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Vineyard Avenue Specific Plan Loans In March of this year, the City Council approved the Vineyard Avenue Corridor Infrastructure Financing Plan (Financing Plan) to fund water and sewer projects included in the Vineyard Avenue Corridor Specific Plan (VCSP). This Financing Plan included three loans from the CIP Water and Sewer Fund as follows: VINEYARD AVENUE SPECIFIC PLAN LOANS Loan No. Loan Descri tion and Source Amount 1 Sewer CIP Re lacement and Im rovement $1,178,625 2 Water CIP Replacement and Improvement from 2001 $3,240,000 3 New CIP Water Replacement and Improvement Loan $3,991,944 Total $8,410,569 While it was necessary to present the Financing Plan with the three loans noted above to emphasize the amount of additional funding required for completing Vineyard Corridor infrastructure improvements, for the purpose of tracking these loans in the CIP, the two water loans will be combined into one loan. As a result, the combination of loans 2 and 3 detailed above are being consolidated into a single water loan in the amount of $7,231,944. In accordance with the Financing Plan, repayment of the loans is programmed to come from the following sources: VINEYARD AVENUE SPECIFIC PLAN LOAN PAYMENT SOURCES Sources for Loan Pa went Amount Future Vine and Corridor S ecific Plan Fees $5,326,000 Reimbursement Due Ci from Develo ers and A encies $2,429,569 Potential Fourth Tier Water Rate Adjustment $655,000 Total $8,410,569 In accordance with City policy, and as noted previously, CIP water and sewer revenue is separated into two categories (a) expansion revenue derived from new development (primarily water and sewer connection fees) used for funding new infrastructure, and (b) replacement and improvement revenue derived from utility user fees used for replacement/improvement projects. As part of the VCSP financing process, it became clear that there were inadequate water and sewer expansion funds available to cover the cost of the VCSP infrastructure improvement and as a result, the Council approved using or "loaning" replacement/improvement revenue to fund a utility expansion project. Had there been adequate reserves of water and sewer expansion funds, the loans would have been unnecessary. As a result, the loans are essentially interfund transfers within the water and sewer CIP funds. That is, no funding is being transferred to any other party or agency, or to another fund within the City's budget. Because the City restricts the use of water and sewer maintenance revenue to maintenance and improvement projects, it is necessary to replenish these funds with utility expansion revenue that is collected from development activity to fund new projects such as the VCSP. While the Council has