[PPT] - Summa ry of Comme nts Inte r fund L oans E xplaine d Se we r F PowerPoint Presentation

SLIDE 1

Rive r side Ca.gov

Inte r

fund L

ans E

xplaine d

Se we r

F und Inte r fund L

ans
2009 Se we r

Re ve nue Bonds

Summa ry of Comme nts

SLIDE 2

Rive r side Ca.gov

Inte rfund L

a ns E

xpla ine d

SLIDE 3

Rive r side Ca.gov

T

he City ha s ma de inte rfund lo a ns fo r de c a de s

– L

a ns in a ntic ipa tio n o f upc o ming b o nd issue s in o rde r to sta rt

pro je c ts

– L

a ns fo r pro je c ts o f a sma ll size
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he se lo a ns a re a c o mmo n pra c tic e in munic ipa l g o ve rnme nt

T

ypic a l lo a n te rms a re sho rte r tha n tra ditio na l fina nc ing s a nd in the ra ng e o f 5-10 ye a rs o r le ss, ve rsus 20-30 ye a rs fo r b o nd fina nc ing s

L
a ns a re ma de fro m a va rie ty o f funds, b ut prima rily fro m the

City’ s utility funds a nd inte rna l se rvic e insura nc e trust funds

L
a ns a re only ma de from a va ila ble c a sh re se rve s

Purpose of Inte rfund L

a ns

SLIDE 4

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T

he City’ s utility funds a nd inte rna l se rvic e funds ha ve histo ric a lly he ld siza b le c a sh re se rve s

Ca sh re se rve s a re a n impo rta nt pa rt o f the se funds’ so und

fina nc ia l ma na g e me nt a nd lo ng -te rm fisc a l he a lth

Ca sh re se rve s a re a c c umula te d fo r purpo se s o the r tha n to fund
ng o ing o pe ra tio ns

– Utility c a sh re se rve s pro te c t a g a inst a se rio us na tura l disa ste r o r

the r una ntic ipa te d e ve nt
Utilizing c a sh re se rve s to ma ke inte rfund loa ns in no wa y

inc re a se s utility ra te s or e nc umbe rs funds tha t c ould othe rwise be use d for ope ra tions

Ca sh Re se rve s a nd Ra te s

SLIDE 5

Rive r side Ca.gov

T

he inte re st ra te c ha rg e d fo r inte rfund lo a ns is se t a nnua lly b a se d o n the a ve ra g e e a rning s o f the City’ s inve stme nt po rtfo lio during the pre vio us 12 mo nths

L

e nding funds the re fo re re c e ive the sa me inte re st the y wo uld ha ve re c e ive d if the ir re se rve c a sh ha d b e e n inve ste d in the City’ s inve stme nt po o l

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nte rfund lo a ns pro vide a c o st-e ffe c tive me a ns o f b o rro wing tha t sa ve s the City mo ne y (the c urre nt inte rfund lo a n ra te is le ss tha n 1% ve rsus ra te s in the ra ng e o f 2% - 4% fo r e xte rna l fina nc ing )

F

le xib ility is ma inta ine d to mo ve lo a ns b e twe e n funds if the le nding fund ne e ds a c c e ss to its c a sh re se rve s

Inte rfund L

a n Inte re st E

a rning s

SLIDE 6

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he re ha s b e e n c o nfusio n re g a rding inte rfund lo a n-re la te d te rmino lo g y

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nte rfund lo a ns a nd inte rfund a dva nc e s ha ve b e e n de sc rib e d b y me mb e rs o f the pub lic a s two diffe re nt thing s a nd it ha s b e e n implie d tha t a dva nc e s re ma in o utsta nding tha t the City is no t disc ussing

–

T he r e is no diffe r e nc e be twe e n a n a dva nc e a nd a loa n

– Ac c o unting rule s re q uire sta nda rdize d la ng ua g e fo r a mo unts due to o r

fro m o the r funds (“Adva nc e s T

” o r “Adva nc e s F

ro m”) in the City’ s fina nc ia l sta te me nts

– “I

nte rfund lo a n” is the F ina nc e De pa rtme nt’ s te rmino lo g y to re fe r to the se a dva nc e s a s it is a mo re de sc riptive te rm

