R2013-55 APPROVING CITY TO ENTER INTO A TEMPORARY CASH ADVANCE AGREEMENT WITH THE LIBRARY BOARD

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FINANCIAL MANAGEMENT DEPARTMENT #2013-21 DATE: May 31, 2013 TO: Honorable Mayor McElroy and City Council Members FROM: Ryan P. McCrady, City Manager Gregg D. Zientara, City Treasurer&Director of Finance SUBJECT: Resolution Approving the City of Decatur to enter into a Temporary Cash Advance Agreement with the Decatur Public Library Board of Trustees whereby the City will advance sufficient cash to the Decatur Public Library Board of Trustees for the purpose of funding the Library payroll and other operating expenses until such time that the Library receives the June 2013 property tax distribution from the Macon County Treasury and the temporary cash advance is repaid in full to the City of Decatur SUMMARY RECOMMENDATION: City Administration recommends City Council approval of the attached Council Resolution. BACKGROUND: As of April 30, 2013, the Decatur Public Library has a cash deficit position of approximately $142,000. The Library's estimated payroll and operating expenses are approximately$300,000 per month. The Library will receive a property tax distribution from the 2012 tax levy for the assessed value year 2012 with tax payable and collected in 2013 and distributed to the tax levy recipient units by the Macon County Treasury in 2013, and where such tax distribution is estimated to be approximately$1,470,000 in June 2013 and $1,470,000 in September 2013 and where such tax distribution is dependent upon monies collected by the Macon County Treasury and monies determined for distribution by the Macon County Treasurer. It is estimated by City Administration that the cash advance required by Council action in approval of this resolution will approximate $750,000, comprised of the cash deficit as of April 30, 2013, and the estimated payroll and operating expense for the months of May and June, 2013. Upon Library receipt of the property tax distribution, whenever such distribution shall occur, the Library agrees to pay back all monies advanced to the Library by the City to the date of the property tax distribution receipt without reference to the dollar amount of the property tax distribution received, so as to liquidate any such cash loan advance to the Library by the City, which for the purpose of this agreement is estimated to be approximately$750,000. The agreement includes language whereby the Library agrees to prepare a financial plan to extinguish the Library's operating deficit and create an operating expenditure budget that will bring into balance the Library's income and expenditure disbursements. The City will participate council letter.doc Page 1 of 2 131