Short-Term Measure X Loans to Monterey-Salinas Transit

1. AUTHORIZE Executive Director to sign agreement(s) with Monterey-Salinas Transit (MST), pending approval by Counsel, for short-term Measure X loans up to $3,000,000 for payroll and other operating costs, to be repaid upon receipt of Federal Transit Administration funds. 
2. AUTHORIZE Executive Director to charge interest for the loan(s) based upon current interest rates earned by Measure X funds during the quarter that MST receives the loan. 

MST has requested a short-term Measure X loan to fund operating costs due to an unexpected delay by the Federal Transit Administration in disbursing federal transit operating funds. Unless MST can obtain funds at a reasonable rate to keep an adequate cash-flow pending receipt of federal funds, MST could be forced to reduce services to the community.  Board approval would authorize the Executive Director to execute future loans under the same terms to help ease similar cash-flow crises.

Disruptions in federal funding adversely impact MST's ability to receive federal funds in a timely manner and has caused a cash-flow problem affecting MST's ability to meet payroll obligations and other operating costs. Unless MST can obtain funds at a reasonable rate to keep an adequate cash-flow pending receipt of federal funds, MST could be forced to reduce their services to the community. 

Staff is recommending that the Board of Directors authorize the Executive Director to execute short-term Measure X loans of up to $3,000,000 to MST for the current and potential future delays to reimbursement of federal operating funds.

The recommended action is consistent with Ordinance 2016-01, Monterey County Transportation Safety & Investment Plan (Measure X), which states that TAMC may issue limited loans, from time to time, to finance any program or project in the Investment Plan. These loans fall under the Mobility for All category of the Investment Plan. 

The recommended action is consistent with past Agency precedent to loan funds in emergency situations to mitigate funding cuts and shortfall that could impact MST operations (the Agency approved short-term loans from the Regional Surface Transportation Program to MST in 2002, 2009, 2011, and again in January 2012 to address cash-flow emergencies caused by state funding cuts and federal funding delays). Each loan was executed and promptly repaid by MST upon receipt of its federal funds. 

The draft loan agreement is included as an attachment to this report. Approval of the agreement is subject to review and approval by Agency Counsel.