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<br />  <br /> <br />Presale Report <br />City of St. Anthony, Minnesota <br />May 28, 2019 <br />Page 2 <br /> <br />Bonds will be due on February 1 in the years 2021 through 2035. Interest is payable <br />every six months beginning February 1, 2020. <br />The Bonds will be subject to prepayment at the discretion of the City on February 1, <br />2028 or any date thereafter. <br />Bank Qualification: Because the City is expecting to issue no more than $10,000,000 in tax exempt debt <br />during the calendar year, the City will be able to designate the Bonds as “bank <br />qualified” obligations. Bank qualified status broadens the market for the Bonds, <br />which can result in lower interest rates. <br />Rating: The City’s most recent bond issues were rated by Standard & Poor’s. The current <br />ratings on those bonds are “AA”. The City will request a new rating for the Bonds. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the rating for <br />the issue may be higher than the City’s bond rating in the event that the bond rating <br />of the insurer is higher than that of the City.   <br />Basis for <br />Recommendation: <br />Based on our knowledge of your situation, your objectives communicated to us, our <br />advisory relationship as well as characteristics of various municipal financing options, <br />we are recommending the issuance of general obligation bonds as a suitable financing <br />option for the following reasons: <br />- These are viable options available to finance these types of projects under <br />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 projects with <br />this type of debt issue <br />Method of <br />Sale/Placement: <br />We will solicit competitive bids for the purchase of the Bonds from underwriters and <br />banks. <br />We will include an allowance for discount bidding in the terms of the issue. The <br />discount is treated as an interest item and provides the underwriter with all or a portion <br />of their compensation in the transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount (maximum <br />discount), the unused allowance may be used to reduce your borrowing amount. <br />Premium Pricing: In some cases, investors in municipal bonds prefer “premium” pricing structures. A <br />premium is achieved when the coupon for any maturity (the interest rate paid by the <br />issuer) exceeds the yield to the investor, resulting in a price paid that is greater than <br />the face value of the bonds. The sum of the amounts paid in excess of face value is <br />considered “reoffering premium.” The underwriter of the bonds will retain a portion <br />of this reoffering premium as their compensation (or “discount”) but will pay the <br />remainder of the premium to the City. The amount of the premium varies, but it is not <br />uncommon to see premiums for new issues in the range of 2.00% to 10.00% of the <br />69