Chapter 2.130
INTERFUND LOANS Revised 12/17

Sections:

2.130.010    Approval by Ordinance. Revised 12/17

2.130.020    Interest. Revised 12/17

2.130.030    Authorized Uses. Revised 12/17

2.130.040    Term. Revised 12/17

2.130.050    Accounting Required. Revised 12/17

2.130.060    Annual Review. Revised 12/17

2.130.010 Approval by Ordinance. Revised 12/17

Interfund loans must be approved by Ordinance. The Ordinance will state the lending fund and the borrowing fund, a schedule of principle and interest payments, primary and secondary sources of repayment, interest rate and maturity date. The planned schedule of repayment should specify the due date(s) of payment(s) needed to repay the principal and interest. (Ord. 2017-55 § 1 (part), 2017)

2.130.020 Interest. Revised 12/17

A.    Interest should be charged in all cases.

B.    The interest rate should be fixed for the term of the loan at the current Local Government Investment Pool (LGIP) rate, as published by the Washington State Treasurer's Office, plus 1 percent. If the LGIP rate is not available or deemed inappropriate to use, the rate should be set for the term of the loan at a rate no higher than an external rate available to Pierce County. The basis for the rate should be clearly stated in the Ordinance.

(Ord. 2017-55 § 1 (part), 2017)

2.130.030 Authorized Uses. Revised 12/17

A.    Interfund loans may be used to offset timing of cash flows, interim capital funding, short-term capital funding in lieu of external financing, or for other needs as deemed appropriate.

B.    Interfund loan proceeds may only be used for the purpose identified in the authorizing Ordinance.

C.    Interfund loans should not be made where the source of repayment cannot be clearly identified or is in doubt. The borrowing fund must show that there is a stream of funding that will be used as the primary source of repayment and that this source of repayment will be sufficient over the life of the loan to service the debt.

(Ord. 2017-55 § 1 (part), 2017)

2.130.040 Term. Revised 12/17

The term of the loan may continue over a period of up to two years, except for loans made with a source of repayment that fully amortizes the loan over its life, in which case the maturity can be up to five years. Loans must be temporary in the sense that no permanent diversion of funds from the lending fund results from the failure to repay by the borrowing fund. Loans that need to be renewed due to nonpayment of principle should be reviewed for appropriateness of the primary source of repayment and, if determined to be insufficient, a new source of repayment should be substituted. (Ord. 2017-55 § 1 (part), 2017)

2.130.050 Accounting Required. Revised 12/17

Appropriate accounting records shall be maintained to reflect the balance of loans in every fund affected by such transactions. (Ord. 2017-55 § 1 (part), 2017)

2.130.060 Annual Review. Revised 12/17

The status of all loans shall be reviewed annually by the County Council at a public meeting. (Ord. 2017-55 § 1 (part), 2017)