TITLE
Recommendation to adopt resolution authorizing City Manager, or designee, to execute a Revolving Line of Credit with JPMorgan Chase Bank, N.A., in an amount not to exceed $25,000,000 for a one year term, with the option to extend the term for an additional one-year period, secured by pledged City assets and payable by the General Fund Group, and authorize the execution of all necessary documents in connection therewith. (Citywide)
DISCUSSION
The COVID-19 pandemic continues to cause severe economic distress at the national, state, and local levels. To enhance the City’s capacity to respond to the pandemic and increase the City’s financial flexibility during these difficult and challenging times, a Revolving Line of Credit for general purpose use, in an amount not to exceed $25,000,000, for a one-year term, with the option to extend for an additional one-year period, would provide cash flexibility for this unique time. At the present time, there is no intent to utilize the Line of Credit; rather, the intent is to provide a level of temporary cash security for an unknown future where the pandemic has shown the ability to substantially disrupt the capital markets for which the City relies on to fund projects. The City would only utilize the Line of Credit in the event that it needed liquidity in the extreme financial situation that cash had been drained due to the pandemic. It is likely that the City will not be in this situation; however, the Line of Credit is a relatively inexpensive insurance policy to help in the event that liquidity becomes a problem.
The total cost to issue the Revolving Line of Credit, including trustee, consultant, and counsel fees is estimated to be $135,000. In addition, to maintain the Line of Credit, the City will pay an annual commitment fee of $125,000, for a total first year cost of $260,000. The commitment fee must be paid, even if the Line of Credit is unused. The Line of Credit may also be extended at the option of the ...
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