I just read the article in the Strib and CM Ostrow's post to the list.
I have to agree with him, from the info in the article.
My understanding from the article is that the city MAY seek early
repayment. This is like you ( if you were Brookfield) getting an
opportunity to pay
off your mortgage early -- you aren't "gaining" or "losing" if you do
this -- you are simply paying the present value of your loan instead of
dragging it out over several more years. While that might seem to be
less total money, it really isn't -- because the value of cash
deteriorates over time. (A dollar invested at some rate pays out as
more than a dollar in the future, whereas if you kept your dollar in a
sock under your mattress you would only have a dollar in the future
instead of the dollar plus the rate of interest).
In general, the sooner one gets cash into ones own hands, the better
off one is. This is because one then has the opportunity to use the
cash to generate greater value than the previous investment, plus you
don't have the risk that the other person won't pay the loan back.
If the city's initial impression of Brookfield's ability to pay the loan
off in the future (they think it is a low probability, I gather) turns
out to be a safe assumption, then seeking early repayment is even better
(lower
risk) than just getting the loan repayment early.
So, from what I've read so far, it looks like the city's offer to let
them pay early might be the best move it could make. There's no harm in
raising the question, after all.
Let's not jump to conclusions before we see where the risk levels lay.
Now, what the city decides to do if they DO get an early repayment --
that will tell the tale of their fiscal responsibility.
Barbara Nelson
Seward
~~
Barbara Nelson
EMAIL [EMAIL PROTECTED]
I wish you all manner of prosperity, with a little more taste.
� Alain-René Le Sage
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