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cet <br />994 /1.4 Cana ria <br />515 Little Canacta Road, Little Canada, MN 55117 -1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />w vw. ei.little- canada. mn. us <br />MEMORANDUM <br />TO: Mayor Fahey & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: May 21,2004 <br />RE: <br />Reduction in Interest Rate for Historical Society Loan <br />MAYOR <br />Michael 1. Fahey <br />COUNCIL, <br />Jim LaValle <br />Malt Anderson <br />Rick Montour <br />Bill Blesener <br />ADMINISTRATOR <br />Joel R. Hanson <br />Attached is the Agreement between the City and Little Canada Historical Society (LCHS) <br />relative to the financing of their addition to City Hall. You will note that we are charging them a <br />6.5% interest rate. This rate was established in 1998 based on what we were able to earn (on <br />average) on our money. With interest rates dralnatically declining, this rate is high by today's <br />standards (even with the current and anticipated increases). LCHS has proposed that we <br />consider lowering the rate to 4% given current market conditions. This is somewhat lower that <br />what we earn on our money, on average, but higher that what we could reinvest funds at in <br />today's market. <br />Under the current arrangement, the outstanding balance owed is $56,945.85. I would <br />recommend we amend the agreement to lower the interest rate on the outstanding balance to 4% <br />retroactive to January 1, 2003. This would reduce the outstanding balance to $54,360.75. (See <br />amortization worksheets attached.) <br />Should you have any questions regarding this proposal, please let me know. <br />cc: Jean Donovan, LCHS <br />1 <br />