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City of Mounds View, Minnesota <br /> February 28, 1996 <br /> Page 2 <br /> • Cost of Money <br /> The factors to be considered when deciding to use existing TIF revenues are: <br /> 1. The cost of borrowing and the savings if TIF funds are not used but unspent. <br /> 2. The need for TIF revenues for other development. <br /> The following chart shows the estimated tax-exempt interest rates for level debt/"A" rated <br /> borrowing in the current market: <br /> G.O. <br /> Interest <br /> Years Rates <br /> 10 years 4.4% <br /> 15 years 4.9 <br /> 20 years 5.4 <br /> The investment rate or three-month Treasury bills is currently around 4.95%. <br /> A Referendum <br /> --al approach would be to design and present to the electorate a proposal and <br /> • plan for the new facility. Unfortunately, it has become increasingly more difficult for <br /> the public to recognize and support the physical and capital needs of local government. <br /> Further, State law now requires that this type of project, if voted, be levied strictly on market <br /> value, thereby shifting the tax burden to single-family homes. <br /> Lease/Purchase Options <br /> The desire to provide cost-effective services must be balanced with meeting the needs of <br /> dents. It has been increasingly difficult to hold the line on property taxes and still maintain <br /> ,vice levels and build necessary facilities. On the other side of the equation is the difficulty of <br /> incurring debt. Local governments are giving serious consideration to lease/purchase financing <br /> for public facilities. <br /> Annual Appropriation Lease <br /> The statutory authority for lease/purchase financing comes from Minnesota Statutes, <br /> Section 465.71, which reads as follows: <br /> 465.71 Installment and Lease/Purchases; <br /> Cities; Counties; School Districts <br /> A home rule charter city, statutory city, county, town, or school district may <br /> purchase personal property under an installment contract, or lease real or <br /> III personal property with an option to purchase under a lease/purchase agreement, <br /> by which contract or agreement title is retained by the seller or vendor or <br /> assigned to a third party as security for the purchase price, including interest, if <br /> any, but such purchases are subject to statutory and charter provisions <br />