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Carol Harding
From: Myrna Folsom [myrna_f_2000@yahoo.com] 52
Sent: Saturday, January 29, 2005 8:46 AM
To: Carol Harding IDE
Cc: Bruce Barker
Subject: MRI loan
Custom microwave revenue bonds
Dear Commissioners:
The appropriateness and wisdom of issuing revenue bonds for the benefit of Custom Microwave, Inc.
[MRI] raises some questions.
What interest rate will MRI be charged for the funds lent to it by the County? 2 " 1
Will this be sufficient, in addition to paying interest on and amortization of principal of the bonds, to
pay for the expenses of the County, including hidden expenses such as time expended by County staff,
over and above those expenses described in paragraph 3 of the Resolution? Is there sufficient spread
between the loan and bond interest to allow for bond interest rate market conditions at the time of
issuance of the bonds? / '� �a2?Uc' i^1 ✓✓ '1 0 - " -1 i-
What is the inducement for the County to become involved in this venture besides those mentioned in
paragraph 1 of the Resolution. The reputation of the County is put at risk if MRI defaults on loan
payments and investors in the County issued bonds realize substantial losses.
Will the loan to MRI be made by the County before the bonds are issued and revenue from them is in
hand [see paragraph 5 of the Resolution]? If so, is there any assurance or security that MRI will be able
to pay the loan interest [other than out of the funds loaned] during that period?
Has the County obtained the opinion of a reliable consultant as to the financial condition [it is privately
held] and capacity of MRI to carry through successfully with this transaction [its being in existence
since 1965 gives some assurance]?
These considerations may sound like the negative musings of a Cassandra, but unfortunately sometimes
they are real and become a reality. Bottom line is that like any proposal it must be decided on a risk-
reward evaluation some of the elements of which are subjective and not easily quantifiable. However,
the residents of the County do not at some time in the future want to read in the Tribune how the Board
was mistaken in lending its good name to participate in a flawed agreement
John Folsom
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