01-27-1993 Council Agenda - Laserfiche WebLink

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cCJG r " 9 (7 cCJCGYeda 515 Little Canada Road, Little Canada, MN 55117 -1600 (612) 484 -2177 / FAX: (612) 484 -4538 MEMORANDUM TO: Mayor Hanson & Members of the City Council FROM: Joel Hanson, City Administrator DATE: January 22, 1993 RE: Kandice Heights II Financing MAYOR Raymond G. Hanson COUNCIL Beverly Scalze Jim LaValle Steve Morelan . • Bob Pedersen ADMINISTRATOR Joel R. Hanson Enclosed are some materials related to the permanent financing of the Kandice Heights II project. This is a tax increment project with the proceeds being paid to the developer in March of 1992 pursuant to the terms of our development agreement. Due to the type of sureties that were used in this tax increment district, this would be a taxable bond issue versus the traditional tax exempt issues we normally deal with. As you will note, we are using an eight percent (8 %) interest rate for this bond issue. Rather than have a public sale for this amount, I feel it would be to our advantage to have this done on an internal basis due to the following reasons: * An interest rate of 8% is higher than we can earn on our investments. Rather than pay this money to private investors, it would be better to pay it to ourselves as our own investment instrument. * By doing an internal financing, we are saving some substantial costs on issuance such as bond printing, rating fees, additional costs associated with fiscal agents and bond counsel. (Please note that we do have some costs in this area, but not to the extent that we would incur if doing a public sale.) As indicated on the attachments, Phase II does stand alone as far as its ability to support itself. By combining Phases I and II, we are generating some excess tax increments that could be utilized for home buy -outs in the future. As stated before, this would require a third Page 23