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HomeMy WebLinkAbout2003-042 Council ResolutionCITY OF LINO LAKES RESOLUTION NO. 03-42 RESOLUTION AUTHORIZING THE ISSUANCE OF 2003 CERTIFICATES OF INDEBTEDNESS, SERIES B WHEREAS, the 2003 budget includes $330,000 for equipment replacement, $130,000 of which would be funded through the sale of certificates of indebtedness, and WHEREAS, the City Council has adopted Resolution 03 -10 authorizing the issuance of $130,000 in certificates of indebtedness, and WHEREAS, the Governor's proposed budget for FY 2004/2005 eliminates Local Government Aid and Market Value Homestead Credit the City expected to receive in 2003 and 2004, creating a 2003 budget gap of $502,546, and WHEREAS, the issuance of additional certificates of indebtedness would fill a substantial amount of the gap left by the Governor's proposal, and WHEREAS, the City has the capacity to issue additional certificates of indebtedness to fund equipment replacement needs, and WHEREAS, the Area and Unit Fund (406) has sufficient reserves to issue a loan, and WHEREAS, a special levy will pay for these certificates in 2004, 2005 and 2006, and WHEREAS, bills being proposed in the State Legislature, specifically Senate File 330 and House File 751, may have an adverse affect on the City's ability to issue these certificates at a later date. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lino Lakes that: 1. It is hereby found and determined that it is necessary and expedient for the City to issue a Certificate of Indebtedness for the purpose of financing the purchase of capital equipment, in accordance with the provisions of Minnesota Statutes, Section 412.301; and that the sale of said Certificates to the Capital Improvement Project Fund (401), on terms hereinafter set forth, is hereby ordered. 2. The City shall issue a Certificate of Indebtedness in the amount of $200,000.00 authorized by the City Council pursuant to the provisions of Minnesota Statutes, Section 412.301; for the purpose of financing the purchase of capital equipment. Said Certificate shall be dated on March 31, 2003 and shall be payable to the Area and Unit Fund of the City of Lino Lakes. 3. Said Certificate shall be as follows: CITY OF LINO LAKES ANOKA COUNTY, MINNESOTA 2003 CERTIFICATE OF INDEBTEDNESS, SERIES B Know All Men By These Presents that the City of Lino Lakes, Anoka County, Minnesota, hereby acknowledge the Capital Improvement Project Fund to be indebted and for values received promises to pay the Area and Unit Fund of the City of Lino Lakes, the sum of $200,000 plus interest at 4% per annum in three installments in 2004, 2005 and 2006 per attached schedule. This Certificate is issued for the purpose of purchasing capital equipment for the City and is authorized by a duly adopted resolution of the City Council of Lino Lakes, dated March 24, 2003 and is issued pursuant to and in full conformity with Minnesota Statutes, Section 412.301, and is to be effective as of March 31, 2003. It is Hereby Certified and Recited, that all acts, conditions and things required by law to be done, to exist, to happen and to be performed, precedent to and in the issuance of this Certificate have been done, do exist, have happened and have been performed in regular and due form, time and manner; that a direct, annual, irrepealable ad valorem tax will be duly levied by said City in an amount sufficient to pay the principal and interest on this Certificate, together with all other existing indebtedness of the said City, does not exceed any constitutional or statutory limitation on indebtedness. 4. Should the actual 2003 State Aid Cuts be less than $502,546 currently proposed by the Governor, the difference between the proposed cuts and the actual cuts would be used to prepay the certificates of indebtedness herein issued. Adopted by the City Council of Lino Lakes, Minnesota, this 24th day of March, 2003. Ann Blair, Qty Clerk 4 • • SCHEDULE OF PAYMENTS 2003 CERTIFICATES OF INDEBTEDNESS SERIES B Dated March 31, 2003 PRINCIPAL December 31, 2004 $ 50,000.00 December 31, 2005 65,000.00 December 31, 2006 85,000.00 Total $200,000.00 Interest Rate — 4.00% Levy 2003 Payable 2004 Levy 2004 Payable 2005 Levy 2005 Payable 2006 INTEREST $ 14,000.00 6,000.00 3,400.00 $ 23,400.00 $ 67,200.00 (includes 5% overlevy) 74, 550.00 92,820.00 Total $234,570.00 TOTAL $ 64,000.00 71,000.00 88,400.00 $223,400.00 • • • AGENDA ITEM 3A STAFF ORIGINATOR Al Rolek MEETING DATE March 24, 2003 TOPIC Authorizing the Issuance of the 2003 Certificates of Indebtedness, Series B Simple Majority (3/5) VOTE REQUIRED BACKGROUND 2003 budget includes $330,000 for equipment replacement, $130,000 of which would be funded through the sale of certificates of indebtedness. The City Council has adopted Resolution 03 -10 authorizing the issuance of $130,000 in certificates of indebtedness. The Governor's proposed budget for FY 2004/2005 cuts state Local Government Aid (LGA) and Market Value Homestead Credit (MVHC) payments to cities by up to 5% of total revenues for 2003. This cut effectively eliminates the total LGA and MVHC the City expected to receive in 2003 and 2004, creating a 2003 budget gap of $502,546. The issuance of additional certificates of indebtedness would fill a substantial amount of the gap left by the Governor's proposal, and the City has the debt capacity to issue additional certificates of indebtedness to fund equipment replacement needs. The Area and Unit Fund (406) has sufficient reserves to issue a loan for this additional amount. This would be repaid over a three - year period through a special levy in 2004, 2005 and 2006. It is also important to note that bills being proposed in the State Legislature, specifically Senate File 330 and House File 751, may have an adverse affect on the City's ability to issue these certificates at a later date. To eliminate a substantial portion of the City's projected shortfall due to the Governor's proposed state aid cuts, and to preserve the City's ability to issue this debt and maintain future flexibility, staff recommends th eadoption of Resolution 03 -42 authorizing the issuance of $200,000 in Certificates of Indebtedness. OPTIONS 1. Approve Resolution 03 -42 issuing the 2003 Certificates of Indebtedness, Series B 2. Return to staff for further review RECOMMENDATION Option 1.