The URL can be used to link to this page

Home My WebLink About2000-05-22 00-205 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 ASSign¢Lb CawICiIM Tr¢ le May 22, 2000 CITY OF BANGOR <TrnEJ Order, Authori7:ng the Provision cf Interim Construction Financing to the Eastern Maine Childress Museum and Directing City Staff to Take Such Steps as May be Available to Reduce the Interest Costs Associated with Capital construction Costs far the Museum WHEREAS, the City of Bangor has aggressively worked to redevelop the former Frees's building so as to generate significantly increased visas to the downtown area; and WHEREAS, the Eastern Maine Chlldrerls Museum (EMCM) has demonstrated wide community supportfar its presence at that location and, based on this support, promises to achieve that goal; and WHEREAS, EMCM has thus far raised, through its capital campaign, mare 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 continue over a four year period; and WHEREAS, over the next six months, EMCM's capital casts will exceed available ash flow from current and anticipated pledges, many of which are to be paid over a three to five year period; and WHEREAS, conventional financing for EMCM is relatively expensive and may not be secured In a timely enough mariner so as to complete the project in time for its scheduled opening; and WHEREAS, the City of Bangor has the financial resources to provide the EMCM with the interim Framing necessary th allow the project to proceed without delay while permanent financing is arranged; and WHEREAS, mechanisms may also be available to the City to allow the EMCM to arrange Financing at a lower overall Interest rate than may be available without City participation; and WHEREAS, the City also finds that further direct financial suport to the EMCM is in the best interest of established downtown development goals to the extent that such financing may further reduce the interest vests associated with this pmject. NOW, THEREFORE, BE IT ORDERED BY THE CRY COUNCIL OF THE CITY OF BANGOR, THAT The City Manager is authorized to execute a loan agreement designed to provide interim financing to the Eastern Maine Children Museum during the period in which the EMCM Is arranging permanent financing. Such agreement shall be evidenced by a note in a form acceptable to the Finance Director and City Solicitor and shall be for a term of no more than 120 days and in an amount which stall not exceed $1,000,000; and BE R FURTHER ORDERED, THAT The Finance Director is authorized to take such steps as are necessary to assist the EMCM in arranging permanent financing at a favorable Interest rate through such mechanisms as may be necessary and available and in so far as such mechanisms do not pledge the full faith and credit of the City of Bangor. The form of such arrangements shall be subject to final approval by the Ory Council of the City of Bangor; and BE R FURTHER ORDERED, THAT. The Finance Director shall prepare a schedule showing the annual diferance between the interest costs projected to be incurred by the EMCM for their permanent financing and those which would have been incurred had the City made a direct ban to the EMCM. The Ory Manager shall include an appropriation In the revised proposed FY01 City budget in the amount of the estimated difference In ingest costs for that year and shall include in the Manager's proposed budgets for FY02 through FY06 a similar appropriation for each of these subsequent years, such appropriations to be a contribution to the EMCM made with the Intention of reducing the interest coss associated with this project. The City Manger may choose W recommend higher Contributions within any given fiscal year. If adopted, these higher contributions shall serve to reduce the amount to be appropriated in future years by the amount of the additional appropriation. The total amount to be appropriated during the period from FY01 through FY06 for the purpose of reducing Interest costs shall not exceed the Finance Director's estimate of the total additional Interest costs to be incurred by the Eastern Maine Children Museum. IN CITY COUNCIL Nay 22, 2000 Milan to Indefinitely Postpone Made and Seconded IUde£ioitely Postponed utly 00-205 ORDER TVJM, Authorizing the Provision of Interim Construction Pivamcing to the Eastern Nein Children's Musew and Directing City Staff to Take Such steps as May a to sorReduce ss the interest iated With Capital Construction Costs for the Museum 16n—Wd2 C➢Mntlbr i