–

E ve r y loan/ advanc e e ve r made by the Se we r F und has be e n paid in full, with inte r e st, othe r than thr e e outstanding loans still r e fle c te d in the City’s financ ial state me nts (de tails to follow)

Inte rfund L

a n T

e rminolog y

SLIDE 7

Rive r side Ca.gov

T

he re ha s b e e n a dditio na l c o nfusio n re g a rding “inte rfund” ve rsus “inte ra g e nc y” lo a ns

– Ac c o unting rule s re q uire inte rfund lo a ns b e twe e n the City a nd

se pa ra te le g a l e ntitie s suc h a s the Suc c e sso r Ag e nc y to b e c la ssifie d diffe re ntly

– Ho we ve r, the a c c o unting e ntrie s a re ide ntic a l a nd e ithe r type o f

lo a n is re fe rre d to a s a n “inte rfund lo a n”

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he re ha s a lso b e e n c o nfusio n re g a rding why so me lo a ns ha ve e xe c ute d lo a n do c ume nts a nd o the rs do no t

– T

he City e xe c ute s lo a n do c ume nts fo r lo a ns fro m the City to se pa ra te le g a l e ntitie s suc h a s the Suc c e sso r Ag e nc y

– T

he City do e s no t e xe c ute lo a n do c ume nts fo r lo a ns b e twe e n two City funds b e c a use b o th funds a re within the sa me le g a l e ntity

– A lo a n a g re e me nt is the re fo re unne c e ssa ry

Inte r fund L

an T

e r minology and Doc ume nts

SLIDE 8

Rive r side Ca.gov

De ta ile d re c o rds a re ke pt in the City’ s

fina nc ia l syste m o f a ll inte rfund lo a ns

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nte rfund lo a ns a re fully disc lo se d to a nd disc usse d with the b o nd ra ting a g e nc ie s

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a n tra nsa c tio ns a re a udite d b y the City’ s

e xte rna l a udito rs a nnua lly

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he City ha s a writte n inte rfund lo a n po lic y

Inte rfund L

a n Ac c ounting

SLIDE 9

Rive r side Ca.gov

A fe w inte rfund lo a ns ha ve b e e n ma de re q uiring

no pa yme nts until the lo a n is due

Whe n lo a ns ha ve this pro visio n, a c c o unting rule s

re q uire tha t inte re st b e “c a pita lize d” a nnua lly, me a ning tha t the inte re st due e a c h June 30th is a dde d to the princ ipa l b a la nc e o f the lo a n

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he a c c o unting e ntrie s re c o rding the se tra nsa c tio ns a re c o mplic a te d a nd c a n g ive the a ppe a ra nc e o f the fund pa ying itse lf inte re st, b ut the y a re o nly re c o rding the la rg e r b a la nc e due fro m the b o rro wing fund

Inte r fund L

an Inte r

e st Capitalization

SLIDE 10

Rive r side Ca.gov

Se we r F und Inte rfund L

a ns

SLIDE 11

Rive r side Ca.gov

Re fe re nc e ha s b e e n ma de to “$200 millio n o f a dva nc e s” b e ing ma de

fro m the Se we r F und a nd no t re pa id

– T

he Se we r F und ha s ne ve r ha d the re so urc e s to ma ke lo a ns in tha t ma g nitude , a nd ha s o nly b e e n a b le to ma ke the to ta l a mo unt o f lo a ns it ha s b e c a use e a rlie r lo a ns we re re pa id

– T

he Se we r F und c a sh re se rve is c urre ntly a ppro xima te ly $42 millio n a nd ha s no t e xc e e de d $77 millio n in the pa st de c a de

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t ha s a lso b e e n sug g e ste d tha t b o nd pro c e e ds we re “a dva nc e d” to

the r funds fo r unre la te d pro je c ts

– Bo nd pro c e e ds a re he ld b y a truste e a nd c a n no t b e lo a ne d to a no the r

fund o r spe nt o n pro je c ts o utside the Se we r F und

– Bo nd pro c e e ds a re re le a se d to the City upo n the City pro viding de ta ile d

re c o rds to the truste e de mo nstra ting tha t the City ha s e xpe nde d funds fo r e lig ib le Se we r F und pro je c ts

