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Department Approval MEQUEST FOR, COUNCIL ACTION Date: 7/28/OV, Item No.: 7. • City Manager Approval Item Description: Establish a Date of Sale for the Issuance of Equipment Certificates 1� BACKGROUND 2 Earlier this year, the City Council authorized the use of equipment certificates to finance the construction of 1 3 a geothermal refrigeration system at the Ice Arena. The project is underway and is expected to be 41 completed late this year. While the City has funds on hand to temporarily finance the project in the interim, 5 it is in the City's best interest to issue the certificates now to capitalize on a favorable market and bidding 6 environment. Based on the most recent estimates, the project is expected to cost between $2.1 and $2.5 million including the design work. It is recommended that the City issue the full $2.5 million in equipment certificates to pay for known costs as well as potential overruns. A Certifi cate of this size will also require approximately 1 0,000 in issuance costs. As such, Staff recommends that the City issue $2,550,000 in total to pay for 1� 2 both the project costs and the issuance costs. If the project is more than $2.5 million, the City can rely on , 3 the Building Replacement Fund which currently has a balance of $300,000. In the event that the project is 1111 less than the $2.5 million, the City can use the excess proceeds to pay down the eventual debt service. 1 5 POLICY OBJECTIVE 1� 6 The issuance of equipment certificates to finance the construction of a geothermal refrigeration system for 1� 7 the Ice Arena was previously approved by the City Council. FINANCIAL IMPACTS A umin the City issues $2.55 million in equipment certificates to pay for the project and amortized the ssg 20 debt over a 9-year debt service period (the maximum allowed) ; the impact would be as follows: 2 1� ZZOMA