HomeMy WebLinkAbout5/17/2000 - STAFF REPORTS (17) DATE: May 17, 2000
TO: City Council
FROM: Assistant City Manager-Special Projects
WASTEWATER TREATMENT PLANT FUND LOANS - FORGIVENESS
RECOMMENDATION:
It is recommended that City Council approve the forgiveness of certain Wastewater
Treatment Plant Fund loans.
BACKGROUND:
The City has, in the past, borrowed money from the Wastewater Treatment Plant
Fund for other City activities. These loans, in all cases, were made including interest
rates, and while some of the loans have been paid in full, others have only paid
interest and yet others are completely nonperforming.
In November of 1999, the voters amended the City Charter with the passage of
Measure"U"which now states"The City may not borrow funds held on reserve by the
...Wastewater Division..." During the election process,the proponents of Measure"U"
campaigned around the theory that these types of loans actually resulted in the
taxpayers paying themselves back, which they felt unnecessary. Even the only
existing public agency that the City could sell or lease the Wastewater Treatment
Plant to under Measure "U," the Desert Water Agency, had already proposed that
should they be leased or sold the plant, they would forgive the loans.
At a recent budget workshop, City Council discussed the loans and asked that their
forgiveness be scheduled for a City Council review and possible action. The current
outstanding loans from the Wastewater Treatment Plant Fund are shown on Exhibit
"A,"attached. Three of the loans, Canyon Project, Project Area#9 and Baristo/Farrell,
represent the basic indebtedness required of a redevelopment area and these are not
recommended for forgiveness.
The Ramon Bogie loan is a nonperforming loan;the Train Station loan is being repaid
from the General Fund, and the Golf Course Fund loans are nonperforming. The
above three sets of loans are recommended for forgiveness.
Attached is a Resolution which would forgive the loans.
ALLEN F. SMOOT, AAE THOMAS M. KANARR
Assistant City Manager-Special Projects Director of Finance &Treasurer
APPROVED
City Manager � u
ATTACHMENTS: 7�t
1. Resolution
2. Exhibit A
MEMORANDUM
From the desk of: Allen F. Smoot, A.A.E., Assistant City Manager-Special Projects
DATE: May 12, 2000
TO: David Aleshire, City Attorney
SUBJECT: SEWER LOANS - AB 1600 IMPACT
Following our recent conversation concerning the Wastewater Treatment Plant Fund loans, and their
possible forgiveness, I have carried out research into the issue of whether the loans are from Sewer
Service Charges (no AB 1600 impact) or Connection Fees (AB 1600 impact).
The Sewer Connection Fee was established well before AB 1600's effective date of January 1989.
The developer's fee was established to pay for plant capital, including the retirement of debt on plant
expansion. Collections of this fee since 1989 are covered by AB 1600 restrictions and could not
be utilized for loans that might be forgiven. Sewer Connection Fee collections and debt service since
1/1/89 are as follows:
Year Collections Debt Service
1988-89 $1,233,220 $2,269,920
1989-90 1,499,504 2,271,045
1990-91 948,012 2,267,220
1991-92 1,036,148 2,268,220
1992-93 268,821 2,267,995
1993-94 163,751 2,270,845
1994-95 896,218 2,128,586
1995-96 494,370 2,112,792
1996-97 446,938 2,165,155
1997-98 583,414 2,162,273
1998-99 606,435 2,165,890
1999-00 598,125 2,263,000
TOTALS $8,774,966 $26,612,941
As can be seen, AB 1600 effected collections were 58,774,966, which came nowhere close to
covering the debt service of $26.6 million since 1989. Therefore, the dollars for the subject loans
came from sewer service charges which are not affected by AB 1600.
Thanks.
ALLEN F. SM bOT, AAE
Assistant City Manager-Special Projects
AFS:ps
cc: Dallas Flicek
Tom Kanarr
RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA, FORGIVING CERTAIN WASTEWATER
TREATMENT PLANT FUND LOANS TO VARIOUS CITY
FUNCTIONS.
WHEREAS the Wastewater Treatment Plant Fund reserves have been leant at market
interest rates to various other activities of the City as depicted in Exhibit"A"to this Resolution;
and
WHEREAS the Palm Springs voters in November 1999 amended the City Charter to prohibit
loans from the Wastewater Treatment Plant Fund for other than emergency purposes; and
WHEREAS the proponents of the Charter Amendment campaigned that the loans required
the taxpayer to pay themselves back and that this was inappropriate; and
WHEREAS, during the campaign,the Desert Water Agency, the only existing public agency
that would qualify under the Charter Amendment to take over the plant, openly displayed its
response to the City Request for Proposal which clearly stated it would "forgive the loans,"
NOW THEREFORE BE IT RESOLVED that the following Wastewater Treatment Plant Fund
loans are hereby forgiven in full, including all accrued interest through the date of this action:
Recipient Original Date Original Amount Purpose
Ramon Bogie 1/93 $90,600 Landfill Study
Ramon Bogie 11/89 $269,450 Interest Expense
Ramon Bogie 4/86 $593,650 Auto Center Land
Ramon Bogie 3/86 $1,627,500 Auto Center Land
Train Station 3/94 $1,150,000 Land/Grant Match
Golf Course Fund 10/94 $1,652,000 Debt Service
Golf Course Fund 4/96 $550,000 Land
Golf Course Fund 7/96 $590,322 Land
ADOPTED this day of 12000.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
City Clerk City Manager
REVIEWED&APPROVED AS TO FORM__
Iy ,
EXHIBIT "A"
WASTEWATER TREATMENT PLANT FUND LOANS
As of 6130/99
RECIPIENT INT RATE DATE ORIGINAL CURRENT REPMNT TERM PURPOSE
AMOUNT BALANCE SCHEDULE
Canyon Project 6.00% 6193 400,000 400,000 Int Only Open Start Up & Canyon Project
Project Area #9 6.00% 7/92 413,500 413,500 Int Only Open Plaza Theater Refurbishing
Baristo Farrell 6.00% 7/92 413,500 413,500 Int Only Open Plaza Theater Refurbishing
Ramon Bogie 5.00% 1/93 90,600 101,548 Int Only Open Landfill Study
Ramon Bogie 8.50% 11189 269,450 361,062 Int Only Open Interest Expense
Ramon Bogie 8.00% 4186 593,650 869,478 Int Only Open Auto Center Land Acquisition
Ramon Bogie 8.00% 3/86 1,627,500 2,427,854 Int Only Open Auto Center Land Acquisition
Capital Project Fund 5.50% 8/93 597,674 113,403 119,642 P&I 8/1999 * 800 MHZ Radio System
Train Station 5.00% 3/94 1,150,000 1,150,000 30 years Open Land Acquisition/Grant
Fund Match
Golf Course Fund 4.00% 10194 1,652,000 1,652,000 Deferred Open Debt Service
Golf Course Fund 6.00% 4/96 550,000 550,000 30 Years Open Land Acquisition
Golf Course Fund 6.00% 7/96 590,322 590,322 30 Years Open Land Acquisition
TOTAL FROM WASTEWATER 8,348,196 9,042,667
* Paid in Full on 8/99