Laserfiche WebLink
Pre -Sale Report - 1995A Bonds <br />OTHER CONSIDERATIONS <br />A summary of the terms and conditions of the issue appear in the Terms of Proposal <br />contained in Attachment 2. The key factors in the finance plan include: <br />• The Bonds maturing in the years 2003 through 2006 will be subject the <br />redemption without penalty beginning on February 1, 2002. This provision <br />makes 42% of the issue callable. <br />We anticipate that the City will not issue more that $10,000,000 in tax- exempt <br />bonds during calendar year 1995. This will allow the 1995A Bonds to be <br />designated as bank qualified. Bank qualified status broadens the market and <br />achieves lower interest rates. <br />If the County does not issue more than $5,000,000 in tax- exempt bonds during <br />calendar year 1995, then the Bonds will qualify for the small issuer exemption <br />from arbitrage rebate. <br />The Bonds will be global book entry. As "paperless" bonds, the issue avoids the <br />costs of bond printing and the need for registrar/paying agent. A registrar/paying <br />agent could be appointed to assist the City if so desired. <br />USE OF PERMANENT IMPROVEMENT REVOLVING FUND <br />We have been discussing the long -term strategy for funding capital improvements. One <br />part of this strategy is the creation of a permanent improvement revolving fund. Minnesota <br />Statutes, Section 429.091, Subdivision 7a authorizes the use of a revolving fund "for the <br />payment of costs of any improvement or any waterworks systems, sewer systems, or <br />storm sewer systems described in section 444.075 and for the payment of any <br />obligations issued to pay the costs thereof or to refund obligations issued for these <br />purposes ". The revolving fund provides a common tool for financing public <br />improvements. <br />The merit of this approach lies with increased flexibility. With a traditional <br />improvement bond, special assessments pledged to a bond issue cannot be used for <br />other purposes until the bonds are retired. With a revolving fund, the assessments are <br />deposited into the fund. Monies in the fund can be used to pay debt service and finance <br />eligible improvement costs. This approach would allow the City to use monies in the <br />revolving fund to finance small improvement projects or provide interim financing until <br />a bond issue was needed. <br />Page 30 <br />