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File #: 217-2020    Version: 1 Name:
Type: Afternoon Administrative Report Status: Agenda Ready
File created: 6/25/2020 In control: CITY COUNCIL
On agenda: 8/4/2020 Final action:
Title: Tax and Revenue Anticipation Note
Attachments: 1. ATCH 1 - Resolution, 2. ATCH 2 - Term Sheet, 3. ATCH 3 - Note Purchase Agreement
To: Honorable Mayor and Members of City Council

From: Bret Prebula, Finance Director

Prepared By: Bret Prebula, Finance Director

Tax and Revenue Anticipation Note


Adopt a resolution approving the borrowing of funds to pay General Fund obligations for Fiscal Year 2020/21, the issuance and sale of a Note (which may be referred to as a Tax and Revenue Anticipation Note, or "TRAN") in an amount not to exceed $15,000,000, the execution and delivery of a Note Purchase Agreement, and other related documents and actions.

The City's FY 2020/21 revised budget approved by City Council on June 16,2020, reflected $20 million less in revenue compared to the original FY 2020/21 budget adopted June 18, 2019. The reduction was primarily made up of significant decreases in Transient Occupancy Tax (TOT) and sales tax.

These two revenue sources served as the cash flow bridge between the two property tax payments that occur in December and April. Although expenses were significantly reduced citywide, the timing of the remaining (lower) expenses is still generally consistent across the twelve months of the fiscal year, whereas the revenue comes in more inconsistently with the largest portion of revenue received in December and April. This creates an imbalance between cash coming into and payments (cash) going out of the General Fund requiring a bridge to ensure enough cash will be available throughout the fiscal year to pay all the City's obligations.

To mitigate the possible cash imbalance, the City may issue a Tax and Revenue Anticipation Note (TRAN), which acts as a short-term cash bridge during potential dry periods throughout the fiscal year. As COVID-19 has created additional variability in revenue amounts and timing, the City has created a financial structure that acts as a revolving line of credit, "revolver", which allows the City the option to borrow a maximum of $15,000,000, but does n...

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