01-06-2014 Council Agenda - Laserfiche WebLink

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Executive Summary of Proposed Debt Proposed Issue: $2,570,000 General Obligation Capital Improvement Plan Bonds, Series 2014A Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475.521 as a capital improvement plan bond for public facilities. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. The Bonds count against the City's general obligation debt limit of 3% of market value. The City will have over $20,000,000 of debt limit remaining after the Bonds are issued. Purposes: The proposed issue includes financing for a new public works facility to be located at 2858 Centerville Road. The Bonds will contain a pledge from ad valorem property taxes but the City may choose to write down a majority of the tax levy with utility revenues since most of the facility will he devoted to the sewer and water utilities operations. Term /Call Feature: The Bonds are being issued for a 20 year teen. Principal on the Bonds will be due on February 1 in the years 2015 through 2034. Interest is payable every six months beginning February 1, 2015. The Bonds maturing on and after February 1, 2024 will be subject to prepayment at the discretion of the City on February I, 2023 or any date thereafter. Bank Qualification: Because the City is issuing less than $10,000,000 in the calendar year, the City will be able to designate the Bonds as "bank qualified" obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Rating: The City's most recent bond issues were rated "AA" by Standard & Poor's. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating in the event that the bond rating of the insurer is higher than that of the City. Method of Sale /Placement: In order to obtain the lowest interest cost to the City, we will solicit competitive bids for purchase of the Bonds from national and regional underwriting firms as well as local banks. We have included an allowance for discount bidding equal to 1.2% of the principal amount of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the Presale Report City of Little Canada, Minnesota January 6, 2014 Page 1