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<br />ADMINISTRATION <br /> <br />, <br /> <br />e <br /> <br />e <br /> <br />CITY OF LA PORTE <br />INTER-OFFICE MEMORANDUM <br /> <br />TO: JACK OWEN <br /> <br />DATE: 9-28-83 <br /> <br />FROM: BOB HERRER~ I 11 <br />'~ (le~~ <br />SUBJECT: TAX ANTICIPATION NOTE <br /> <br />DEFINITION: <br /> <br />This particular type of note, sometimes called <br />warrants, is issued in anticipation of collection <br />of taxes, usually retireable only from tax <br />collections, and frequently only from the proceeds <br />of the tax levy whose collection they anticipate. <br /> <br />HISTORY: <br /> <br />July 1, 1981, the City of La Porte acquired a debt <br />of the above nature for the La Porte Area Emergency <br />Ambulance Coporation (LPAE'AC). Each year since <br />then, the unpaid principal balance has been refi- <br />nanced based on the amount that the LPAEAC has <br />refunded to us and the current interest rate. The <br />payment from LPAEAC is reflected by a reduction <br />from their monthly contract payment. At this point <br />the principal is approximately half paid and the <br />interest paid equals slightly over $6,000. At this <br />rate the note would be paid out by September 30, <br />1985, making this a four year project. Please note, <br />this program does not cost the City of La Porte, we <br />are merely providing a service. <br /> <br />PROPOSAL: <br /> <br />The City of La Porte could pay this note and finance <br />for LPAEAC, and LPAEAC could continue to pay the <br />City of La Porte at the current rate of principal <br />and interest. This procedure would avoid the necessity <br />of another bank agreement with Baysnore Bank and <br />enable the City of La Porte to earn interest for their <br />services. We would reflect approximately $6,000 from <br />interest earned over the remaining two year life. <br /> <br />ALTERNATIVE: <br /> <br />Continue as historical records suggest. <br /> <br />FINANCIAL: <br /> <br />Princ~pal balance 9-30-83 equals $ 21,235.77 <br />Interest rate quoted to finance equals 7.5% <br /> <br />RECOMMENDATION: <br /> <br />It is the recommendation of this administration that we <br />payoff the note with Baysho~e, continue the repayment <br />schedule with LPAEAC, and reflect revenue in our budget <br />1983-1984. <br /> <br />SEE ATTACHMENTS: <br /> <br />1 - Prior year Tax Anticipation Note <br />2 - Prior year Resolution <br />3 - Current year Tax Anticipation Note <br />4 - Current year Resolution <br />