Se we r F und L e nding Ca pa c ity

SLIDE 12

Rive r side Ca.gov

Ove r the past 10 ye ars, the Se we r F

und has loane d a total of $87,351,434, of whic h $11,973,136 is outstanding

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he o utsta nding b a la nc e o f inte rfund lo a ns ha s ne ve r e xc e e de d $54 millio n a nd ha s ne ve r e xc e e de d $33 millio n o the r tha n b rie fly during fisc a l ye a r 2006/ 07

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he o utsta nding lo a n b a la nc e wa s $0 in 2008, whe n the Se we r F und’ s c a sh wa s re q uire d to pa y o ff the 1993 Se we r Re ve nue Bo nds a nd fund pro je c ts in a ntic ipa tio n

f issuing the 2009 Se we r Re ve nue Bo nds
As o f June 30, 2013, the Se we r F

und he ld a b a la nc e o f $11,973,136 o f inte rfund lo a ns, a n a mo unt tha t ha s de c line d ste a dily sinc e 2010

Histor ic al Se we r F und Inte r fund L

ans

SLIDE 13

Rive r side Ca.gov

T

he ta b le b e lo w illustra te s a nnua l inte rfund lo a n b a la nc e s a s c o mpa re d to to ta l c a sh re se rve s a va ila b le in the Se we r F und

Histor ic al Se we r F und Cash Balanc e s

Fiscal Year Ending Total Cash Less: Loans Cash Not Loaned 6/30/2004 $ 76,790,000 $ 7,731,000 $ 69,059,000 6/30/2005 69,522,000 10,728,000 58,794,000 6/30/2006 65,224,000 32,810,000 32,414,000 6/30/2007 56,106,000 22,104,000 34,002,000 6/30/2008 43,603,000

43,603,000

6/30/2009 12,056,000 10,018,000 2,038,000 6/30/2010 28,265,000 20,554,000 7,711,000 6/30/2011 36,159,000 18,439,000 17,720,000 6/30/2012 36,093,000 12,196,000 23,897,000 6/30/2013 42,141,000 11,973,000 30,168,000

SLIDE 14

Rive r side Ca.gov

Ove r the pa st 10 ye a rs, the Se we r F

und ha s e nte re d into 28 inte rfund lo a n tra nsa c tio ns

– 10 sho rt-te rm lo a ns to the Re de ve lo pme nt Ag e nc y in a ntic ipa tio n

f issua nc e o f the 2007 RDA ta x a llo c a tio n b o nds tha t we re ma de

a nd pa id within fisc a l ye a r 2006/ 07

L
a ns we re pa id in full b e fo re the e nd o f the fisc a l ye a r a nd a s a re sult

we re ne ve r a ssig ne d a lo a n numb e r o r re c o rde d in the City’ s inte rfund lo a n re c o rds

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nte re st wa s pa id in full

– 18 tra ditio na l, multi-ye a r inte rfund lo a ns

9 lo a ns to the Re de ve lo pme nt Ag e nc y

(8 pa id in full)

5 lo a ns to the Ge ne ra l F

und (4 pa id in full)

4 lo a ns to o the r City funds

(3 pa id in full)

All but 3 loa ns ha ve be e n pa id in full with inte re st

Spe c ific Se we r F und L

an T

r ansac tions

SLIDE 15

Rive r side Ca.gov

Sho rt-te rm RDA lo a ns - $20,763,793

– Re pa id fro m 2007 RDA ta x a llo c a tio n b o nd pro c e e ds – Outsta nding fo r le ss tha n o ne ye a r

