Agenda - Council - 03/13/2012 - Laserfiche WebLink

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F Debt Issuance Services Executive Summary of Proposed Debt Proposed Issue: $7,420,000 Taxable GO Tax Increment Bonds, Series 2012 Authority: The TIF Bonds are being issued pursuant to Minnesota Statues, Chapter 469 and 475. The Bonds will be general obligations of the City, for which its full faith, credit and taxing powers are pledged. Because tax increment from TIF District #14 is expected to equal not less than 20% of the principal amount of the Bonds, the Bonds can be a general obligation without a referendum and will not count against the City's debt limit. Purposes/Funding Sources: The Bonds are being issued to pay for certain qualified costs related to the construction of the COR Apartments which will consist of approximately 230 rental units. The Bonds will be paid by tax increment generated by the project and payments to be made by the developer or the parent of the developer pursuant to the Loan Agreement, Note and Development Agreement. Discussion Issues Due to extremely low rates in the bond market, the City decided to proceed with issuing a longer term bond with an early call date of June 1, 2015 (3 years). The Bonds will have capitalized interest in the amount of approximately $462,889 to pay for interest costs through December 1, 2014 (prior to the call date). The first principle payment due on the Bonds is June 1, 2015 (the date the Bonds can be paid in full). This payment has been reduced to provide the City the flexibility to not have a large payment due if in fact the developer has not secured its permanent financing in order to pay the Bonds off. Term/Call Feature The Bonds have 10 principle payments in the years 2015-2024. The Bonds have a 3 year call date, meaning that they can be prepaid on June 1, 2015, or any date thereafter. This early call date allows the City the flexibility to pay off the bonds at any time on or after this date when there is adequate proceeds from the project to do so. Bank Qualification Because the Bonds are taxable obligations they will not be designated as "bank qualified" obligations. Presale Report City of Ramsey, Minnesota February 28 Page 1