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• • Springsted Incorporated 380 Jackson Street. Suite 300 Saint Paul, MN 55101 -2887 Tel: 651 - 223 -3000 Fax: 651- 223 -3002 www.springsted.com September 8, 2006 Mayor Bergeson and City Council Members Mr. Gordon Heitke, Administrator Mr. Al Rolek, Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 RE: Partial Refinancing of Lino Lakes Economic Development Authority 1998A (Civic Center Complex) Background In 1998, the construction of the Civic Center Complex was financed using lease revenue bonds issued by the City's Economic Development Authority (EDA). Lease payments of an amount sufficient to cover debt service are made by the City to the EDA annually. The original issue size was $5,350,000 and the bonds have a 20 year term, maturing in 2019. Ownership of the Civic Center Complex would be transferred to the City upon final payment of the bonds. The first call date was 2/1/2006. In 2003, the Minnesota Legislature enacted into law a program that allows home rule and statutory cities to establish a capital improvement program and issue bonds for certain capital improvements without an election. Eligible improvements include city halls, public safety facilities and public works facilities. Such bonds would be general obligation (GO) backed capital improvement plan (CIP) bonds. In order to qualify projects as CIP bondable improvements, a City must adopt a five year capital improvement plan following a public hearing. Upon adoption, there is a 30 day reverse referendum period. The annual debt service of bonds issued under this authority may not exceed 0.16% of market value or about $2.7 million. This level of debt service would support about $31 million of bonds. The City has not used this financing before and so the entire $31 million is available. The bond issue size needed to refinance the outstanding balance on the existing lease revenue bonds would be about $4.3 million, which is well below this cap. Refunding Opportunity Refinancing using new lease revenue bonds results in minimal savings (non GO backed to another non GO backed bond). The estimated present value savings without converting to GO CIP bonds was estimated to be $100,739 in August. GO backed bonds result in the lowest interest rates. Using the 2003 CIP bonding authority, the City could issue GO CIP bonds to refinance the EDA bonds to increase the resulting savings. Upon adoption of the Capital Improvement Plan, the City would be authorized to issue CIP refunding bonds. Even though the facility was built prior to the CIP bond law, the purchase from the EDA occurs when the bonds are refinanced, so the 2003 law would apply. —45g- Pub', Sector Advzsars