*Authorize temporary operating loans between various funds to provide interim funding to cover lags in federal, state, and other grant reimbursements and other negative cash and fund balances

This legislation authorizes temporary interfund loans from the Transportation Operating Fund and the SDC Parks Capital Construction and Maintenance Subfund to various funds under the Grants Division, including the Grants Fund, Community Development Block Grant Fund, and HOME Fund. The loan from the Transportation Operating Fund will not exceed $25,000,000 and the loan from the SDC Parks Construction and Maintenance Subfund will not exceed $25,000,000. The loans are to be funded on June 30, 2022 expected to be repaid on July 1, 2022, the first day of the following fiscal year. The Grants Fund, HOME Fund, and Community Development Block Grant Fund are reimbursement funds such that all expenses in each fund are expected to be reimbursed by entities outside of the City of Portland (the “City”). The City accounts for grant reimbursement on a modified accrual basis, per the requirements of Generally Accepted Accounting Principles (“GAAP”); under this modified accrual basis of accounting, expenses are incurred at the time services are delivered or goods are provided and revenues are recognized when reimbursement is received. This creates a lag between recorded expenses and revenues. This lag can result in temporary negative fund balances in the grants funds. Oregon State Local Budget Law requires that fund balances not be negative at the end of a fiscal year. GAAP requires that governmental funds not end the year with negative cash assets. Interfund loans to the Grants Division’s funds are necessary to comply with Local Budget Law and GAAP, and such loans must be approved by City Council.

Because the amount of the loans will not be known until the year-end close process is well underway, the loan not-to-exceed amounts included in the ordinance are conservative (i.e. high). In the fall, during the year-end close process, once the necessary loan amounts are determined, the Accounting Division of the Bureau of Revenue and Financial Services will execute the necessary loan journal entries. While the ordinance authorizes loans not to exceed a total of $50.0 million, the actual loan amount will not be known until the City’s year-end financial audit process has been completed and the interfund loan requirement is known. The repayment sources for the loans are the grant receivables and tax payments, which are considered to be very secure.

This is an administrative action to provide temporary operating loans. No direct community impact or involvement is anticipated.