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HomeMy WebLinkAbout2000-05-22 00-204 ORDERIten No._8M Dale: May $ 2000 55 Item/Subject: COrder,apital Conduction a loan of up to $1,7OO,OoO tp be Eas[em Maine CM1iltlrens Maseum for Capitalet:CityMnagems Resporusible Department: City Manager Commentary: Over the last several weeks, both the Finance Committee and the full Couml have been discussing a request from the Eastern Maine Children's Museum W provide construction financing for their project This request was iniflafxl by the Museum in an ebort W reduce Interest cots Wendel well such a Icon. Based on our analysis, the interest coat savings assn urtal with a direct ban ham the City would range from $63,400 to $84,500 when compared with more conventional finandng. During these disassions, 0 has become clear that the City Cool strongly support the efforts of the Children's Museum. At the were the, two separate approaches to meeting the immediate need of the Museum haw surfaced. Under the first approach, me City would provided the necessary final dae¢ly. Through a ban, the CRY would provide up to $1,700,000 W the Museum or a peril of up W five years. In eteG, the City would vest a portion of its available funds In me museum with this Investment earned as an asset on the Cilys General Fund balance sheet This approach has the advantage of being fairly straightforward. The poternal downside, however, is that me EMC4 has not yet rwelf its WWI fund raising goal and it also projects; the requirement W raise additional funds annually once it N open to meet its operating budget requirements. M a real there is no absolute guarantee that the loan will be repab in full within the aMitipate l five year period. UMer a second apprwdh, the City woultl provide support in a variety of ways. First, given the immediate time pressure under which the Museum his operating, an intalm ban would be provided hill permanent financing is arranged and in plan. This is antedated to take about intent days. Second, the City would work with the Museum W provide it with potential aaffi W a non-taxable ban by serving as a bortowing conduit. Such a ban, while notpledgingthefull eimand cher i[ofthe City, wouklwrryalovrerintereY rate. Finally, the City would provide an annual conlbuton W th Museum designed W reduce me interest costs fran such a Icon W me same coats as would have been imuned Mould me City have made a direct loan. This approach clearly eliminates the risk mat the City might have W write off a portion of a dire2lwn in me figure. It charries the disadvantage of requiring periodic direct tax supported contributor' W the Museum over a number of years. Both of these approaches may, also provide a pr dent her other organisations W seek Ory support in the future. This Museum may be differential however, given me peen of me C yrs involvement in the redevebpment of the Freese's building, the difficulues associated with such retlevelopmenp and our goals for downtown development. In addition, while prdems may bei set ham then W tlore, the Council always retains me final decision making summer on any future happens. At me est Finance Canmittee meaning, the Commitee split 2 W t on me appropriate approach W pro. Asa result two separate Council Q-tlers are attached The first provides for a direct City Icon; this second for me alternate approach outlined above. PrpCMumlly, me Orst order will bei the Imtlal one funded before the Council. At met point several procedural options east. This artier may be debar 1 and wWd on. If this order fails, the second would come W the floor for consideration. If the original order is passed, de mcoM sutler wool elm cone W the floor and Niel be intlMniter postponed or defeated Finally, while the first order Is on the flow, a motion could be made W amend R by replacing It with the second order. Regardless of procedure, however, I bellieve the intent Of these two separate orders Is W allow the equal to debate tie merits of either approach uts m nmu Manage/is Comments: City Manager Associated InformaOan: Orders, various staff memoranda Aaailinedw Camcilw Palmer May 22. zaoo CITY OF BANGOR (T E.) Order, Authonimg a Loan of Up to $1,700,000 W the Eastern Maine Chiltlrens Museum for Capital Construction Projects. WHEREAS, the CM of Bangor has aggressively worked to redevelop the former Frees's building so as to generate significantly Increased visits to the downtown area; and WHEREAS, the Eastern Maine Chiltlrens Museum (EMCM) has demonstrated wide community support for its presence at that location and, based on this support, promises to achleve Nat goal; and WHEREAS, EMCM has thus far raised, through Its capital campaign, more than three quarters of the funding necessary to complete Its portion of the Freese's building; and WHEREAS, the flow of capital campaign contributions to EMCM is scheduled to confine over a four year period; and WHEREAS, expenditures necessary to complete the Museum must be funded over the next seven months; and WHEREAS, convendonal financing for EMCM is relatively expensive and may not be secured in a timely enough manner so as to complete the project in time for its scheduled opening; and WHEREAS, Cry financing will be more timely and less expensive than conventional financing, thereby helping to assure the Museum's success; and WHEREAS, the City of Bangor is highly desirous of continuing Its support of downtown devebpment anchored by the former Freese's building; NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CIT' OF BANGOR, THAT: There is Hereby authorized a ban of up to $1,700,000 to the Eastern Maine Chiltlrens Museum in order to complete necessary capttal projects in advance of pledged revenues to be received. Such ban will be evidenced by a note, subject to final approval of the France Committee of the City Council as to terms and conditions, to be executed by the City and by authorized EMCM represenath es which will be payable from a first lien on pledged revenues to be received by the Museum. Such note shall be for a period not to exceed five years and shall be at a ate of interest to be deter nined and approved by the Finance Committee. Budget Approval Fvonce Di Legal Approval: CRY 11 or Introduced for X passage Finr Reading page_of Referral W Finance IB CRT COUNCIL May 22, 2000 Notion for Passage Made and Seconded Coamil voted Conflict for Coattail Chair Aabe, Council Chair Abstained Eton Discussion and Vote. Councilor Relearn As suned the Chair. MOtim for Pas- sage Dotthtel. Vote: l yes, l m 1 abstaining Councilors voting yea: RRldacci, Blanchette, Parnham, Palmer, Rohmtt, Tremble E Vardmis Coumilor abstaining: Aube Passed Trde, Authorising a L an of Up t $I.IDgoo0 to the RAsteru Maine Children's Mmeum for Capital Con- strmtioo Projects Te':l,a:.L