Agenda Packets - 1994/03/28 - Laserfiche WebLink

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City of Mounds View, Minnesota March 22, 1994 when combined with the Series 1994B Bonds, would exceed $10,000,000. Bonds which are not"bank-qualified" receive rates higher than bonds which are "bank-qualified." Common To Both Issues Principal Amount Variability As interest rates fluctuate, the amount of money needed in each escrow account for each of these issues fluctuates also. Therefore, we have included a provision in each issue to permit the City to increase or decrease the principal amount in any of the maturities by $150,000 for the Series 1994A Bonds and $25,000 for the Series 1994B Bonds. This will also allow for any variances in the actual issuance costs, which will be paid by the escrow accounts, and the actual-discount taken-by-the underwriters both-of which may vary from the assumptions made - in these recommendations. Interest rates can change rapidly with changing market conditions. As always the City reserves the right to cancel sale of the bonds if interest rates received are deemed unfavorable. These refunding issues will be sold in the same manner as a new money bond issue, including the need for a rating from Moody's Investors Service. Springsted Incorporated will make that application on your behalf. The rating fee (approximately $7,000) has been pro-rated in our estimated costs of issuance for each issue and will be paid from moneys in each of the escrow accounts. Economic Life Another new requirement of the arbitrage regulations is that the bond issue cannot have an average maturity greater than 120% of the weighted economic life of the assets purchased with the original bond proceeds. The City is in compliance with this requirement based on the following analysis. The 1988A Bond proceeds were originally used to finance land acquisition and public improvements associated with development of the Mounds View Business Park located in the City's Development District No. 2. Under generally accepted accounting principles the Project would have an economic life of a minimum of 20 years, 120% of which equals 24 years. The average maturity of the Series 1994A Bonds is 6.118 years. The time which has elapsed from the date of issuance of the 1988A Bonds (February 1, 1988) to the date of issuance of this issue (May 1, 1994) is 6.0 years fora total of 12.118 years. The 1988B Bond proceeds were originally used to finance public improvements which has an economic life of 20 years, 120% of which equals 24 years. The average maturity of the Series 1994B Bonds is 7.467 years. The time which has elapsed from the date of issuance of the 1988B Bonds (November 1, 1989) to the date of issuance of this issue (May 1, 1994) is 4.5 years, for a total of 11.967 years. Sale Process Springsted Incorporated, together with Capital Guaranty Insurance Company, a municipal bond insurer, will offer a surety bond service to underwriters in lieu of putting up a good faith check in order to bid on the obligations. The program is called "Sure-Bid" and we have again allowed for its use in the Terms of Proposal, attached to these recommendations. There is no cost to the City for this service, and Springsted Incorporated does not have a financial interest in the use of Sure-Bid. Page 4