10-08-2018 Council Meeting Packet

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Page 4 SECURITY AND SOURCE OF PAYMENT: The Bonds will be general obligations of the City, secured by its full faith and credit and taxing power. In addition, the City will pledge net revenues of its Utility Funds. Security and source of payment information specific to each portion of the Bonds is outlined below: Street Reconstruction Portion – The City made its first levy for the Street Reconstruction Portion of the Bonds in 2018 in the amount of $200,000 for collection in 2019. The taxes collected in 2019 are projected to cover the interest payments due on August 1, 2019 and February 1, 2020. Thereafter, each year’s collection of taxes will be used to make the August 1 interest payment due in the collection year and the February 1 principal and interest payment due the following year. West Shadow Utility Portion – Net revenues of the City’s water and sewer utility funds are pledged to the payment of the West Shadow Utility Portion of the Bonds. In addition, the City expects to pay a portion of the debt service on the West Shadow Utility Portion of the Bonds with assessments filed against benefited properties. Special assessments in the principal amount of $943,343 are expected to be filed in the fall of 2019 for collection in 2020. Interest on the unpaid balance will be charged at a rate of 5%. It is expected that each year’s collection of assessments will be used to reimburse a portion of the city’s debt service payment from the prior year. Debt service net of the special assessments is anticipated to be paid from the City’s Trunk Utility Fund. Lake Drive Utility Portion – Net revenues of the City’s water utility fund are pledged to the payment of the Lake Drive Utility Portion of the Bonds. However, debt service is anticipated to be paid from the City’s Trunk Utility Fund. STRUCTURING SUMMARY: In consultation with the City, the Bonds have been structured as follows: Street Reconstruction Portion – Debt service on the Street Reconstruction Portion of the Bonds has been structured to provide one year of interest-only payments ending February 1, 2020. The interest only payments are forecasted to equal approximately $200,000 in alignment with taxes levied in 2018. If the Bond pricing results in first year interest payments exceeding $200,000, excess reoffering premium, if any, will be allocated to make up the difference. Following the first year of interest-only payments, the Street Reconstruction Portion is structured to provide an approximately level annual levy requirement for a term of 14 years. West Shadow Utility Portion – Debt service on the West Shadow Utility Portion of the Bonds has been structured for a term of 15 years with approximately level annual payments of debt service. Lake Drive Utility Portion – Debt service on the Lake Drive Utility Portion of the Bonds has been structured for a term of 10 years with approximately level annual payments of debt service.