08-22-2012_Housekeeping item_CC Loan Update i
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)�� Country Club Loan Update
➢ FY 2013 Budget changes to date :
Country Club
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FY 2013
Budget
Country C Update
Issue:
The amortization schedule calculated by Spectrum Municipal Services (financial advisor for CC Loan) is
incorrect due to the application of the "interest rate basis", also known as the "accrual basis." This is the
method used to apply the interest rate to the outstanding principal balance. Spectrum's schedule utilized
a 30/360 interest rate basis, traditionally utilized in municipal bond issues. This method assumes twelve
thirty-day months. However, the promissory note executed by the Village requires that interest be
calculated utilizing Actual/360, which accounts for the actual number of days between the effective date
and the terminating date. The actual amount of the loan obligation is unchanged. Upon discovery of
this discrepancy, the following options were available to management:
Option #1:
Leave loan as is and pay a balloon payment at maturity of $46,924.65
Option #2:
Revise the amortization schedule and increase each payment from $197,450.20 to $199,075.24. Each
payment only increases by $1,625.04 (resulting in additional payments over the remainder of the loan
of $37,375.95) in lieu of the additional balloon payment of $46,924.65!
Option #2 was chosen by management since the financial impact to the Village is $9,548.67 less.
FY 2013
Budget
Couutry Club Changes
F'Y 2012-2013
Beginning Contingency 128,434
Diwusdon Mrd Rudgetlrs
Camsensm Change: As Proposed ConseRms Is Revised aet
F.c�enn�s
%Dit Te.-m Disability humue remcitd 88=1 (883) -
Ca try Club Loan Pa-,went Cucrease3 394,907 3,_50 39gm (2,36�}
XetBud;etar3 Fasts
Ending Contingency 126,
FY 2013
Budget