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26 Mimi Executive Summary of Proposed Debt Debt Issuance Services Proposed Issue: $1,500,000 General Obligation Water and Sewer Refunding Bonds, Series 2013A Authority: The Bonds are being issued pursuant to Chapter 444 and 475, which allows cities to issue debt without limitation as long as debt service is expected to be paid from water and sewer revenues. The Bonds will be general obligations of the City, for which its full faith, credit and taxing powers are pledged. Purposes/Funding Sources: The proposed issue includes a current refunding of the City's existing General Obligation Water and Sewer Revenue Bonds, Series 2003B. Debt service will continue to be paid from water and sewer revenues. Interest rates on the Bonds proposed to be refunded are 3.75% to 4.45%. The refunding rates are expected to be 0.45% to 1.80% and reduce interest expense by approximately $226,500 over the next eleven years (averaging $20,595 per year). The Net Present Value Benefit of the refunding is estimated to be approximately $209,799, equal to over 14% of the value of the refunded principal, This refunding is considered to be a Current Refunding as the Bonds being refunded are either callable (pre -payable) now, or will be within 90 days of the date of issue of the new Bonds. Term/Call Feature The term of the Bonds is the same term as the original Bonds (not being extended). The Bonds are being issued for an eleven year term.. Principal on the Bonds will be due on February 1 in the years 2014 through 2024. Interest is payable every six months beginning August 1, 2013. The Bonds maturing February 1, 2020, and thereafter will be subject to prepayment at the discretion of the City on February 1, 2019 or any date thereafter. Bank Qualification The refunded Bonds were originally designated "bank qualified" obligations when issued in 2003. As such, the new Bonds will not count towards the $10,000,000 per calendar year in new bonds that the City can designate. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Rating: The City's most recent bond issues were rated AA by Standard & Door's. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating in the event that the bond rating of the insurer is higher than that of the Presale Report November 13, 2012 City of St. Anthony, Minnesota Page 1