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9;1-7 VLF from page 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The state's fiscal crisis in 2003 led the state to "The mission of Califomia Communities since borrow from local governments about $1.2 billion its inception in 1988 has been to help California of funds related to VLF revenue that would have cities and counties prosper," said Dan Harrison of otherwise been paid to cities and counties. Legis- the League of California Cities. "The success of lation was passed last year that called for the the Vehicle License Fee program is a shining state to pay back the $1.2 billion VLF revenue gap example of what California Communities can on August 15, 2006. That legislation also provided provide to cities and counties through the efforts of cities and counties with the authority to sell their the League, the California State Association of VLF receivable to California Communities, a Counties, and an outstanding financing team." statewide joint powers authority with more than 425 member cities, counties and special districts. Sponsored by the League of California Cities and the California State Association of Counties, California Communities was created to invest in California local government and provide cities and counties access to low-cost fInancing for a variety of projects and programs that build better commu- nities and improve the quality of life in California. This past March, California Communities issued over $450 million of notes to finance the VLF receivables of the 142 cities and four counties that participated in the first issue of the VLF Gap Loan Financing Program. More than 90 percent of the VLF receivables due to these cities and counties were funded through this program. The cities and counties that participated in the financing covered a wide range, including some of the largest to some of the smallest in the state and represented all regions of the state. The notes were issued in both taxable and tax-exempt issues. "Due to shifts of property tax revenues away from cities and counties this fiscal year and next, many of these agencies needed these funds to smooth their cash flow situation," said James. Hamill, program manager at California Communi- ties. "Some agencies are using the funds for general fund purposes, while others applied them to capital projects or to repay previously issued debt obligations. Depending on the intended use of the funds, some of the participants were eligible to participate in the tax-exempt portion of the program, which reduced the interest cost and resulted in a higher net payment to the partici- pants." A second round of financing is planned for July, in order to allow those cities and counties that did not participate in the March funding another opportunity to fund their receivable. More informa- tion on the second round of the VLF Gap Loan Financing Program and California Communities can be found at www.cacommunities.orQ. ....................... . VLF GAP LOAN FINANCING PROGRAM, ROUND 2 - THE BUDGET BALANCER The League of California Cities is pleased to announce that California Statewide Communities Development Authority (California Communities) is now accepting applications for participation in the second round of the VLF Gap Loan Financing Program. The VLF Program, which is sponsored by the League and CSAC, permits cities and counties to sell their VLF Gap Loan Receivable and receive funds today, rather than waiting for State repayment in August. 2006. Plans for this second financing come on the heels of the highly-successful first round in which 146 local agencies sold more than $450 million in VLF Receivables to California Communities in a transaction which closed March 17, 2005. The second round is designed for cities and counties who indicated that the VLF Program would be more useful to them in FY 2005-06. The schedule developed by the California Communities financing team should permit interested local agencies to evaluate the VLF Program in connection with their upcoming FY '05-06 budget deliberations. For those who decide to participate, funding is expected to occur in mid to late July, 2005. Continued on Page 3 PAGE 2/PRIORITY FOCUS Visit the League's Official Web Site--www.cacities.org """""""""""""""""""-"--""""""""-'T""""""'"......."