Agenda Packets - 1983/10/24 - Laserfiche WebLink

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Mr. Donold F. Poulcy Mr. Donuld I Sragcr I4 October 198:1 Page 3 currently $992,300 of scheduled tax levies for those five bond issues. The City has been reducing the scheduled levies by approximately 80% and with the defeasance of the bonds would be required to eliminate the levy. We do not think there would be any statutory authority for making a debt service levy on a bond issue which is fully discharged in on escrow account, unless a portion of those levies may have been required to fund unassessed costs of projects which provided future benefit which may have been only partially assessed in later bond issues, not included in this defeasance analysis. In addition to the immediate access to money in the bond fund the City will also receive the deferred assessment income from those five bond issues. According to the 1982 audit it would appear there remains somewhere in the neighborhood of $727,000 of principal outstanding on deferred ussessments, collectable by the City in the years 1984 through 1995. As that money and the interest on the assessments comes into the City it can be allocated to other funds as determined by the City. The third exhibit we have shown, Schedule C, is the cash flow for the 1981 improvement bond issue. This issue was structured in a manner which does not reflect the cash flow of the assessments pledged to the repayment of the bonds. It is our understanding that these assessments are spread against the developer, Kraus -Anderson, and that the City has hacl a good working relationship with this firm and it is reasonable to assume that you will collect 100% of the assessments as filed. If this assumption holds true it appears that the City will have to provide $100,000 for the debt service fund no later than October 10, 1984, in order to cancel a tax levy which is required to meet the principal payment due on May I, 1986. The $100,000 figure will meet 100% of the debt service. By statute the City is required to provide an amount equal to 105% of the actual debt service requirements. The actual debt service requirement at 105% will require cash available of $131,007. A transfer of $100,000 plus the interest to be earned in 1984 until October I on the fund balances should produce the $131,000. Beyond that point the assessment income starts to meet the actual debt service expenditures and surpluses began to accrue in the fund. A temporary transfer to the debt service fund could be reimbursed once the fund begins to develop sufficient income. It appears that actual surpluses will accrue within the following two years and therefore the $100,000 and any interest charged to the fund could be transferred back lu the fund from which it was borrowed. In summary it appears that a full defeasance of the five bond issues will provide a significant fund balance to be used by the City in whatever manner the City so desires. By statute the money would be transferred to the general fund and from the general fund it can be transferred at the direction of the Council. This would be a reasonable source of revenue for the transfer to the 1981 bond fund. The City may also desire to establish some form of permanent improvement revolving find with its excess money which could be used to finance projects prior to bonding or if the projects are of a smaller size finance them without bonding. In addition, the special assessments outstanding for the projects involved in those five bond issues will also be flowing to the City and could be credited to this fund.