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i.A, B VlF WORKSH()PS frOln page 1 ........................................ These concerns led the League to focus on getting the strongest possible guarantee of repay- ment of the "VLF Gap Loan" during the budget negotiations last summer that led to the approval ofSCA4 (Prop. 1A). In addition to the requirement of SCA 4 (Prop. 1A) that the state repay the VLF Gap Loan before the state can ever "borrow" local property taxes, we asked for authority for cities and counties to sell this VLF "receivable" to a joint powers author- ity in which most cities and counties already participate (California Communities). Gap Loan Program Now Available The League recently notified cities that this program is now available, and the response from local agencies has been strong. To date, we have received indications of interest from over 100 local agencies with receivables totaling over $360 million. The program provides a city or county the opportunity to sell their VLF Gap Loan debt for an upfront fixed price of about 92 to 95% (estimated) of the amount receivable from the state rather than wait for payment in 2006. California Commu- nities is planning to issue bonds and use the proceeds to purchase the VLF receivables and pay financing costs ("VLF Bonds"). California Communities will pledge the VLF receivables to secure payment on the VLF Bonds. A city's sale of its VLF receivable is i"evocable and inves- tors will have no recourse to the city if the state does not repay the VLF gap loan. Many cities find the program attractive be- cause it: . Provides immediate cash relief. . Transfers the risk of non-payment by the State to bondholders. . Levels out cash flow from the State over the next few years. One city manager summed it up this way: "This program is great! I wish every city would participate. Besides the immediate benefits to the city, it effectively ensures full repayment because receivables sold to bondholders are protected by contract. And even if the state did fail to pay, it would not be the cities' fight. " How to Participate For cities that have not yet signed up but would like to do so, there is still time to participate in the first financing, scheduled for sale in late February. Application materials are available at www.cacommunities.com. To participate in the February financing, all required documents must be approved by your city council by February 18, 2005. Interested cities should initiate the applica- tion process no later than January 7. You can easily find your city's VLF gap loan amount and more information about the program on the California Communities website at www.cacommunities.com. More questions? Please contact California Communities Program Manager James Hamill at (925) 933-9229 x216 or ihamilltmcacomm un ities. com. Leaving City Office? Retiring? The League wants to stay in touch! Just because you are leaving your position with the city doesn't mean you stop caring about or wanting to be involved in city issues. Keep abreast of developments affecting cities and the League by becom- ing part ofthe League's alumni group. Members will receive periodic updates on city issues and League activities. This is the League's way of saying "thank you" for your public service-there is no fee for this service. To :;m,go Ð www.cacities.ora/aiumni or send your contact information to dha rrisontmcacities. ora. PAGE 2/PRIORITY FOCUS Visit the League's Official Web Site--www.cacities.org