5.4. SR 11-04-1996 - Laserfiche WebLink

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ElkT"River MEMORANDUM TO: Mayor & City Council FROM: Pat Klaers, City Admi1.istrator October 28, 1996 ;p DATE: SUBJECT: Liquor Store Projects i 1 FINANCES - I previously noted to the City Council that the liquor store fund was the internal source of money used (as a loan) for the Kingl11ain purchase. Since that discussion with the Council, staff has transferred part of tha t loan to a less active reserve - the self insurance fund. Part of the Kingl11ain internal loan is still in the liquor store fund, but this is the $225,000 that is the anticipated purchase price for this property. It is scheduled that this property will be sold to Mr. Chuba in July, 1997. Accordingly, the liquor store fund will be made whole in 1997 in time to finance any type of construction project that is desired. Assuming that the liquor store fund is made whole in July, 1997, the finances for a Westbound site and a new Northbound store looks something like the following: 1/97 Cash Balance Westbound Site 7/97 Kingl11ain Revenues $675,000 ( 375,000) 225.000 525,000 125.000 650,000 200.000 $450,000 Northbound Profits '97 Operating Reserves A new Northbound store is estimated at $960,000 plus bond issuance costs. Accordingly, the debt for a new Northbound store would be approximately $550,000. This debt could be repaid in about a six year time frame with profits from the Northbound store. The above scenario assumes a continued contribution out of the liquor store profits of $163,000 annually to the general fund. This contribution includes the payment for part of the City Hall and Fire Hall projects. This contribution is based on the assumption of $293,000 annual profits being made by the Northbound operation. Accordingly, about $130,000 annually will be available for debt. More funds could be available for a project debt if the profit estimate is low or if the city transfers less money into the general fund. The above scenario is viewed as a worse case scenario and the financial situation could be much better than the above review. Staff prefers to not go into debt for a new Northbound store, but even if we waited one year we would still be in debt to a certain extent. The debt would be less and more manageable, but at this time it does not appear that we can construct a new Northbound by only using the liquor store reserves. As long as the debt is manageable, this situation is not a major concern. ._. .', -.... ,~.,. .._..~._..~.~....,.,..