1999 AGN DEC 21 I08 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT FOR CITY COUNCIL MEETING OF DECEMBER 21,1999 TO: Honorable Mayor and Council Members APPROVAL: Henry Garcia, City Manager FROM: Al Holliman, Finance Directo SUBJECT: Clarification of Terms Regarding Loan from the Electric Utility Fund to the General Fund, Originally Approved on July 15,1997 DATE: December 13, 1999 BACKGROUND: On July 15,1997, the City Council approved a reduction in the amount owed by the General Fund to the Electric Utility Fund. New terms of the revised agreement called for payments of $175,000 per year over a thirty-year period, totaling $5,250,000. Based upon research by staff, it appears that the $175,000 annual payment was to cover principal and interest. However, the original staff report was somewhat confusing, and a promissory note and resolution were not executed. Finance staff has made the necessary journal entries to restate the loan balance and record the payments in FY 97/98 and FY 98/99 on a principal and interest basis. However, the City's auditors need these terms evidenced by an actual promissory note and resolution. DISCUSSION/ANALYSIS: The total amount to be repaid by the General Fund to the Electric Utility has not changed. This sum is still $175,000 per year over 30 years to equal $5,250,000. The $175,000 annual payment will amortize a loan balance of $2,408,845.43 at 6% interest over 30 years. The attached promissory note contains a balance of $2,346,078.73 which has been reduced for the principal portion of the 1997-98 and 1998-99 annual payments. FINANCIAL IMPACT: The total sum to be repaid by the General Fund to the Electric Fund will remain unchanged from the amount originally approved by the City Council on July 15,1997. There is no budgetary impact to either the General Fund or the Electric Utility Fund as a result of this clarification. ENVIRONMENTAL IMPACT: Not Applicable RECOMMENDATION: Staff recommends that Council approve the attached promissory note and related resolution which clarify payment terms originally approved by the City Council on July 15,1997. Item #8