TITLE
Recommendation to adopt resolution authorizing the Financial Management Department to record a 10-year interfund loan of $21,832,202 between the Fleet Services Fund Group and the General Fund Group from the General Fund’s contributions for vehicle replacement in the Fleet Acquisitions Fund, to reimburse $21,832,202 from the General Fund Group to the Water Fund Group, pursuant to the outcome of Measure M litigation. (Citywide)
DISCUSSION
The outcome of the Measure M litigation requires the General Fund Group (General Fund) to reimburse the Water Fund Group (Water Fund) $21.8 million by September 20, 2022. To avoid reducing the General Fund’s cash reserves by that amount, City staff recommend a $21.8 million interfund loan between the Fleet Services Fund Group and the General Fund. The loan amount will be funded from the General Fund’s prior contributions to the Fleet Acquisition Fund (a fund within the Fleet Services Fund Group) for vehicle replacement. The Fleet Acquisition Fund is an internal service fund into which the General Fund has been prefunding vehicle replacement costs. Over the years, the General Fund has contributed 57 percent of the $44.7 million in pooled cash and cash equivalents held by the Fleet Acquisition Fund as of September 30, 2021.
The term of the interfund loan is 10 years with an interest only payment in the amount of $436,000 in Fiscal Year (FY) 23 and both principal and interest payments beginning in FY 24. Annual principal payments from FY 24 through FY 32 will be $2,425,800, payable on the anniversary date of the loan, i.e., mid-September. Early each fiscal year, simple interest will be paid by the General Fund to the Fleet Acquisition Fund for interest earned the previous fiscal year, at the same rate earned by the pooled cash investment portfolio managed by the City Treasurer. By the time the interfund loan is fully paid off in September 2032, it is anticipated that the Fleet Acquisition Fund in the Fleet Services Fund Gro...
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