Spe c ific Se we r F und L

an T

r ansac tions

Loan Purpose Loan Amount CC Approval Repaid 2791 University Ave. Acquisition $ 515,000 7/25/2006 6/1/2007 Imperial Hardware Acquisition 2,510,000 7/25/2006 6/1/2007 3372 University Ave. Acquisition 1,300,000 8/8/2006 6/1/2007 University Ave. Streetscape 1,960,993 8/22/2006 6/1/2007 Monroe Canal Project 3,900,000 9/5/2006 6/1/2007 University Ave. & Ottawa Acquisitions 2,887,800 9/5/2006 6/1/2007 University Ave. Acquisitions 990,000 9/5/2006 6/1/2007 3893 Mission Inn Ave. Acquisition 1,300,000 9/12/2006 6/1/2007 Olivewood House Covenants 400,000 9/19/2006 6/1/2007 La Sierra/Arlanza Project Area Formation 5,000,000 9/19/2006 6/1/2007

SLIDE 16

Rive r side Ca.gov

Re de ve lo pme nt Ag e nc y lo a ns - $35,778,670

– 9 lo a ns o ve r 10 ye a rs – 1 lo a n re ma ins o utsta nding

Spe c ific Se we r F und L

an T

r ansac tions

Loan Purpose Loan Amount CC Approval Repaid Magnolia Center Projects $ 3,000,000 3/8/2005 6/1/2007 Hunter Park/NS Project Area Formation 4,000,000 9/13/2005 6/1/2007 Merrill Avenue Acquisitions 3,500,000 2/7/2006 6/1/2007 First to Third Project Loan #1 1 5,999,171 9/19/2006 1/25/2012 First to Third Project Loan #2 1 5,450,938 2/13/2007 2/13/2012 Olivewood Property Assembly 1 4,018,391 5/1/2007 Outstanding Utilities Plaza Purchase (by RDA) 1 4,910,170 3/11/2008 3/30/2012 Doty/Trust Park Improvements 3,625,000 1/25/2011 6/16/2011 Pierce Street Acquisitions 1,275,000 3/1/2011 6/16/2011

1 Loan amount is the balance as of the date the loans were reassigned to the Sewer Fund.

SLIDE 17

Rive r side Ca.gov

Ge ne ra l F

und lo a ns - $18,677,221

– 5 lo a ns o ve r 10 ye a rs – 1 lo a n re ma ins o utsta nding

Spe c ific Se we r F und L

an T

r ansac tions

Loan Purpose Loan Amount CC Approval Repaid Pellisier Ranch Purchase $ 8,508,000 12/6/2005 7/1/2008 Utilities Plaza Purchase (Initial) 4,000,000 12/20/2005 6/30/2008 Corporation Yard Parking Lot Paving 400,000 9/19/2006 7/1/2010 Hulen Place Shelter Parking Lot 1,300,000 12/19/2006 6/30/2008 Utilities Plaza Purchase (From RDA) 4,469,221 3/30/2012 Outstanding

SLIDE 18

Rive r side Ca.gov

Othe r lo a ns to City funds - $12,131,750

– 4 lo a ns o ve r 10 ye a rs – 1 lo a n re ma ins o utsta nding

Spe c ific Se we r F und L

an T

r ansac tions

Loan Purpose Loan Amount CC Approval Repaid Measure A Fund: Van Buren Widening $ 5,000,000 6/7/2005 2/1/2009 Parking Fund: Garage 6 3,000,000 9/27/2005 11/30/2009 Parking Fund: Parking Meters 729,750 5/23/2006 6/30/2008 Park Fees Fund: Renaissance Debt Svc. 3,402,000 6/21/2011 Outstanding

SLIDE 19

Rive r side Ca.gov

2009 Se we r Re ve nue Bonds

SLIDE 20

Rive r side Ca.gov

Se we r re ve nue b o nds we re issue d in 2009 to ta ling $240,910,000

– Se rie s A – T

a x-E xe mpt Bo nds o f $36,835,000

– Se rie s B – Build Ame ric a Bo nds o f $204,075,000

Bo nds issue d to fund the Se we r Ca pita l I

mpro ve me nt Pro g ra m

– Pla nt re ha b ilita tio n a nd e xpa nsio n – Co lle c tio n syste m a nd o the r misc e lla ne o us pro je c ts – Re imb urse me nt o f $15 millio n o f prio r se we r pro je c t e xpe nditure s

(fro m Se rie s A b o nds unde r a re imb urse me nt re so lutio n)

