11-13-2018 Council Meeting Packet

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- 5 - SECURITY AND FINANCING The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. Additional sources of security for the Bonds are described below. Street Reconstruction Portion The City will levy taxes for repayment of the Street Reconstruction Portion of the Bonds. The City made its first levy in 2018 in the amount of $200,000 for collection in 2019, which is anticipated to be sufficient to make the February 1, 2020 interest payment due on Street Reconstruction Portion of the Bonds. Thereafter, each year’s collection of taxes, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. Water and Sewer Utility Portion Pursuant to Minnesota Statutes, Chapter 444 and the Resolution, the City will covenant to impose and collect charges for the service, use, availability and connection to the water and sewer utilities to produce net revenues in amounts sufficient to support the operation of the water and sewer utilities and to pay 105% of debt service on obligations to which it has pledged its water and sewer utility revenues, including the Water and Sewer Utility Portion of the Bonds. The City is required to annually review the budget of the water and sewer utilities to determine whether current rates and charges are sufficient and to adjust such rates and charges as necessary. The City does not anticipate the need to levy taxes for repayment of the Water and Sewer Utility Portion of the Bonds; however the City intends to offset a portion of the debt service on the Water and Sewer Utility Portion of the Bonds with available special assessments. Water Utility Portion Pursuant to Minnesota Statutes, Chapter 444 and the Resolution, the City will covenant to impose and collect charges for the service, use, availability and connection to the water utility to produce net revenues in amounts sufficient to support the operation of the water utility and to pay 105% of debt service on obligations to which it has pledged its water utility revenues, including the Water Utility Portion of the Bonds. The City is required to annually review the budget of the water utility to determine whether current rates and charges are sufficient and to adjust such rates and charges as necessary. The City does not anticipate the need to levy taxes for repayment of the Water Utility Portion of the Bonds. FUTURE FINANCING The City does not anticipate issuing any additional long-term general obligation debt within the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations.