05/22/2006 Council Packet - Laserfiche WebLink

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• • • City of Lino Lakes, Minnesota May 16, 2006 We have structured the Abatement Bonds over a term of 17 years from the dated date, with principal retirement beginning in 2011. The debt service schedule for the Abatement Bonds is shown on page 9 and includes the projected tax abatement revenues (column 7) that are expected to be available to make the debt service payments on the Abatement Bonds. Page 9 shows the following information: • Columns 1 through 4 show the principal payment dates, annual principal amounts, estimated interest rates and total principal and interest, given the current market environment. • Column 5 shows the capitalized interest needed to pay the interest payments due through February 1, 2009. • Column 6 shows the 5% overlevy which is required by State statutes and serves as a protection to bondholders and the City in the event of delinquencies in the collection of tax abatement revenues. • Column 7 shows the projected tax abatement revenues. • Column 8 shows the difference between column 6 and column 7, which represents the City's annual surplus and/or deficit. The Utility Bonds The Utility Bonds will be used to finance improvements to the City's water utility and sewer utility related to the following projects (i) the County Road 49 watermain project; and (ii) the Lois Lane watermain project. The sources and uses for the Utility Bonds are shown on page 10. Page 10 shows the project amount, the costs of issuance and the underwriter's discount. The County Road 49 watermain project will be repaid from net revenues of the City's water utility and the Lois Lane watermain project will be repaid from net revenues of the City's water and sewer utilities. In addition to net revenues of the utilities, the City expects to use assessment income, as available, to pay a portion of the debt service on the Lois Lane watermain project. The assessment income will be based on a principal amount of $186,572 paid over a term of 15 years with level payments of principal and interest. Interest on the unpaid balance will be charged at 7 %. Pursuant to Minnesota Chapter 444 and the resolution authorizing the Utility Bonds, the City will covenant to maintain water and sewer rates in an amount sufficient to generate revenues sufficient to support the operation of the water and sewer utilities and to pay debt service. The City is required to annually review the budget of the utilities to determine whether current rates and charges are sufficient and to adjust them as necessary. The Utility Bonds have been structured with even annual debt service payments over a term of 10 years. The debt service for the Utility Bonds is shown on page 11. Page 11 shows the proportionate share of debt service to be paid from the City's water utility and trunk fund respectively. Page 12 shows the debt service for the Lois Lane project showing the projected assessment income and net debt service payable from the Trunk Fund. - 6 1 - Page 6