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City Hall Financing Considerations <br />Page 2 <br /> <br />Other issues to be considered as the City reviews financing a new City Hall include the <br />current legislation under consideration and the favorable interest rate market. <br /> <br />Proposed Legislation - The Governor's proposed tax bill (H.F. 751/S.F. 748) and <br />Senator Pogemiller's proposed tax freeze bill (S.F. 330) are currently being <br />considered at the State Legislature. Suffice it to say that the City's ability to issue <br />bonds with a tax levy component would be severely impacted (Exhibit A is a <br />summary comparison). As the proposed bills relate to the financing options for a <br />City Hall, certain "grandfather" provisions currently exist: <br /> <br />o <br /> <br />S.F. 330 - bonds may be issued and a tax levy certified for 2004 and 2005 <br />so long as 1) the bonds were issued prior to June 1 or 2) the project was <br />under contract prior to June I and bonds subsequently issued. <br /> <br />H.F. 751 & $.F. 748 - bonds may be issued and a tax IeVY certified as a <br />special levy so long as 1) election held prior to May 1 or 2) bonds issued <br />prior.to May 1. <br /> <br />Under its current form, it is my understanding the City may meet the exemptions <br />under S.F. 330 but would likely not be able to meet the grandfather provisions <br />for H.F. 751/S.F. 748 which would result in a reverse referendum process. As you <br />can imagine these bills have sparked many discussions and debates within the <br />public finance industry. The lobbyist groups we are in touch with indicate that <br />various modifications to these bills are being considered. <br /> <br />The Municipal Bond Market - Interest rates are a~ historical lows! There has not <br />been a better time to leverage money and borrow for capital improvements in <br />over 40 years. The estimated average coupon for a 20-year city of Ramsey <br />General Obligation bond would be below 4.00% and roughly 4.25% for a Lease <br />Revenue Bond. Cities have brought proje, cts forward .f3 take advantage of the <br />current interest cost savings being afforded by the Iow rate environment. <br /> <br />I look forward to learning more details about the project and assisting you as the City <br />moves forward. If you have any other questions, please do not hesitate to contact me. <br /> <br />Sincerely, <br /> <br />NORTHLAND SECURITIES INC. <br /> <br />Paul Donna <br /> <br />Vice President and Partner <br /> <br />-27- <br /> <br /> <br />