12-09-1992 Council Agenda - Laserfiche WebLink

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Mr. Joel Hanson, City Administrator City of Little Canada Page 8 Fast Bond Interest: The second major financing tool obtained in 1989 is the City's ability to draw down future MSA Allotments to recover past interest on MSA Bonded Debt. This additional revenue source will generate additional monies for the city to use for other MSA construction purposes or as otherwise approved by the City Council. Such additional revenues will accumulate as follows: Year Amount 1989 $16,058 1990 43,652 1991 37,317 1992 19,317 1993 (est) 14,158 1994 (est) 18,097 1995 (est) 24,497 1996 (est) 5,191 Total $178,287 As stated previously, such drawn downs are entirely discretionary at the option of the City, and such decisions must be made annually. The City has already elected the 1989, 1990, 1991 and 1992 draw downs. The 1993 - 1996 draw downs must be applied for annually. You will note that I have spread these draw downs out for longer periods from past reports. This was done to provide more 1992 and 1993 MSA allotments for other purposes. The City Council should approve this plan and strategy. Remaining Bond Proceeds: The December 31, 1991 fund balance includes bond proceeds totaling $89,807 (MSA Bonds of 1981) which have yet to be expended on "eligible" MSA projects - plus unallocated investment earnings (on such bond proceeds) totaling $86,006. Schedule 5 presents a summary of the City's "Bond Account" with the State MSA Department. This "Account" does not reflect any available resources to the City. Alternatively, this "Account" reflects a contingent liability by the City. When the State measures a City's "construction needs" for purposes of allocating MSA Allotments (between and among the various cities), it uses money actually spent (i.e. draw downs) plus expended MSA bond proceeds. Such expended bond proceeds are measured as shown on Schedule 5. Little Canada has never fully expended the proceeds of its 1981 MSA Bonds according to records maintained by the State, in addition to the City's own records. This State account can be cleared by designating the use of such proceeds (to the State) for a future MSA project (i.e. Project 1992 - XX LaBore Road). By such a designation, the City will opt to use the balance in this "bond account" instead of drawing down current construction allotments. After such designation is made, the City's Bond Account at the State will be cleared, and the City will be credited for actually expending such bond proceeds. See the bottom of Schedule 5. When such designation is made, the City can consider these bond proceeds to be fully expended. Page 39