Agenda - Council - 02/28/1995 - Laserfiche WebLink

Home

City of~amsey, Minnesota February 23, 1995 Appendix I is the maturity schedule and projected cash flow for the bonds. The bonds have been Structured around the cash flow projections prepared by City staff for Tax Increment Finandng District No. 1 only. The cash flow projections are attached as Appendix II to these recommendations, and Springsted has not attempted to independently verify the projections. The C~ty expects to utilize tax increment revenue solely from Tax Increment Financing District No. 1 fo support this issue. Columns 1 and 2 of Appendix I s. how the years of tax increment revenue collections and the maturity years of the issue. Columns 3 through 6 show the principa~ amounts, estimated interest rates, total interest cost and total principal and interest due on the bonds. Column 7 show~ the 5% overlevy required by State statute. The 5% overlevy is a protection to the bondh~dders and to the City in the event 100% of the projected tax increment revenues are not cd~ected as expected. The beginning cash balance of Tax Increment Financing District No. 1 is show~ in Column 8, and the projected annual cash balance of tax increment funds from Tax Increment Financing District No. 1, after repayment of this issue, is shown in Column 9. 'You will nbte the principal repayment of the bonds has been weighted more heavily after the colle~ion year 2000 in order to keep a positive cash balance of tax increment funds. We rbcommend the bonds maturing on or after February 1, 2006 be callable on February 1, 2005~ and any day thereafter, at a price of par plus accrued interest. This call feature will permit prepayment of the bonds with tax increment revenue surpluses, if the City so desires. Included in the principal amount of the bonds is a provision for discount bidding in the amount of $~9,000, representing 1.5% of the principal amount of the issue, or $15 per $1,000 bond. The ~iscount provides the underwriters with all or part of their profit and/or working capital for purchasing the issue. It permits them to reoffer the bonds at or close to a par reoffering scale, and, ~n our experience, results in lower interest rate~ on the bonds. Book Entry We ~ecommend the bonds be issued as "book entry only" obligations through the Midwest SecUrities Trust Company of Chicago, Under the book entry system, the holders of the bonds will Bot receive printed bonds but will have only a record from the broker/dealer stating they are hold, by the depository. This system will enable the aggressive settlement of the bonds on or befo-re March 30, 1995 as described in the last paragraph of these recommendations. addition, the book entry system eliminates the cost of printing the bonds and can also eliminate the ~eed for a registrar, since the City is responsible for sending its debt service payments directly to the depository. However, we recommend the City retain a registrar for a nominal fee to ~il reminder notices to the City indicating the date and amount of the payments coming due and~to act as an intermediary with the depository, should the need arise. We can assist with the ~rocess of determining a registrar. Ratings Th~ City is currently rated "Al" by Moody's Investors Service. This issue will require a rating review in order to maintain the ratings on the City's outstanding bonds and to insure the high level of marketability for this issue. The rating agency fee, estimated to total $5,500 will be bilt~d directly to the City by Moody's and is included in the issuance costs as a part of the size of t~he issue. I I ! I I I I I I I I I I I i I Page 2 !