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Department of Transportation recommending the Board:
1) Approve the re-calculation of the Placerville Airport Fuel Tank Loan (“Loan”) using the County’s pooled rate of investments thereby reducing the principal of the Loan by $15,219.88 to reflect the correct amount of principal as of July 1, 2010; and
2) Forgive the remaining balance of the Placerville Airport Fuel Tank Loan in the amount of $36,851.14.
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Fiscal Impact/Change to Net County Cost:
The General Fund would not recognize revenue of approximately $2,800 per year for the next seventeen years or $47,500 ($36,851.14 plus interest).
Background:
On June 13, 1995 the Board approved Agenda Item #19 which authorized the Chairman to sign a budget transfer transferring $71,000 from the General Fund Contingency to the Placerville Airport Enterprise Fund to fund a portion of the cost of the Airport fuel tank. This approval was with the caveat that the transfer was a loan. At the January 9, 1996 Board meeting, Item #50, the Board determined to leave in place the loan from the County General Fund to finance a portion of the underground fuel tank replacement, and have the matter come back through the budget process for an analysis of budget impacts. During the 1996/97 budget hearings the record shows the Board made no change with regard to the loan. Approved loan documentation has not been located. The Placerville Airport has made annual loan payments to the General Fund based on a 5% fixed interest rate, which was approximately the County‘s pooled rate of investment (“Pooled Rate") in 1995.
Reason for Recommendation:
It is customary to the practices of County internal loans to charge an interest rate based on the annual Pooled Rate of interest. The 30-year amortization schedule that was prepared for the airport loan used the 1995 Pooled Rate of 5%. The annual payments were made based on this rate with no adjustment for the fluctuation in the Pooled Rate. Because the interest rate on the loan had ...
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