due regard for the maintenance and
operation expense of the activities supported by the General Fund and finds that the General
Fund revenues and cash balances are expected to be more than sufficient to meet all of the needs
of the General Fund through the loan period and has funds available to make the interfund loan
authorized herein, now therefore,
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON,
DOES RESOLVE AS FOLLOWS:
Section 1. Authorization of Loan. The City's Director of Finance is authorized and directed,
on and after November 25, 2013, to cause the City's Capital Construction Fund to borrow cash
from the General Fund in one or more draws, where the outstanding principal amount of the loan
shall at no time exceed Five Hundred Thousand Dollars ($500,000), and which may vary as
determined by the Director of Finance based on the Director's analysis of the cash needs of the
Capital Construction Fund from time to time during such time period.
Section 2. Scheduled Repayment. The Director of Finance shall cause any and all outstanding
balance of the interfund loan to be repaid to the General Fund by the Capital Construction Fund
on (and in no event later than) December 31, 2014, and this interfund lending authorization shall
terminate on that date, except that this interfund loan may be extended, at Council's discretion, if
there continues to be non - utility reimbursable grant- funded projects in the Capital Construction
Fund.
Section 3. Interest. There shall be no interest charged for this loan as the expenses could be
legally and properly paid from the General Fund.
Section 4. No Fees or Prepayment Penalties. Prepayments shall be permissible at the
discretion of the Director of Finance, and there shall be no fees or prepayment penalties on inter -
fund loans and, subject to the Five Hundred Thousand Dollars ($500,000) overall principal limit
on outstanding balance as stated in Section 1, there shall be no advance notice required for any
additional interfund draw or prepayment.
Section 5. Reporting to City Council. The Director of Finance shall provide reports to City
Council, as requested.
Section 6. Effective Date. This resolution shall be in full force and effect from and after its
approval by the City Council until the date stated in Section 2.
PASSED by the City Council this 25th day of November, 2013.
APPROVED by the Mayor this 25th day of November, 2013.
f
Steven Bonkowski, Mayor
2
ATTEST:
Rosalind D. Lassoff, Cite Clerk
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL
RESOLUTION NO.
November 6, 2013
November 25, 2013
2013 -20