2016-05-06-AC-STM2-STM4-rpt (supplement)

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AC–STM2016-2STM2016-4(P2) PPROPRIATIONOMMITTEE AND ART contingency clause in the motion is not needed because the debt could be excluded by referendum at any time after the acquisition until bonds are issued to fund the purchase. The purchase would initially be funded using a Bond Anticipation Note (BAN), an interest-only loan with a term ending up to 12 months from the date of issuance. If necessary, this BAN could be rolled over for another year, but at some point, the BAN would be converted to a bond with a term of up to 30 years, less the number of years that notes were outstanding. The projection of annual debt service would range from approximately $600,000 (in the early years of full principal and interest payments) down to approximately $285,000 near the end of the term. These figures do not include issuance costs or a possible bond premium. If the cost was financed entirely as within-levy debt, the first annual payment would represent roughly 7% of the current annual budget for within-levy debt service and cash capital. The Committee recommends approval of this request (7-1). 4