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11-12-18 Community Investment
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11-12-18 Community Investment
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City Council - City Clerk
City Council - Document Type
Committee Mtg Minutes
City Counci - Date
11/12/2018
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a- CITY OF SOUTH BEND OFFICE OF THE CLERK <br /> Committeemember Davis asked, Dr. Mueller, do you have the statistics? In our talk, there was <br /> something about some of the debt rolling off by the time this would come. <br /> Dr. Mueller handed out graphs (which are available in the City Clerk's Office). He stated, <br /> Currently, in 2018, we have about $14 million of annual debt service and lease obligations <br /> outstanding. In 2019 it goes to under $11 million. It stays there roughly in 2020 and that is when <br /> our revenue will decrease due to the circuit breaker so our debt service coverage will decrease <br /> slightly,but by the time payments are contemplated for this bond,we are already$4 million under, <br /> per year, than we were in 2018. This is based on interest rates and the term of the bond. So right <br /> now we are conservatively using a fifteen (15) year term and an interest rate one hundred (100) <br /> basis points above today's levels. We don't know what the interest rate will be in three (3) years. <br /> Committeemember Davis asked, When you thought about doing this based on what <br /> Councilmember Broden said, how does this play in with that issue? <br /> Dr. Mueller replied,There are$4 million in net proceeds and$4.8 to deal with credit enhancement <br /> debt reserve and issuance costs. Those were a little over$100,000 and then the other is to enhance <br /> our credit when we go to the market. It would be exactly$4.8 million but what we promised in the <br /> MOU was $4 million net proceeds. <br /> Committeemember Davis interjected, My thing is, let's clarify, the $4.8 million is right here. But <br /> my thing is there was a discussion on$6 million and$10 million. Let's say we went with something <br /> else. How high can we go and how low can we go? What are our options? <br /> Committee Chair Ferlic replied, It affects future projects as well. <br /> Committeemember Davis interjected, I understand. But you see, I'm saying I recognize people are <br /> saying some things are coming off and everything else. Clearly, the issue is it is almost the same <br /> thing we had with the park. What is our leeway? Then after future issues,then the next question is <br /> what are our priorities? Do we want to push this off because this is such a great thing we want to <br /> use and we know we are going to take a loss there because of this? It is all that. <br /> Councilmember Scott stated, To be clear, this is a County Library. <br /> Dr. Mueller stated, So for reference, if you think of what we can do, each Western Avenue Phase <br /> is about $2 million. Think about major projects. The idea with this one (1) is because the Library <br /> and the Community Foundation are non-taxing entities, it was a little bit of a discomfort for the <br /> Redevelopment Commission. They came with a $10 million ask. That was very large. In talking <br /> to members and others, in full transparency, we settled around more of a $6 million contribution. <br /> That was with an eye toward commitments on programming. We have confidence we will get the <br /> programming but it is not in the current agreement. So our thought was that we will reduce the <br /> capital spending to $4 million. Of course we want this to be a success so we can come down the <br /> line and supplement as needed. We are already talking about a potential contribution to the City <br /> of Life Long Learning Initiative with Redevelopment funds. So, this is a substantial amount. This <br /> was part of the thought process of where we were. There are neighborhood plans and other pieces. <br /> Committeemember Davis interjected, I know, I'm at peace. <br /> EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT <br /> 455 County-City Building 227W Jefferson Bvld South Bend.Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov <br /> 7 <br />
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