10-24-1990 Council Agenda - Laserfiche WebLink

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Office of: JOEL R. HANSON, Administrator 515 Little Canada Road Little Canada, MN 55117 612- 484 -2177 FAX: 612-484-4538 CITY OF LITTLE CANADA RAMSEY COUNTY, MINNESOTA MEMORANDUM TO: Mayor Fahey and Members of the City Council FROM: Joel Hanson, City Administrator DATE: October 19, 1990 RE: Financing of Kandice Heights I Tax Increment Costs Pursuant to our agreement with the developers of the Kandice Heights I project, we are obligated to make the land transfer which results in the payment of $190,500 to them in land write down assistance. This project contemplated the issuance of bonds to finance this transaction. These would be taxable bonds with an estimated net effective interest rate of 10 %. The total size of this bond issue should be less than $260,000. (Brad Farnham of Juran & Moody is preparing a schedule showing debt service payments and the sizing of the issue. This schedule will be available for Wednesday's meeting.) Rather than have a public sale of this transaction, it is my recommendation that the City handle this on an internal basis. This would mean that the City is in effect purchasing our own debt instrument and paying ourselves the interest and principle amounts. I feel we have sufficient funds available to us which would allow this transaction to take place. The advantages of this scenario are as follows: * Savings of between $10,000 and $15,000 on bond issuance cost consisting of fiscal fees, discount rating fees, printing, publishing and registrar fees. * Increasing the City's rate of return on our own investments. Presently, I am earning somewhere in the low to mid 8% range on investments depending on the maturity period. As stated earlier, this investment will earn us 10 %. I an not able to earn that type of return at the present time. -.Page 121 MAYOR Michael Fahey COUNCIL Beverly Scalze Bill Blesener Rick Collova Jim LaValle