05-11-2015 Council Packet - Laserfiche WebLink

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Executive Summary of Proposed Debt Proposed Issue: $1,365,000 General Obligation Refunding Bonds, Series 2015A (the "Bonds") Purposes: The proposed issue includes financing for the partial crossover refunding of the tax increment financing portion of the $2,690,000 General Obligation Bonds, Series 2008A (the "Prior Bonds"). The City plans to use cash to pre- pay the street improvement portion of the Prior Bonds. Interest rates on the Prior Bonds proposed to be refunded average just under 4%. Rates today are between 2% and 2.25% The refunding is expected to reduce interest expense by approximately $80,000 over the next 11 years. The net present value benefit of the refunding is estimated to be $70,000 to $75,000, equal to over 5% of the refunded principal. State law minimum for an advance refunding is 3% of principal. This refunding is considered an advance refunding as the new Bonds will be issued more than 90 days prior to the call date of the obligations being refunded, Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapters 469 and 475. Because the City paying for at least 20% of the project costs with TIF from District No.5-1 the Bonds can be a general obligation without a referendum and will not count against the City's debt limit. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. Term/Call Feature: The Bonds are being issued for an 11 year term. Principal on the Bonds will be due on February 1 in the years 2017 through 2026. Interest is payable every six months beginning February 1, 2016. The Bonds maturing on and after February 1, 2025 will be subject to prepayment at the discretion of the City on February 1, 2024 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 jtaik Presale Report NOlir City of Little Canada, Minnesota Page 1