RES 22-832 - Authorizing Interfund LoanRESOLUTION NO.22-832
A RESOLUTION of the City of Federal Way, Washington, authorizing
an Interfund Loan of up to $5,016,656 from the Fleet & Equipment
Fund, Downtown Redevelopment Fund, and Transportation Capital
Fund to the General Fund of the City of Federal Way.
WHEREAS, the City Council of the City of Federal Way approved the 2017 LTGO debt
issue in the original amount of $6,000,000 which has a balloon payment of $5,016,656 due Nov.
17, 2022, anticipating that the underlying property would have been divested before that date; and
WHEREAS, current bank inquires indicate current market rates are 3.3%, an option
which, over a 10-year amortization, would incur $870,800 in interest expense; and
WHEREAS, the City continues to anticipate that the underlying property, land and a
vacant retail store previously operated as a Target store on the land adjacent to the City's
Performing Arts and Event Center, may be divested to be developed in the private sector, with a
currently -unknown timeframe; and
WHEREAS, the amount to be refinanced of $5,016,656 is impractical to justify bond
issuance costs on its own and there are no other potential debt issues currently contemplated nor
are there any viable refinancing opportunities to combine with; and
WHEREAS, the City's General Fund's available reserves are not adequate to use to pay
down the entire remaining balloon payment to defease the debt obligation entirely; and
WHEREAS, the City's Fleet & Equipment Fund, Downtown Redevelopment Fund, and
Transportation Capital Fund each have adequate funds set aside for future capital projects and
capital expenditures which can be loaned on an interfund basis with sufficient time for both
planning of capital expenditures and extinguishment of an interfund loan; and
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WHEREAS, the City's reserves on deposit in various funds including those named above
are currently invested in the State Investment Pool (currently earning 1.0% as of June 30, 2022)
and a laddered portfolio of Treasury and Agency medium -term notes (currently earning 1.40% as
of June 30, 2022), earning a weighted average yield of 1.143% as of June 30, 2022).
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
RESOLVES AS FOLLOWS:
Section 1. The City's General Fund is authorized to borrow from the City's Fleet &
Equipment Fund, Downtown Redevelopment Fund, and Transportation Capital Fund not more
than a total of $5,016,656 for the purpose of defeasing the 2017 LTGO debt issue before the date
the final payment is due and payable on Nov. 17, 2022. The term of the loan shall be for a
period not to exceed three years from the day of first advance, at an interest rate of 1.40%, with
payments of interest only until final payment. The City's loaning funds may pay off this
interfund loan or make extra payments any time during the life of the loan.
Section 2. The City Finance Director is designated on behalf of the City to process and
administer a temporary loan not to exceed $5,016,656 from the available cash of the City's Fleet
& Equipment Fund, Downtown Redevelopment Fund, and Transportation Capital Fund, where
money deposited therein is not immediately required for expenditure for the purposes of each
respective fund.
Section 3. Severability. If any section, sentence, clause or phrase of this resolution
should be held to be invalid or unconstitutional by a court of competent jurisdiction, such
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invalidity or unconstitutionality shall not affect the validity of constitutionality of any other
section, sentence, clause, or phrase of this resolution.
Section 4. Corrections. The City Clerk and the codifiers of this resolution are authorized
to make necessary corrections to this resolution including, but not limited to, the correction of
scrivener/clerical errors, references, resolution numbering, section/subsection numbers and any
references thereto.
Section 5. Ratification. Any act consistent with the authority and prior to the effective
date of this resolution is hereby ratified and affirmed.
Section 6. Effective Date. This resolution shall be effective immediately upon passage
by the Federal Way City Council.
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON this 9th day of August, 2022.
[signatures to follow]
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CITY OF FEDERAL WAY:
ATTEST:
-M-1 Z-A-MA
APPROVED AS TO FORM:
J. RYAN CALL, CITY ATTORNEY
FILED WITH THE CITY CLERK: 08/02/2022
PASSED BY THE CITY COUNCIL: 08/09/2022
RESOLUTION NO.: 22-832
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