Subject
A resolution authorizing the City of Hermiston to enter into a $250,000 Rural Economic Development Loan & Security agreement with Umatilla Electric Cooperative to assist in fundraising efforts related to capital construction of the Funland Playground.
Summary and Background
With the City Council's direction, the Funland Fundraising Committee partnered with Umatilla Electric Cooperative's Rural Economic Development Loan and Grant program.
The program provides grants and zero-interest loans to rural electric cooperatives, which pass the money along to municipalities, businesses, or nonprofits working on projects in a rural area.
Twenty percent of the interest-free loan to the city came from UEC's Revolving Loan Fund and 80% came from the USDA. When Hermiston repays the loan, UEC's Revolving Loan Fund will be able to keep 100% of the funds, enabling UEC to reinvest that money into future community projects rather than sending it back to the federal government.
The loan will allow Parks and Recreation to complete the project this year and pay the loan as donors make their payments.
The Fundraising Committee offered donors the opportunity to spread payments for large donations over five (5) years.
Tie-In to Council Goals:
Goal 1: Engage the Community on Important Issues and the Development of a Vision for the City.
Goal 2: Exercise Fiscal Prudence.
Goal 7: Provide City Facilities that Meet the Current and Future Needs of the Hermiston Community.
Fiscal Information
The City of Hermiston will enter into a $250,000 Rural Economic Development Loan & Security agreement with Umatilla Electric Cooperative.
Umatilla Electric Cooperative will loan the City of Hermiston $250,000 without interest or fees.
The City of Hermiston agrees to pay the loan back in annual installments of $25,000 per year beginning on the anniversary of the date of the first advance of funds.
The City of Hermiston can pay the loan back early without penalty.
Alternatives and Recommendation
Alternatives
1. Adopt Resolution 2177 as drafted.
- This alternative allows Funland to finalize financing agreements that will secure one of the final capital funding portions of the project.
2. Do not approve Resolution 2177.
- This alternative would halt Funland's remaining capital purchases until donors make remaining payments in future years.
Recommendation
Staff recommends the selection of Alternative #1 to authorizing Byron Smith, City Manager of the City of Hermiston, to execute and deliver the Rural and Economic Development Loan and Security Agreement and Promissory Note with Umatilla Electric Cooperative in the amount of $250,000.
Requested Action/Motion
Motion to approve Resolution 2177 as drafted.
Submitted By: Byron D. Smith