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City Council Regular Meeting Minutes August 12, 2003 Page 3 Mark Ruff, Ehlers and Associates, explained this sale had also been delayed until September 23, 2003. He stated the 2003E Bonds would refund the 1996 Tax Increment Bonds and would be 3 paid from the same revenue source as the original issue, tax increment proceeds. 4 5 Mr. Ruff stated, because these bonds were not callable until February 1, 2006, the City would 6 continue to pay the debt service on the outstanding bonds until this call date. He noted the 7 proceeds from this bond sale would be invested in government securities until the call date. He 8 explained the City would earn less interest than payable on the new bonds given current 9 investment rates and this impact or"negative arbitrage"had been calculated into the projected 10 net savings. 11 12 Mr. Ruff stated these funds, including accrued interest, would be used to pay off the bonds 13 outstanding on the original issue as of February 1, 2006. He noted the expected savings would 14 average approximately$7,500 per year(net present value of$50,000) for a net savings of about 15 4.7%. 16 17 Mr. Ruff indicated that Ehlers and Associates would review market conditions prior to the sale 18 and would advise the City if it appeared minimum savings would be achieved. He stated the sale 19 could be cancelled anytime up to three days before the sale. 20 21 Motion by Councilmember Sparks to adopt Resolution 03-064 providing for the sale of$630,000 22 General Obligation Refunding Improvement Bonds, Series 2003D. 0 Discussion: 25 26 Councilmember Faust asked if the City would save $50,000 in interest under the current rates. 27 Mr. Ruff responded the savings realized for the Improvement Bonds should be approximately 28 $50,000, which was about 6% of the outstanding principal. He added the savings realized for the 29 Tax Increment Bonds would also be approximately$50,000, which was about 5% of the 30 outstanding principal. He noted the threshold was 3%. 31 32 Motion carried unanimously. 33 34 Motion by Councilmember Faust to adopt Resolution 03-065 providing for the sale of 35 $1,175,000 Advanced Refunding Taxable General Obligation Tax Increment Bonds, Series 36 2003E. 37 38 Motion carried unanimously. 39 40 B. Resolution 03-063, re: Call for hearing on TIF plan. 41 It was noted the City Council called for a public hearing on September 23, 2003, on the 42 modification for Redevelopment Project Area No. 3, the establishment of Tax Increment 43 Financing District No. 3-5 and the adoption of a Tax Increment Financing Plan. 44 City Manager Mornson stated the schedule would be put together based on the hearing. He indicated staff would let the public know about the upcoming public hearings that would be held