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FREERS <br />& ASSOCIATES INC <br />To: Mike Mornson —Executive Director <br />0 <br />From: Stacie Kvilvang —Ehlers and Associates <br />W Date: March 6, 2006 <br />c Subject: Sale of Commercial TIF .Revenue Bonds for Silver Lake Village <br />Overview <br />Pursuant to Section 12.7 of the Redevelopment Agreement with Apache Redevelopment LLC, <br />upon successful completion of any element of the redevelopment, the City/TRA agreed to issue tax <br />exempt debt to refund and pay existing Taxable TIF Notes. <br />The commercial development is now complete and the commercial developer has requested that <br />the City/HRA issue tax .exempt TIF revenue bonds to "take out" their TIF Note. The TIF Note was <br />originally issued in the principal amount of $2,554,583 and was assigned to the commercial <br />developer's lender. Ehlers will be completing the required "look back" on the* commercial <br />development to determine whether the principal amount should remain the same or be lowered to <br />reflect actual qualified TIF costs incurred. Once the look back is completed and the tax exempt <br />TIF bonds are issued, the City/HRA will be required to pay off the commercial developer's lender <br />the newly determined principal amount of the note plus accrued interest to date. If we were to <br />assume that the principal was not reduced from the original TIF Note, the amount that would be <br />repaid would be approximately $2,984,000 ($2,554,583 at 6.75%). <br />Issues to be considered <br />• What is the par amount of TIF revenue bonds that are going to be issued? <br />• When will the bonds be issued? <br />• Is there any risk to the City/HRA in issuing these bonds? <br />• What will the net proceeds be after paying off obligations? <br />• What will the net proceeds be utilized for? <br />Ana sis of Issues <br />• What is the par amount of TIF revenue bonds that are going to be issued? <br />The resolution approves a par amount of bonds to be issued that will not exceed $5.8 million or <br />that any coupon can exceed 6.5%. Currently; we anticipate that the par amount will be <br />approximately $5.4 million and may be adjusted per final bond runs provided by the <br />Underwriter, Dougherty and Company LLC. <br />LEADERS IN PUBLIC FINANCE <br />3060 Centre Pointe Drive Phone: 651-697-8506 Fax: 651-697-8555 <br />Roseville, MN 55113-1.105 skvilvang@ehlers-inc.com <br />58 <br />