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<br />~A --4 <br /> <br />CONS: <br /> <br />New child care facility not available. <br />Utilities and accessibility will be more difficult if not developed in conjunction <br />with the hotel project. <br /> <br />Financing Options <br />In order to make child care on this site a reality, the City needs to consider possible <br />solutions to the financing challenges described earlier. Two options are described below. <br /> <br />A) The City could use funds from its reserves to finance the construction of the <br />facility and be repaid, by the developer, over a 20 year term. <br /> <br />PROS: <br /> <br />CONS: <br /> <br />The lower interest rate the City could offer would make the project <br />financially feasible. <br />A private party can develop the child care facility in a timely manner. <br />The City would continue to earn interest on its money at our traditional, or <br />slightly higher yield. <br /> <br />It removes a substantial sum of funds (approximately $2.6M ) from the <br />City's reserves, which makes such funds unavailable should an <br />emergency arise. <br />This could establish a precedent that other private, for-profit, <br />organizations may ask the City to replicate (i.e. making a below market <br />rate loan to a for-profit organization). <br />The City assumes the risk of the developer defaulting on the loan. <br />However, if the developer defaults then the City owns the land and a child <br />care facility. <br /> <br />B) The City could secure tax exempt financing (bonds or certificates of <br />participation) to construct the child care facility, and cover the debt service <br />payments through lease to a non-profit child care operator. <br /> <br />PROS: <br /> <br />CONS: <br /> <br />Summary <br /> <br />The lease rate to a child care provider could probably be lower than other <br />scenarios require, due to the lower interest rates available. <br /> <br />The City would have to construct the child care facility, which would take <br />longer. <br />The City would need to find a non-profit child care operator. <br />City would probably not have a cooperative agreement with Mr. Keech so <br />access difficulties and additional utilities expenses would be experienced. <br /> <br />In order to work cooperatively with the hotel developer, the City will need to make a <br />decision quickly. The plans for the hotel are about 80% complete and will either include <br />access to the day care facilities and additional capacity for the water and sewer or they will <br /> <br />4 <br />