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CASSI;LBI;RRY CITY COMMISSION Minutes of Jnly 25, 2011-Regular Meeting Page 12 of 18 acre property on Triplet Lalce Drive and U.S. Highway 17-92. The outstanding principal is $3,028,000. Estimated accrued interested will be $11,820. The total to be disbursed would be $3,039,820. On April 29, 2004, the City acquired the 15 acres from Casselberry Investment Properties (CIP) for redevelopment. The cost at closing was $2,763,476. Later on December 20, 1005, a corner outparcel was purchased from First Coast Energy for $461,244. To fund the purchases, the City issued "Sales Tax Revenue Note, Series 2004" on February 24, 2004 to SunTrust Bank. It was in the form of an interest only note and no principal was scheduled to be paid down. The note was secured with the pledge of sales tax revenue ofthe City. The initial loan received favorable tax treatment and was issued tax exempt. The applicable interest rate was 1.85%. The loan was scheduled to balloon December 2006. The loan was reissued with SunTrust Bank on December 12, 2006. Upon review, it was determined that the land was acquired for the purpose of redevelopment and was deemed not to have been purchased for a propose that qualified for tax exempt status. The new interest rate was 5.57%. It was reissued a second time to SunTrust Bank on November 12, 2008 at 4.683%. The Casselberry CRA supported this land purchase and has been paying the annual finance charges. To date, a total of $1,040,313 has been paid in interest. The annual debt service is $141,801. The current note is scheduled to mature October 1, 2011. All principle and accrued interest will be due and payable. Sales tax collected by the City has been pledged by the City as security for the long-term debt. The revenue source has been in decline along with the economy and property values. Sales tax can no longer offer sufficient security to allow short term financing at lower short term taxable interest rates followed by a balloon payment of principle. The debt could be converted into a conventional long term note where principal could be repaid over time. Finance charges would still apply but actual debt service that would need to be budgeted would be much higher to allow for the principal component. The payments would be very difficult for the CRA to carry and the burden would shift to the General Fund no later than the sunset of the CRA in 2015. The interest rate would be higher as well, given the longer term and the debt would still qualify as taxable. The City Commission discussed options at a workshop on debt held July 11, 2011. Consensus was reached topay- offthe SunTrust Bank note from General Fund reserves. Budget Impact: Budget Amendment #11-046 authorizes the disbursement from the fund balance of the General Fund of $3,039,820 to pay-off Sales Tax Refunding Note, Series 2008 payable to SunTrust Bank. BA# 11-046: Explanation of Request: Authorization is requested to utilize General Fund reserves to pay-off the outstanding note payable to SunTrust Bank. The note payable is in the form of a taxable, interest only note that is set to balloon at the end of FY 201 L The note is associated with the acquisition of a parcel of land on Triplet Lake Drive and U.S. Highway 17-92. It has a principal balance of $3,028,000 and interest is paid semi- annually at a rate of 4.683%. Fund balance reserves have accumulated sufficiently to pay-off the note while maintain the minimum fiord balance reserve requirement. The City Commission expressed support to pay off the note at its workshop on July 11, 2011. If not satisfied the note would have to be refinanced before its maturity date of October 1, 2011. Account Number Account Description Amount INCREASE: 001-0190-517.72-22 Principle -Sales Tax Ref Note $3,028,000 Series 2008