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City of Blaine, Minnesota <br /> August 13, 1997 <br /> requirements. However, the City will not <br /> owe any rebate from the investment of the <br /> bond proceeds of this refunding issue <br /> because the proceeds will be invested in an <br /> escrow account at a yield less than the yield <br /> on the bonds. <br /> 11. Bona Fide Debt Service Fund The City must maintain a bona fide debt <br /> service fund for the bonds or be subject to <br /> yield restriction. A bona fide debt service <br /> fund is a fund for which there is an equal <br /> matching of revenue to debt service <br /> expense, with carry-over permitted equal to <br /> the greater of the investment earnings in the <br /> fund during that year or 1/12 of the debt <br /> service of that year. <br /> 12. Economic Life The average life of the bonds cannot exceed <br /> 120% of the economic life of the project to <br /> be financed. The economic life of buildings <br /> averages 40 to 50 years. The bonds are <br /> within the economic life requirements. <br /> 13. Continuing Disclosure This issue is subject to the SEC's continuing <br /> disclosure regulations as have been all of <br /> the City's issues since July 1995. The City <br /> 411 has contracted with Springsted to provide <br /> annual reports and file material events <br /> notices, as needed. An amendment to the <br /> contract for this issue has been sent to City <br /> staff. <br /> 14. Attachments Refunding Schedules <br /> Terms of Proposal <br /> DISCUSSION <br /> This issue is a crossover refunding, in which the proceeds of the refunding bonds (new issue) <br /> are placed in an escrow account with a major bank and invested in government securities. <br /> These securities and their earnings are structured to pay interest on the new bonds until the call <br /> date of the Series 1991A Bonds (on February 1, 2001), at which time the escrow account will <br /> cross over and prepay the remaining principal of the Series 1991A Bonds. The three cities will <br /> continue to pay the debt service on the Series 1991A Bonds until the February 1, 2001 call <br /> date. Beginning with the 2000 levy, the cities will cross over and begin to levy for debt service <br /> payments on the refunding bonds, taking advantage of the lower interest rates. <br /> We have attached a summary of the refunding which shows the estimated savings. Page 6 <br /> shows the current debt service requirements for the Series 1991A Bonds. Page 7 shows the <br /> total principal of being refunded on the crossover date of February 1, 2001. Page 8 shows the <br /> • principal and interest paid by the cities until the crossover date. Page 9 shows the principal and <br /> estimated interest rates for this new issue. Page 10 (Column 6) shows the estimated annual <br /> Page 3 <br />