RM 08-23-85 - Laserfiche WebLink

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South Bend Regular Me elopment Commission - August 23, 1985 6. NEW BUS$NESS (Cont.) a. uontinuea... Mr. Treptow explained that to get to the total $4. 2 million bond issue, besides the actual project costs, there are a few other costs. The largest is a provision for $535,000 which is a debt service reserve for this issue. This is an amount of money included in the bond issue for the purpose of protecting both the City and the bond holders in the event there is any unforeseen short fall in revenue. This is a common feature of pure revenue bonds. This amount is equal to the estimated average annual payments on the bonds and is set aside out of the bond proceeds into a special separate account which is invested at maximum permitted interest rates. That fund continues to earn interest, and the interest earnings are available to make payments on the bonds. The money exists in this fund until the end of the issue and makes the final payments on the bonds. It is an added sectrity device, but it does take up a portion of e bond proceeds. There is also the cost of he bond issuance and underwriter discount whi h are also included in the total c sition of the issue. Mr. Wensits asked if the acquisition of the State Theater is considered as part of this issue. Mr. Hunt responded by saying the C ssion does not plan to use TIF bond funds for that acquisition. There are other sources available. If priorities would change or a project would not come on line in time to use the bond proceeds, we could shift that money to the State Theater, but we are not anticipating that acquisition out of the bond Mr. Piasecki asked if the monies generated by the TCU garage can be used to pay off the bonds. Ms. Schwartz stated that leases of property owned by Redevelopment or monies acquired by Redevelopment from selling property comes back in and is by statute required to at least go into the bond fund to pay principal and interest on the bond. -11-