1998 AGN MAY 05 I20 - Laserfiche WebLink

Browse Search

City of Colton AGENDA REPORT FOR COUNCIL MEETING OF MAY 5, 1998 TO: HONORABLE MAYOR AND CITY CN APPROVAL: HENRY T. GARCIA, CITY MANAGE FROM: ANNA A. VEGA, FINANCE DIRECTORs.� SUBJECT: TAX AND REVENUE ANTICIPATION NOTE FOR THE 1998-99 FISCAL YEAR DATE: APRIL 27, 1998 BACKGROUND The attached resolution authorizes the issuance by the City of Colton of not to exceed $2,040,000, 1998 tax and revenue anticipation notes (TRANS). The maturity of the 1998 TRANs will not exceed 15 months and will be dated July 1, 1998. The TRANs will be issued through a statewide financing program jointly sponsored by the California State Association of Counties and the League of California Cities. DISCUSSION/ANALYSIS The purpose of the temporary borrowing is to increase available cash balances, which provide operating funds to cover cash shortfalls. Cash shortfalls arise due to the timing differential of monthly cash receipts and disbursements throughout the 1998-99 fiscal year. The borrowing also provides and additional source of revenue because the cost of the borrowing is less than reinvestment income, producing a net gain to the City of Colton. The advantages of participating in the statewide TRANs program rather than an individual financing or another pooled TRANs, are many. The costs are lower because the costs are shared by the other participating cities, counties and special districts. There is standardized documentation and credit criteria employed in the financing, as well as a streamlined issuance process. The statewide program also offers the City of Colton the option of issuing TRANs, which mature in 15 months or 12 months. The 15 -month option will provide the City of Colton with three more months of interest earnings. Finally, there is the ability to obtain the highest credit rating on the financing with the availability of insurance. The City's TRANs maturity will be up to 15 months dated July 1, 1998 and due no later than September 30, 1999. The City will determine the maturity of the TRANs depending on market conditions in June, 1998. Even if the City issues 14 -month TRANs, the City will be able to issue another 12 or 15 month TRANs on July 1, 1999. The attached resolution authorizes the issuance by the City of tax and revenue anticipation notes (TRANs) in an amount not -to -exceed $2,040,000. The resolution authorizes various financing documentation, including a purchase agreement (Exhibit B to the resolution) and an Indenture which is on file in the City Clerk's office. The resolution authorizes the City Manager, Treasurer, and Finance Director to sign financing documentation in connection with the issuance of the TRANs. The resolution also appoints the law firm of Orrick, Herrington & Sutcliffe (Orrick) as bond counsel to the City of Colton. Orrick is a national law firm, which specializes in municipal bond law. FINANCIAL IMPACT The City of Colton will receive $2,040,000 in bond proceeds. The City Treasurer will invest those funds to provide an additional source of revenue due to the cost of borrowing being less than the reinvestment income, producing a net gain to the City. RECOMMENDATION Staff recommends that the City Council approve the resolution authorizing the issuance of tax and revenue anticipation notes for the 1998-99 fiscal year. Attachments: Resolution/Purchase Agreement Item # 20