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Mounds View City Council February 26, 2001 <br />Regular Meeting Page 19 <br />The Springsted Representative stated the City would have paid a higher interest rate in order to <br />be allowed the option of refinancing in a shorter term. <br />MOTION/SECOND: Marty/Sonterre. To Extend the Meeting Fifteen Minutes. <br />Ayes - 5 Nays - 0 Motion carried. <br />The Springsted Representative stated his company was asked if the City can cut costs and still <br />make money at the golf course. He stated he cannot answer that question right now noting the <br />City may not be able to sell the course if it makes changes that make it not as valuable to <br />customers. <br />Council Member Stigney questioned whether, using the original projections for the original golf <br />course and the escalating debt payments, if it were ever practical that it would be paid off. <br />The Springsted Representative stated it absolutely was or the bond would not have been <br />approved. He explained the one issue he had to work with is that the City did not want a <br />substantial up front contribution in the first couple of years so the principal was pushed out and <br />for the first couple of years only interest was paid. <br />Council Member Stigney asked what the risk factor was for the City. <br />The Springsted Representative stated at that time there were three different ways to finance the <br />golf course a referendum, a gross revenue bond, or a straight revenue bond. When the City <br />decided to use a gross revenue bond, the risk factor for the analysis went away because the risk <br />shifted from the bond-holder to the City. He stated the City assumed the risk noting had the City <br />done a straight revenue bond then the bond-holder would have demanded a sensitivity figure but <br />it was not required when the City did a gross revenue bond. <br />Council Member Stigney questioned whether the City was aware of the information concerning <br />the different types of bonding. <br />The Springsted Representative stated the City had all the information. <br />Council Member Thomas questioned what the depreciation figure was for. <br />Finance Director Kessel explained it was for leasehold equipment and buildings. <br />Council Member Thomas asked if depreciation was figured in the original pro forma. <br />The Springsted Representative indicated it was not. <br />Finance Director Kessel explained there are different ways to define things and the projections <br />done by City Staff for profit would show depreciation but no principal on debt. One of the main <br />• <br />