MOTION-- The 2021-22 Adopted Budget included $3,119,700 in the Municipal Improvement
Corporation of Los Angeles (MICLA) financing program for the Los Angeles Department
of Recreation and Parks (RAP) to purchase equipment for the Bulky Item Illegal Dumping
(BIID) and Homeless Encampment Cleanup crews. Cleanups of encampments and
debris left at RAP facilities have reached critical levels and are causing unsanitary
conditions in City of Los Angeles parks. In order to address these conditions, funding
was provided in the 2021-22 Adopted Budget to form three additional BIID and Homeless
Encampment Cleanup crews. In order to bring these crews into full operational status, it
is necessary to expeditiously procure equipment to provide crews with the necessary
equipment to perform their duties.
The issuance of Municipal Improvement Corporation of Los Angeles (MICLA) debt is a
General Fund obligation. The issuance of MICLA for the acquisition of RAP BIID
Equipment ($2,729,700) and RAP Homeless Encampment Cleanup equipment
($390,000) approved in the 2021-22 Adopted Budget would cause the City to borrow a
total of $3,119,700 at an approximately 5.5 percent interest rate over ten years. The total
estimated debt service for the capital equipment is $4,139,000, including interest of
approximately $1,019,000. During the life of the bonds, the estimated average annual
debt service is $414,000 over 10 years.
Actual interest rates may differ as rates are dependent on market conditions at the time
of issuance.
In accordance with the City's Debt Management Policy, the City has an established debt
ceiling to guide in evaluating the affordability for future debt. The debt ceiling for non-voted direct debt as a percentage of General Fund revenues is 6.0 percent. The City is
currently at 3.45 percent for 2021-22. The issuance of the debt for these projects will not
impact the City's debt capacity for non-voter-approved debt as the issuance of debt for
the projects is already included in the debt ratio.
I THEREFORE MOVE that City Council, subject to the approval of the Mayor, approve
MICLA financing in the amount of $3,119,700 included in the 2021-22 Adopted Budget
for the acquisition of equipment in support of RAP's BIID and Homeless Encampment
Cleanup crews.