12-26-1990 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 December 21, 1990 CITY OF LITTLE CANADA RAMSEY COUNTY, MINNESOTA TO: Mayor Fahey and Members of the City Council FROM: Joel R. Hanson, City Administrator RE: Debt Service Restructuring MAYOR Michael Fahey COUNCIL Beverly SCaISe Bill Blesener Rick Collova Jim LaValle Attached are some sheets prepared by Juran & Moody regarding the proposed restructuring of certain bond issues. The first sheet is a summary of four options that we considered. The following sheets are details related to Scenario #3 and Scenario #4. It is my recommendation that we not consider Scenarios #1 and #2 due to the fact this requires the excess cash available from the 1976 improvement bond issue to be immediately used to reduce debt. It is my feeling that this money will be necessary in the closed bond fund to provide the City with some needed cushion for unexpected projects that may come up in the future or to help fund capital expenditures. By undertaking the restructuring as proposed, no significant dollars will flow into the closed bond fund until 1998. Therefore, I do not feel it is prudent for us to consider the use of the excess 1976 proceeds at this time. In looking at Scenarios #3 and #4, we are essentially looking at two different factors. The first is one whereby we maintain existing cash flow structures of assessments and tax levies and reduce the debt term. In Scenario #4, we are maintaining the same debt term and reducing yearly cash flow needs which would translate into lower tax levies. The key numbers to look at in comparing these two options are the difference between debt service reduction and issuer funds used. It should be noted that issuer funds used consists of front end money from existing cash balances that will be plugged into the bond issue. Therefore, this amount should be subtracted from the debt service reduction to see the true savings in terms of dollars saved by the City. The other factor to look at is the net present value reduction. This giving us a true indication of the best value for our dollar considering the repayment terms. In reviewing Scenario #3, we see that the net dollar savings to the City equals $514,970. That compares with a true cash savings under Scenario #4 of $336,480. (A difference of $178,490.) Also, Scenario #3 achieves a net present value reduction of $72,356.78 as compared with $62,162.42 generated in Scenario #4. (A difference of $10,194.36.) Pag 53e3