.Fiscal Note
This resolution accomplishes two purposes. First, it provides the legal authorization for the Water Utility to use borrowed funds to finance specific capital projects started prior to the actual borrowing date.
Second, it authorizes a $5,000,000 increase in the working capital loan from the City's general fund to the Water Utility fund to temporarily finance these Water Utility capital expenditures, bringing the total authorized loan amount to $10,000,000. This increase is needed because an unanticipated 3 month delay in the Public Service Commission's approval of the Water Utility's latest rate increase has resulted in a corresponding delay in the Utility's ability to issue bonds to finance its approved capital improvement program.
The loan from the City to the Water Utility will accrue interest at the rate of earnings on City investments, plus .25% and shall be repaid when the Water Utility sells revenue bonds to permanently finance its capital projects. No significant budgetary impact is anticipated, although the City's general fund balance will be reserved for the amount of the actual loan to the Water Utility and will be unavailable for appropriation until that loan has been repaid.
Title
Authorizing an additional loan from the general fund to the Water Utility fund and the reimbursement of certain capital expenditures from the proceeds of future waterworks system revenue bonds.
Body
PREAMBLE
The Water Utility seeks to temporarily borrow an additional loan amount not to exceed $5,000,000 from the general fund to finance certain capital expenses of the Water Utility System. The Utility will repay the general fund from the proceeds of the Utility's bonds, which are expected to be issued in November, 2007. Federal regulations permit proceeds of bonds, the interest of which is excluded from gross income for federal income tax purposes, to be allocated to reimburse expenditures paid prior to the issue of the bonds if the municipali...
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