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CITY COUNCIL �,.,.. AGENDA ITEM 2A STAFF ORIGINATOR: Sarah Cotton MEETING DATE: September 26, 2016 TOPIC: Recommendations for Issuance of Bonds VOTE REQUIRED: 3/5 BACKGROUND At the August 8, 2016, City Council meeting, the City Council approved the plans and specifications and authorized the advertisement for bids related to the 2016 Aqua Lane to Black Duck Drive Trunk Water Main Project. The project will create a looped water system that will provide residents with high quality water supply and adequate pressure for fire demand. The project includes trunk water main improvements along Aqua Lane, through the Anoka County Regional Park, along Sand Piper Drive and West Shadow Lake Drive, and connecting the existing water main on the north end of Black Duck Drive. In order to finance this project the City will need to issue General Obligation Water Utility Revenue bonds. Our financial advisor, Springsted, Inc. has issued their recommendation for the issuance of $1,420,000 General Obligation Water Utility Revenue Bonds, Series 2016A for consideration by the City Council. Resolution No. 16- 116 would provide for the issuance and sale of this issue. If approved, bids would be received on October 24, 2016, with consideration for award of sale by the City Council at its meeting the same day. The Series 2016A issue will be repaid over a 10 year period utilizing revenues from the City's Area and Unit Trunk fund. Minnesota Statutes Section 475.67, subdivision 3 authorizes the issuance and sale of refunding obligations during the six month period prior to the date on which the obligations to be refunded may be called for redemption. Our financial advisor, Springsted, Inc. has issued their recommendation for the issuance of $1,980,000 Taxable G.O. Refunding Improvement Bonds, Series 2016B and $1,600,000 G.O. Tax Abatement Refunding Bonds, Series 2016C. These issues would refinance the outstanding portion of the Taxable G.O. Improvement Bonds, Series 2005A and the G.O. Tax Abatement Bonds, Series 2006C, respectively. With the assistance of Springsted, Inc., staff continually monitors the market for opportunities to refinance existing debt issues at lower interest rates, thereby saving the city money on financing costs. By refinancing the outstanding balance of our Taxable G.O. Improvement Bonds 2005A, it is estimated that the city can achieve net present value savings of approximately $130,682 over the term of the issue, a 6.20% savings. In addition, by refinancing the outstanding balance of our G.O. Tax Abatement Bonds, Series 2006C, it is estimated that the city can achieve net present value savings of approximately $133,833 over the term of the issue, a 7.73% savings. If approved, the bids for the refunding issues would be received on October 24, 2016, with consideration for award of sale by the City Council at its meeting the same day. The Series 2016B issue has been structured with a term matching that of the 2005A bonds and would be repaid through previously adopted special assessments, TIF, and other miscellaneous revenues. The