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0 <br />TO: Mayor Peterson and Council Members <br />FROM: Ron Moorse, City Administrator <br />DATE: April 30,2003 <br />SUBJECT: Bond Sale <br />h <br />The funding for the Navarre Neighborhood Fire Station is to be provided through a lease~purchase <br />arrangement with the Orono HRA, which involves the sale of revenue bonds by the HRA. Carolyn <br />Drude of Ehlers Associates, the City ’s bond consultant, will attend the May 1 work session to <br />provide information regarding the bond issue, including repayment options. The worksession will <br />also be an opportunity to make a final determination as to the size of the bond issue. <br />The amount of the bond issue is based on the total costs of the Navarre Fire Station, along with the <br />cost of fire equipment. The total costs related to the construction of the Navarre Fire Station are <br />$1,600,000. In addition, the station will need to be equipped with a pumper and a light rescue <br />vehicle. Both of these vehicle.s can be used vehicles. The estimated cost of these vehicles is <br />$280,000. <br />Also, the Long Lake Fire Department’s capital budget includes the replacement of a medium rescue <br />vehicle in 2003 and the replacement of a pumper in 2004. The cost to Orono for these vehicles is <br />estimated to be $ 150,000 for the rescue vehicle and $300,000 for the pumper. We have asked the <br />Long Lake Fire Department to consider whether a used rescue vehicle would meet their needs. We <br />may also be able to purchase a pumper at a lower cost. However, at this time, in order to set out a <br />maximum bond issue amount, we will use the costs indicated above. <br />Although the City has been transferring $40,000 per year into a fire equipment replacement account, <br />the recent substantial expenditures for a new tanker and the 800 MHZ radios has substantially <br />reduced the balance in this account. The large capital expenditures in 2003 and 2004 require <br />financing spread over a number of years. <br />Based on the costs set out above, plus issuance costs, discount, and a required one-year debt service <br />reserve, the total amount of the bond issue will be $2,500,000.