AgdaPkt 2003-08-11 - Laserfiche WebLink

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very conservative, sustained growth of 2% in the Agency's assessed valuation base (in addition to projects now under way). In approximately 15 years the City Council and Agency Board will need to review the funds available for debt service and may need to make changes to the Agency's operating budgets to provide funds needed pay the principal and interest on these bonds or alternatively, identify a sour :e of additional funds. The proposed loan of $4.460 million to the Agency via the refunding of the 1991 PFA bonds takes advantage of the current low interest rates available in the market. The City is currently paying approximately $1.2 million annually on its $6.725 million outstanding 1991 Public Financing Authority (PFA) Lease Revenue Bonds. The bonds bear interest at 6.5 %. The debt service on these bonds, which runs through FY 2011/12, is paid with utility users tax revenue. The City can reduce its interest cost to approximately 3.8% by refinancing the bonds and realize substantial debt service savings. This refinancing is very similar to that undertaken by a homeowner who desires to reduce his /her monthly mortgage payment and obtain funds to improve the home. By extending the debt maturity out to 2019 and adding a new money component to the refunding, the City can loan sufficient funds to the Agency to allow the Agency to complete its projects and nevertheless realize total annual debt service savings through 2012. The foregoing amounts may change as the financing plan is further refined and as interest rates change. The financing options will be brought back to the Agency for more in -depth review and analysis as part of the review and actions required for the issuance of the bonds. GENERAL OPERATING BUDGET The 2003 -2004 General Operating Budget (shown below) budgets the resources needed for the ongoing operations of the Agency and the implementation of the vision for downtown inherent in the Council priorities and the Downtown Plan. The budget differs from the previous year's budget primarily because (1) the proposed budget includes an "ERAF" transfer of $439,656 approved by the State to help balance its budget; (2) there is a slight increase in Administration due to an anticipated increase in attorney fees and the reorganization of the Planning and Redevelopment functions; (3) an interest payment due the City for the $20 million loan approved in January, 2003, which is offset by higher interest earnings because of the transfer of the monies from the City to the Agency. The City loan will be repaid in total with bond proceeds. Also shown are current capital projects to be carried forward into the new fiscal year. E