Coversheet


Agenda Item 3.1.6


TRANSPORTATION AGENCY FOR MONTEREY COUNTY *Memorandum*

To:	Board of Directors
From:	Rita Goel, Director of Finance & Administration
Meeting Date:	June 26, 2019
Subject:	Transfer of Accounts for City of Gonzales Loan

RECOMMENDED ACTION:
AUTHORIZE the Executive Director to transfer an amount equal to the balance of the City of Gonzales Alta Street Rehabilitation project loan as of June 30, 2019 from the Measure X Transportation Safety and Investment Plan Account to the Transportation Agency reserve.

SUMMARY:

In 2017, the City of Gonzales requested and received a $2.5 million loan from the Transportation Agency for Monterey County to fund and complete their Alta Street Rehabilitation project. Since Measure X had just recently passed, there were insufficient funds in that account to make the requested loan. Hence, the loan was made from the Agency reserves and was to be repaid, with interest, from the City's share of future Measure X revenues. Now that the Transportation Safety and Investment Plan Account (Measure X) has sufficient funds, Agency staff is seeking to replace the Agency reserves used for the loan with Measure X funds.

FINANCIAL IMPACT:
There is no financial impact to exchanging the source of funding for the Alta Street Rehabilitation loan. All the terms of the loan agreement remain as negotiated with Gonzales in 2017. This would just be an administrative change to keep the financial accounting clearer and better reflect the intent of the parties.

DISCUSSION:

In 2017, the City of Gonzales requested that the Transportation Agency provide a loan to the City for their Alta Street Rehabilitation project. The $4.275 million project required an additional $2.5 million in funding to complete the project. Due to insufficient funds in the Measure X account, the Agency responded to the request from the City to provide that gap funding in the form of an interest-bearing loan, from the Agency reserves, to be repaid from the City's share of Measure X revenues.

The Agency loan terms were as follows:

The City was required to fund the project using their local funding first, prior to accessing the loan;
The loan would be paid out on a reimbursement basis, with the City submitting monthly invoices and progress reports;
The interest on the loan would be fixed at 2.5%, switching to variable based on the Monterey County Pool Quarterly Rate plus 50 basis points, if the Monterey County Pool Quarterly Rate rose above 2.0%;

Gonzales would repay the loan from its share of Measure X funds, and,
City was expected to pay back the loan in 10 to 15 years.

While the original source of TAMC’s loan to Gonzales was not Measure X funds, the parties clearly contemplated the use of Measure X funds to undertake the Alta Street rehabilitation. Since the Transportation Safety and Investment Program Account now has sufficient funds to cover the anticipated outlay, staff is recommending that the Board authorize the transfer of an amount equal to the balance of the Alta Street Rehabilitation loan, as of June 30, 2019, from the Transportation Safety and Investment Program Account to the Transportation Agency account.

Such an internal transfer does not affect the Alta Street Rehabilitation loan itself, nor does it affect amounts available under Measure X for the other cities or for regional projects. It does, however, allow the Agency more flexibility with its reserves.

It is worth noting that the Alta Sreet Reconstruction project was completed in March 2018, and the City has been repaying the loan from the its share of Measure X revenues on a quarterly basis.