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South Bend Redevelopment Authority <br />Regular Meeting -November 4, 1993 <br />3. NEW BUSINESS (Cont.) <br />a. continued... <br />Mr. Horton noted that the projection shows a shortfall of approximately <br />$40,000 per year on the Century Center bond debt service, which will be <br />made up by tax increment. We hope that figure will decrease as the <br />construction costs are firmed up. <br />Mr. Horton explained the Hall of Fame bond structure. He noted that, <br />although we intend to pay the Hall of Fame bond off with corporate donations, <br />it would not be possible to sell a bond structured with that revenue stream. In <br />order to sell an A rated bond at the best interest rate possible, we have <br />structured the bond as if it were to be paid by tax increment. Using a <br />conservative projection of TIF revenue from the downtown TIF district, a <br />repayment schedule has been developed which would keep bond payments at <br />or below expected TIF revenue to the year 2019. Therefore, to the bond <br />market this looks like astraight-forward TIF bond. The other advantage that <br />• gives the City is that, if a corporation cannot make its commitment in a given <br />year, there would be tax increment enough to make the lease payment. We <br />don't anticipate that happening, but we feel that we have an obligation to cover <br />that contingency. <br />As contributions come in, they will be used to purchase treasury securities <br />which will defease the bonds. The end result is that the U.S. government will <br />be paying the principal and interest on the bond. <br />The Lease must name the maximum lease payment which would be required <br />during the term of the lease. The estimated highest lease payment that will be <br />required for the Century Center portion of the project is $538,000 per year <br />and, therefore, the Lease establishes the maximum semi-annual lease payment <br />for the Century Center portion during the first years of the project at $300,000 <br />and the maximum semi-annual lease payment during the remaining years at <br />$300,000. <br />According to the proposed debt service schedule, the maximum debt service <br />for the Hall of Fame portion of the project is .$2,685,000 per year and, <br />therefore, the Lease establishes the maximum semi-annual lease payment for <br />the Hall of Fame portion during the first years of the project at $660,000 and <br />the maximum semi-annual lease payment during the remaining years at <br />$1,600,000. <br /> <br />-4- <br />