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C. Use of Loan Proceeds

Interfund loans must only be made to finance short-term capital needs of the
borrowing fund. Short-term is defined as a period up to five (5) years. The
exception to this policy is loans from the General Fund to other funds.

D. Repayment Source

The borrowing fund must have an identified revenue stream for the
repayment of all principal and interest incurred from the loan. Management
must provide documentation of the ability to repay the obligation, and the
department/fund incurring the loan must execute an agreement described in
paragraph F, below. Loans will not be approved if the obligor fund cannot
substantiate the ability to finance current business and capital operations,
make agreed upon loan repayments, and maintain sufficient cash to meet
emergency cash needs.

E. Repayment Term

All interfund loans must be repaid in no more than five (5) years from the
date loan documents are executed.

F. Legal Documentation

All interfund loans shall be approved by the City Council by official action,
and are consummated by loan agreements. Those agreements will stipulate
the loan purpose, the loan amount, the term, repayment source, interest rate,
and other information as required to fully document the transaction.

G. Repayment

Interfund loans are interest bearing except for advance funding for grants,
reimbursement resolutions, or when senior management finds it appropriate to
forego the payment of interest. The interest rate charged and paid must comply
with all applicable laws and regulation. At a minimum the rate charged will
equal the return earned on the City’s short-term investment portfolio.

H. Water and Sewer Fund Loans

In accordance with the Water and Sewer System Master Ordinance, excess
pledged revenues can be used to make loans to other City
Departments/Funds. Before making that determination, the Water and Sewer
fund must cover all obligations for Operation and Maintenance Expenses,

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