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• Favorable <br /> Base rental agreement (Option - A) allows rents costs to be fixed over the life of the lease. <br /> There is no cash payment with this option, however, from a budgeting/profit viewpoint there is <br /> an immediate and significant increase in rent costs. <br /> Least Favorable <br /> Base rental agreement (Option - C) has CPI adjustments occurring at the anniversary of each <br /> five-year period and does not lock in costs. Often, there are several different views and analysis <br /> as to what the CPI is at and which figures should be used. In addition, this option could be the <br /> most costly of all the proposed lease options. <br /> Funding: <br /> The HRA Projects Fund Balance at the year end (12/31/95) totaled $799,546. This fund was <br /> established in 1993 and in addition to interest earnings, each TIF District contributes to the fund <br /> to cover costs for of administration of the TIF's. <br /> If the City Council so desired, the money could be replenished as profits from the liquor <br /> operation increase from the Redevelopment of Apache. However, capital equipment funding <br /> • from liquor profits may supersede the ability to repay the funds. <br /> It would be my recommendation that any contribution made to subsidize the lease be recognized <br /> as a contribution to improving economic activity in the City. Funding for capital equipment will <br /> be an increasing concern over the next few years and ultimately increase pressure for liquor <br /> profits. <br /> Having the HRA contribute towards the profitability of the liquor operation could greatly <br /> enhance the liquor operations ability to fund capital equipment. This could have a direct affect <br /> on the taxpayers of the community and eliminate a levy increase caused by the issuance of <br /> Certificates of Indebtedness for capital equipment funding. <br /> • <br />