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<br />- 5 - <br /> SOURCES AND USES OF FUNDS <br /> <br /> <br />The composition of the Bonds is estimated to be as follows: <br /> <br /> Sources of Funds: <br /> Principal Amount $4,800,000 <br /> <br /> Total Sources of Funds $4,800,000 <br /> <br /> Uses of Funds: <br /> Deposit to Project Fund $4,682,367 <br /> Estimated Underwriter’s Compensation 62,400 <br /> Estimated Costs of Issuance 55,233 <br /> <br /> Total Uses of Funds $4,800,000 <br /> <br /> <br /> SECURITY AND FINANCING <br /> <br /> <br />The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and <br />power to levy direct general ad valorem taxes; however, the City does not anticipate the need to levy taxes <br />for repayment of the Bonds. <br /> <br />Pursuant to Minnesota Statutes, Chapter 444 and the Resolution, the City will covenant to impose and <br />collect charges for the service, use, availability and connection to the water utility to produce net revenues <br />in amounts sufficient to support the operation of the water utility and to pay 105% of debt service on <br />obligations to which it has pledged its water utility revenues. The City is required to annually review the <br />budget of the water utility to determine whether current rates and charges are sufficient and to adjust such <br />rates and charges as necessary. <br /> <br /> <br /> FUTURE FINANCING <br /> <br /> <br />The City does not anticipate issuing any additional long-term general obligation debt within the next <br />90 days. <br /> <br /> <br /> LITIGATION <br /> <br /> <br />The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's <br />ability to meet its financial obligations. <br />