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Cloverdale staff weigh borrowing against pay-as-you-go use of new sales tax revenue
Summary
City staff and outside advisors presented options for using Cloverdale's new sales tax revenue either to borrow up front for capital projects or to fund projects over time, with discussion focused on size of borrowing, repayment structure and trade-offs including interest and fees.
Cloverdale City officials and outside advisers discussed whether to borrow now against the city's newly approved sales tax or to wait and pay for projects as revenue arrives.
Advisers told the finance director and council subcommittee that dedicating a portion of the city's sales tax could produce roughly $7 million in project proceeds if the city dedicates 0.25 percentage points and about $14 million if it dedicates 0.5 percentage points. The presentation modeled a 20-year borrowing term and projected average annual debt service in a range from about $500,000 to $1.1 million depending on the loan size.
The consultants cautioned the subcommittee about a legal and practical constraint:…
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