The property owners within Zimmerman Trail Subdivision have requested to hook up to public sanitary sewer.  SID 1387 will construct the necessary improvements to hook all of the properties up to public sanitary sewer.

The COuncil is being asked to authorize the submission of an application for an Intercap loan through the Montana Board of Investments in the amount of $80,500 for the funding of SID 1387.

This item was on the September 28, 2009, agenda but was delayed until October 13, 2009 to allow property owners to be notified of a change in the proposed interest rate for the project.

The Council may:

• Approve the loan application and Finance will proceed with the submission and execution of related documents for the loan; or
• Not approve the loan application and look for another financing option and assess properties next year or use General Fund reserves.  

The Intercap Loan Program through the Montana Board of Investments is a way for State agencies and local governments to finance projects with limited paperwork and at attractive interest rates. The State does set restrictions for the special improvement districts (SID) loans.  The maximum loan limit is $500,000 and loans in excess of $250,000 are required to obtain two underwriter opinions that the bonds are not marketable through competitive bond sale.

Currently, the interest rate is 3.25% and is adjusted every February.  Because of the interest rate adjustment, the five  properties' assessments may also be adjusted annually.  

Looking at financing options, an Intercap loan was the best option because of the limited time frame to sell bonds and prepare the assessments for the tax file and the small size of the SID. 

Loan approval was received from the Board of Investments on Monday September 14, 2009.

It is recommended that the City Council approve the attached application.