Agenda Packets - 1994/03/28 - Laserfiche WebLink

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City of Mounds View, Minnesota March 22, 1994 City will continue to pay debt service on the 1988A Bonds through the call date. Beginning with the August 1, 1996 interest payment, the City will cross over and begin making debt service payments on the new issue, taking advantage of the lower interest rates. Attached as Appendix I of these recommendations is a summary of the refunding. Schedule A of this appendix shows the existing debt service of the 1988A Bonds. Schedule B shows the amount of principal being called on February 1, 1996 and Schedule C illustrates the principal and interest payments the City will make on the 1988A Bonds as originally scheduled. Schedule D represents our recommended maturity schedule for this issue. The Series 1994A Bonds will be dated May 1, 1994 and mature each February 1, 1997 through 2003. Column 6 of Schedule E shows the estimated annual savings to the City accomplished by the refunding, averaging approximately $60,937 per year. Inaddition—toits general obligation pledges the City also pledged tax increment revenues generated in the City's Tax Increment Redevelopment District No. 1 to make debt service payments on the 1988A Bonds. These same tax increment revenues will also be used to make debt service payments on the 1994A Bonds beginning on August 1, 1996. Interest on the 1994A Bonds due through February 1, 1996 will be payable from an escrow account established upon the sale of this issue. Thereafter, the interest payments due each August 1 will be payable from the first-half collections of tax increments and the principal and interest payments due the following February 1 will be payable from second-half collections of tax increments, together with the surplus of first-half collections. The same payment sequence will continue throughout the life of the 1994A Bonds. We recommend the 1994A Bonds not be subject to prepayment in advance of the stated maturity since the issue will be retired in less than 10 years, which is the usual market consideration on a call option. $725,000 General Obligation Tax Increment Refunding Bonds, Series 1994B The proceeds of this issue will be used to advance refund the 1998 through 2005 maturities of the City's $930,000 General Obligation Tax Increment Bonds, Series 1989B, dated November 1, 1989 (the "1989B Bonds") to effect interest cost savings. These bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 469. Proceeds of the 1989B Bonds were originally used to finance public improvements, including the installation of sanitary sewer, water main, storm sewer, curb/gutter and other eligible items, within the City's Development District No. 2. Refunding of the 1989B Bonds The net interest rate on the 1989B Bonds, those maturing in the years 1998 through 2005, is 6.72%. Based on current market conditions, it is our recommendation that the City proceed with the sale of a crossover refunding bond issue that would refund the maturities in the years 1998 through 2005. We project that the new bonds could be sold at a net interest rate of approximately 4.87%, resulting in a future value savings to the City, net of all costs of issuance, of approximately $30,595. The refunding process will be conducted in the same manner as the 1994A Bonds. Attached as Appendix II of these recommendations is a summary of the refunding. Schedule A of this appendix shows the existing debt service of the 1989B Bonds. Schedule B shows the amount of principal being called on February 1, 1997 and Schedule C illustrates the principal and interest payments the City will make on the 1989B Bonds as originally scheduled. Schedule D represents our recommended maturity schedule for this issue. The Series 1994B Bonds will Page 2