11-12-18 Community Investment - Laserfiche WebLink

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