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South Bend Redevelopment Commission <br />Regular Meeting -September 15, 2006 <br />6. NEW BUSINESS (CONT.) <br />D. Airport Economic Development Area <br />continue ... <br />capital needs over that period of time. <br />In addition, Mr. Reid and Mr. Quickstad <br />have put together a pro forma ten-year <br />operating budget covering three historical <br />years, from 2003 through 2005, and <br />projections for 2006 through 2012. The pro <br />forma includes revenues from the course, <br />expenses related to course operations, and a <br />net income line. It also includes an annual <br />sinking fund. The purpose of the sinking <br />fund is to be a reserve to deal with <br />emergency administrative and capital needs. <br />The target level of the sinking fund when it is <br />fully funded will be 15% of annual operating <br />revenues. It is being funded over a period of <br />time, contributing 2-1/2% of operating <br />revenue each year until 2012. There is a line <br />for net cash flow after the sinking fund <br />contributions each year. That line indicates <br />what funds are available for annual capital <br />projects. Then, there is a line for capital <br />projects that flows right out of the capital <br />plan. Mr. Inks pointed out that in 2006 and <br />2007 there are some large negative numbers. <br />The planned capital needs for 2006 and 2007 <br />would generate negative cash flows, but there <br />is a capital reserve that has been built up <br />from 2003 to 2005. Over that period the golf <br />course generated net profits of $651,000. <br />That includes subtracting out capital that was <br />spent from golf course revenues, both golf <br />course capital as well as TIF capital. So, it is <br />a true net profit from operations after capital <br />expenditures for the period 2003-2005. The <br />recommendation today is to take $250,000 of <br />14 <br />