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Item No: 11.B.1 Meeting Date: November 23, 2009 Type of Business: Reports City Administrator Review: _____ City of Mounds View Staff Report To: Honorable Mayor and City Council From: Mark Beer, Finance Director Item Title/Subject: Consideration to Call for Redemption of Outstanding Taxable Tax Increment Revenue Bonds, Series 2001, Dated October 1, 2001 Introduction: The Taxable Tax Increment Revenue Bonds, Series 2001 for the Mermaid property were callable anytime after August 1, 2008. With a potential sale pending on the hotel portion of the property, staff deferred recommending any action on the bonds. Background: The Mounds View Economic Development Authority (EDA) and Mounds Vista, Inc. (Mermaid) entered into a development agreement to redevelop the Mermaid property and add a hotel to the redevelopment area at 2200 County Highway 10. The EDA issued $815,000 Taxable Tax Increment Revenue Bonds on behalf of Mounds Vista, Inc. to be repaid with tax increment generated from the two parcels that comprise the Mermaid property. The bonds have semi-annual principal and interest payments and mature on February 1, 2013. Discussion: The outstanding balance to be called is $345,000. The bonds pay interest at 7.5% and the remaining balance of interest that could be avoided is $46,950. Trustee fees that could be avoided if the bonds are called would be $7,590. The lost interest earnings of calling the bonds would be approximately $16,800. The net benefit to calling the bonds would be approximately $37,740. ($46,950 + $7,590 - $16,800 = $37,740) There is $40,498 held in trust by the bond trustee and $25,064 in the debt service fund to apply toward the call. The net amount that would be paid out of TIF District 1 is approximately $279,438. The City has sufficient TIF resources to facilitate this call and it will not affect the financing of the street projects. This is an opportunity for the City to save approximately $37,740. Recommendation: Staff is looking for Council direction on whether the EDA should call the outstanding Taxable Tax Increment Revenue Bonds, Series 2001, dated October 1, 2001. If the Council supports calling the bonds, the attached EDA resolution and notice will be presented at the next EDA meeting. Respectfully submitted, ___________________________ Mark Beer, Finance Director