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CITY COUNCIL <br />AGENDA ITEMS 3B & 3C <br />STAFF ORIGINATOR: Jeff Karlson <br />MEETING DATE: February 22, 2016 <br />TOPIC: Proposed G.O. Financing for HD Capital Equipment <br />VOTE REQUIRED: 3/5 <br />INTRODUCTION <br />The City Council is being asked to adopt two resolutions regarding the issuance of general <br />obligations bonds, under the authority granted to North Metro Telecommunications <br />Commission (NMTC), to finance the acquisition of high definition (HD) video equipment. <br />BACKGROUND <br />It has become necessary for North Metro Television (NMTV) to upgrade its video equipment <br />from either an analog or standard digital format to a high definition (HD) format. NMTV staff <br />recently prepared an HD equipment replacement analysis and provided recommendations for <br />upgrading the entire cable facility to the HD format. Attached is a project summary for the <br />upgrade of HD equipment at NMTV. <br />Under the terms of the Joint Powers Agreement, the Commission was granted authority to issue <br />up to $2.5 million in bonds payable solely from franchise fee revenues collected quarterly from <br />the member cities. The Commission had two options for financing a $2 million capital <br />equipment upgrade: (1) a Commission -issued revenue bond; or (2) a general obligation bond <br />issued by one of the member cities. The City of Circle Pines agreed to facilitate the overall <br />financing using its bonding authority on the condition that it each member city issues their own <br />capital notes that will be held by Circle Pines in order to reduce the risk. To offset the levy <br />requirement for each member city, the Commission agreed to budget franchise fee revenues to <br />repay the debt. By Circle Pines agreeing to issue the debt, the NMTC will save approximately <br />$278,000 in sales tax and closing costs for the life of the bonds. <br />Lino Lakes estimated share of the annual debt payments is $37,070. Even though each <br />individual member city will be responsible for its share of the bond payments, the annual <br />payments will be covered (or reimbursed) by NMTC. The Commission is able to do this for <br />two reasons: (1) the television facility no longer carries any debt (an annual savings of <br />$190,000); and (2) the Commission budgeted about $188,000 annually for capital equipment <br />replacement. <br />RECOMMENDATION <br />1. Approve Resolution No. 16-10, concurring in the issuance of G.O. bonds, Series 2016A, to <br />be issued by the City of Circle Pines <br />