1994 AGN JAN 18 I22 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT For Council Meeting of January 18, 1994 To Honorable Mayor and City Council Date.- January 10, 1994 From: Jerry L. Young, City Manager Subject: Update on City Lease Agree BACKGROUND: On January 19, 1993, the City Council adopted Resolution No. R-06-93, which states the City's intention to re -finance certain lease obligations and to provide a "line of credit" for new capital items for use by General Fund departments. DISCUSSION: Current status of the City Lease Agreement is as follows: 1. Lease #1 will require a reduction in the lease amount ($934,000) in order to equal the appraised value of the Library ($909,000). Financing costs cannot be added on to the appraised value of the Library to derive the lease amount. The bank would approve a lease amount of up to $910,000. 2. Lease #2 will require collateral (Ex: City Hall) or it will not be approved. Our original intention was to collateralize Lease#2 with the equipment we purchased, however, that request was declined by National Westminster Bank. The lease amount is presently $840,00, and would be approved if the collateral's appraised value is greater than or equal to this amount. At the present time we have two viable options which we could pursue. They are as follows: Option 1. Would be to switch collateral betweenthetwo leases. In other words, if the City Hail building were appraised in excess of $930,000, it could be used as collateral in Lease #1 to obtain the original amount. The Library could then be used as collateral in. Lease #2. Option 2. If the Council wishes to use only one building for collateral for the above leases and still purchase the equipment as specified in Lease #2, Lease #2 could be secured by the Library and the application for Lease #1 (refinancing the 800 mHz radios and the ambulances), could be withdrawn. The above mentioned lease applications can be amended by Council Resolution and then re -submitted to the Bank. Page 1 of 2 MWF ...er-----