SUBJECT: APPROVAL OF THE FIRST AMENDMENT TO THE AGREEMENT WITH ACROSS THE BRIDGE FOUNDATION, INC. INCREASING THE LINE OF CREDIT TO SUPPORT GAP FINANCING NEEDS OF THE DOWNTOWN COLLEGE PREP CHARTER SCHOOL BY $150,000
It is recommended that the City Council approve the first amendment to the Line of Credit Agreement between the City of San Jose and Across the Bridge Foundation, Inc. to provide for the second $150,000 installment of a multi-year no interest gap financing Line of Credit being provided by the City for the operation of Downtown College Prep Charter School.
BACKGROUND
As recommended in the Mayor’s Budget Message dated March 21, 2000, Council approved the concept of providing a series of annual gap financing loans in the amount of $150,000 for four years, beginning in 2000-01. Funding in the amount of $150,000 was included in the 2000-01 Adopted Operating Budget for the first year loan (line of credit). An additional $150,000 for the second year installment is included in the Adopted 2001-02 Operating Budget (Anti-Tobacco Master Settlement Agreement Revenue Fund).
Across the Bridge Foundation, Inc. is a California nonprofit corporation operating the San Jose Downtown College Preparatory Charter High School (School). The School is San Jose’s first charter school. It began operation last year with its first freshman class, and has now embarked on its second year of operations. The school is dedicated to helping young people who have academic potential, but who are less likely to do well in a traditional school.
The line of credit, or loan, authorized in this agreement is to provide “gap financing” to assist the School with its establishment and continued operation. The loan proceeds are to be used for such operating costs as payroll expenses, consultant services, supplies and materials, rent, utilities, or other expenses related to the operation and maintenance of the School. The loan/line of credit is interest free and is to be repaid in full no later than June 30, 2009.
Funding for Line of Credit agreements for the subsequent two years will be included in upcoming Proposed Budgets, and contract amendments providing for the additional funding brought to Council for approval, after the adoption of the budgets containing that funding.
The Mayor’s Budget Message was considered and heard during the 2000-2001 budget proceedings.
This memo was coordinated with the Office of the City Attorney.
COST IMPLICATIONS
The funds for this agreement are already appropriated for 2001-2002 and will be taken into consideration when developing budgets in future fiscal years.
Fund: Anti-Tobacco Master Settlement Agreement Revenue Fund - 426
Appn: 2565
Amount: $150,000
Budget Document: Adopted 2001-2002 Operating Budget
LARRY D. LISENBEE
Budget Director