Agenda - Council - 08/23/2011 - Laserfiche WebLink

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CC Regular Session Meeting Date: 08/23/2011 By: Diana Lund, Finance 7. 1. Title: Authorization of Resolution #11-08-XXX Authorizing the Sale of $4,365,000 General Obligation Bonds, Series 2011 A Background: At its regular meeting of May 31, 2011, city council authorized a contract with Douglas -Kerr Underground, LLC for City project #11-21. This project is for the Armstrong and Bunker Lake Boulevard Intersection Signalization which was a requirement of the COR Regional Roadway Improvements JPA Agreement with Anoka County and for the Legacy Christian Academy development approvements. The costs attributed to the city for the intersection signalization and street and utility improvements was estimated at $2.7M and Legacy Christian Academy Improvements were estimated at $1.701M. Funding for the two projects were to come from the issuance of debt, with the issuance of an MSA revenue bond for the city share, and a Special Assessment bond for the Legacy share. As the project has already been awarded, the city will incur costs prior to bond funds being received. A reimbursement resolution was adopted by city council on June 14, 2011 which allows the city to pay itself back with bond proceeds. The MSA bond will be backed by the City's MSA (state aid) funds and the annual debt service payment will be paid from the city's annual state aid allocation. The MSA bond will be for a period of 10 years. The Special Assessment bond will be levied against the property of the Legacy Christian Academy for a period of 20 years. A portion of the assessment will be deferred for three years per the terms of their special assessment agreement. City Council authorized the issuance of $4,405,000 at its meeting of July 26, 2011. On August 8, 2011, the ratings agency of Standard & Poors gave the city's bond a rating of AA+ which retained the city's bonding rate attained in November 2009. The actual bond sale occurred on August 10, 2011 by Northland Securities and the bonds sold at a $40,000 premium (Investors paid more than par) which allowed the amount of the principal of the bond to be reduced from the original $4,405,000 to $4,365,000. The net interest rate on the Special Assessment portion of the bond was a 3.34% and the MSA portion a 2.3%. A copy of the final debt service schedule for the total issue is attached. Northland Securities, the City's Financial Advisor, will be present at the meeting to present the bond pricing. Recommendation: Staff recommends that Council adopt Resolution #11-08-XX authorizing the issuance and awarding the sale of $4,365,000 General Obligation Bonds, Series 2011A. Funding Source: These bonds will be backed by the City's Municipal State Aid funding with the debt service paid from the annual allocation and the Special Asssessment Bond will be backed by an annual levy to the property owner of the Legacy Christian Academy Project. Council Action: