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Springsted <br />September 29, 2008 <br />Mayor John Bergeson and City Council <br />Mr. Gordon Heitke, City Administrator <br />Mr. Al Rolek, Finance Director <br />600 Town Center Parkway <br />Lino Lakes, MN 55014 -1182 <br />RE: GO Assessment Bonds, Series 2005A <br />Cash Flow and Financing Options <br />Springsted Incorporated <br />380 Jackson Street, Suite 300 <br />Saint Paul, MN 55101 -2887 <br />Tel: 651 - 223 -3000 <br />Fax: 651 -223 -3002 <br />www.springsted.com <br />Background <br />In November, 2005, the City issued $5,550,000 Taxable G.O. Improvement Bonds, which were originally <br />expected to be repaid entirely from special assessments levied on benefiting properties, in the Legacy at <br />Woods Edge development project. <br />Marshall Investments foreclosed on the Hartford Group's remaining property in the Legacy at Woods Edge <br />in January 2008. Marshall became the controlling partner for this transaction of 28 banks that have <br />provided financing. The property is for sale. <br />Assessments were scheduled to cover annual debt service payments, beginning in 2006 at 7% interest. <br />The assessments have not been paid beginning with the second half of 2006 through today. The unpaid <br />principal, interest and penalties through May of 2010 (most likely time that unpaid assessments will be paid <br />in order to avoid the Sheriff sale) would amount to $3,365,627. While it is expected that this amount will be <br />paid in full, there are no guarantees. In the meantime, the annual debt service on the bonds of $535,000 <br />beginning in 2007 requires payment. The City has been able to fund payments from prepaid assessments <br />until now. <br />Public Sector Advisors <br />