HomeMy WebLinkAboutAgenda Report - July 18, 2007 E-27(1)CITY OF LODI
COUNCIL COMMUNICATION
rM
AGENDATITLE: Adopt Resolution Approving the Execution by the City Manager of a
$245,000 Promissory Note Payable to James E. Dean as Surviving Trustee
of the James E. Dean Family Trust with Interest of 6% and Interest Only
Payments to be Made on a Quarterly Basis (CM)
MEETING DATE:
PREPARED BY:
July 18,2007
Deputy City Manager
RECOMMENDED ACTION: Adopt Resolution approving the execution by the City
Manager of a $245,000 promissory note payable to
James E. Dean as surviving trustee of the James E.
Dean Family Trust with interest of 6% and interest only payments to be made on a quarterly
basis.
BACKGROUND INFORMATION: On May 1, 2002 the City cf Lodi issued a promissory
note for $245,000 to James E. Dean and Carol Dean as
trustees of the of the James E. Dean Trust, for the
purchase of the property at 307 West Elm Street, which is part of land upon which the current
Police facilities are located. The note expired as of April 1, 2007 and the payment terms included
interest only payments at an annual interest rate of 5%. Investment rates have increased
dramatically over the last five years and the Dean's have requested an extension of the note for
another five years at an annual interest rate of 6%. The current interest rate the City is earning
on its investment pool is approximately 5.3 % and it is anticipated over the course of the next
five years that the investment rate will be at or close to the rate requested by the Deans. Based
on the current cash flow needs of the City and the anticipated favorable rates that the City will
earn on investments, it is prudent to renew the promissory note for another five years at 6%.
Staff recommends that the City Attorney draft a promissory note payable to James E. Dean as
surviving trustee of the James E. Dean Family Trust with terms including payment in full of the
note on April 1, 2012 and quarterly payments of interest only at 6% annual interest.
FISCAL IMPACT There is an opportunity cost associated with the choice between
paying off the note at this time and the anticipated investment earnings from retention and
investment of the cash that would be used to pay off the note. Based on continuing favorable
investment rates with the Local Agency Investment Fund (LAI F) there is no fiscal impact from
this action.
FUNDING AVAILABLE: Debt payments are budgeted in the Capital Outlay Fund.
a es R. Krueger, Deputy City Manager
APPROVED: /
EgatKKIng, City Manager
RESOLUTION NO. 2007-143
A RESOLUTION OF THE LODE CITY COUNCIL
APPROVING AND AUTHORIZING THE CITY MANAGER
TO EXECUTE $245,000 PROMISSORY NOTE PAYABLE
TO JAMES E. DEAN AS SURVIVING TRUSTEE OF THE
JAMES E. DEAN FAMILYTRUST
WHEREAS, the City of Lodi desires to renew the promissory note that was due
and payable as cf April 1,2007, to James Dean as surviving trustee of the James E. Dean
Family Trust; and
WHEREAS, the terms agreed upon by the City of Lodi and James E. Dean for
repayment of the promissory note include an interest rate of 6% with quarterly payments
starting on July 1, 2007, and continuing thereon until April 1, 2012.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager to execute a $245,000 promissory note payable to James E.
Dean as surviving trustee of the James E. Dean Family Trust with terms including interest
only quarterly payments at 6% and full repayment on April 1, 2012.
Dated: July 18,2007
hereby certify that Resolution No. 2007-143 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held July 18,2007, by the following vote:
AYES: COUNCIL MEMBERS— Hansen, Katzakian, and Mayor Johnson
NOES: COUNCIL MEMBERS— Mounce
ABSENT: COUNCIL MEMBERS— Hitchcock
ABSTAIN: COUNCIL MEMBERS— None
kINNUIHL
City Clerk
2007-143