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-8- City could borrow for that purpose to 10% of the issue or $121 ,000. This would require the City to supplement that amount by either using available funds on • hand or funding the reserve increase requirement over several years from current operating profits. Mr. Childs said he had learned that the City could not use general reserve funds as: reserves for the bond issue but asked whether there was any interest on the Council for transferring $121 ,000 from the $500,000 in debt service reserves the City has sitting untouched in the bank just making interest. The Mayor Pro Tem said he would also like to see some of the construction costs like signage, fixtures, and architectural costs paid from the reserves rather than putting them in this issue. Councilmember Enrooth said he would like to see the issue kept under one million dollars if that could be done. Mr. Childs indicated he would prepare a report on just where reserves are available "for the City to borrow from itself". Mr. Treptow said he was not certain just how the market would be reacting to the uncertainty about the City's ability to get liability insurance over 15 years but Springsted had seen enough interest on the part of the underwriters to recommend a public sale be held November 10th to get bids for the issue. He said he knew the underwriters would always be willing to buy the bonds on a negotiated basis which would reduce their risks so, if no bids are received by November 10th, the City would have the right to negotiate a sale with them. _- The consultant told Councilmember Enrooth that because of the demand for any type of bonds right now, Springsted's "most conservative" judgment was that . the bonds would go for 8.5% in this period of law interest rates. If general = • obligation bonds were involved, Mr. Treptow said they would go for only 6%. He affirmed that the bonds would be tax exempt under the new tax law. The bid openings for construction of the liquor store would be October 28th after which the City could exercise its options to reduce the amount of the bonds -- according to the bids to the appropriate levels for a final decision by November 10th, Mr. Treptow indicated. Mayor Pro Tem Ranallo told him he was quite .certain the City would not be increasing the amount of the issue because there are options available which if deleted could reduce the cost of the project. Mr. Childs indicated 15 companies have requested to see the plans for the project and he expected some low bids which could cut the project costs back. The architect : had provided some options for cutting the project itself back and the Manager said using City reserves to cut down the issue or going for a ten year issue instead of 15, might make the bonds more attractive to the bond bidders. When Councilmember Enrooth said he was concerned about projecting revenues for 15 years in the liquor business, Mr. Treptow said the bond buyers would determine how realistic those revenue projections were. He also said because -the -City is not permitted to use general funds to pay off the bonds, the bond owners could under the issue Covenants only force the sale of the liquor facilities if revenues went too low to support bond payments. The bond consultant added that if the City's population ever exceeded 10,000 a referendum to decide whether or not to continue the liquor operations in that event would be necessary. Mr. Childs said the 1970 census showed St. Anthony with only 9,239 persons living in the City, which was the highest ever reached and there would have to be some drastic is changes made before the current figure of 7,770 would reach 10,000. Mayor Pro Tem Ranallo recalled that Spring Lake Park had sold $600,000 in bonds for a liquor store about two years ago but that was only for an off-sale operation.