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<br /> <br /> <br /> <br />Presale Report <br />City of St. Anthony, Minnesota <br />March 28, 2017 <br />Page 3 <br /> <br />“bank qualified” obligations. Bank qualified status broadens the market for the <br />Bonds, which can result in lower interest rates. <br />Rating: The City’s most recent bond issues were rated AA by Standard & Poor’s. The <br />City will request a new rating for the Bonds. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the rating <br />for the issue may be higher than the City’s bond rating in the event that the bond <br />rating of the insurer is higher than that of the City.  <br />Basis for Recommendation: Based on our knowledge of your situation, your objectives communicated to us, <br />our advisory relationship as well as characteristics of various municipal <br />financing options, we are recommending the issuance of general obligation <br />bonds as a suitable financing option for the following reasons: <br />- These are viable options available to finance these types of projects <br />under state law. <br />- This is the most overall cost effective option that still maintains future <br />flexibility for the repayment of debt. <br />- This coincides with the City’s past practices to finance these types of <br />projects with this type of debt issue <br />Method of Sale/Placement: In order to obtain the lowest interest cost to the City, we will competitively bid <br />the purchase of the Bonds from local and national underwriters/banks. <br />We have included an allowance for discount bidding equal to 1.2% of the <br />principal amount of the issue. The discount is treated as an interest item and <br />provides the underwriter with all or a portion of their compensation in the <br />transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount <br />(maximum discount), the unused allowance may be used to lower your <br />borrowing amount. <br />Premium Bids: Under current market conditions, most investors in municipal <br />bonds prefer “premium” pricing structures. A premium is achieved when the <br />coupon for any maturity (the interest rate paid by the issuer) exceeds the yield <br />to the investor, resulting in a price paid that is greater than the face value of the <br />bonds. The sum of the amounts paid in excess of face value is considered <br />“reoffering premium.” <br />The amount of the premium varies, but it is not uncommon to see premiums <br />for new issues in the range of 2.00% to 10.00% of the face amount of the <br />issue. This means that an issuer with a $2,000,000 offering may receive bids <br />that result in proceeds of $2,040,000 to $2,200,000. <br />For this issue of Bonds, we have been directed to use the premium to reduce the <br />size of the issue. The adjustments may slightly change the true interest cost of <br />the original bid, either up or down. <br />You have the choice to limit the amount of premium in the bid <br />specifications. This may result in fewer bids, but it may also eliminate large <br />adjustments on the day of sale and other uncertainties. <br />18