CC PACKET 11082011 - Laserfiche WebLink

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Debt Issuance ServicE9 Details of Proposed Debt Proposed Issue: $2,215,000 General Obligation Refunding I3onds, Series 2011B Purpose: The 2011B GO Improvement Bonds are a current refunding of the 2004A and 2005A GO hnprovement Bonds, both of which are callable on February 1, 2012. The 2004A Bonds were originally issued in the amount of $1,790,000 with remaining coupon rates ranging from 4.00% to 4.60%. The refunding principal amount will be $1,065,000 with the same term (ending on February 1, 2020) and the new rates are estimated to be .55% to 2.35%. The 2005A Bonds were originally issued in the amount of $1,695,000 with remaining coupon rates ranging from 3.55% to 4.15%. The refunding principal amount will be $1,150,000 with the same term (ending on February 1, 202 1) and the new rates are estimated to be .55% to 2.55%. Authority: The Bonds are being issued pursuant to Minnesota Statues, Chapter 429 and 475. Funding Source(s): These Bonds will be paid from the same source of payment originally pledged to them (special assessments and tax levy). Risk Factors: We have not assumed any pre -paid special assessments. If the City receives a significant amount of pre -paid assessments, it may need to increase the levy portion of the debt service to make up for lower interest earnings than the expected assessment interest rate on the prior bonds. Arbitrage Monitoring: The IRS is becoming more active in surveying municipal issuers. Therefore, IRS rules regarding the amount of interest that the City may earn on bond proceeds is more of a concern. Because the City is issuing less than $5,000,000 in this calendar year (GO Improvement Portion of the Bonds), the proceeds can earn interest without restriction for three years. The City will also need to keep its debt service funds within IRS parameters to avoid penalties on carrying too high of a balance during the life of the issue. It should be noted that pre -paid special assessments may cause the Debt Service Fund to be higher than IRS parameters. Rating: It is anticipated that Standard and Poor's will rate the Bonds a "AA". Presale Report November 8, 2011 Page 2