CC RESOLUTION 5102 RESOLUTION NO. 5102
A RESOLUTION ADOPTING AN INTER-FUND LOAN POLICY.
The City Council of the City of EI Segundo does resolve as follows:
SECTION 1: Recitals:
A. Inter-fund loans involve the lending of cash from one City fund to another
for a specific purpose with a requirement for repayment;
B. The practice of inter-fund loans is a recognized and necessary aspect of
municipal finance;
C. The proposed City of EI Segundo Inter-fund Loan Policy documents the
methods used by the City to demonstrate prudent financial management
over inter-fund loans;
D. The City Council desires to adopt the policy.
SECTION 2: Adoption and Authorization. The City Council hereby adopts the "City of EI
Segundo Inter-fund Loan Policy," attached as Exhibit A and incorporated by this
reference. The City Manager or his designee is authorized to take any actions needed to
effectuate this resolution or the policy.
SECTION 3: This Resolution will become effective immediately upon adoption and
remain effective unless superseded by a subsequent resolution.
PASSED, APPROVED, AND ADOPTED RESOLUTION No. 5102 this 4t" day of
September, 2018.
Drew Boyles yor
ATTEST:
Tracyeave , City Clerk
APPROVED AS TO FORM:
Mark D. Hensley, (WAttorney
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EXHIBIT A
CITY OF EL SEGUNDO lN'1 EWFUND LOAN POLICY
(adopted by the City Council on September 4, 2018)
A. All inter-fund loans, other than short-term inter-fund loans (as defined), require City Council
approval by resolution. Any long-term inter-fund loan must be documented by a formal
agreement that specifies the following terms and conditions of the loan:
1. Purpose of Inter-fund Loan and Documentation Requirements
Loan purpose, amount, term, and repayment source will be identified any time a loan
is recommended. Loans will be coordinated with the City Attorney's Office to ensure
compliance with the Municipal Code and will be approved by the City Council via
resolution. Payments made on outstanding loans shall be reflected in the Proposed
and Adopted Budget and Annual Financial Report, as applicable. A summary of all
outstanding loans will also be included in the annual Proposed and Adopted
Operating Budget and the Comprehensive Annual Financial Report (CAFR). The
CAFR will also consistently include the loan term, rate of interest, and the interest
amount due in its calculation of the total liability associated with the loan.
2. Identification of the source fund
a. Availability of unrestricted funds in the source fund;
b. The borrowing fund has the capacity to repay the debt;
c. The lending fund has the capacity to lend the funds, beyond its own operating and
capital needs; and
d. The loan does not violate any debt covenants, regulatory requirements or other
provisions of the borrowing and lending funds.
3. Repayment of Inter-fund Loan
a. Repayment must have a payment source and funding stream;
b. Specific repayment schedule (term of the loan);
c. Interest is imposed at a rate equal to at least investment earnings if loan did not occur;
d. Interest is to be accrued monthly and paid quarterly;
e. The interest expense paid on inter-fund loans is to be treated as user fund expense,
while the interest income is to be treated as interest revenue to the loaning fund; and
f. There is no prepayment penalty on an inter-fund loan.
4. Other Considerations
a. Internal controls to monitor repayment; and
b. The inter-fund loan is callable by the lending fund if needed to ensure that the lending
fund has sufficient operating funds.
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B. For purposes of this policy, "Short-term inter-fund loans" are defined as those loans made
from one City fund to another that will be repaid within less than 12 months. Short-term
inter-fund loans may be made for working capital to provide cash for Council-approved
reimbursable grants and projects. Short-term inter-fund loans are also permitted for
temporary timing differences in cash flows when expenditures are incurred before revenue is
collected. Short-term inter-fund loans may be approved by the City Manager or Finance
Director and do not require City Council approval.
C. Prohibited Uses:
1. Inter-fund loans must not be used to solve ongoing structural budget issues; and
2. Inter-fund loans must not hinder the accomplishment of any function or project for
which the lending fund was established.
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CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
CITY OF EL SEGUNDO )
I, Tracy Weaver, City Clerk of the City of EI Segundo, California, do hereby certify that
the whole number of members of the City Council of said City is five; that the foregoing
Resolution No. 5102 was duly passed, approved and adopted by said City Council at a
regular meeting held on the 4th day of September, 2018, approved and signed by the
Mayor, and attested to by the City Clerk, by the following vote:
AYES: Mayor Boyles, Mayor Pro Tem Pirsztuk, Council Member Brann, Council
Member Pimentel and Council Member Nicol
NOES: None
ABSENT: None
ABSTAIN: None
WITNESS MY HAND THE OFFICIAL SEAL OF SAID CITY this day of October,
2018.
Tra Weaver, City Clerk
of the City of EI Segundo,
California