CC - Item 5B - Exchange Agreement for Rosemead Surplus Proposition A Local Return Transportaion FundsROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER L{U�
DATE: JUNE 26, 2012
SUBJECT: EXCHANGE AGREEMENT FOR ROSEMEAD SURPLUS
PROPOSITION A LOCAL RETURN TRANSPORTATION FUNDS WITH
CITY OF IND USTRY
SUMMARY
The FY 2012 -13 budget includes a number of one -time balancing measures, one of
them being the exchange (sale) of the City's surplus Proposition A Return funds with
another city for their general funds. The City of Industry has been identified as a city
seeking to exchange their general funds for Proposition A Local Return funds. A
"Proposition A Exchange Agreement Between the City of Rosemead and the City of
Industry" ( "Agreement ") is provided.
Staff Recommendation
Staff recommends that the City Council approve the exchange of $666 of surplus
Proposition A Local Return funds with the City of Industry for $500,000 of their general
funds and authorize the City Manager to sign the Agreement (Attachment A).
ANALYSIS
The City receives monthly distributions of Proposition A Local Return funds (sales tax)
from the Los Angeles County Metropolitan Transportation Authority ( "Metro "); the
amount received is based on a mathematical formula, not on use. The City spends its
Proposition A revenue to operate the public transportation program including capital
outlays for street maintenance along transportation routes, bus shelter construction and
other capital equipment purchases as needed. Unused Metro funds may be saved for
up to three years when a major project is planned, that is how the Garvey Avenue
Bridge reconstruction was financed. However, funds held for more than three years
(lapsed) must be returned to Metro. Since considerable transportation route re- building,
using a variety of funding sources, has been completed over the past few years, full use
of Proposition A revenues is not expected this year creating a surplus.
ITEM NUMBER: - b
City Council Meeting
June 26, 2012
Page 2 of 2
When the City has surplus Proposition A funds they can be exchanged with another
agency for their general fund dollars. The City of Industry is engaged in constructing a
transportation center, a qualified Proposition A funding source project and is willing to
exchange their general fund dollars for the City's Proposition A funds at an exchange
rate of $.75 for each Proposition A dollar. Staff is recommending that $666,667 of the
City's Proposition A funds be exchanged for $500,000 of City of Industry's general fund
cash. Formal approval from Metro is not a requirement for the exchange and they have
advised that the exchange rate of 75% is commonly used for similar exchanges. The
exchange will leave the City's Proposition A fund reserves high enough to reasonably
avoid jeopardizing emergency transportation needs should they arise and at the same
time subsidize the General Fund.
FINANCIAL REVIEW
At the end of the 2010 -11 Fiscal Year the Proposition A fund had a $1.3 million surplus
or almost a two year reserve. With the exchange of $666,667 the 2012 -13 Fiscal Year
end reserve is projected to be about $500,000 or approximately a nine month reserve,
well within the time frame to avoid lapsing of funds.
PUBLIC- NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Steve Brisco
Director of Finance
Attachment A: Proposition A Fund Exchange Agreement between the City of
Rosemead and the City of Industry
Attachment A
Proposition A Fund Exchange Agreement between the City of Rosemead and the
City of Industry
This Fund Exchange Agreement is made and entered into this 26` day of July, 2012, by and between City
of Rosemead, California and City of Industry, California with respect to the following facts:
A. City of Industry is engaged in the construction of a qualified Proposition A project. Adequate
Proposition A Local Return funding for such a project is not available given the limited amount of
City of Industry's Local Return allocation and the needs of other priority transit projects in the
City.
B. City of Rosemead has uncommitted funding authority for its Fiscal Year 2012 -13 allocation of
Proposition A Local Return funds which could be made available to the City of Industry to assist
in providing construction funding for the project referred to in Paragraph A of this agreement.
C. City of Industry is willing to exchange its general funds in the amount indicated in Section 1
below in exchange for City of Rosemead's uncommitted Proposition A Local Return funds.
D. City of Rosemead is willing to exchange its uncommitted Proposition A Local Return funding in
the amount indicated in Section 1 below to City of Industry for the purpose indicated in
Paragraph A above, for City of Industry's general funds.
Now, therefore, in consideration of the mutual benefits to be derived by the parties it is mutually agreed
as follows:
1. Exchange City of Rosemead shall transfer $666,667 of its Fiscal Year 2012 -2013 Proposition
A Local Return Funds to City of Industry. In return, City of Industry shall transfer $500,000 of
its General Funds to City of Rosemead.
2. Term This agreement is effective on the date above written and for such time as is
necessary for both parties to complete their mutual obligations under this agreement.
3. . Termination . Termination of this Agreement may be made by either party with written
notice of intent to terminate given to the other party at least five (5) calendar days prior to
the termination date.
Attachment A
4. Notices Notices shall be given pursuant to this agreement by personal service on the party
to be notified, or by written notice upon such party deposited in the custody of the United
States Postal Service addressed as follows:
a. City Treasurer
City of Industry
P.O. Box 3366
City of Industry, CA 91744 -0366
b. Director of Finance
City of Rosemead
8838 East Valley Boulevard
Rosemead, CA 91770
5. Assurances
A. City of Industry shall use the assigned Proposition A Local Return funds only for the
purpose of providing funding for the project referred to in Paragraph A of this
agreement and within the time limits specified in Metro's Proposition A Local Return
Program Guidelines.
B. Concurrently with the execution of this Agreement City of Industry shall provide Metro
with the Standard Assurances and Understanding Regarding Receipt and Use of
Proposition A Funds specified in the Guidelines regarding the use of assigned
Proposition A Local Return funds.
6. This agreement constitutes the entire understanding between the parties, with respect to
the subject matter herein. This Agreement shall not be amended nor any provisions or
breach hereof waived, except in writing signed by the parties hereto. ,
IN WITNESS WHEREOF, the parties hereto have caused this Fund Exchange Agreement to be executed
by their respective officers, duly authorized, on the day and year above written.
City of Industry
BY
City of Rosemead
BY
ATTEST:
City Attorney
Approved as to Form
City Attorney
Approved as to Form