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Background: <br />PRESENTATION OF POSSIBLE REFINANCING SCENARIOS OF THE CITY'S <br />MUNCIPAL CENTER DEBT <br />By: Diana Lund, Finance Officer <br />The city received notice that the 2010 market values of the city are averaging a decrease of 11% for <br />residential properties and 8 1/2% for commercial properties. These valuations will affect the city's <br />proposed 2011 tax rate. If the city were to use the adopted 2010 levy with the proposed 2011 market <br />value decrease, the city would see the tax rate rise from 37.68% to 42.38 %. In terms of levying <br />amount, retaining a 37.68% tax rate would require the city to reduce its 2011 levy by almost $942,000. <br />Staff is looking at different options of how the city can manage the 2011 levy and tax rate. Two of <br />these options are being presented tonight which pertain to the city's fund balance policy and the debt <br />structure of the city's municipal center. <br />Paul Donna, the city's financial advisor from Northland Securities, will be present to discuss possible <br />refinancing scenarios of the municipal center debt and their implications. <br />Four different scenarios have been attached. The four options are: refinancing with present term <br />structure to take advantage of interest rates: net savings of approximately $43,000; 5 -year debt term <br />extension, yearly savings of approximately $212,000 and additional debt of $2.7m ($613,000 present <br />value); 9 -year debt term extension, yearly savings of $297,000 and additional debt of $5.25m <br />($920,000 present value) and 14 -year debt term extension, with a yearly savings of $372,000 and <br />additional debt of $8.48m ($1.28m present value). <br />Funding Source: <br />Informational only. <br />Committee Action: <br />No action required. Informational only until further 2011 budget discussions. <br />Reviewed By: <br />City Administrator: <br />Finance Officer <br />FC: 4/13/10 <br />