HomeMy WebLinkAbout2002-05-13 City Council (10)City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL 12A
CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:MAY 13, 2002 CMR: 247:02
SUBJECT:APPROVAL OF BUDGET AMENDMENT ORDINANCE IN THE
AMOUNT OF $800,000 FOR A RESIDENTIAL REAL ESTATE
LOAN TO THE DIRECTOR OF ADMINISTRATIVE SERVICES
RECOMMENDATION
Staff recommends that Council approve the attached Budget Amendment Ordinance
(BAO) (Attachment A) in the amount of $800,000 to fund the acquisition of a residential
property located at 1331 Glen Eyrie Avenue, San Jose, California, in accordance with the
Housing Assistance Provision of the Administrative Services Director’s Employment
Agreement. ’
BACKGROUND
On May 13, 2002 the City Council approved an amended employment agreement with
the Administrative Services Director, Carl Yeats. The agreement includes a housing
provision, allowing the City to provide a loan, up to a maximum of $800,000 and fully
secured by the purchased property. In accordance with the agreement, the City would
provide an $800,000 City loan with a 30-year term. For the first five years of the loan
term, interest is due at the lower of 5.5 percent or ¼ percent over the City portfolio rate of
return, adjusted annually on a fiscal year basis. Thereafter, interest on the loan is to be
paid at ¼ percent over the City’s portfolio rate-of-return.
DISCUSSION
The Administrative Services Director has found housing in San Jose and an escrow has
been opened on the property located at 1331 Glen Eyrie Avenue, San Jose, California.
RESOURCE IMPACT
The attached BAO requests an appropriation of expenses in the amount of $800,000 from
the Budget Stabilization Reserve (BSR). This transaction will reduce the BSR to $22.6
CMR:247:02 Page 1 of 2
million. The effect of the BSR reduction is that the $800,000 is no longer available for
appropriation as expenditures.
The net effect on the City’s financial position is neutral. These transactions represent
conversion of one type of asset (cash) to another type (property, plant and equipment and
accounts receivable) in the same amount.
POLICY IMPLICATIONS
This recommendation is consistent with Council direction. The risks involved in this
transaction are associated with market changes in the price of real estate and potential
¯ default on the loan.
ENVIRONMENTAL REVIEW
None required.
ATTACHMENTS
A.Budget Amendment Ordinance
B.Budget Amendment Ordinances Impacting the BSR Approved to date in 2001-02
PREPARED BY:
CHARLES PERL, Budget Manager
DEPARTMENT HEAD:
Deputy Director
[nistrative Services
CITY MANAGER APPROVAL:
HARRIS~
Assistant City Manager
CMR:247:02 Page 2 of 2
ATTACHMENT A
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE .CITY OF PALO ALTO
AMENDING THE BUDGET FOR THE FISCAL YEAR 2001-02 TO
PROVIDE AN ADDITIONAL APPROPRIATION OF $800,000 FOR A
RESIDENTIAL REAL ESTATE LOAN TO THE DIRECTOR OF
ADMINISTATIVE SERVICES
WHEREAS, pursuant to the provisions of Section 12 of Article
III of the Charter of the City of Palo Alto, the Council on June ii,
2001 did adopt a budget for fiscal year 2001-02; and
WHEREAS, the Council has approved the execution of an
employment agreement with the Director of Administrative Services;
and
WHEREAS, pursuant to the employment agreement, the City will
loan up to $800,000 to the Director of Administrative Services, for
the purchase of a home in accordance with the terms set forth in the
agreement; and
WHEREAS, an additional appropriation is needed to enable the
City to make .the loan; and
WHEREAS, the additional appropriation of funds from the General
Fund Budget Stabilization Reserve is a one-time cost and no future
year General Fund ongoing costs are anticipated; and
WHEREAS, City Council authorization is needed to amend the
2001-02 budget as hereinafter set forth.
NOW, THEREFORE, the Council of the City of Palo Alto does
ORDAIN as follows:
SECTION i. The sum of Eight Hundred Thousand Dollars
($800,000) is hereby appropriated to General Fund Notes Receivable,
and the Budget Stabilization Reserve is correspondingly reduced.
SECTION 2. A note receivable of~ $800,000 is thus established on
behalf of Mr. Yeats, Director of Administrative Services.
SECTION 3. The Council hereby authorizes the City Manager to
execute all documentation as the City AttorneY deems necessary to
affect the loan on behalf of the City.
SECTION 4. This transaction will reduce the
Stabilization Reserve from $23,443,911 to $22,643,911.
Budget
SECTION 5~ As specified in Section 2.28.080(a) of the Palo Alto
Municipal Code, a two-thirds vote of the City Council is required to
adopt this ordinance
SECTION 6. The Council of the City of Palo Alto hereby finds
that this is not a project under the California Environmental
Quality Act and, therefore, no environmental impact assessment is
necessary.
SECTION 7. As provided in Section 2.04.350 of the Palo Alto
Municipal Code, this ordinance shall become effective upon adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:City Manager
Senior Asst. City Attorney ~Deputy Director of
Administrative Services
City of Palo Alto
ATTACHMENT B
Budget Amendment Ordinances Impacting General Fund Reserves Approved-To-Date in 2001-02
Balance $24,490,000
Adopted Budget Addition to BSR $1,117,000
Municipal Fee Schedule Correction
Library Muster Plan - CIP 10204, and Miscellaneous Operating Expenses
Single Family Review
COPS Police Department Grant
Midyear Report
Library Master Plan - CIP 10204, PLF Grant
Street Maintenance Project - CIP 18670/18971
ASD Director’s Housing Loan
$0 $0 $0($305,444)($305,444)
($170,000)$170,000 $0
$67,577 $67,577
$5,915,522 ($7,840,744)($1,925,222)
($92,550)$92,550 $0
($180,788)$180,788 $0($8oo,ooo)$o ($8oo,ooo)
$o
$291,000
BSR Balance After BAO’s $22,643,911
5/8/2002