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ICABAARUS COUNI~I <br /> N~]~TI~ C,~llOtl NA <br />MEMORANDUM <br /> <br />To: <br /> <br />From: <br /> <br />Date: <br /> <br />Subject: <br /> <br />Frank Clifton <br /> <br />Blair Bennett ~ <br /> <br />August 10, 1998 <br /> <br />Financing Land for Tourism Authority <br /> <br />On August 5, 1998 I met with Mark Shore to discuss a plan for financing approximately <br />two million dollars for land at King's Grant, the proposed future site for a public <br />exhibition/civic center for the Tourism Authority. We reviewed a schedule projecting the <br />Occupancy Tax Revenue based on the current 3% room occupancy tax and also the <br />impact of an additional 2% tax. Over a seven-year period the additional 2% room <br />occupancy tax is proposed to yield approximately $3.2 million dollars. It is proposed that <br />the Tourism Authority would pay the County back monthly from the additional 2% tax. <br />Since the amount generated would probably be less the first two years, depending on how <br />fast the new motels are built, I would anticipate it taking six to seven years to repay the <br />loan. I would propose that the Board of Commissioners consider lending the money to <br />the Tourism Authority at a 5.75% fixed interest rate, which is currently approximately .30 <br />basis points above the five-year treasurery bond. The payment terms would be as follows: <br />Interest will be calculated on the basis of a 365 day year based on the actual number of <br />days elapsed. Principal and interest is payable monthly amounting to the collections from <br />the previous month of the 2% room occupancy tax. Payments shall satisfy interest first <br />and any remaining amount shall be applied to reducing principal. The term of the loan <br />shall continue until all principal and accrued interest is liquidated. The rate shall be fixed <br />at 5.75~o for the term of the loan. This would be an incredible deal for the Tourism <br />Authority since the prime lending rate is 8.50%; and there would be little or no closing <br />cost, while at the same time guaranteeing the County a fair return on our investment. <br /> <br />Should the Board of Commissioners feel comfortable with this deal, I would request that <br />the Board authorize me and the County Manager to proceed with finalizing a formal legal <br />agreement with the Tourism Authority. I will await the decision of the Board of <br />Commissioners and am available should further questions arise. <br /> <br /> Finance Department <br />P.O~ Box 707 * Concord, NC 28026-0707 · (704) 788-8104 <br /> <br /> <br />