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<br />I <br />I <br />I <br />I <br /> <br />, <br /> <br />,I <br />! <br />'I <br />I <br />!I <br />i <br />il <br />, <br />, <br />:1 <br />I <br /> <br />I <br />I <br />I <br />II <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />where the present revenue base will not support an issue of bonds. <br /> <br />City A wishes to acquire a water storage tank, but its current revenues will <br /> <br />not provide the coverage to issue revenue bonds. It therefore executes a lease <br /> <br />agreement with an option to buy. The lease is a tax-exempt lease and contains a <br /> <br />provision for interest only for three years. At the end of three years Ci ty A, <br /> <br />now in a much healthier financial situation, issues IOn:! term bonds and buys out <br /> <br />the lease. <br /> <br />One of the major problems of a lease is that a lease generally cannot be <br /> <br />entered into until the equipnent is delivered and operable. It is, however, <br /> <br />possible to combine a BAN, RAN, or T.I\N wi th a lease to be taken out be a long <br /> <br />term bond. <br /> <br />Short Term Bank Lines <br /> <br />We have not discussed bank lines, but really, a bank line is no different <br /> <br />than a BAN, RAN or T.I\N, wi th one very important exception. The BANs, RANs, and <br /> <br />TANs are generally fixed rate instruments. Bank 1 ines tend to float wi th the <br /> <br />pr ime. If you have a fr iendly banker, more often than not you can get a good <br /> <br />fixed rate, but banks have lending limits and on larger projects it is almost <br /> <br />impossible to get fixed rate lines. <br /> <br />Summary <br /> <br />Short term financing is a "facilitator". It's a problem solver, but most <br /> <br />importantly, its a bridge to long term financing. <br /> <br />Prepared for and Presented to <br />The Colorado Water Congress by <br />John Conrad <br />Boettcher & Company <br /> <br />7 <br />