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,,T~,H,,E CI~TY OA~F 11 • CITY COUNCIL AGENDA REPORT TON April 21, 2009 City Manager TITLE: CONSIDERATION OF REVOLVING LINE OF CREDIT AGREEMENT FOR AN AMOUNT NOT TO EXCEED $1.2 MILLION WITH PLEASANTON UNIFIED SCHOOL DISTRICT SUMMARY In 2002 and 2003, the Pleasanton Unified School District issued approximately $20 million in certificates of participation (collectively the "COPS") for the acquisition and construction of land and school improvements for the betterment of the PUSD school facilities. The annual debt payments for the COP are approximately $1.2 million, and funds collected from development impact fees are used to fund the annual debt service on the COPS. Over the past year, a downturn in the economy has sharply impacted the growth of new construction, which in turn has impacted the amount of funds collected by the PUSD. In the current fiscal year, the collection of development fees totaled approximately $300,000. To help facilitate a bridge in the gap between the revenues collected and the amount of the COP payment, staff proposes that the City loan the PUSD up to $1.2 million for the next four years using a revolving line of credit. RECOMMENDATION Staff recommends the Council approve by resolution a revolving line of credit agreement between the City and the Pleasanton Unified School District for an amount not to exceed $1.2 million and authorize the City Manager to sign the agreement on behalf of the City. FINANCIAL STATEMENT The loan amount of $1.2 million will come from excess funds currently invested in the City's investment portfolio. Per the proposed revolving line of credit agreement, these funds will continue to earn interest throughout the duration of the agreement. The funds will either be invested in an interest-bearing account when they are not being utilized by PUSD, or when they are advanced to the PUSD, they will pay an interest rate equal to the Bank of America prime rate (currently at 3.25%).