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<br /> <br />Item 6.4. <br /> <br />MEMORANDUM <br /> <br />TO: Mayor and City Council <br /> <br />FROM: Lori Johnson, Finance and Administrative Services Director/Interim <br />City Administrator <br /> <br />DATE: December 5, 2005 <br /> <br />SUBJECT: Pinewood Appraisal Presentation <br /> <br />Attached is a copy of the Analysis of Market and Financial Factors for the Pinewood Golf Course <br />prepared by McMurchie Golf Management, Inc. Mr. McMurchie will make a presentation to the City <br />Council and will be prepared to answer questions regarding his analysis. Parks and Recreation <br />Director Bill Maertz worked with Mr. McMurchie on gathering information for the analysis, and he <br />will be also be prepared to answer questions from the Council. <br /> <br />The Letter of Intent authorized by the Council for the purchase of this property offers a purchase <br />price of $2.4 million over five years at five percent interest with a $500,000 down payment if the <br />appraisal indicates that the property is worth $2.4 million. A copy of the Letter of Intent sent to Mr. <br />Krause is attached for your reference. The Council previously received some information on <br />possible funding sources, but no action was taken to specify which funds would pay for the <br />purchase. If the purchase proceeds, the Council needs to identify the funding source(s) for the <br />purchase, capital improvements (as stated in Mr. McMurchie's analysis) and possible annual <br />operating shortfalls. <br /> <br />Attached is fmancial data identifying possible sources for the down payment and the annual <br />payments. The biggest challenge is funding the balloon payment that is due in the fmal year of the <br />contract. In order to fund that payment, the Council would need to either reserve the funds now or <br />annually reserve funds at an amount sufficient to cover the balloon payment. As you can see, there <br />is currently money available in several reserve funds to fund part of the purchase. However, these <br />reserve funds are the likely funding source for other projects such as the library expansion, public <br />works expansion and remodeling, and park property acquisition and development. Plus, there will <br />be other opportunities or needs that come up in the next five years that would typically be funded <br />from these reserves. The purchase of Pinewood will significantly reduce the funds available to the <br />Council for other city projects. <br /> <br />s: \ Council\Lori\200S \Pinewood Appraisal Presentation. doc <br />