Agenda - Council - 12/17/1991 - Laserfiche WebLink

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City of Ramsey, Minnesota December 12, 1991 As with the temporary bonds, we have included a provision for discount bidding in the improvement bonds. The discount allowance of $6,820 represents $11 per bond. New Issue Portion The composition of the new portion of this issue is shown in Appendix II. The amount of borrowing for the projects has been reduced by available service availability charges (SAS Funds), prepayments of special assessments and collections of 1991 special assessments filed in 1990. Assessment rolls for the various projects have been or will be assessed over periods of three, five and ten years, depending on the project. The estimated assessment collections, which do not include collections of prepayments, are detailed in Appendix III. We have not made any projections of prepayments or delinquencies of special assessments and are assuming for all structuring purposes that assessments will be collected as scheduled. Appendix IV is the recommended cash flow for the new issue portion, which has been structured around the projected assessment income (as developed in Appendix III). Columns 1 through 5 of Appendix IV show the years and amounts of principal and estimated interest due and payable on the new portion of the bonds. Column 6 shows the total estimated debt service required to pay 100% of the debt service, with Column 7 showing the 105% requirement as set forth by State statute, which is a protection to the bondholder and to the City in the event 100% of assessment collections are not received as expected. Column 8 shows the projection of assessment income from Appendix III (not including the 1991 collections) and Column 9 shows the net levy requirement which represents the City's share of these improvement projects. Refunding Portion In 1984 the City sold $2,045,000 General Obligation Improvement Bonds at a net interest rate of 8.90%. The 1984 Bonds are callable as of April 1, 1992, and the remaining bonds carry a net interest rate of approximately 9.35%. We project the refunding bonds could be sold today at an estimated net interest rate of 4.80%, resulting in a savings to the City of approximately $57,937 with an estimated present value of that savings of $34,171. We therefore recommend the City call the 1984 Bonds on April 1, 1992 by using available funds on hand and the issuance of new refunding bonds. We have discussed this refunding carefully with Ms. Ashley Helling, who has advised us the City has approximately $288,328 in the Debt Service Fund for the 1984 Bonds. The City will need to retain approximately $158,000 of the debt service fund to make the April 1, 1992 principal and interest payment, leaving approximately $130,000 available to reduce the size of the refunding portion of this issue. Rounding the issue size down to the nearest $5,000 brings the City's debt service fund contribution to approximately $126,871. One of the advantages of the refunding is that the City has received substantial prepayments of special assessments which funds have not over the past several years been able to be invested at the interest rate carried on the 1984 Bonds. Therefore, the City is actually losing money by receiving these prepayments. We estimate new bonds will be sold at interest rates much less than a net rate of 9.35%, and therefore it will be easier to invest any additional assessment collections at interest rates closer to the interest rates received on the new bonds. Attached as Appendix V is a complete analytical summary of the refunding portion of this issue, which has been structured around even principal payments with the approval of City staff. Appendix IV, Schedule A, shows the debt service of the 1984 bonds (refunded bonds) as it exists now. On the call date of April 1, 1992 all of the remaining bonds maturing in 1993 through 1996 will be called for redemption. The total amount of this refunded principal is Page 4