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CITY COUNCIL AGENDA ITEM NO. 08


Meeting Date: September 25, 2001

Subject/Title: Approve a resolution authorizing a loan between the City of Brentwood Water Enterprise and the Water Facility Fee Fund. 

Submitted by: Pamela Ehler, Director of Finance & Information Systems

Approved by: Jon Elam, City Manager


RECOMMENDATION
Approve a resolution accepting a loan in the amount of $1,000,000 from the City’s Water Facility Fee Fund to the City Water Enterprise.

PREVIOUS ACTION
On September 20, 2001, this proposed action was presented to the Water & Sewer Subcommittee.

BACKGROUND
Due to some unforeseen maintenance problems with the City’s Potable Water Wells, additional water purchases were warranted to keep up with the City’s demand. These purchases were in excess of the budgeted amounts for fiscal year 2000/01. These and other unforeseen expenditures have created an unexpected cash shortage for the Enterprise.

With continued Capital purchases that are anticipated for this fiscal year, such as Sunset Industrial Park and increased water purchases, the Enterprise will continue to have a cash flow problem.

In trying to correct this situation, Finance recommends a loan from the Water Facility Fee Fund for $1,000,000 for a four (4) year period. This will fund this next year’s capital purchases and allow for completion of Well #14 to come online. The Water Rate Study will then help determine future needs and address the debt payment of this loan.

FISCAL IMPACT
The resolution accepts a loan from the City’s Water Facility Fee Fund in the amount of $1,000,000 to the City’s Water Enterprise for capital purchases. The interest rate to be assessed by the City for this loan is six percent (6%) which is equivalent to the approximate rate currently earned by the investment of other City funds with the State of California Local Agency Investment Fund. It is anticipated that the Water Enterprise revenues will be sufficient to repay this loan by June 30, 2005.


RESOLUTION NO. 


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD ACCEPTING A LOAN IN THE AMOUNT OF $1,000,000 FROM THE CITY’S WATER FACILITY FEE FUND TO THE CITY WATER ENTERPRISE.

WHEREAS, unforeseen maintenance problems with the City’s Potable Water Wells, warranted additional water purchases to keep up with the City’s demand; and

WHEREAS, these and other unforeseen expenditures have created an unexpected cash shortage for the Enterprise; and

WHEREAS, with continued Capital purchases that are anticipated for this fiscal year, the Enterprise will continue to have a cash flow problem; and

WHEREAS, in trying to correct this situation, Finance recommends a loan from the Water Facility Fee Fund for $1,000,000 for a four (4) year period; and

WHEREAS, this loan will fund this next year’s capital purchases and allow for completion of Well #14 to come online; and

WHEREAS, the Water Rate Study will help determine future needs and address the debt payment of this loan.

NOW THERFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby accept a loan in the amount of $1,000.000 from the City’s Water Facility Fee Fund to the City Water Enterprise.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on September 25, 2001 by the following vote:

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