Finance Highlights 2009 1215 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: December 15, 2009 TO: City Council Finance Committee FROM: Perry Carter, Interim Finance Director, SUBJECT: Issuance of Tax Allocation Bonds by the Redevelopment Agency for The Alameda at San Leandro Crossings Housing project. BACKGROUND/DISCUSSION At the Committee's November 17, 2009 meeting, staff presented a report regarding the issiuance of Tax Allocation Bonds (TAB's) by the Redevelopment Agency (RDA) for The Alameda at San Leandro Crossings Housing project. That report is attached for-the Committee's reference. In that report staff sought approval of the Committee to take the recommended TAB financing forward to the full City Council for review and approval In addition, staff sought Committee approval of a contingency plan whereby ashort-term loan from the City's Water Pollution Control Plant (WPCP) could be made to the RDA. The contingency loan would be for a period of up to 90 days and would allow the RDA to meet a funding deadline. The Committee considered staff s recommendations and indicated concern over the cost of the financing. Staff responded that the major contributor to the cost was the necessity to issue taxable bonds. The Committee then asked if staff had considered internal financing to lower the overall borrowing cost. In particular, the Committee asked if there were sufficient funds in the Water Pollution Control Plant fund to finance the project. Staff responded that it had reviewed internal borrowing as an option and was not recommending internal financing. The Committee then asked staff to take a second look at internal financing as an option and to report any finding to the Committee in December. Since the November Committee meeting, Finance staff has met with the City Manager and Public Works Director to see if an internal financing with WPCP funds might be feasible. In brief, it would require a major dislocation of WPCP capital improvement plans to make $6.9 million available for a borrowing period of 10 io 15 years. An analysis of WPCP cash requirements over the next five years alone shows balances dipping to under $7.0 million, exclusive of working capital requirements. In terms of projects, the Public Works Director has indicated that at least four major projects would be negatively impacted by such a loan. These include the cogeneration facility, sludge thickener project, wet weather storage project and the collection system point repair program project. Consequently, in view of the negative impact that such a borrowing would have on the WPCP, which is rate payer funded, staff is not