04/03/1995 Park Board Packet - Laserfiche WebLink

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S P R I N GST E D 120 South Sixth Street Suite 2507 PUBLIC FINANCE ADVISORS Minneapolis, MN 55402.1800 (612) 333-9177 Fax: (612) 349-5230 Home Office 85 East Seventh Place 16655 West Bluemound Road Suite 100 Suite 290 Saint Paul, MN 55101-2143 Brookfield, WI 53005-5935 (612) 223-3000 (414) 782-8222 Fax: (612) 223-3002 Fax: (414) 782-2904 6800 College Boulevard Suite 600 Overland Park, KS 66211-1533 (913) 345-8062 Fax: (913) 345.1770 1850 K Street NW Suite 215 Washington, DC 20006-2200 (202) 466-3344 February 14, 1995 Fax: (202) 223-1362 Mr. Martin D. Asleson, Park Director Lino Lakes City Hall 1189 Main Street Lino Lakes, MN 55014-2123 Re: Proposed Bond Referendum Dear Mr. Asleson: We have prepared for your consideration proposed bonding schedules for $2,000,000, $3,000,000, $4,000,000, and $5,000,000 together with the resulting estimated tax impact. Since these bonds would be authorized pursuant to a referendum, the impact is based on Estimated Market Value rather than the traditional tax capacity. The City has a current Estimated Market Value of $435,100,000 which, at 2%, yields a debt limit of$8,702,000. The proposed range is well within this limit, the upper range of which would use up about 60% of your capacity. We understand the City is exploring the potential of purchasing land now for future development. The estimated cost differential between now and seven years from now is about 300%; it would certainly be an advantageous decision. However, there are certain constraints which must be considered when using bond proceeds to finance project costs. Federal arbitrage rules and regulations set forth specific guidelines as to the timing and expenditure of bond proceeds. Generally, proceeds must be spent within three years from the date of issue. In the event they are not spent, the remaining proceeds would be restricted as to investment at a rate not exceeding the nominal rate of the bonds issued to finance the project. In addition, and perhaps more onerous, the proceeds must be reasonably expected to be spent within that three-year period of time. I have discussed your proposal with Dave Kennedy at Holmes & Graven, bond counsel to the City, and he does not believe the proposal to bond now to acquire property seven years in the future would permit the issuance of tax-exempt bonds. I believe the City has the authority to purchase land on a Contract for Deed basis, but I understand the limitation for that instrument is for five years. We understand the future cost of land is based on speculation not only as to the developability of the property but also as to the extension of the MUSA line. Those factors are not guaranteed and therefore, you may be able to negotiate an intermediate price acceptable to both sides.