Agenda Packets - 2020/11/09 - Laserfiche WebLink

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To qualify for the credit enhancement, a City must submit an application and $500 fee to the State. Ehlers will coordinate the application to the State on your behalf. Rating: The City's most recent bond issues were rated by Standard & Poor's. The current ratings on those bonds are "AA". The City will request a new rating for the Bonds. Basis for Recommendation: Based on the City's objectives, our advisory relationship and characteristics of various municipal financing options, we are recommending the issuance of General Obligation Bonds as a suitable option to finance the city's Utility Improvement project is based on: • The issuance is consistent with the City's practices for financing capital projects and is structured to fit within its long-term financial plan and revenue projections. • General Obligation pledge will result in lower interest rates than most other financing options. • The expectation this form of financing will also meet the City's objectives for term, structure and optional redemption. • The method of sale process identified herein complies with the City's Debt Management Policy as well as best practices endorsed by the Government Finance Officers Association (GFOA). Method of Sale/Placement: We will solicit competitive bids for the purchase of the Bonds from underwriters and banks. We will include an allowance for discount bidding in the terms of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to reduce your borrowing amount. Premium Pricing: In some cases, investors in municipal bonds prefer "premium" pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid in excess of face value is considered "reoffering premium." The underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or "discount") but will pay the remainder of the premium to the City. For this issue staff will determine whether to use the net premium to either reduce the size of the issue or increase the net proceeds for the project after bids have been received on the day of sale. Any resulting adjustments may slightly change the true interest cost of the issue, either up or down. Presale Report November 9, 2020 City of Mounds View, Minnesota Page 2