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Council approves internal loan up to $4 million from sewer to water fund to ease short-term cash flow
Summary
The council approved an internal loan not to exceed $4 million from the sewer fund to the water fund. Staff characterized the structure as a line-of-credit style draw, repayable within three years, with interest accruing to the sewer fund and reporting in annual financial statements.
Council authorized an internal loan not to exceed $4,000,000 from the sewer fund to the water fund to address short-term cash-flow issues. The resolution, approved May 18, allows the water fund to draw only the amount needed rather than receiving a single up-front transfer, and requires repayment within three years under the city's internal loan administrative rules.
Finance staff described the arrangement as similar to a home-equity line of credit: available to draw on, with interest calculated to ensure fairness between funds. "It will be treated like that line of credit...we will follow Laith as far as an interest rate, to make sure it's fair and equitable for each of the funds," the finance presenter said.
Council emphasized transparency and reporting: the loan will appear in the annual comprehensive financial report and the receivable will be tracked on both funds' books. Staff said the approach is more cost effective than seeking a conventional external loan and that draws will follow internal loan policy and administrative regulation, including reporting when the first draw is made.
Provenance: Staff presentation and council vote are in SEG 4191–SEG 4326.
