Agenda Packets - 2017/03/13 - Laserfiche WebLink

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Presale Report City of Mounds View, Minnesota March 13, 2017 Page 1 Executive Summary of Proposed Debt Proposed Issue: $6,000,000 General Obligation Capital Improvement Plan Bonds, Series 2017A Purposes: The proposed issue includes financing costs associated with the construction of the new Mounds View Public Works facility according to the Capital Improvement Plan adopted 11/14/16. The debt service will be paid from ad valorem property taxes. Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter(s) 475.521, the Capital Improvement Plan (“CIP”) Bonding Authority and 475, General Bonding Authority. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. The Bonds count against the City’s General Obligation Debt Capacity Limit of 3% of estimated market value (EMV). In the City, the EMV for pay 2016 (2017 is not available at the time of the drafting of this report) is $935,172,600. Therefore, the total amount of outstanding debt cannot exceed $28,055,178. As of March 1, 2017, the City has $4,615,387 subject to the legal debt limit (this amount does not include the 2017A Bonds). After this issue, the City has over $17,000,000 available. In addition, a separate limitation under the CIP Act is that, without referendum, the total amount of principal and interest in any one year on all CIP Bonds issued by the City debt cannot exceed 0.16% of the total estimated market value in the municipality. In the City, that maximum annual debt service amount is $1,496,276 for the Pay 2016 tax year ($935,172,600 x .0016). The highest annual principal and interest payment on the CIP Bonds to be issued under this CIP and the Mounds View portion of the outstanding joint powers CIP Bonds is anticipated to be approximately $578,660. As such, debt service on the CIP Bonds will be well within the annual limits under the CIP Act. Term/Call Feature: The Bonds are being issued for a 21 year term. Principal on the Bonds will be due on February 1 in the years 2019 through 2038. Interest is payable every six months beginning February 1, 2018. The Bonds maturing on and after February 1, 2027 will be subject to prepayment at the discretion of the City on February 1, 2026 or any date thereafter. Bank Qualification: Because the City is expecting to issue no more than $10,000,000 in tax exempt debt during the calendar year, the City will be able to designate the Bonds as “bank qualified” obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates.