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<br />  <br /> <br />Presale Report <br />City of St. Anthony, Minnesota <br />March 27, 2018 <br />Page 2 <br /> <br />Basis for <br />Recommendation: <br />Based on our knowledge of your situation, your objectives communicated to us, <br />our advisory relationship as well as characteristics of various municipal financing <br />options, we are recommending the issuance of general obligation bonds as a <br />suitable financing option for the following reasons: <br />- This coincides with the City’s past practices to finance this type of project <br />with this type of debt issue <br />- This is the most overall cost-effective option that still maintains future <br />flexibility for the repayment of debt. <br />Method of <br />Sale/Placement: <br />In order to obtain the lowest interest cost to the City, we will competitively bid the <br />purchase of the Bonds from local and national underwriters/banks. <br />We have included an allowance for discount bidding equal to 1.200% 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 borrowing <br />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 to <br />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 for <br />new issues in the range of 2.00% to 10.00% of the face amount of the issue. This <br />means that an issuer with a $2,000,000 offering may receive bids that result in <br />proceeds of $2,040,000 to $2,200,000. <br />If this Bond issue receives a premium bid, the City may choose to reduce the size <br />of the issue or increase the net proceeds for the project when the sale is awarded. <br />The adjustments may slightly change the true interest cost of the original bid, <br />either up or down. <br />You have the choice to limit the amount of premium in the bid specifications. This <br />may result in fewer bids, but it may also eliminate large adjustments on the day of <br />sale and other uncertainties. <br /> <br />Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there are <br />no refunding opportunities at this time. <br />We will continue to monitor the market and the call dates for the City’s <br />outstanding debt and will alert you to any future refunding opportunities. <br />39