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The PIR component addresses a number of possible projects that we will not necessarily do in 2008 <br />(Canadian Woods utility extension is an example of that). However, we believe it makes sense to issue <br />debt at this time due to lower interests rates and the opportunity to make some investment earnings on the <br />bond issue (legal arbitrage). A number of the items in the list can ultimately be repaid through capital <br />improvement funds, but by issuing debt at this time, we provide ourselves with more flexibility. <br />It should also be noted that there has been a recent uptick in the bond market over the last couple of weeks <br />that amounts to about 'A% increase in the annualized interest rate. Staff's plan is to authorize the issue at <br />this time with a goal of selling bonds by the end of March. If the market doesn't improve by that time, we <br />will likely postpone the sale until a later date. From a cash Clow standpoint, we have the luxury of a little <br />time and we would like the opportunity to time the market to our advantage. However, the market could <br />worsen over that time put us at risk for higher interest costs at which time we would re- evaluate the overall <br />financing program (eliminate some of the PIR components). <br />Mr. Hagen will review this information in greater detail on Wednesday. If you have any comments or <br />questions in the meantime, please let me know. <br />cc: Todd Hagen, Ehlers, Inc. <br />2 <br />