06/01/1992 Park Board Packet - Laserfiche WebLink

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City of Inver Grove Heights, Minnesota August 16, 1990 We are recommending bids be taken on this issue on September 24, 1990. Construction bids on the main golf course facility will be taken on September 18, and If those bids are acceptable, they will be forwarded to you in the form of a contract award on the same night you will receive bids on the bonds. With this schedule, you will not be faced with having to award construction contracts without an assurance that these bonds can be marketed. We have also attached as Appendix III the proposed bondholder's risk section which will be placed in the Official Statement for this Issue. A bondholder's risk section will be new to you since it is not included in general obligation issues for which the City's full faith and credit taxing power Is pledged for the payment of bonds. We suggest you review the risk section. Upon that review, I think you will understand why these bonds are not rateable, uninsurable, and will require a higher rate of interest. You will also receive before your meeting on August 27, 1990 a copy of the proposed bond resolution as prepared by Dorsey&Whitney,with input from your staff,the City Attorney, and Springsted. Since that resolution contains the primary requirements for the City in establishing fund structures, funding accounts, and making commitments as to future events, we recommend you review It carefully. Mr. Hay and a member of Springsted will be present at your meeting on August 27 to answer any questions you might have about that document. Following that meeting, and until approximately September 4, you will be able to make changes in the resolution. After September 4, the critical portions of that resolution which outlines the City's obligations will be printed in the Official Statement for this issue and it will not be feasible to change the sale resolution after that date. There are several critical commitments the City Is making which I have attempted to outline In summary form below, so that you may follow these requirements in the resolution, reading the full text that document. This summary is not intended to be a complete analysis of the City's obligations under the resolution. 1. Reserve Fund. The City agrees to establish a one-year maximum debt service reserve which will be funded by $584,000 of bond proceeds, and an estimated $18,250 of other City funds, which amount will have to be deposited In the Reserve Account before settlement of the issue. 2. The City is establishing an Operating Reserve Account which will be initially funded by City monies, other than bond proceeds, in the amount of$245,000. That amount represents the projected cumulative operating deficit to be experienced in the operation of the golf course between 1992 and 1995 as estimated by Effective Golf Course Systems, Incorporated. You will recall we discussed this requirement with you at the time the golf course program was being considered earlier this year. After December 1, 1995, the City is agreeing that after funding debt service requirements and current operating expenses, any income not required for these Items will be deposited in the Operating Reserve Account until the Operating Reserve Account balance is equal to 50% of the estimated cost of operating and maintaining the golf course each year. After that level is first reached, the City would be responsible each year only for funding the 50% share of any proposed annual increase in operation and maintenance costs. After meeting this requirement, and the requirement for funding the Depreciation and Replacement Account, the City may ,..� allocate any remaining monies to the Surplus Account, which may be used for any corporate purpose. We believe the establishment of this perpetual Operating Reserve Account will reduce the likelihood of operating deficits in the golf course which might have to be met by Page 3