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• <br /> MEMORANDUM <br /> DATE: May 1, 2003 <br /> TO: Mike Morrison, City Manager <br /> FROM: Roger Larson, Finance Director <br /> ITEM: STONEHOUSE REDEVELOPMENT <br /> Per your request, I reviewed the funding options for building of the new SAV 1I off-sale <br /> store. <br /> Ehlers provided me with the following numbers to work with: <br /> Cost of a new store $950,000.00 <br /> Less: Sale of Existing Property ($640,000.00) <br /> $310,000.00 <br /> Add: Hennepin County Easement $ 55,000.00 <br /> Cash Needed to Build New Store $365,000.00 <br /> With all projects, the goal is to develop a financial plan that provides funding at the most <br /> affordable price. Factoring in such things as revenue streams, affordability of borrowing, <br /> current operating budgets and long-term cash needs, often provides the potential <br /> alternatives/funding sources for a project. <br /> The funding options for this redevelopment include: <br /> 1) Issue Liquor Revenue Bonds. <br /> 2) Cash on Hand/Reserves. <br /> 3) Internal Loan. <br /> Option #1 —Liquor Revenue Bonds <br /> Liquor revenue bonds, totaling $940,000.00, were used to finance the redevelopment of <br /> SAV I. However, given the small amount of cash needed to build the store ($365,000.00 <br /> is considered quite small in the bond market), the cost of issuance and interest of the debt <br /> makes a small issue not as attractive as that of a larger one. <br /> Adding the issuance costs and interest expense for a ten-year bond, the total cost would <br /> • be approximately $550,000. <br />