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CITY COUNCIL AGENDA ITEM 2A • STAFF ORIGINATOR Al Rolek MEETING DATE September 24, 2012 TOPIC Consideration of Resolution 12 -99 Providing for the Issuance and Sale of Approximately $2,030,000 General Obligation Bonds, Series 2012A VOTE REQUIRED Simple Majority INTRODUCTION • The City has awarded a bid to construct traffic signals and related improvements at the intersections of Lake Drive and Main Street and Birch Street and Ware Road. These projects require debt financing to fund the construction of the improvements. In addition, market conditions are favorable to refinance a currently outstanding debt issue to achieve a better interest rate for this debt, thereby lowering the city's financing cost. BACKGROUND On November 2, 2010, the voters of the City passed a referendum approving the issuance and sale by the City of up to $1,840,000 general obligation bonds to construct traffic signals and related improvements at the intersections of Lake Drive/Main Street and Birch Street /Ware Road. The City Engineer has prepared plans and specifications for these improvements and the City Council awarded a bid for the construction of these improvements. Because Anoka County is participating financially in these projects, the City's cost for the improvements is budgeted at $1,551,000. Including the cost of issuance and capitalized interest, the necessary bonding to finance the City's portion of the improvement is $1,595,000. In addition, staff continually monitors the market for opportunities to refinance existing debt issues at lower interest rates, thereby saving the city money on financing costs. By refinancing the outstanding balance of our G.O. Improvement Bonds 2003A, it is estimated that the city can achieve net present value savings of approximately $32,340 over the term of the issue, a 7.609% savings. Minnesota Statutes Section 475.67, subdivision 3 authorizes the issuance and sale of refunding obligations during the six month period prior to the date on which the obligations to be refunded may be called for redemption. Our financial advisor, Springsted, Inc. has issued their recommendation for the issuance of $2,03-0,000 General Obligation Bonds Series 2012A. This issue will finance the signal construction projects and will refinance the outstanding portion of G.O. Improvement Bonds, Series 2003A bond. If approved, the bids for this issue would be received on October 22, 2012, with consideration for award of sale by the City Council at its meeting the same day. The Series 2012A issue will be repaid over 10 years through the use of a tax levy and the refunding portion will be repaid through previously adopted special assessments. RECOMMENDATION Staff recommendation is for the City Council to approve Resolution 12 -99 providing for the issuance of $2,030,000 General Obligation Bonds Series 2012A. ATTACHMENTS Recommendations for the Issuance of Bonds Resolution 12 -99.