Agenda - Council - 05/08/2012 - Laserfiche WebLink

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CC Regular Session 7. 1. Meeting Date: 05/08/2012 Submitted For: Kurt Ulrich By: Amy Dietl, Administrative Services Information Title: Authorization of Resolution #12-05-XXX Accepting Proposal on the Sale of $16,875,000 General Obligation Capital Improvement Plan Bonds, Series 20152A, Providing for Their Issuance and Levying a Tax for the Payment Thereof Background: In 2005 bonds were issued in the amount of $19,200,000 for the construction of the municipal center and that portion of the municipal center parking ramp that pertained to employee parking. Lease Revenue Bonds, via a lease agreement with the EDA, were issued. As part of the 2003 legislative session, Governmental units were allowed to issue what is termed "Capital Improvement Plan (CIP) Bonds" to fund municipal projects such as city halls, fire station, police stations, etc. The issuance of CIP bond allows the City to attain a lower interest rate on the debt. As the city will be refunding the Lease Revenue Bond, the lease agreement that is between the city and the EDA needs to be terminated. The termination of this lease will be on the agenda of the EDA on May 10, 2012. The city is refinancing the debt of the municipal center earlier than the December 2014 call feature on the original 2005 bond issue. The city wants to not only take advantage of the interest rate savings, but to bring the annual debt levy to a more manageable level of $1.1M versus the current $1.5M. A public hearing was held on March 13, 2012 and a resolution passed that approved the issuance of General Obligation Capital Improvement Plan Bonds. The bonds were originally scheduled to be sold on March 20, 2012 and brought back to the City Council for acceptance at its regular meeting of March 27, 2012. Due to a change in market conditions, long-term interest rates increased significantly and our finance consultant advised the city to hold back on the sale until market conditions were once again favorable. Within the last couple of weeks, interest rates have turned favorable and a positive present value, comparable to what was originally presented to council was achievable. To take advantage of these factors, the bonds were sold on Monday, April 30 ,2012. Final sale information will be presented by Paul Donna of Northland Securities, the city's financial advisor, at the city council meeting. Notification: Observations: Recommendation: Funding Source: The General Obligation Capital Improvement Plan Bonds will be used to Refund the current Public Project Lease Revenue Bonds.