El Cerrito’s history of loans to keep afloat

El Cerrito has been using Tax Revenue Anticipation Notes (TRANS) since 2011 to keep the government afloat. Someone online calls them payday loans and to a large extent that is what they look like. Each year more is borrowed. It started in 2011 with 3.5 million and in 2019 it was 9 million which was a 3 million dollar jump from 2018.

At the next City Council meeting on June 2, 2020, this will be discussed. What is very significant is that since the start of these loans the majority of years (still confirming every year) West America Bank has taken the loan on. As the City staff said in their reports “By selling the TRAN directly to a single investor, the City avoids the costs associated with rating agencies, disclosure counsel, and underwriting firms.” You will see in the chart below how the cost of the loan is in the $17,000-$37,000 range.
This year West America declined to take on the $8,5000,000 loan. This means that the loan will be offered to the public and the estimated cost of OBTAINING the loan will be $105,000. Interest at the 2-3% rate will cost somewhere between $170,000 and $255,000.

This is yet again an example of how El Cerrito’s financial mismanagement has cost the city over a million dollars since 2011. If the city had not allowed their bond rating to drop (before COVID) perhaps West America would have taken the loan again and saved the city at least $70,000 this year alone. Nowhere in any of the many financial documents that I have reviewed is anything stated about working towards not needing a TRAN annually. The additional concern is that if it is more challenging to get the TRAN this year what about next when COVID effects and the effects of the recession will deepen? If a TRAN is not issued either this year or next then how does the city avoid bankruptcy?

If you are interested in learning more please join our IO group for El Cerrito residents concerned about these issues found here https://groups.io/g/ECCfRG

Please also consider making a public comment on this agenda item 7A before the meeting on Tuesday. If you send in your comments after 1pm they have to be read into the record. It is important for the City Council to understand that people are watching.

To make a public comment

Public Comments may be submitted one of two ways:

Via email to Cityclerk@Ci.El-Cerrito.ca.us Email must contain in the subject line Public Comments ­ Not on the Agenda OR Public Comments ­ Agenda Item #.

Via Voicemail at (510)­306-­2558. The caller must start the message by stating Public Comments ­ Not on the Agenda OR Public Comments ­ Agenda Item # followed by their name and city of residence, followed by their comments


TRAN Chart-some information on the cost of 2011 and 2014 loans I have yet to access. The chart will be updated when I obtain the information. The interest rate estimate for 2020 was put into the spreadsheet at the higher 3% rate.

The packet for. the June 2, 2020 meeting has a lot of information on the 2020 TRAN found starting on page 68. Information on past TRANS were found here.

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