02/27/2006 Council Packet - Laserfiche WebLink

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• • • FEB. 17.2006 5:18PM EHLERS & ASSOCS. Na 3947 P. 3 One of the benefits of the sale of the Columbia Arena is that the second four sheets will carry a reduced debt load compared to the Super Rink debt. The $3,000,000 of cash from the sale of Columbia plus a minimum of $1,500,000 of cash from user groups purchasing ice time rights for the facility will result in a decreased debt burden for the facility. Another consideration of the sale and subsequent demolition of Columbia is that there is only a net increase of two sheets of ice in the County with the new facility. Structure of the 2006 Bonds In the fall of 2005, MASC/NSCF have requested the HRA and County to again participate in the financing of the new four sheets through the issuance of $6,600,000 Ice Arena Revenue Bonds (the "2006 Bonds'). The 2006 Bonds are expected to carry an interest rate at slightly less than 5 %. Final interest rates on the Bonds will not be set until approximately February 15, when approvals from all governmental bodies have been secured, including the County Board on February 14. The original 1997 Bonds carry a term of 25 years, with a final payment in February 1, 2023. The 2006 Bonds will carry a 20 year terra with the final payment in March, 2026. Interest on the 2006 Bonds will be capitalized through October, 2006 when the facility opens_ The projected debt service schedule is found in Exhibit B Security for the 2006 Bonds Because the Mighty Ducks legislation has sunset, the HRA and County have chosen to finance the project through lease revenue bonds rather than with a general obligation pledge. Nevertheless, the structure of the bond issue proposed for 2006 is similar to the structure of the 1997 Bonds. The HRA will issue approximately $6,600,000 in Bonds and lease the facility to the County. The County lease is the primary security for the bondholders. The bondholders assume that the County will appropriate funds to make up any shortfall in debt service from the facility. While the County has the right to annually decide if it will appropriate funds for a shortfall, a failure to pay bond holders would likely result in a significant reduction in the County's "Aa3" G.O. bond rating. The County in turn will sublease the facility to the NSCF. The NSCF has agreed to pledge its gross revenues to the Bonds as well as operating pledges from cities for two of the sheets of ice. The pledges from the cities are not expected to cover as many hours as was found in the first Super Rink. Blaine has agreed to rent a minimum of 1,340 hours in its second sheet for its figure skating and other youth hockey. Lino Lakes, Centerville, and Circle Pines are schedule to vote on a collective minimum of approximately 1,300 hours. Exhibit C has the latest estimates for potential prepared by MASC for the potential user groups. The total number of hours is not a projection, but is a composite of potential user groups for each of the four rinks. The debt service reserve for the 2006 Bonds is a requirement of the marketplace. It is security for the bond holders to be used only if the County does not appropriate for any debt service payment. If MASC/NSCF does not make monthly payments, we advise the County and HRA to not rely upon the debt service reserve to make payments to the bond trustee. Page 2