TITLE
Recommendation to adopt resolution authorizing the issuance of Tax and Revenue Anticipation Notes in an amount not to exceed $55 million; and authorize City Manager to execute all necessary documents. (Citywide)
DISCUSSION
The Tax and Revenue Anticipation Note (TRAN) is a cash management tool used by public agencies to fund cash flow needs during a fiscal year. It is typically issued at the beginning of a fiscal year and matures within 13 months. In no case may a TRAN be outstanding for more than 15 months. A TRAN enables public agencies that receive revenues sporadically throughout the year (e.g., property taxes, property tax in-lieu of Vehicle License Fees and property tax in-lieu of sales tax) to have the cash on hand needed for expenditures while awaiting the receipt of these revenues. The City annually issues a TRAN and repays it within 13 months. For FY 09, the City will receive the proceeds from this issuance on October 1, 2008 and will repay the principal on September 30, 2009.
Due to the State's "Triple Flip" legislation and property tax in-lieu of VLF initiatives, which have dramatically changed the timing of the City's sales tax and VLF revenue receipts, the need for an annual TRAN has continued. The General Fund and Redevelopment Agencies are expected to experience short-term cash needs prior to the receipt of the City's first major property tax payments in December and the General Fund's property tax in-lieu payments in January. To bridge this projected cash need, the attached Resolution provides for the issuance of a TRAN in an amount not to exceed $55 million. The TRAN will be competitively bid in late September 2008 through the use of an online bidding service.
This matter was reviewed by Assistant City Attorney Heather Mahood on August 25, 2008 and Budget Management Officer Victoria Bell on August 4, 2008.
TIMING CONSIDERATIONS
The first property tax payments are due to be received from the County of Los Angeles on December 19, 2...
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