02-03-2009 - Prop A Fund Exchange - West Hollywoodi
City of West Covina
Memorandum
TO: Andrew G. Pasmant, City Manager
and City Council
FROM: Tom Bachman, Assistant City Manager
AGENDA
Item: D-5c
Date: February 3, 2009
SUBJECT: PROP A FUND EXCHANGE — WEST HOLLYWOOD
RECOMMENDATION:
It is recommended that the City Council approve the attached agreement authorizing the sale of
Prop A Funds to the City of West Hollywood.
DISCUSSION:
The City adopted a General Fund budget for the 2008-09 fiscal year that contained a $2.1 million
deficit. Due to the continued rapid deterioration of the economy and the severe drop off in
revenues, most notably sales tax, the budget deficit is projected to grow to $3.9 million. Staff
presented a number of revenue items to the City Council for consideration in December as a way
to reduce the deficit and minimize the need for more drastic cuts during the current fiscal year.
One of those items was selling a portion of the City's Proposition A Transportation Funds at a
discount to other cities in return for unrestricted General Fund dollars.
The City receives approximately $1.8 million in Prop A Local Return Transit Funds that can
only be used for public transportation purposes. The City spends these funds on fixed route and
dial -a -ride transportation services and transit related capital projects. The Prop A Fund has in
recent years experienced surplus fund balances and began the fiscal year with $463,000 in
unencumbered funds. In addition to that beginning balance, staff has freed up an additional
$670,000 by downsizing, deferring, and reallocating funding for capital projects and reallocating
funding sources for ongoing transit services. There will be no reduction of ongoing transit
services as a result of these changes.
City staff has negotiated the sale of $1 million of West Covina Prop A Funds to the City of West
Hollywood in exchange for $750,000 of their unrestricted general fund dollars. This $750,000 of
unrestricted funds can be deposited into the City's General Fund. This will reduce the deficit in
the current fiscal year and mitigate the need for more drastic immediate budget cuts.
FISCAL IMPACT:
The Exchange of Prop A Funds will result in an increase of $750,000 of General Fund revenues
in the 2008-09 fiscal year. The exchange will result in the downsizing and deferring of certain
capital projects but will not cause any reduction of ongoing transit services.
Prepared by:
om achm
Assistant City Manager
0 . 6
ASSIGNMENT AGREEMENT
PROP A LOCAL RETURN FUND EXCHANGE
This Assignment Agreement is made and entered into this 3rd day of February, 2009, by the City
of West Covina, California and the 2nd day of February, 2009 by the City of West Hollywood,
California with respect to the following facts:
A. The City of West Hollywood provides a community shuttle and taxi jitney service to serve
people with disabilities and the general public. Given the grave traffic congestion and parking
problems of the City, West Hollywood is committed to reducing auto dependency by providing
alternative modes of transportation. Adequate Proposition A Local Return funding for transit
services are not available given the limited amount of West Hollywood's Local Return allocation
and the needs of other priority transit projects in the City.
B. City of West Covina has uncommitted Proposition A Local Return funds which could be
made available to West Hollywood to, assist in providing the services discussed in Paragraph A
of this Agreement. In exchange for the assignment by West Hollywood of the amount of its
general funds indicated in Section 1 below, the City of West Covina is willing to assign
uncommitted Proposition A Local Return funds to West Hollywood for the purpose identified in
Paragraph A.
Now, therefore, in consideration of the mutual benefits to be derived by the parties and of the
premises herein contained, it is mutually agreed as follows:
1. Exchange. City of West Covina agrees to assign $1,000,000 of its Fiscal Year 2008/2009
Proposition A Local Return funds to West Hollywood. In return, West Hollywood agrees to
assign $750,000 of its general funds to the City of West Covina. The exchange rate is $.75/1.00
2. Consideration. City of West Covina shall assign the agreed upon Proposition A Local Return
funds to West Hollywood in one lump sum payment. West Hollywood shall assign the agreed
upon general funds to the City of West Covina in one lump payment. The lump sum payments
shall be due and payable within thirty (30) days of execution of this Agreement.
3. 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.
4. Termination. Termination of this Agreement may be made by either parry so long as written
notice of intent to terminate is given to the other parry at least five (5) days prior to the
termination.
5. 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. Andrew Pasmant
City Manager
City of West Covina
P.O. Box 1440
West Covina, CA 91793
B. Paul Arevalo
City Manager
8300 Santa Monica Blvd.
West Hollywood, CA 90069
6. Assurances
A. West Hollywood shall use the assigned Proposition A Local Return funds only for the
purpose of providing the services discussed in Paragraph A of this Agreement and within the
time limits specified in LAC Metro's Proposition A Local Return Program Guidelines.
a
B. Concurrently with the execution of this Agreement, West Hollywood shall provide
LAC Metro with the Standard Assurances and Understandings Regarding Receipt and Use of
Proposition A funds specified in the Guidelines regarding the use of the assigned Proposition A
Local Return funds. .
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers, duly authorized, by the CITY OF WEST HOLLYWOOD on
February 2, 2009 and by the CITY OF WEST COVINA on February 3, 2009.
CITY OF WEST COVINA
BY
Andrew Pasmant, City Manager
Approved as to Form:
BY
Arnold Alvarez-Glasman, City Attorney
ATTEST:
BY
Sue Rush, City Clerk
CITY OF WEST HOLLYWOOD
Ami kianany, liirecior or r mane
BY
Paul Arevalo, City Manager
ATTEST:
BY
Thomas R. West, City Clerk