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Committee reviews interfund loan program; staff proposes five-year standard term and policy clarifications
Summary
Staff updated the Finance Committee on outstanding interfund loans, proposed policy revisions and a recommendation that enterprise-fund lending require prior board and council approval. Outstanding interfund loans total about $8.5 million as of April 1, 2025, staff said.
The Finance Committee received an update May 14 on Riverside’s interfund loan program, outstanding loans and a proposed policy revision to clarify roles, loan terms and approvals.
Staff presented a summary of six outstanding interfund loans with an aggregate outstanding balance of about $8,500,000 as of April 1, 2025, and described each loan’s purpose and maturity. The loans cited included an interfund loan for the Utilities Plaza (maturing fiscal year 2027), loans tied to redevelopment-era purchases including Riverside Golf Course (maturing 2028) and Reid Park (maturing 2029), an airport loan for deferred maintenance (maturing 2037), a $2,000,000 parking interfund loan (maturing circa 2034) and a refuse vehicle loan (maturing 2028).
Policy changes proposed: staff said they replaced outdated language, clarified roles and responsibilities, and revised standard loan terms. The revised policy sets a typical five-year term for interfund loans, with longer terms allowed only by exception and with approval by the city council (and where enterprise funds are lenders, approval from the Board of Public Utilities and council). Staff said all interfund loans require council approval prior to issuance.
Why it matters: Interfund loans use city pooled cash that otherwise would be invested; staff said loans generally earn the same pooled investment return that the city earns on its portfolio, and that using internal loans avoids issuance costs and market interest and underwriting fees that would apply if a fund borrowed externally. Finance Director Christie Thomas noted recent general fund loans made to airport and parking funds have longer terms because those receiving funds are less financially resilient.
Public comment and concerns: Caller Jason Hunter, Ward 1, urged restricting loans from enterprise funds and said long-term interfund loans originating in enterprise funds can amount to ratepayer arbitrage if those funds were overcharged. “You’re basically loaning at short-term rates for long-term projects,” Hunter said, urging that enterprise-fund lending be curtailed and that council be the policy-setting authority on such loans.
Next steps and oversight: Staff recommended the committee receive the update and provide feedback on the revised interfund loan policy; the committee did not adopt policy changes at the meeting but staff will bring the revised policy forward for council consideration per the recommended process.
