10/27/2003 Council Packet - Laserfiche WebLink

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City of Lino Lakes, Minnesota October 21, 2003 It is expected that assessment income, if collected as scheduled, will be sufficient to pay 100% of the debt service on the Project Portion of the Issue. Debt service on the Project Portion of the Bonds has been structured around the projected assessment income to provide for even annual cash flow surpluses over the repayment term beginning with calendar year 2005. Our recommended principal structure for the Project Portion of the Bonds is shown on Page 13. Page 13 shows the following: • Columns 1 through 4 show the annual principal, estimated interest rates and projected total principal and interest payments, given the current market environment. • Column 5 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 assessments or taxes. • Column 6 shows the total projected assessment income developed on Pages 9 through 12. • Column 7 shows the difference between columns 5 and 6 and represents the projected annual surplus of assessment income over 105% of debt service. Based on projected assessment income, it is expected that the City will not be required to levy ad valorem property taxes to pay debt service on the Bonds. Refunding Portion • Proceeds of the Refunding Portion of the Bonds will be used on February 1, 2004 to redeem the February 1, 2005 through 2007 maturities of the City's General Obligation Improvement Bonds, Series 1996A (the "Series 1996A Bonds "), dated October 1, 1996 and currently outstanding in the aggregate principal amount of $1,570,000. Because the Series 1996A Bonds will be redeemed within 90 days of the issuance of the Bonds, the transaction will be conducted as a current refunding. The objective of the transaction is to achieve interest cost savings. On February 1, 2004, the City will use (i) funds on hand from 2003 collections of assessments to pay the scheduled principal and interest due on the Series 1996A Bonds and (ii) proceeds of the Refunding Portion of the Bonds to prepay the remaining $1,170,000 of outstanding principal of the Series 1996A Bonds. The City will need to invest the proceeds of the Refunding Portion Bonds for the period between the closing date and the February 1, 2004 call date in order to achieve the savings level estimated for this transaction. Based on current interest rate estimates, the Refunding Portion of the Bonds are projected to generate cash flow savings averaging approximately $14,700 annually. This results in aggregate future value savings of approximately $48,200, with a net present value benefit to the City of approximately $44,000. These estimates are net of all costs associated with the refunding. The City will begin to realize cash flow savings beginning with the City's 2003 levy and the August 1, 2004 interest payment. We have attached a set of schedules that summarizes the refunding statistics and the projected savings resulting from the sale of the Bonds. These schedules include the following information about the proposed Refunding Portion of the Bonds: • Refunding Summary: shows the sizing of the Refunding Portion of the Bonds, savings data and bond data — page 14 • Page 5