Staff recommends that City Council authorize the Finance Department to execute lease financing documents, consistent with the attached term sheet, with Montana Board of Investments for improvements to the New City Hall. 

On 2-12-24, staff presented to the Council information on the need for financing on the New City Hall project. Financing is needed to fund construction until other anticipated revenues are realized at the City (i.e. Historic Tax Credits, Sale of Existing City Hall, etc.). 
On 2-28-24 the Montana Board of Investments conditionally approved a lease-purchase financing agreement up to $14.690 million. Funds will be used for actual construction costs as they are incurred and related financing costs (bond counsel and financial advisor).

The following information was provided to City Council at the 2-12-24 meeting:

City Council may:

• Approve the lease financing terms with Montana Board of Investments; or,
• Not Approve the lease financing terms. If not approved, construction on the New City Hall could be stopped until other financing is arranged.

The interest rate is variable and will be determined every February.  Currently, the interest rate is 5.75%.  No penalty for prepayment. The term of the lease financing is 15 years. Current estimated short-term financing needs for the project are $13.25 million. It is estimated that the long-term portion of this will range from $2.7 to $9.5 million, largely dependent upon Historic Tax Credits and the sale of City properties. Annual payments will be determined by the total amount drawn, and will be budgeted annually by City Council. If City Council chooses not to annually appropriate funds, the Montana Board of Investments has right to the improvements in the New City Hall.