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HomeMy WebLinkAboutPR 20391: REQUEST A LOAN UNDER THE COMMUNITY DISASTER LOAN PROGRAM OF FEMA 9 40 City of -— — cam_ r,rt rtltar Texas www.PortArthurTx.gov INTEROFFICE MEMORANDUM Date: August 7, 2018 To: Harvey Robinson, Interim City Manager From: Andrew Vasquez,Finance Director RE: Community Disaster Loan Program Nature of the request Finance is requesting a Disaster Recovery Loan from FEMA due to the effects of Hurricane Harvey. The Stafford Act, Section 417, subparts 206.360 through 206.367,authorizes FEMA to provide direct loans to local governments who have suffered a substantial loss of tax and other revenues as a result of a major disaster and which can demonstrate a need for Federal financial assistance in order to perform its governmental functions.44CFR 206.361(a). Background The City has completed the long loan application process for the Community Disaster Loan Program. This is a loan not to exceed$5,000,000.00 (Five Million Dollar)loan that is intended to substitute for lost revenue due to Hurricane Harvey. The City must show a substantial loss(greater than 5%)of tax and other revenues for the current or succeeding year as a result of a major disaster. Budget Impact This loan may be forgiven if it is determined that the City does show a substantial loss in revenues. Funds may be used to carry on existing local government functions of a municipal operation character. If the City does not qualify for forgiveness,the City may opt to use the funds and repay the loan. Recommendation Finance is requesting City Council to approve P.R. 20391 for the Disaster Recovery Loan from FEMA "Remember,we are here to serve the Citizens of Port Arthur" P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743 P.R. 20391 8/8/18 cr RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO REQUEST A LOAN UNDER THE COMMUNITY DISASTER LOAN PROGRAM OF THE FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA) FOR A MAXIMUM AMOUNT OF $5,000,000.00, TO RECEIVE AND MANAGE THESE FUNDS AND FOR OTHER PURPOSES WHEREAS, due to the effects of Hurricane Harvey, the City of Port Arthur is projecting substantial revenue losses necessary for the continued operations of essential government services including, but not limited to, and public safety and garbage collection services; and, WHEREAS, the Federal Emergency Management Administration (FEMA), through its Community Disaster Loan Program (CDL Program), makes available low interest loans to help offset substantial revenue losses until such time as recovery efforts lead to restored revenue sources; and, WHEREAS, the City of Port Arthur is interested in submitting to FEMA a consideration request for a CDL Program loan in the amount of$5,000,000.00 (Five Million Dollars), that must be repaid no later than 5 years after the execution of the note, and will be used as revenue in support of annual budgets as permitted by Law; and, WHEREAS, the described law permits local governments to accept such load proceeds and anticipate same in support of their annual budgets; and, WHEREAS, (1) the interest rate of will be equal to the five year maturities based on the United States Treasury obligations in effect on the date the Promissory Note is executed by FEMA; (2) the loan may be forgiven under certain circumstances; and (3) whatever portion of a loan not forgiven will be repaid at a time when economic recovery has broadened the base of revenues in support of the budget; and, WHEREAS, refraining to accept such a loan would irresponsibly forgo relief available to the residents of the City of Port Arthur, at a time when relief is critically needed. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1. That, the City Manager is hereby authorized to begin all the necessary steps to present to FEMA the formal request for the loan of the CDL program for an amount not to exceed $5,000,000.00 (Five Million Dollars) and will be effectuated in compliance with Texas Local Government Code §101.005(c). Section 2. That, if FEMA approves the loan, the City Council authorizes the City Manager to receive and administer these funds, as provided by the Community Disaster Loan Program. Section 3. That, the City Manager is hereby authorized and designated as representative of the City of Port Arthur and such may and will provide any additional information, as required, including all the guarantees contained in the request. Section 4. That, with respect to such request and receipt of funds, the City of Port Arthur in accordance with the requirements of the Community Disaster Loan Program of FEMA shall comply with the following: A. A contract with FEMA, in a manner and manner acceptable to the Director of the Agency, for payment of the amount requested and compliance with any other obligation required, as a condition of receiving the loan proceeds. B. Commit re-payment funds that the City of Port Arthur may be receiving in the future. C. Request an amount of funds not to exceed $5,000,000.00 (Five Million Dollars). D. Authorize the Finance Director to create a sinking fund account that will be used to amortize the CDL service debt. E. Establish a payment period that does not exceed a term of five (5) years. F. Provide, at the discretion of the Director of FEMA, any other type of guarantee that it deems appropriate. Section 5. That, the City Manager is hereby authorized to sign any contract and/or agreement with the Director of FEMA in relation to said request and is also authorized to review and obligate such funds requested pursuant to said contract and/or agreement. Section 6. That, to the extent that all or any or any of the actions authorized by this means have been carried out and/or executed by the City Manager all are ratified and confirmed. Section 7. That, any ordinance, resolution or any of its parts that may be in conflict with this are hereby repealed. Section 8. That, copy of this resolution duly approved by the City Council of Port Arthur will be sent to the Director of Finance of the Municipality of the City of Port Arthur, to the Assistant Director of Finance, Budget of the City of Port Arthur, the City Attorney of the City of Port Arthur, to the authorized officials of FEMA Community Disaster Loans Program and any other agency with interference in the process. Section 9. That this resolution will take effect immediately once signed by the City Manager. READ, ADOPTED AND APPROVED this the day of , A.D., 2018 at a Regular Meeting of the City of Port Arthur, Texas by the following vote: Ayes: Mayor: Councilmembers: • NOES: Derrick Freeman, Mayor ATTEST: Sherri Bellard—City Secretary APPROVED AS TO FORM: efrO Val Tizeno— ity Airney APPROVED FOR ADMINISTRATION: Harvey Robinson Interim City Manager APPRO E/D A.,..TylE AVAILABILITY OF FUNDS: "iI( /1", Andre Vasquez—Finance Director