03-23-2015 Council Packet - Laserfiche WebLink

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AUTHORITY: Statutory Authority: Abatement Bonds are being issued pursuant to Minnesota Statutes, Chapter 475 and Sections 469.1812 through 469.1815. Street Reconstruction Bonds are being issued pursuant to Minnesota Statues, Chapter 475 and the City's Five -Year Street Reconstruction Plan (2015-2019). Statutory Requirements: Abatement Bonds — On March 23, 2015 the City Council will be asked to adopt a resolution approving the property tax abatement denoting certain properties benefitting from the improvements which using the City's tax rate would generate enough taxes to pay for the abatement levy (the "Abatements") in the City for a period of ten years and a maximum principal amount of $495,000. The projected abatement levy will be sufficient to pay the principal and interest on the Abatement Bonds. The public hearing approving the abatement will be held on March 23, 2015. The annual maximum amount of abatement by the City cannot exceed the greater of 10% of the net tax capacity of the City or $200,000. Based on the City's 2013/2014 net tax capacity of $17,766,193, the greater amount is $1,776,619. The City has one outstanding abatement bond issue, together the projected maximum annual tax abatement including the Abatement Bonds is estimated to be $635,440, which is well within the statutory limits. Street Reconstruction Bonds - Pursuant to Minnesota Statutes, Section 475.58, the City held a special election on November 4, 2014 approving the issuance of the Street Reconstruction Bonds in a maximum principal amount of $3,150,000 and adopting a five-year street reconstruction plan. SECURITY AND The Bonds will be general obligations of the City, secured by its full faith and credit and taxing power. SOURCE OF Annual principal and interest payments on the Bonds will be made from a combination of ad valorem PAYMENT: property taxes and tax abatement levy as further described below. Abatement Bonds — Debt service on the Abatement Bonds will be repaid with an abatement tax levy. The City will make their first levy in 2015 for collection in 2016. Each year's collection of tax abatement revenue will be used to make the August 1 interest payment due in the collection year and the Febraury 1 principal and interest payment due in the following year. The February 1, 2016 interest payment will be paid with capitalized interest including in the par amount of the Abatement Bonds. Street Reconstruction Bonds - The City will make their first levy in 2015 for collection in 2016. Each year's collection of taxes will be used to make the August 1 interest payment due in the collection year and the Febraury 1 principal and interest payment due in the following year. The February 1, 2016 interest payment will be paid with capitalized interest including in the par amount of the Street Reconstruction Bonds. STRUCTURING Abatement Bonds — At the direction of the City, debt service on the Abatement Bonds has been SUMMARY: structured with approximately level annual debt service requirements for a term of 10 years. Street Reconstruction Bonds - At the direction of the City, debt service on the Street Reconstruction Bonds has been structured with approximately level annual debt service requirements for a term of 15 years. Springsted Page 3