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Special Council Meeting <br />1/7/93 <br />Page 2 <br />Mr. Busa said his only questions are, will this affect our borrowing power if we decide <br />to acquire the golf course or if we endeavor to build a municipal center? <br />Mr. Brett said he talked briefly with Mayor Pietrafese on this and has reviewed the <br />proforma. The proforma includes the purchase of this vehicle in its calculation of <br />indebtedness over the next ten years. He said with the arrangement before you, it <br />actually benefits the Village. Whereas the truck was included in the proforma as a <br />one-time payment, it is now a payment to be spread over five years. Total payments <br />will exceed by only $7,000 what is in the proforma. Instead of paying $490,000 in 1993, <br />he said it spreads it out over some years. The proforma indicates there are some <br />problems with the goals and objectives as far as capital objectives over the next ten <br />years. With respect to debt limitations, Mr. Brett said he does not think those problems <br />will be alleviated by spreading this particular payment over the next five years but it <br />brings the Village closer to compliance with its debt limitations. Mr. Brett said Mayor <br />Pietrafese suggested he talk to representatives of A.G. Edwards to discuss with them in <br />detail the problems he sees with respect to the debt limitations. Mr. Brett said to make a <br />long story short, the impact on the proforma is minimal. If anything, it is an <br />advantageous change. <br />Mr. Busa asked if it would be smarter for us to buy it, cash and out rather than making <br />payments and having this debt hanging over our heads. Mr. Busa said he wants the <br />truck but does not want to jeopardize our plans for the future. <br />Mr. Brett said the question is will the interest rates the city will command on its <br />investments exceed 5.59 in the next six years. Mr. Brett said he is a firm believer in <br />paying cash whenever possible but believes it is a good investment to take the lease <br />program at this time. He believes the lease program is as acceptable if not more <br />advantageous than an outright purchase. He said that should be Council's final call. <br />One question Council must ask themselves is how committed they are to a cash carry <br />over of 20% of their revenues. That is another factor that must be weighed against the <br />proforma; that is one of the goals of the Village which he thinks is a very good goal. <br />Are they willing to hedge on that for perhaps a year or two in order to purchase this <br />particular piece of equipment at this time? He said they are talking about a total of <br />$67,000 spread out over six years. From that you need to subtract the interest you are <br />receiving on the money that you are deferring on. When you come down to it, he <br />would guess it is probably in the area of $7,000 one way or another (to the plus or <br />minus.) <br />