HomeMy WebLinkAboutResolution No. 4385, Board of Investments Intercap Revolving Loan Program
Commission Memorandum
REPORT TO: Honorable Mayor and Commission Members
FROM: Anna Rosenberry, Finance Director
Chris Kukulski, City Manager
SUBJECT: Resolution No. 4385 – Resolution Authorizing Participation in the Board
of Investments of the State of Montana Annual Adjustable Rate Tender
Option Municipal Finance Consolidation Act Bonds (INTERCAP
REVOLVING PROGRAM), Approving the Form and Terms of the Loan
Agreement and Authorizing the Execution and Delivery of Documents
Related Thereto.
MEETING DATE: June 25, 2012
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Adopt Resolution No. 4385 - Authorizing the loan necessary to
complete the reconstruction of South 8th Avenue.
BACKGROUND: The Montana Board of Investments - Intercap Program has approved the
City’s request for a loan of up to $1,700,000, for the reconstruction of South 8th Avenue. This
resolution is required by the Board in order to secure the loan.
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At the time the Board approved our loan application, we believed we would need to borrow as
much as $1.7 million for the project. The Board approved the application. Since that time, we
have received and awarded bids for the project. Including the contingency amount, the
anticipated amount of the loan will be no larger than $1,273,000.
The loan is to be repaid with Street Maintenance District Assessments, over a 10 year period.
Interest rates on INTERCAP loans are variable, being established each February.
FISCAL EFFECTS: We have planned for repayment of this loan within our existing Street
Maintenance District Assessment calculations. Under current Intercap rates, a loan of
$1,273,000 will require annual debt payments of $135,818 (10 year term, 1.25%). However, this
rate is variable and changes each February. Since 1987, Intercap has had rates as high as 7.5%
and as low as 1.25%, with an average interest rate of 4.542% (would require an annual payment
of $159,138.) The program’s rate history is attached to this memo.
Report compiled on: June 15, 2012
Attachments: Resolution No. 4385
Intercap Rate History Sheet
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Montana Board of Investments
INTERCAP LOAN RATE* HISTORY
Year Loan Rate
1987 5.625%
1988 6.625%
1989 7.950%
1990 7.500%
1991 6.350%
1992 4.950%
1993 4.350%
1994 4.500%
1995 6.400%
1996 4.850%
1997 4.750%
1998 4.850%
1999 4.300%
2000 5.600%
2001 4.750%
2002 3.150%
2003 2.850%
2004 2.700%
2005 3.800%
2006 4.750%
2007 4.850%
2008 4.250%
2009 3.250%
2010 1.950%
2011 1.950%
2012
Overall Average 4.542%
Average past 10 years 3.160%
*variable rate changes every February 16.
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