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CASE # / REVIEW RECOMMENDATIONS FROM SPRINGSTED REGARDING CALLING CERTAIN DEBT SERVICE ISSUES By: Jessie L. Hart, Finance Officer BACKGROUND: Springsted periodically reviews all of the City of Ramsey's outstanding indebtedness to determine the benefits of calling or refunding certain issues. In its most recent review, it was determined that there are two debt service issues, the $170,000 1984 Improvement Bonds and the $660,000 1985 Improvement Bonds, that it would be beneficial for the City to call at the fa'st call date. As noted in the attached letter, we are earning substantially less in interest earnings then we are paying, and there is sufficient monies in the two debt service funds to cai1 both bonds. There will be approximately $300 to $500 of fees associated with each issue called. These fees do not include any publications costs, which could amount to about $200 per issue called, and we do not know at this time if bond counsel will require formal publication. I will be in contact with Holmes and Graven and have thea'n make that determination. The potential savings by calling these bonds is as follows: $170,000 1984 Improvement Bonds $2,000 (interest payable net of earnings) $660,000 1985 Improvement Bonds $3500 (interest payable net of earnings) After netting out costs to call these bonds, the City will have a net savings of approximately $4,100. Also included in this recommendation is to establish a policy in which it is determined what should be done with excess debt service funds once an issue is completely paid. Bob Thistle made one recommendation, in the attached letter, pe~aining to establishing a revolving fund for improvements. While at this time it is not necessary to make this decision, I believe it is important that we address the issue during the budget process. " COMMI'ITEE ACTION: Based on discussion - recommend that Council approve proceeding with this process. Refer to attached resolution. Review Checklist: City Administrator Finance Officer