2003-195 Council Resolution - Laserfiche WebLink

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85 E. SEVENTH PLACE, SUITE 100 SAINT PAUL, MN 55101-2887 651-223-3000 FAX: 651-223-3002 October 21, 2003 • Mayor Bergeson and City Council Members Mr. Daniel Tesch, Acting City Administrator Mr. Alan Rolek, Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014-1182 The 21st Avenue Street and Storm project costing an estimated $240,000 is recommended to be bonded for separately from three other projects (Elm Street, Twilight Acres and Century Farm Lift Station) included in the proposed $2,120,000 General Obligation Improvement and Refunding Bonds, Series 2003A, which will be issued as tax exempt bonds. According to Bond Counsel, certain provisions in the City Charter require that the 21st Avenue Street and Storm Project be financed with taxable bonds rather than tax-exempt. As a result, Springsted Incorporated (Springsted) recommends issuing $250,000 General Obligation Improvement Taxable Bonds, Series 2003B. The bonds would provide proceeds of $240,000 for project costs and $10,000 of issuance costs. We are recommending that rather than sell these bonds competitively, as recommended for the 2003A Bonds, that these be privately placed through a local bank. SPRINGSTED Advisors to the Public Sector We are recommending this approach to save costs and effort. A competitive process, which will yield lower interest costs, would also increase the costs of marketing such as bond rating fees, bid process and awarding. At bond size thresholds below $500,000, the slightly higher issuance costs may not be offset by lower interest rates achieved through a competitive sale because interest is a smaller component of total costs. When factoring in additional City staff time, a negotiated sale is more efficient for an issue of this size. The $250,000 General Obligation Improvement Taxable Bonds, Series 2003B would be 10 year bonds with level debt service payments. Call dates for early retirement would be negotiated along with interest rates. The bonds would be repaid from special assessments totaling $135,000 plus interest at 7%. The remainder would be paid from annual tax levies. Under the negotiated approach, Springsted would contact a local bank recommended by the City and negotiate pricing for each maturity and any terms or conditions. Current market index rates and recent bond transactions would be considered in agreeing to rates and conditions. The negotiated rates would be brought back to the City Council for final approval prior to awarding the sale to the bank. Appropriate documents would then be completed in conjunction with Bond Counsel. Springsted would facilitate the process through closing. CORPORATE OFFICE: SAINT PAUL, MN • Visit our website at www.springsted.com IOWA • KANSAS • MINNESOTA • VIRGINIA • WASHINGTON, DC • WISCONSIN