| Background: |
The proposed loan is for an amount not to exceed $400,000 including all
related loan fees and costs of financing. It is being classified as taxable,
not tax-exempt. Taxable borrowings generally carry a higher interest rate
but are required when the Project will provide a benefit to someone other
than the City. In this case, parking private planes in a municipally owned
building, even while making rental payments, benefits private parties and
disqualifies the tax-exempt financing ability. The estimated rate for this
taxable financing is less than 7% and may be adjustable during the life of
the loan.
The loan will include all fees for borrowing and the final amount will be
brought back to Council as part of a Supplemental Budget in February.
The initial estimate for construction of the structure was $225,000 however
the total cost of improvements including permits, water lines and hydrants
is approximately $350,000. Bids for the project were received in December
but clarification of cost and specifications are now being finalized.
Approving the resolution will allow the City to finance and build new hangars
providing increased service at the airport. There currently is a waiting
list for hangar space for new aircraft or from those parked in the open. |
