Laserfiche WebLink
4110 TO: Mayor & Council <br /> FROM: Finance Director-Treasurer <br /> DATE : February 2, 1984 <br /> I <br /> RE : DEFEASANCE <br /> On January 18, 1984 the five bond issues accounted for in the Improve- <br /> ment Bond Redemption Fund were defeased. Investments and cash totalling <br /> $2, 493, 600. 00 were transferred to Norwest Bank Minneapolis on that date. <br /> Those investments will earn an average of 11. 4% interest. Norwest will, <br /> pursuant to the escrow agreement, manage those investments and make bond <br /> principal and interest payments on the City' s behalf until the final <br /> bond payment is made on January 1, 1996 . The City will receive an annual <br /> report on the status of this escrow account. The City is responsible <br /> for the payment of bond service and coupon service charges to the banks <br /> that were designated as paying agents on the five bond issues which were <br /> defeased. In 1983 those service charges were $496. 05. Using current <br /> rates these charges are estimated to amount to $4, 922. 00 from now until <br /> the final bond payment is made on January 1, 1996 . The proposed ordi- <br /> ance establishing a Special Projects Fund provides for payment of these <br /> service charges. <br /> illIn undertaking this defeasance of five improvement bond issues the City <br /> has resulted in the following: <br /> 1. The City has provided for $3,960, 945 . 00 of future bond <br /> principal and interest payments. ($3, 135, 000 . 00 principal; <br /> $825, 945 . 00 interest) . <br /> 2 . The City has cancelled $904, 800 . 00 of future debt service <br /> tax levies originally scheduled to be levied between 1984 <br /> and 1994. The originally scheduled levy for these bonds <br /> in 1983 was 1. 618 mills. <br /> 3. The defeasance cost $2,522, 022. 00 . These costs are as follows : <br /> cash and investments to escrow agent $2 , 493, 600 . 00 <br /> - escrow agent fees 15, 000 . 00 <br /> - financial consultant fees 5, 000 . 00 <br /> - legal fees (estimated) 2 , 500. 00 <br /> - C. P.A. review fees (estimated) 1, 000. 00 <br /> - allowance for future bond and coupon <br /> service charges (estimated) 4, 922. 00 <br /> $2, 522, 022. 00 <br /> 4. There remains in the Improvement Bond Redemption Fund a <br /> balance of $928, 120 . 00 which may be used to start the <br /> • Special Projects Fund. <br /> Should you have any questions do not hesitate to contact me. <br /> DB/ds <br />