09/25/2006 Council Packet - Laserfiche WebLink

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• • City of Lino Lakes, Minnesota September 18, 2006 The issuance of the Series 2006E Bonds is being conducted as a "partial current" refunding, in which the proceeds of the Refunding Bonds (new issue) are used within ninety days of bond settlement to redeem 79.45% of the principal of the Prior Bonds (old issue). On December 1, 2006, the City will use $392,342.50 of the debt service reserve fund of the Series 1998A Bonds and the proceeds of the Series 2006E Bonds to redeem the a portion of the February 1, 2010 maturity and all the remaining maturities in the principal amount of $3,345,000 of outstanding principal on the Series 1998A Bonds. The City will need to invest the proceeds of the Series 2006E Bonds for the period between the closing date and the call date (December 1, 2006) in order to achieve the savings level estimated for this transaction. The City will continue to make debt service payments through February 1, 2010 on the outstanding principal amount of $865,000 on the Series 1998A Bonds. The City will pay interest only payments on the Series 2006E Bonds through August 1, 2009. The Series 2006E Bonds will be repaid with ad valorem tax levies. The City will make its first levy for the Series 2006E Bonds in 2006 for first collection in 2007. The interest payment due on February 1, 2007 will be made with cash available from the City's annual appropriation collected in 2006 for the Series 1998A Bonds. Thereafter, beginning with the August 1, 2007 interest payment, each year's taxes will be used to make the August 1 interest payment in the year of collection and the February 1 principal and interest payment in the following year. Based on current interest rate estimates, the refunding is projected to produce cash flow savings averaging approximately $26,400 annually beginning with the 2006 levy for taxes collected in 2007. This results in future value savings of approximately $288,800 with a net present value benefit to the City of approximately $225,900. These estimates are net of all costs associated with the refunding. The City will begin to realize cash flow savings beginning with the 2006 levy and the August 1, 2007 interest payment. With approval of City staff, the term of the Series 2006E Bonds have been shortened by one year (final maturity of February 1, 2018 rather than February 1, 2019) due to the impact of the debt service reserve fund being used as a source of funds in reducing the par amount of the borrowing versus being used to pay the final debt service payment. Attached are a set of schedules that summarize the refunding statistics and the projected savings resulting from the sale of the Series 2006E Bonds. These schedules include the following information: • Preliminary Feasibility Summary: indicates the sizing of the Series 2006E Bonds, savings data and bond data — page 9 • Prior Original Debt Service: shows the existing debt service requirements on the Series 1998A Bonds without a refunding — page 10 • Debt Service to Call and to Maturity: shows the Series 1998A Bonds' remaining debt service to maturity and to the call date — page 11 • Debt Service Schedule: shows the new debt service on the Series 2006E Bonds, based on current estimated interest rates — page 12 • Debt Service Comparison: shows the debt service comparison and the projected annual cash flow savings of the Series 2006E Bonds to the Series 1998A Bonds — page 13 - 6 2 - Page 6