– Also funde d thre e ye a rs o f inte re st a nd a c a sh re se rve fund

Re imb urse me nts o nly fo r pro je c t e xpe nditure s ma de 60 da ys

prio r to a do ptio n o f a re imb urse me nt re so lutio n a nd the re a fte r

– While so me pro je c ts fo r whic h e xpe nditure s we re re imb urse d ha d

b e e n in pro g re ss lo ng e r, o nly tho se e xpe nditure s fro m the a llo wa b le time fra me we re re imb urse d

– Olde r e xpe nditure s we re funde d with c a sh re se rve s

Purpose of Bond Issue

SLIDE 21

Rive r side Ca.gov

T

he b o nd o ffic ia l sta te me nt c o nte mpla te d the dive rsity o f pro je c ts ultima te ly funde d fro m b o nd pro c e e ds

– “to re imb urse c e rta in pre vio us e xpe nditure s re la te d to

the Se we r Syste m”

– “re ha b ilita tio n o r re pla c e me nt o f…c o lle c tio n syste m

piping ”

– “e xpa nsio n o f tre a tme nt c a pa c ity a nd the

re pla c e me nt o f tre a tme nt fa c ilitie s”

T

he o ffic ia l sta te me nt a lso c le a rly indic a te d tha t “a c tua l c o mpo ne nts to b e fina nc e d…ma y c ha ng e b a se d o n the City’ s ne e ds a nd prio ritie s”

Pla nne d Use of Bond Proc e e ds

SLIDE 22

Rive r side Ca.gov

T

he re ha s b e e n c o nfusio n re g a rding the a c tua l use

f b o nd pro c e e ds

– Orig ina l pro je c t fund

$200,759,383

– I

nte re st e a rning s $ 10,532,220

100% of the pr
c e e ds we r

e use d for Se we r F und pr

je c ts

– Re imb urse me nts

$ 15,000,000

– Pla nt Re ha b & E

xpa nsio n $127,917,435

– Othe r Pla nt Pro je c ts

$ 19,986,112

– Co lle c tio n Syste m

$ 44,198,056

– Jurupa Ave nue E

xte nsio n $ 4,190,000

Ac tua l Use of Bond Proc e e ds

SLIDE 23

Rive r side Ca.gov

T

he re ha ve b e e n c o mme nts re g a rding e xpe nditure o f Se we r F und mo ne y, inc luding b o nd pro c e e ds, o n the c o nstruc tio n o f the Jurupa Ave nue E xte nsio n b e ing a n ine lig ib le use o f funds

Co nstruc tio n o f this pro je c t wa s pursua nt to a n a g re e me nt with

the de ve lo pe r o f the Ag ric ultura l Pa rk pro pe rty, whic h wa s a ppro ve d b y the City Co unc il

Co nstruc tio n o f the ro a d b y the City wa s in lie u o f the City

inc urring o the r Se we r F und re la te d e xpe nditure s fo r e nviro nme nta l re me dia tio n a c tivitie s fo r the Ag ric ultura l Pa rk pro pe rty, the site o f a fo rme r se we r tre a tme nt pla nt

As suc h, the proje c t is a n e lig ible use of Se we r F

und mone y a nd the roa d c onstruc tion, be ing a public works proje c t, is a n e lig ible use of bond proc e e ds

Jurupa Ave nue E xte nsion

SLIDE 24

Rive r side Ca.gov

All inte rfund loa ns ma de from the Se we r F

und ha ve be e n re pa id in full, with inte re st, e xc e pt for thre e loa ns tha t re ma in

utsta nding
Outsta nding inte rfund loa ns tota l $12 million of a $42 million

Se we r F und c a sh re se rve a s of June 30, 2013

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he re ha ve be e n no loa ns or a dva nc e s ma de from bond proc e e ds

Bond proc e e ds ha ve only be e n use d for Se we r F

und proje c ts, inc luding one roa d c onstruc tion proje c t funde d in e xc ha ng e for othe r Se we r F und proje c t c osts be ing pa id by a de ve lope r

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nte rfund lo a ns a nd inte rfund a dva nc e s a re inte rc ha ng e a b le te rms a s use d b y the F ina nc e De pa rtme nt

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