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FC#~f.(~ PRESENTATION OF POSSIBLE REFINANCING SCENARIOS OF THE CITY'S MUNCIPAL CENTER DEBT By: Diana Lund, Finance Officer Background: The city received notice that the 2010 market values of the city are averaging a decrease of 11 % for residential properties and 8 %z% for commercial properties. These valuations will affect the city's proposed 2011 tax rate. If the city were to use the adopted 2010 levy with the proposed 2011 market value decrease, the city would see the tax rate rise from 37.68% to 42.38%. In terms of levying amount, retaining a 37.68% tax rate would require the city to reduce its 2011 levy by almost $942,000. Staff is looking at different options of how the city can manage the 2011 levy and tax rate. Two of these options are being presented tonight which pertain to the city's fund balance policy and the debt structure of the city's municipal center. Paul Donna, the city's financial advisor from Northland Securities, will be present to discuss possible refinancing scenarios of the municipal center debt and their implications. Four different scenarios have been attached. The four options are: refinancing with present term structure to take advantage of interest rates: net savings of approximately $43,000; 5-year debt term extension, yearly savings of approximately $212,000 and additional debt of $2.7m ($613,000 present value); 9-year debt term extension, yearly savings of $297,000 and additional debt of $5.25m ($920,000 present value) and 14-year debt term extension, with a yearly savings of $372,000 and additional debt of $8.48m ($1.28m present value). Funding Source: Informational only. Committee Action: No action required. Informational only until further 2011 budget discussions. Reviewed By: City Administrator: Finance Officer FC: 4/13/10