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Indian River County Inter -Office Memorandum Office of Management and Budget Departmental Matters 12 6- 1 TO: Members of the Board of County Commissioners DATE* December 30, 2013 SUBJECT: Interfund Loan — San FROM: Jason E Brown Director, Management & Background Golf Course Irrigation The Dunes Golf Course at Sandridge Golf Club opened for play in 1987. Since that time, the course has operated with the original irrigation system This system is now over twenty-seven (27) years old, including the grow -in period of the course. The life expectancy for these systems is about 20 years. Due to its age, the irrigation system now requires significant additional maintenance. International Golf Management (IGM) provides maintenance operations at the course. Due to continued breakage and maintenance issues IGM staff has had to devote additional resources to maintain the irrigation system This, in turn, reduces the amount of time available to maintain the course itself. The County has also expended significant amounts for repair and replacement parts for the system over the last few years During fiscal year 2012/13, irrigation parts expenses were $52,119. For the previous year (2011/12), these costs totaled $36 855 Staff now recommends replacement of the irrigation system on the Dunes course at an estimated cost of approximately $1 million. Funding Staff proposes the use of interfund borrowing from the General Fund to provide funding for this project in an amount not to exceed $1 million. At this time, staff is proposing an interest rate of 2.5% per year on the interfund loan. This mechanism will provide funds at a relatively low interest rate for the golf course. Additionally, it will provide increased interest earnings for the General Fund The current interest earnings on County surplus funds average about 0.50%. Therefore, the General Fund will receive a higher return from the loan than it would earn on alternate investments. The final amount of the loan has not been determined at this time, though staff proposes a limit of $1 million The amount will vary depending upon final construction costs and the amount to be funded internally by the Golf Course. Staff anticipates a payback period of four (4) years as shown in the attachment. The timing of the loan will also depend upon the construction schedule. This project is planned for the summer to avoid closure of the course during peak business times. Once the final amount and timing of the interfund loan are determined, staff will present the proposed debt service schedule to the Board for approval Staff is requesting conceptual approval of the loan at this time in order to move forward with bidding the project. 87