SR - RES-10989 - INTERFUND LOAN FOR PURCHASE OF MOBILE RADIOS1. SUBJECT
Resolution No. 10989 — A Resolution of the City Council of the City of Orange authorizing an
interfund loan from the Capital Projects Fund to the Proposition 172 Sales Tax Fund.
2. SUMMARY
On December 13, 2016, the City Council approved the purchase of mobile radios in connection
with the Orange County 800 Megahertz (MHz) Countywide Coordinated Communication System
(CCCS). The City Council directed staff to establish an interfund loan in order to complete the
purchase, as the Proposition 172 Sales Tax Fund (Prop 172 Fund) does not have sufficient fund
balance available for the entire purchase price of $3.5 million. An initial payment of $730,000
from the Prop 172 Fund has been made toward the purchase of the radios, leaving a balance to be
loaned from the Capital Projects Fund of $2,770,118.76.
13. RECOMMENDED ACTION
1. Approve Resolution No. 10989.
2. Authorize the appropriation of $420,000 from the Proposition 172 Sales Tax Fund (120)
unreserved fund balance to expenditure account 120.0201.56510.20223.
3. Authorize the appropriation of $2,770,119 from the proceeds of the interfund loan from
the Capital Projects Fund (500) to expenditure account 120.0201.56510.20223.
14. FISCAL IMPACT
The interest expense to the Prop 172 Fund over the life of the six -year loan is $68,876.29. This
interest will be deposited in the Capital Projects Fund.
ITEM 3.14 1 1/10/17
5. STRATEGIC PLAN GOAL(S)
2. Be a fiscally health community
a. Expend fiscal resources responsibly.
d. Effectively manage and develop City assets.
16. GENERAL PLAN IMPLEMENTATION I
Not applicable.
17. DISCUSSION and BACKGROUND
The City has committed to participate in the Orange County 800 MHz CCCS. As part of that
commitment, the City is required to replace a majority of its current public safety radio inventory.
On December 13, 2016, the City Council approved the purchase of new radios and upgrades to
some existing radios at a cost of $3,500,118.76. In addition, the Council directed staff to
establish an interfund loan to finance the cost of the radios, with the caveat that we maximize the
available funds in the Prop 172 Fund for the purchase, thereby minimizing the amount needed to
be financed.
Staff increased the initial payment from the Prop 172 Fund by taking the $500,000 down
payment that was initially proposed and adding in the initial two payments totaling $230,000 that
would have otherwise been made on the loan, for a total down payment of $730,000. This
decreased the principal on the loan, and staff has deferred the commencement of payments on the
loan until the first quarter of Fiscal Year 2017 -18.
The recommended actions in this report will establish an interfund loan in the amount of
$2,770,118.76 from the Capital Projects Fund (500) to the Prop 172 Fund (120), and authorize
appropriations that will make sufficient funds available in the Prop 172 Fund for the purchase.
Given the amount of the loan, it only would result in a change in the City's short-term cash flow.
As such, an appropriate interest rate for the loan would be based on the State's Local Agency
Investment Fund yield, which is currently 0.68 %. This results in giving the City the ability to
shorten the loan period to six years, with quarterly payments of $118,291.46. The total interest
over the life of the loan is $68,876.29.
18. ATTACHMENTS
Resolution No. 10989
ITEM 2 1/10/17
RESOLUTION NO. 10989
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE AUTHORIZING AN
INTERFUND LOAN FROM THE CAPITAL
PROJECTS FUND TO THE PROPOSITION 172
SALES TAX FUND
WHEREAS, the City Council, on March 10, 2015, approved an amendment to a
joint agreement for the operation, maintenance, and financial management of the Orange
County 800 Megahertz Countywide Coordinated Communication System (herein referred
to as "CCCS "), which committed the City of Orange (herein referred to as the "City ") to
participate in the next generation of the CCCS; and
WHEREAS, the City, in order to utilize the CCCS, must have radio equipment
that is compatible with the system; and
WHEREAS, the City Council, on December 13, 2016, approved the purchase of
radio equipment for use in the CCCS in the amount of $3,500,118.76; and
WHEREAS, the voters of the State of California passed Proposition 172 in 1993,
establishing a Statewide half -cent sales tax dedicated to local public safety expenditures;
and
WHEREAS, the CCCS is used by public safety personnel to ensure
communication between various safety agencies within the County of Orange and,
therefore, is eligible to be funded by proceeds from Proposition 172 sales tax revenues;
and
WHEREAS, the Proposition 172 Sales Tax Fund, as of the date of this
Resolution, does not contain sufficient funds to pay for the entire purchase of the radio
equipment, but can contribute the sum of $730,000.00 toward the purchase; and
WHEREAS, the Capital Projects Fund has sufficient funds, as of the date of this
Resolution, to cover the difference in the purchase price of $2,770,118.76;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Orange as follows:
1. The City Council authorizes a loan from the Capital Projects Fund to the
Proposition 172 Sales Tax Fund in the amount of $2,770,118.76 (herein referred to as the
"Loan ").
2. Interest on the Loan shall accrue as of the date of this Resolution and
continuing until such time as the Loan is repaid in full, at a rate of 0.68 %, which is equal
CITY COUNCIL MINUTES JANUARY 10, 2017
3. CONSENT CALENDAR (Continued)
RESOLUTIONS
3.14 Authorization of an interfund loan from the Capital Projects Fund to the Proposition
172 Sales Tax Fund. Resolution No. 10989. (C2500.J.1.5)
ACTION: 1) Approved Resolution No. 10989; 2) Authorized the appropriation of
$420,000 from the Proposition 172 Sales Tax Fund (120) unreserved fund balance to
expenditure account 120.0201.56510.20223; and 3) Authorized the appropriation of
$2,770,119 from the proceeds of the interfund loan from the Capital Projects Fund (500)
to expenditure account 120.0201.56510.20223.
3.15 Upholding Appeal No. 0546 -16 and approving construction of two residential units
and detached two car garage on property containing an existing single family
residence located at 730 West Palm Avenue. Resolution No. 10990. (A4000.0)
NOTE: Councilmember Alvarez voted no on this Item.
ACTION: Approved Resolution No. 10990.
3B. SUCCESSOR AGENCY TO THE ORANGE REDEVELOPMENT AGENCY
3.16 Authorization to approve Recognized Obligation Payment Schedule ( "ROPS ") for
the period of July 1, 2017, through June 30, 2018; Resolution No. SAORA -025; and
authorization to approve administrative budgets for the Successor Agency of the
Orange Redevelopment Agency; Resolution No. SAORA -026. (SA1000.0)
ACTION: 1) Approved Resolution No. SAORA -025 and Resolution No. SAORA -026;
and 2) Directed staff to transmit ROPS 17 -18 and related Administrative Budgets to the
Oversight Board of the Successor Agency to the Orange Redevelopment Agency.
MOTION — Murphy
SECOND — Whitaker
AYES — Alvarez, Whitaker, Smith, Murphy, Nichols
Councilmember Alvarez recorded a no vote on Item 3.15. All other items on the Consent
Calendar were approved as recommended.
END OF CONSENT CALENDAR
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