TITLE
Recommendation to adopt resolution authorizing the issuance of Tax and Revenue Anticipation Notes in an amount not to exceed $30 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 12, the City expects to receive the proceeds from this issuance on October 3, 2011 and will repay the principal on September 28, 2012.
Due to the State’s “Triple Flip” legislation and property tax in-lieu of Vehicle License Fee (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 is 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 $30 million. The amount the City is borrowing in FY 12 is reduced from prior years because the City will not be prepaying its CalPERS obligation and will not be borrowing operating cash for the Redevelopment Agency. The TRAN will be sold through a negotiated sale, where the City will negotiate with bidders to sell the bonds at the best price.
This matter was reviewed by Assistant City ...
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