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Supes wary of loan sans assurances |
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Tuesday, 16 September 2008 |
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By Mike Gervais
Register Staff
9-13-2008 Inyo County isn’t sure if it can help foot the bill for the struggling Eastern Sierra Transit Authority, but will work to identify funds for the organization if ESTA can provide assurances it can get back on its feet financially.
The county on Tuesday became the last of the four member-agencies to consider loaning the transit authority supplemental funds to keep ESTA’s buses operating in the midst of a severe state budget crunch. The City of Bishop, Town of Mammoth Lakes and Mono County have already agreed to help the beleaguered transit provider overcome its budget shortfalls.
“ESTA faces a significant cash flow challenge at this time due to lower than anticipated funding from the state through the State Transportation Assistance (STA) program and due to delays in payment as a result of the state budget crisis,” ESTA Executive Director John Helm said in his request for financial aid.
ESTA is seeking at least $81,250 from each of the member-agencies, but before the Inyo County Board of Supervisors would commit to loaning the money, it said it must consult with its financial officers and find re-assurance from ESTA that the loan could be repaid.
The ESTA board held a special meeting in early August to discus the financial challenges created by the reduced state funding.
One of the measures directed by the board at that meeting was to ask ESTA’s member entities to fund a line of credit to allow the agency to meet its ongoing financial obligations until the state payments are received and until a revised budget plan can be in place.
According to ESTA Auditor/Controller Brad Koehn, a total of $325,000 from the four agencies, or $81,250 each, “should be sufficient to meet the cash flow needs of the authority during this period of delayed funding.”
There are many factors the Inyo County Board of Supervisors took into consideration when discussing the loan.
First and foremost, the board wanted to be sure that the loan would help get ESTA back on its feet, and that the transit authority would not have to sink deeper into debt to continue operations next year.
The board also expressed concerns about how ESTA’s cost control measures could affect its payments to the county for renting office space at the Eastern Sierra Regional Airport in Bishop.
Second District Supervisor Susan Cash said that, if she were to approve the loan, without an official cash-flow analysis on the part of ESTA, she would consider it a gift, and, given the organization’s financial state, would not expect to see a return on the funds.
Third District Supervisor Beverly Brown said she could not approve the loan without assurances that ESTA has “the ability to pay us back.”
First District Supervisor Linda Arcularius asked if ESTA would be willing to put up collateral, in case it can’t find the resources to pay back the loan.
If Inyo County agrees to finance the loan, ESTA said it would pay back the money by June 30, 2009, with interest.
“Developing and funding the ESTA reserve within a year is probably not reasonable,” Cash said.
“I’d like to give you the money,” said Fourth District Supervisor Jim Bilyeu, noting that many Inyo County residents rely heavily on ESTA services, “but it’s just too risky” because the county is also financially strapped.
Supervisor Arcularius asked Helm if Inyo County refused, or could not spare the cash for the loan, whether ESTA would target the county for service reductions.
Helm said it would not.
In the end, the board agreed to send the matter before the Inyo County Financial Advisory Committee, which will identify available funds for the loan.
In the meantime, the board asked Helm and ESTA to conduct a cash-flow analysis, and provide assurances that it will be able to repay the loan by next year.
“We’re working very diligently to identify new revenue sources” in hopes of getting ESTA back on stable financial ground, Helm assured the board.
ESTA discussed its cash-flow analysis at its board meeting on Friday, and is expected to bring the findings to the Board of Supervisors in the coming weeks.
If the county chooses not to fund the loan to ESTA, transit services throughout the Eastern Sierra will most likely be reduced to compensate for the funding shortage.
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Last Updated ( Tuesday, 07 October 2008 )
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