08/12/1996 Council Minutes - Laserfiche WebLink

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COUNCIL MINUTES AUGUST 12, 1996 among other things, a protection for repayment of a debt within the additional 10 years following the initial payment goal. Mr. Shannon stated that such a program should allow for a better rating for the City. Additionally, the City will be retiring the temporary bonds which come due in November of 1997 a year early, which should also result in a positive rating outlook for the City. Mr. Shannon then described the basis for Resolution No. 96 - 90, which proposes to set the sale for issuance of $3,320,000 general obligation water revenue, 1996B, which is structured over a 15 -year period for the following: Well No. 3 & Pumphouse Water Tower No. 2 Birch Street Trunk Water Improvement Otter Lake Road Trunk Utilities Mr. Shannon explained that such an obligation could be structured over a longer period, but this 15 -year issue has been designed to blend with existing 1990 issue debt. Ideally, the only reason this issue would be called would be if interest rates became significantly better than at present; otherwise, revenues from the water utilities and connection funds would be used to pay the debt service on this particular bond issue. Mr. Shannon indicated that this is the City's first experience under the requirement by the Treasury with regard to secondary market disclosure, which provides for provision of certain information pursuant to future trading among underwriters. On Monday, September 9, bids will be taken in the offices of Springsted, Inc., which will be presented to Council for award at 6:30 that evening. Council Member Bergeson asked why the City entered into temporary bonds in the past. Mr. Shannon explained that temporary bonds provide for maturity in entirety within 3 years. With prepayment of assessments a substantial amount was received to allow for payment within that period with the amount outstanding rolled over into an additional 3 -year temporary financing, which resulted in a 6 -year financing schedule. Almost all of the previous issues were paid within the 6 -year period, providing for the lowest cost financing so far as interest is concerned. Presently that differential is not sufficiently substantial between a B -AA 3 -year issue and a B -AA 10 -year issue. In other words, the interest differential --cost of issuance and refinancing bonds -- now works more to the City's benefit. Exercising call in 5 years now equalizes the cost over the long run. Additionally, previous regulations allowed for earning money on positive fund balances and prepayments of assessments. That is no longer allowed. Council Member Kuether moved to adopt Resolution No. 96 - 89, as presented. Council Member Lyden seconded the motion. Motion carried unanimously. Resolution No. 96 - 89 can be found at the end of these minutes. • • •