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

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City of Ramsey, Minnesota February 23, 1995 economic lives of 20 or 50 years, respectively. Since this issue has an average maturity of 9.50 years, ~t is in compliance with this regulation. Bank-Qualified Obligations The Tax Reform Act restricts the ability to banks to deduct tax-exempt interest as a carrying expense under certain circumstances in calculating their tax liability. Because the City is not expected to issue more than $10,000,000 of tax-exempt obligations in 1995, this issue will be eligible to be designated as "qualified obligations." This qualification will help the marketability of the~ssue. Federal Reimbursement Regulations A reimbursement bond is a portion of a bond issue used to pay an expenditure that was paid prior tO the date the bond was issued. A reimbursement bond cannot be issued as tax exempt unless the issuer meets the requirements outlined in this section. If an ~ssuer wishes to reimburse itself with proceeds from tax exempt bonds to be issued after the e~penditure is made it must declare its intent to do so within 60 days after the expenditure has been made. This declaration of intent must contain (i) a description of the project or ident~ the fund or account used to pay the expenditure and (ii) state the maximum amount of bonds expected to be issued for the project. Preliminary expenditures in an amount not greater than 20% of the bond issue may be paid without the declaration of intent. These expenditures include architectural, engineering, testing, surveying, bond issuance costs and other incidental costs incurred prior to commencement of the ~roject. Eligible costs do not include land acquisition or site preparation. A de minimis amo_~nt equal to the lesser of $100,000 or 5% of the proceeds is also exempt from declaration of in!ent. Reimbursement for expenditures previously made must take place not later than 18 months after'the later of (i) the date the expenditure was made or (ii) the date the financed property is plac~d in service or abandoned, but in no event later than 3 years after the expenditure is made. The three-year period, and not the I8 month reimbursement period, applies to governmental entities who issue less than $5,000,000 of tax-exempt bonds in the current cale~ndar year. It is~'our understanding that the City has complied with the regulations and the City's bond counsel, Holmes & Graven, Chartered, of Minneapolis will verify such compliance. Sal~ Process Sp(~ngsted Incorporated, together with Capital Guaranty Insurance Company, a municipal bond insurer, will offer a surety bond service, "Sure-Bid," to underwriters in lieu of putting up a good fait~ check in order to bid on the bonds. In addition to allowing underwriters to submit their bids by ~ail or telephone, we will also allow them to submit bids through PARITY, an electronic bid fili~ process. Springsted has access to the bids via modem and will. verify and tabulate the bid~ received to determine the winning bid. We have allowed for the use of Sure-Bid and P~ITY in the Terms of Proposal, attached to these recommendations. We believe that the use of these bidding options may attract more bids for the sale, since it reduces administrative ba~iers for an underwriter to bid. There is no cost to the City for these services and Springsted does not have a financial interest in the use of Sure-Bid or PARITY. Page 4 I I I i I I I I I I I I I I I I I