Loading...
HomeMy WebLinkAboutCC RES 03-065 A RESOLUTION PROVIDING FOR THE SALE OF $ 1, 175, 000 ADVANCED REFUNDING TAXABLE GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 2003E Meeting Sheet IIIIII VIII VIII VIII VIII VIII IIII IIII ioassa Box: 31 Folder: RES 2003 Document: CC RES 03-065 A RESOLUTION PROVIDING FOR THE SALE OF $ 1, 175, 000 ADVANCED REFUNDING TAXABLE GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 2003E • Resolution No. 03 - 066 Council Member i-a Lt5 f introduced the following resolution and moved its adoption: Resolution Providing for the Sale of $1,175,000 Advanced Refunding Taxable General Obligation Tax Increment Bonds,Series 2003E A. WHEREAS, the City Council of the City of St. Anthony, Minnesota (the "City"), has heretofore determined that it is necessary and expedient to issue the City's $1,175,000 Advanced Refunding Taxable General Obligation Tax Increment Bonds, Series 2003E Bonds in order to provide advance refunding of the City's$1,720,000 Taxable Tax Increment Bonds of 1996. B. WHEREAS, the City has retained Ehlers &Associates,Inc.,in Roseville, Minnesota("Ehlers"),as its independent financial advisor for the Series 2003E and is therefore authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); NOW,THEREFORE, BE IT RESOLVED by the City Council of the City of St. Anthony,Minnesota, as follows: 1. Authorization;Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale of the Series 2003E Bonds. • 2. Meeting_Proposal Opening. The City-Council shall meet at 7:00 P.M. on September 23,2003,for the purpose of considering sealed proposals for and awarding the sale of the Series 2003E Bonds. 3. Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers and participate in the preparation of an official statement for the Series 2003E Bonds and to deliver it on behalf of the City upon its completion. The motion for the adoption of the foregoing resolution was duly seconded by Council Member N.j and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereof: and the following voted against the same: No ne Adopted this_ day of , 2003 7 ayor ATTEST: �'7�' �" • City Clerk Reviewed for Administration: #L--- City AV NianAger • CITY OF ST. ANTHONY, MINNESOTA PRE-SALE REPORT AUGUST 12, 2003 Proposed Issues: $1,175,000 Refunding Taxable General Obligation Tax Increment Bonds Refunding,Series 2003E Purpose: To achieve cost savings by refinancing bonds eligible for refunding at lower interest rates by the issuance of the Series 2003E Bonds in order to provide advance refunding of the City's $1,720,000 Taxable Tax Increment Bonds of 1996. Description: Ehlers&Associates routinely reviews outstanding bond issues to assess potential for cost savings. This review indicated cost savings could be achieved by refunding the above-named issues. Ehlers has established criteria that provide guidance regarding the level of savings, which should be achieved prior to recommending refunding. In addition, State and Federal regulations provide criteria for refunding of existing debt. This issue meets both criteria. Term/Call Feature: The Series 2003E Bonds will retain the debt repayment period of the original issue and will be callable in February 2011 for bonds maturing in 2012. • Funding Sources: The Series 2003E Bonds will be paid from the same revenue source as the original issue,tax increment proceeds. Discussion Issues: Bond interest rates have been at near record lows but are rising. A number of factors, including world events and economic conditions in general, may impact rates prior to the sale date scheduled for September 9. Ehlers will review market conditions prior to sale and will advise the City if it appears minimum savings will be achieved. If it appears that the City will not be in a position to achieve the savings necessary to justify the refunding, Ehlers will recommend that the sale be delayed or cancelled. The 2003E Bonds will be refunding the 1996 Tax Increment Bonds. Because these bonds are not callable until 2/1/06, the City will continue to pay the debt service on the outstanding bonds until this call date. The proceeds from this bond sale will be invested in government securities until the call date. Given current investment rates the City will earn less interest than payable on the new bonds. This impact or"negative arbitrage"has been calculated into the projected net savings. These funds, including accrued interest, will be used to pay off the bonds outstanding on the original issue as of 2/1/06. The City will begin to pay on the new bond issue starting in 8/1/06 (interest)and 2/1/07 (principal). The expected saving will average about $7500 per year (net present value of$50,000) for a net savings of about 4.7%. Federal regulations limit the ability of cities to call bonds in advance of call dates. Therefore consideration should be given to the potential that future interest rates may be lower between now and the 2/l/06 call date. • Prepared by Ehlers & Associates, Inc. • Schedule: Pre-Sale Review: August 12,2003 Distribute Official Statement: Week of August 25, 2003 Bond Sale: September 9, 2003 Estimated Closing Date: October, 2003 Attachments: Sources and Uses of Funds Proposed Debt Service Schedule Bond Buyer Index Resolution authorizing Ehlers to proceed with bond sale Ehlers Contacts: Financial Advisors: Mark Ruff and Jim Prosser • Bond Analysts: Diana Lockard(651) 697-8534 Debbie Holmes (651) 697-8536 Bond Sale Coordinator: Connie Kuck(651) 697-8527 The Oficial Statement for this financing will be mailed to the Council Members at their home address for review prior to the sale date. Prepared by Ehlers & Associates, Inc.