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` 4- ► <br />• JOINT MEETING OF COUNCIL AND PLANNING COMMISSION <br />HELD NOVEMBER 8, 1989 <br />million we would have enough cash on hand to do that. A second <br />way to do that was to go for general obligation bonds, which <br />would require a referendum and the third way which is addressed <br />in the memo is the lease purchase and a variation of that which <br />is the installment purchase contract. The advantages to those <br />are that if you have the cash that you can make money during 10, <br />15 or 20 years which you have bonded, you can actually make about <br />a percent or a percent and half on your money in a decreasing <br />amount, if you are bonding at 6 1/2, 7 or 7 1/2% and you are <br />investing at 8 or 8 1/2% so you actually make some money. This <br />would also give you some flexibility with that money, if you <br />have some up and down years you still have money available to <br />you. <br />Edward Brown asked if the building cost $2 <br />1/2 million and <br />the <br />City had $2 1/2 million in a building fund, <br />is there <br />any reason <br />not to take the $2 1/2 million to build the <br />building <br />and not <br />pay <br />any interest. Bernhardson indicated that if <br />you could <br />invest <br />the <br />money at a greater rate than what you are borrowing <br />it does <br />two <br />things, you make money over the life of the <br />bond and <br />secondly <br />it <br />does give you flexibility to borrow from that and pay <br />it back <br />if <br />• you have an economic downturn in two or three years. Mayor. <br />Gr.abek stated this is a philosophical question. If you've got <br />only $2 1/2 or 3 million in cash you need to keep a buffer.. <br />Nettles asked if the amount in our reserves affected the city's <br />bond rating. Carolyn Durde stated that Moody's basic philosophy <br />is "more is better and it should be more than last year. ". <br />Stating it is very difficult to pin them down as to philosophy as <br />to what the fund balance should be. They do not like to see a <br />fund balance lower than the previous year.. They look at <br />everything from a pl anning standpoint. Nettles said assuming <br />that we are going to bond part and pay off part out of the <br />reserves, what would be your suggestion be as to how much of <br />each, would you say 50 - 50 or what. Dur.de stated that we should <br />take a look at other things that the City will be doing, more of <br />an analysis would need to be done to see what you may need money <br />for.. In the overall scheme of things in Minnesota your borrowing <br />ability is relatively flexible, but there is a limited number of <br />things that you can borrow money for.. A new city facilities <br />possibility was brought to Moody's attention prior to the city's <br />AA -1 rating assignment, so this would not be a surpir.se, they are <br />aware that this is coming up. <br />Ed Cohen stated assuming that a site has been selected, is this <br />site paid for.? Gr.abek stated that the only site paid for were <br />the Crystal Bay site and the Orono sewer plant. Cohen asked if a <br />study had been done as to what the City would receive for these <br />sites when sold. Bernhardson stated there is some off set for <br />selling the Crystal Bay site and part of the sewer plant site. <br />Kelley stated that leasing makes more sense, but it is hard to <br />tell without more economic information. One of the attractions <br />