City To Build New
Hangars For $425,000
City Commissioner Ed Klimek asked the right question at Tuesday night's meeting but he didn't get the right answer.
The Commissioners were considering a new hangar at the Airport. Cost
on the project is $425,000. Rent on the eight new
hangars will be $150 a month. The City has 40 hangars at the airport now. The rent money has been going into the airport
general operating fund.
Using the old hangar rents and the rent for the new hangars, the City
will have $34,000 a year to pay the $37,000 bond and
interest payments on the new building.
Klimek asked Airport Director Ken Black how would the City make up for
the $34,000 taken from the airport general fund?
The question was never answered.
The other Commissioners did not ask questions about the general fund
money. The City will need to make up that money
someway. Here is a memo received by the Commission about the financing:
TO: Ken Black, Airport Director
FROM: Curt Wood, Director of Finance
RE: Financing Airport Hangar Project
On November 24,1999, bids were received on the above referenced project.
R.M. Baril General Contractors Inc., of
Manhattan, was the low bidder.
Based on the low bid, the City will need to issue $417,000 in temporary
notes for the project and a maximum of $425,000 in
general obligation bonds. .
Bond Counsel will prepare the temporary note resolution after the temporary
note sale on February 10, 2000, when the
purchaser and interest rate are known. The purchaser and interest rate information is included in the temporary note
resolution. The temporary note closing will take place on March 15, 2000.
Bond Counsel has prepared a bond resolution authorizing the project
and authorizing a maximum of $425,000 in general
obligation bonds. These bonds will be categorized as private activity bonds because the proceeds will be used for airport
hangars which are leased to private firms or individuals. A public hearing is necessary for private activity bonds prior to the
approval of the bond resolution. The notice of public hearing was published in the Manhattan Mercury on Friday, December
3, 1999. Interest earned by the bondholders will be tax exempt(except for the Alternative Minimum Tax) as the leases will be
under 180 days with a month-to-month option. The City has projected an average interest rate of 6% on these bonds. These
bonds will be issued after the project has been completed and actual project costs are known, probably in November of
2000. The plan is to issue 20-year bonds on this project. The debt service will be paid from tenant lease income and not
property taxes. Anticipated annual debt service is about $37,000 a year.