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HomeMy WebLinkAbout2022-088 - Resolution RESOLUTION NO. 2022-088 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, APPROVING AN INTERFUND LOAN FROM THE GENERAL FUND TO THE FIBER OPTIC FUND IN THE NOT-TO-EXCEED AMOUNT OF $14,035,700, ESTABLISHING THE TERMS UNDER WHICH THE LOAN WILL BE REPAID, AND MAKING A FINDING OF EXEMPTION UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT WHEREAS, the City of Rancho Cucamonga ("City") owns and operates the Rancho Cucamonga Municipal Utility ("RCMU"). RCMU provides broadband internet service to residential and business customers in the City through a fiber optic network owned by the City. RCMU's fiber optic network includes backbone fiber optic cables and other fiber facilities that provide up to one gigabyte per second Ethernet links to provide voice, data, and internet service to City facilities and customers. WHEREAS, in 2019, the Rancho Cucamonga Public Finance Authority ("Authority") issued tax-exempt lease revenue bonds in the principal amount of $9,875,000 (Series A) and taxable lease revenue bonds in the principal amount of $2,320,000 (Series B) to finance the acquisition, design, construction, and equipping of an expansion of RCMU's fiber optic network, among other costs (collectively, the "Bonds"). The Bonds are payable primarily from lease payments made by the City to the Authority pursuant to a lease agreement between the City and Authority ("Lease Payments"), and the Lease Payments are structured to produce revenues sufficient to pay the principal and interest on the Bonds when due. WHEREAS, the City, through RCMU, continues to invest in its fiber optic network in order to expand its broadband service capabilities to more residents and businesses within the City. WHEREAS, in order to maintain the high quality service expected of RCMU's broadband service and make such service available to more residents and businesses, additional funding is needed from the City to support RCMU. WHEREAS, the City's support and expansion of reliable broadband service within the City is an important governmental purpose. WHEREAS, the General Fund has sufficient moneys to loan the Fiber Optic Fund, which supports RCMU's fiber optic network, the not-to-exceed amount set forth in the title of this Resolution. WHEREAS, the City Council finds that an interfund loan from the General Fund to the Fiber Optic Fund, which supports RCMU's fiber optic network on reasonable terms, is a fiscally responsible way to support RCMU. Resolution No. 2022-088 - Page 1 of 4 • • WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, BE IT RESOLOVED, the City Council of the City of Rancho Cucamonga hereby resolves as follows: Section 1. The facts set forth in the Recitals, Part A of this Resolution, are true and correct. Section 2. The City Council hereby authorizes an interfund loan from the General Fund to the Fiber Optic Fund in the not-to-exceed amount of $14,035,700 on the terms set forth in Exhibit A of this Resolution. The interfund loan amount shall be deposited in an irrevocable escrow fund held by the Bond trustee to be used solely to make Lease Payments covering the remaining principal and interest payments on the Bonds through May 1, 2029, and the optional prepayment for the remaining principal component after that. Section 3. The City Council hereby authorizes the Finance Director to take all actions necessary to facilitate the intent of this Resolution, including minor modifications to the terms set forth in Exhibit A, provided any such modification does not result in any greater financial burden on the General Fund without the City Council's prior consent. Section 4. The interfund loan authorized by this Resolution is exempt from the California Environmental Quality Act pursuant to Public Resources Code Section 15378(b)(4) because it is a government funding mechanism and fiscal activity which does not involve any new commitment to a specific project which could result in a potentially significant physical impact on the environment. The RCMU Fiber Optic Master Plan has previously been approved and reviewed under CEQA, and this interfund loan is solely intended to help further the implementation of the RCMU Fiber Optic Master Plan. Section 5. The City Clerk shall certify to the adoption of this Resolution. Resolution No. 2022-088 - Page 2 of 4 • PASSED, APPROVED and ADOPTED this 16th day of June, 2022. . ennis Michael, Mayor ATTEST: ' - e . Reynolds, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) ss CITY OF RANCHO CUCAMONGA ) • I, Janice C. Reynolds, City Clerk of the City of Rancho Cucamonga, do hereby certify that the foregoing Resolution was duly passed, approved, and adopted by the City Council of the City of Rancho Cucamonga, at a Special Meeting of said Council held on the 16th day of June 2022. AYES: Hutchison, Kennedy, Michael, Scott NOES: None ABSENT: None ABSTAINED: None Executed this 17th day of June, 2022, at Rancho Cucamonga, California. an' e C. Reynolds, Clerk Resolution No. 2022-088 - Page 3 of 4 • EXHIBIT A TERMS OF INTERFUND LOAN Standard Period • Not-to-Exceed Loan Amount: $14,035,700 • Loan Period: 17 Years • Interest Rate: Varies, based on quarterly LAIF rates • Interest is calculated on the outstanding loan principal at the beginning of each period • Payment Terms: Payments shall be as follows: o Payment of principal shall be due and payable on each April 15th and interest shall be due and payable on each April 15th and October 15th during the Standard Period; provided that any amount of principal can be prepaid at any time prior to the end of the Standard Period, and provided further that the City Manager may defer payments of principal and interest in the City Manager's discretion. At the end of the Standard Period, any unpaid principal and unpaid matured interest shall be carried over to the Rollover Period. o Payments shall be applied in the following order: 1) interest accrued for period, 2) unpaid matured interest, and 3) principal balance. o On an annual basis, payments will be required only if cashflows from operating activities on the Statement of Cash Flows reflect a surplus. Mandatory payments will be equal to 50% of the surplus operating cash flow. Rollover Period • Loan Amount: Equal to unpaid matured interest and unpaid principal at the end of the Standard Period • Loan Period: 10 Years • Interest Rate: Varies, based on quarterly LAIF rates • Interest is calculated on the outstanding principal at the beginning of each period • Payments shall be as described above under the Standard Period except that the total outstanding principal and interest is due and payable at the end of the Rollover Period. Resolution No. 2022-088 - Page 4 of 4