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Nevada County Treasurer- Tax Collector Chris Dabis is confident Nevada City will meet the June 30 deadline to repay the county $1.1 million it owes.
At a Board of Supervisors meeting on Tuesday, Dabis gave an educational overview of the Tax Revenue Anticipation Note (TRAN) borrowed by Nevada City last year.
State law allows local agencies to borrow against their future revenue in one-year notes.
Asked to show proof that payment with 2.78 percent interest will be made, Nevada City City Manager Gene Albaugh provided Dabis with a May balance of $1.5 million in a Local Agency Investment Fund.
Once a payment is made at month's end, Nevada City hopes to borrow again from Nevada County as part of a 10-year “rolling TRAN.”
The loan allows Nevada City to continue providing services as the town goes through a cash flow “dry period.”
At Tuesday's meeting, Dabis foreshadowed local impacts from state budget cuts.
“Schools are looking for $20 million. I don't know how we're going to handle that,” Dabis said.
With uncertainty about the world, national and state economy hanging on the brink, county supervisors posed “what if” questions and wondered what would happen if the city could not pay off its debt by June 30.
“It would take a legal action, I'm almost certain,” Dabis said. “If they don't pay me on June 30, they're not getting anymore money.”
Nevada County has issued TRANs in the past to support upgrades at the county transfer station, help establish the incorporated area of the Town of Truckee and build a new fire station in North San Juan.
“I've never had one not been paid,” Dabis said.
Nevada City's promise to make a payment is backed by a collateral of property and sales tax revenue.
Because of the uncertainty of the financial times, the city and county used a 10-year recovery scenario to spread out the city's financial shortage. By borrowing from the county, Nevada City saved bond consultant fees and enjoyed a lower interest rate than found on the open market.
“It's kind of like borrowing from your own mom,” Dabis said.
Nevada City's 10-year plan gradually costs less over time, with a second note issued at 10 percent less than the original. By the 10th year, Nevada City would borrow a note at 90 percent less than the cost of the original, according to the treasurer's Web site.
To contact Laura Brown, e-mail lbrown@theunion.com or call 477-4231.
At a Board of Supervisors meeting on Tuesday, Dabis gave an educational overview of the Tax Revenue Anticipation Note (TRAN) borrowed by Nevada City last year.
State law allows local agencies to borrow against their future revenue in one-year notes.
Asked to show proof that payment with 2.78 percent interest will be made, Nevada City City Manager Gene Albaugh provided Dabis with a May balance of $1.5 million in a Local Agency Investment Fund.
Once a payment is made at month's end, Nevada City hopes to borrow again from Nevada County as part of a 10-year “rolling TRAN.”
The loan allows Nevada City to continue providing services as the town goes through a cash flow “dry period.”
At Tuesday's meeting, Dabis foreshadowed local impacts from state budget cuts.
“Schools are looking for $20 million. I don't know how we're going to handle that,” Dabis said.
With uncertainty about the world, national and state economy hanging on the brink, county supervisors posed “what if” questions and wondered what would happen if the city could not pay off its debt by June 30.
“It would take a legal action, I'm almost certain,” Dabis said. “If they don't pay me on June 30, they're not getting anymore money.”
Nevada County has issued TRANs in the past to support upgrades at the county transfer station, help establish the incorporated area of the Town of Truckee and build a new fire station in North San Juan.
“I've never had one not been paid,” Dabis said.
Nevada City's promise to make a payment is backed by a collateral of property and sales tax revenue.
Because of the uncertainty of the financial times, the city and county used a 10-year recovery scenario to spread out the city's financial shortage. By borrowing from the county, Nevada City saved bond consultant fees and enjoyed a lower interest rate than found on the open market.
“It's kind of like borrowing from your own mom,” Dabis said.
Nevada City's 10-year plan gradually costs less over time, with a second note issued at 10 percent less than the original. By the 10th year, Nevada City would borrow a note at 90 percent less than the cost of the original, according to the treasurer's Web site.
To contact Laura Brown, e-mail lbrown@theunion.com or call 477-4231.
