Agenda Packets - 1983/10/24 - Laserfiche WebLink

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0[or Dff&ASANC[ ANALYSIS file oppurluniIles available Ia the City of Mounds View with regard to Its "improvement Bond Redemption Funds" are clearly stated in the DeLaliunt Veto Debt /e'\iervice Study. Due to the significant cash holdings in the Fund and the Iowa Interest rates on the debt to be paid from the Fund when compered to yields available on maket Investments, the City finds itself in a position to liberate excess funds by defeasing the existing debt through the establishment of an escrow account. It would appear from the original dates of Issue of the bonds being paid from this fund that the Federal arbitrage regulations will have little If any effect on the proposed defeasance. Also, given that Bond Counsel opines that this type of defeasanceis legal and that it frees upp excess funds in the account, which we expect to be the core, Minnesota Statutes have little to say about this type of transaction. There are, however, some practical considerations. Some of the necessary considerations are as follows: • should the transaction take place and what is the appropriate timing for the transaction considering the following: • market conditions/projections • nature of the securities composing the escrow account/s. • availability of funds with which to purchase securities. • number of issues to defease by escrow. • whether to establish one or five escrow accounts. V what type of investment should be included in the escrow account and what is the best way to secure those investments. • whether a separate verfication of cash flows in required. To demonstrate what the City may anticipate given current market conditions and assuming that the defeasance in completed on November i, 1983, we have selected groupoings of U.S. Treasury Securities and U.S. Government Agency Securities in numbers sufficient to defease each of the old bond issues. To Identify estimated cash needs for the issues on an individual basis, we have structured five separate accounts. This should not necessarily be considiered an endorsement of separate accounts, but merely an illustration. The requirements, based on Thursday, October 13, 1983 market quotations, are as follows: Principal Debt Service Cash Bond Issue Outstanding Outstanding_ Requirement 1965 b 720,000 S 892,530 62 1,0 5750 62525 1966 1,415,000 1,846,813 , 55,062 1968 60,000 185,000 69,000 209,728 174,824 1971 1974 870,000 1,091t763 778,869 Total $3,250,000 $4,109,834 b2.589,050 It is obvious that a substantial amount of cash will be freed up through defeasance of the five Issues. •dividual scshedules supporting the table above can be found in this section.