AgdaPkt 2003-12-01 - Laserfiche WebLink

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(s.aA - REPORT To the Honorable Mayor and City Council From the City Manager December 1, 2003 Subject Amendment to Loan Agreement Between Capital Outlay Fund and Parking Fund Recommendation It is recommended that the City Council amend the terms of the loan agreement between the capital outlay fund and the parking fund to provide for the parking fund to make only payments of interest until such time as the City Manager determines that the parking fund is in a position to make both principal and interest payments. Background In June 1993, the City Council approved a loan in the amount of $1.3 million from the civic center capital improvements fund (since merged into the capital outlay fund) to the parking fund to assist in the financing of the construction of the parking facility at 755 Marshall Street. The initial terms of this loan required the parking fund to make equal installments of principal and interest annually until June 30, 2013 when all principal was to have been repaid. The interest rate on this loan is the rate the City earns on its funds invested in the State of California Local Agency Investment Fund (LAIF). Since the inception of this agreement, the parking fund has never generated sufficient revenues to pay other than the required interest payments. The parking fund's primary source of revenue is the coins deposited in the parking meters throughout the downtown area. The City's independent auditors, Caporicci and Larson, have recommended that the agreement be amended to provide that only interest payments be made until such time as the parking fund has the financial capacity to make principal and interest payments so that both parties are in conformance with the terms and conditions of this agreement. It is proposed that the City Manager, when overseeing the preparation of the annual budget, determine when the parking fund is in a position to repay principal on this loan. Alternative The Council may reject staffs recommendation to amend the terms of this loan. Doing so will cause both the capital outlay fund and parking fund to be out of compliance with the terms of this agreement. Fiscal Impact This change will have no fiscal impact as the parking fund presently lacks the revenue capacity to make principal payments to the capital outlay fund. At some point in the future, the increased demand resulting from the City's downtown revitalization efforts may generate sufficient revenues to enable the parking fund to repay the principal on this loan. If the entire principal is not repaid by June 30, 2013, staff will recommend at that time to