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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: February 19, 2020
SUBJECT:
A Resolution authorizing the Chief Financial Officer to repay the Line of Credit issued with Fifth Third Bank and Old Second Bank up to $3.0 million in 2020 in three equal installments on or before April 1, 2020, July 1, 2020, and October 1, 2020 as provided for in the 2020 Approved Gaming Fund Budget.
PURPOSE:
The City utilized approximately $9.8 million in Line of Credit funding to secure multiple properties on Bilter Road as approved by Resolution R19-207, which is attached. This loan usage carries a variable interest rate established at the London Interbank Rate (LIBOR) plus between 80 and 100 basis points, which varies around 3.0% depending on market conditions. The repayment of this Line of Credit will save the City in carrying costs for the properties at a rate roughly equal to $30,000 per year per $1.0 million. As such the repayment of $3.0 million in 2020 could save the City approximately $90,000 annually.
BACKGROUND:
The City invested approximately $9.8 million in 2019 in multiple properties along Bilter Road east of Farnsworth Ave. The City anticipates using the approximate 45 acres of land for development purposes to be defined during the 2020 fiscal year. It is probable that this land will be a part of a development incentive. This incentive should be valued at no less than the City's purchase price if at all possible. In such a situation the City will reduce the actual cash/revenues dedicated to the development of Bilter Road by the value of this property. Assuming this course is chosen in some form, the City will need to consider alternative means to pay down the Line of Credit for the property purchase.
DISCUSSION:
Current and future development activities involve the issuance of debt in many cases for the City's contribution/incentive for a given development. Presently, with the approval of the Craft Urban...
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