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Item No. 9F <br />Meeting Date: June 28, 2004 <br />Type of Business: Consent Agenda <br />Administrator Review: _____ City of Mounds View Staff Report <br />To: Honorable Mayor and City Council <br />From: Charles Hansen, Finance Director <br />Item Title/Subject: Resolution 6295 Approving a Contract with Springsted, <br />Inc. for Continuing Disclosure and Arbitrage Rebate <br />Services for the G. O. Improvement Bonds, Series 2004A <br /> <br />Continuing disclosure is a requirement under SEC regulation 15©2-12 in which entities <br />issuing of bonds since 1995 must annually file certain financial information with a <br />national repository. Buyers of the bonds are then able to obtain information on their <br />bonds from a convenient and reliable source. <br /> <br />The City of Mounds View had initially filed the continuing disclosure reports but then fell <br />out of compliance in the late 1990s. Resolution 5809 authorized engaging Springsted, <br />Inc. to bring the City back into compliance by filing the continuing disclosure reports for <br />2001 and 2002. <br /> <br />Arbitrage regulations were issued by the U.S. Treasury Department in 1993. The <br />concept behind arbitrage is that issuers of tax-exempt bonds are not to earn more <br />interest from investments of bond moneys than they pay in interest on the bonds. This <br />applies to both the original proceeds and to money accumulated for debt service. <br />Earnings above certain limits must be rebated to the U.S. Treasury. <br /> <br />The City Council has annually approved having Springsted provide the continuing <br />disclosure services since 2002. The 2004 bonds are the first ones where arbitrage <br />rebate has become an issue for the City of Mounds View. <br /> <br />In years when the City issues a new general obligation bond, continuing disclosure <br />services cost $200 for each existing bond issue. If there is a year when no new bond is <br />issued, or the City issues some type of bond other than general obligation, an additional <br />$1,300 fee will be charged to cover the preparation of an annual report. <br /> <br />Arbitrage reports and, if needed, rebates, must be filed at five-year intervals after bond <br />issuance. The fee for this service currently is $2,750 at the five-year interval only. <br /> <br />Respectfully Submitted, <br /> <br /> <br /> <br />Charles Hansen