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Home My WebLink About1996-01-22 96-89 ORDERItem/subject ORDER, Authorizing the Financing for the Shaw's and Presse's TIP Projects Through the Issuance of General Fund General Obligation Promissory Notes to the Airport Responsible DeWrtnent: Finance Commentary: The City is contractually obligated to fund two TIFa for the Shaw's Project and Presse's Building in the total amount of $1,395,000. Original plans had called for the issuance of taxable general obligation bonds for this purpose. Currently, the Airport has approximately $9N in funded capital reserves. s. These funs are both in short and medium term investments. I would propose that the general fund issue two general obligation promissory notes to the Airport to fund the City's share of these projects. If this approach is taken, the City will realize significant savings i interest costs. In addition, the City will save the legal, banking and other fees associated win issuing general obligation debt. Finally, payments made would remain with the City and contribute to Airport Details of this proposals are summarized in the attached memorandum. This approach to financing was reviewed by the Finance Committee at its last meeting and is recommended tothe full Council for its approval. I would recommend that we proceed in this fashion. This will allow us to better structure our debt repayment schedules to meet project revenues, to decrease our Overall borrowing costs, and provide a revenue stream to Bangor International Airport. �'� Z 4K Associated Information: order Budget Approval: R Legal Approval: UMR _Jntroduced For Passage First Reading Page_of_ Referral CODNCIL ACTION Date: 1-22-96 Item Nu96-B9 Item/subject ORDER, Authorizing the Financing for the Shaw's and Presse's TIP Projects Through the Issuance of General Fund General Obligation Promissory Notes to the Airport Responsible DeWrtnent: Finance Commentary: The City is contractually obligated to fund two TIFa for the Shaw's Project and Presse's Building in the total amount of $1,395,000. Original plans had called for the issuance of taxable general obligation bonds for this purpose. Currently, the Airport has approximately $9N in funded capital reserves. s. These funs are both in short and medium term investments. I would propose that the general fund issue two general obligation promissory notes to the Airport to fund the City's share of these projects. If this approach is taken, the City will realize significant savings i interest costs. In addition, the City will save the legal, banking and other fees associated win issuing general obligation debt. Finally, payments made would remain with the City and contribute to Airport Details of this proposals are summarized in the attached memorandum. This approach to financing was reviewed by the Finance Committee at its last meeting and is recommended tothe full Council for its approval. I would recommend that we proceed in this fashion. This will allow us to better structure our debt repayment schedules to meet project revenues, to decrease our Overall borrowing costs, and provide a revenue stream to Bangor International Airport. �'� Z 4K Associated Information: order Budget Approval: R Legal Approval: UMR _Jntroduced For Passage First Reading Page_of_ Referral 96-89 Aeupmd to Cbmmgor Blanchette January 22, 1996 CITY OF BANGOR (TITLE) (orb", Authorising. the Financing for Shaw'sand Freese's TIF Projects Through the Issuance of General Fund General Obligation Promissory Notes to the Airport By I" chy Council of W Chv Of Seaver: ORDERED, THAT there is hereby authorized the issuance of two general obligation promissory notes to the Airport Fund, one for $975,000 in January, 1996; the second for $400,000 in or around September, 1996. The Finance Director is further authorised to establish the Various terms and conditions of these notes subject to the approval of the Finance Committee. 5 JU CITY COUNCIL! 96-89 '•January 22, 1996 D R D £ R Passed Title, Authorizing,the Financing for CITY CLERK' of TIP Projects Through the Issuance 'of General pan d General 0611 atlon ...port... - 2iam�eeuryN6[es to the Airport. /..]..../.I....yn./................. ... L.GN�tj'q Am . �^din OWcilmen 96-89 MEMORANDUM CIN Of CMAINE BANGOR. Mune u.aoi FlNANCE DEFMIMENT - TBa, aanaaB-uw flagld I. Nelbr Names IlrMm To: Members,Finance Committee Dare: humanly 12, 1996 Re: Alternative FinancingofTIFProjects Page: 2of2 We are currently informed that there are no legal impediments to borrowing from the airport. Further, we believe that we can curry the note in our long term debt toward group such that it has no impact on fund balance. Down the road, if and when we have a taw -exempt issue m sell, WE may has able to roll Me airport now into Me financing. Of course, the airport will carry a wearily with arax-exempt, rather Man =able rare. This does not mea, however, That Me 185 basis points gained by the City WE given up by the ai port. Because of Me short-to-intermMhate maturity structure of the turport's poMoli, their current yield approximates 6%. A a result, the net impact on the airport's portfolio is about 75 basis points. Anodm issue is Me amendment of Me plans we've filed with the state to refem the changed firencingmecbanism. Weare assured Matilda will involve minimal effort. We believe this is a cwtro alive way to finance Me me TlFprojects, and request your permission to proceed. 96-89 MEMORANDUM --_. CITY OF MAINE73 AatowE DRAW FINANCE OEPARTMEM TEL ROT As 4400 RpMM I. HOW Pension Morabor To: Members, Finance Committee Date: ]enemy 12,19% Re: AltEmmive FinancingofTlFProjects Page: 1 oft The proposed fitncing for the Sbaw's and Freese's TIF projects calls for iouing module, general obligation bonds. Smffwould like to propose a more Advantageous alternative using 1 mtemal, Hart tban external Ponding. The City is contractually obligated to fund the two TIF's in $e following amounts at the indicated times: Sbaw's Prober (end Mdammurn: Thele of$W5,000(minwabaa$30,OWin costs on which the City is mti led as reimbursement for incurred cols) or the developer's costs to data, If the developer's costs ere less then the (eppmxlmmealy) $675,000, he is to be paid on a monthly basis thereafter at the one of 8In%of incurred costs. France's Building Prohn (Fall,1996): $400,000. The issuance of general obligation, taxable bonds in January means we most begin paying interest within 15 months. While we can structure the issue in minimize debt service payments in The early years, it will be necessary, because ofd,e timing ofp Jected TIF metes, to meet these costs me of the general fund. We asthma[a had this could mount to about$200,000 (assumingminM tmteof].IV,)WtgbthebegiuningofFiso11999. Thus,weexert bormw pressure on propartimmbd b . Becem Airlshe pro Reserves. expense, staff proposes to borrow the Ponds, on un es-neaied boil, from Airyort reserves. Currently, the airport has about $9 million in funded capital mamas. The fends an in short and medium more imeaments. Smffpropors that the General Fund issue two general obligation promissory notes to the aiNorf me for $975,000 in January, the other for 84O9,000 in or around Septmnber. The notes would bear lumber at atax-exempt rune of about 5.25% and would have maturity uhedula tied to the Flow of TIF metes. There are several bmefa to this. First, we save about 185 basis points in innmeet. This amomtr t0 as much A 5508,6hObr moa over the next fifteen yearn. Second, by avoiding a public offering, Is verba legal, Ranging and other kes associated with is This mould be as much as $20,000. iN, payments would remain with the City, contributing to airport reserves. Finally, because we ve more flexibility in sttttmivg mpaymmi, we cone avoid using genteel flood revmuesm ee dabtservice Nthe emty years. M-