10/06/87 Board of Public Works Minutes

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REGULAR MEETING OCTOBER 6, 1987 11 1 OPTION II - BASIC DESIGN A basic design garage would have a concrete aggregate exterior without embellishments. The basic ramp design size and structure would be identical to Option I and would have the same exposed glass elevator at St. Joseph and Wayne Streets without the enclosure of Option I. Savings would result from the lack of brick facade and deletion of the elevator enclosure. Purchase of the land at $400,000.00 is included and will be adjusted to equal the actual purchase price determined during negotiations. LEASE PRICING ANALYSIS The Proposal indicated that in pricing the lease, PVN-RHC worked from the total issue amounts to analyze the structure of the lease in the manner requested by the City. The two (2) variables in the analysis are the term of the lease and the yield on U.S. Treasury Bills of the same term as the lease. A spread of 200 points is necessary to compensate for the taxable status of the Certificates of Lease Participation to be issued by PVN. Fluctuations in the yield on U.S. Treasury Bills would be reflected in the pricing by an equivalent upward or downward adjustment in the lease payment at time of closing the issue. At the time these lease price projections were prepared on October 2, 1987, the following yields on U.S. Treasury Bills were in effect. 15 year 9.78% 20 year 9.91% 25 year 10.02% Submitted with the Proposal were computer print-outs for lease terms of 15, 20 and 25 years for both Options I and II. The issue will be financed by taxable Certificates of Lease Participation issued by Privatization Ventures and underwritten by Raffensperger Hughes. The City will not pay anything until the garage is turned over for operation by the City. At that time, the first payment will be pro -rated for the remainder of the year which should be no more than three (3) months. All lease prices assume preferred status among other payments from the revenue source or a G.O. backing if funds are not consistently available. TOTAL ISSUE AMOUNTS Option I $4,070,000.00 Option II $3,900,000.00 It was noted that this includes all land costs, design and construction costs, development and project management costs, capitalized interest, underwriter and legal fees and all other incidental costs to the project. LEASE PRICING SUMMARY Term of Lease 15 years 20 years 25 years Average Annual Lease Payments Interest Rate Option I Option II 11.78 589,224 564,863 11.91 540,957 518,488 12.02 518,658 497,804 Upon a motion made by Mr. Vance, seconded by Mr. Leszczynski and carried, the above outlined Proposal was referred to the Department of Economic Development for review and recommendation.