Agenda - Council - 06/27/2017 - Laserfiche WebLink

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Rating: Basis for Recommendation: Method of Sale/Placement: The City's most recent bond issues were rated AA+ by Standard & Poor's. The City will request a new rating for the Bonds. If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue may be higher than the City's bond rating in the event that the bond rating of the insurer is higher than that of the City. Based on our knowledge of your situation, your objectives communicated to us, our advisory relationship as well as characteristics of various municipal financing options, we are recommending the issuance of General Obligation Street Reconstruction Bonds as a suitable financing option because - This is a viable option available to finance this type of project under State law - This is the most overall cost effective option that still maintains future flexibility for the repayment of debt These projects were anticipated when the City completed their street reconstruction plan in 2015 and held the required public hearing to finance these projects under this authority This coincides with the City's past practices to finance these types of projects with this type of debt issue. In order to obtain the lowest interest cost to the City, we will competitively bid the purchase of the Bonds from local and national underwriters/banks. We have included an allowance for discount bidding equal to 1.50% of the principal amount of the issue. The discount is treated as an interest item and provides the underwriter with all or a portion of their compensation in the transaction. If the Bonds are purchased at a price greater than the minimum bid amount (maximum discount), the unused allowance may be used to lower your borrowing amount. Premium Bids: Under current market conditions, most investors in municipal bonds prefer "premium" pricing structures. A premium is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds the yield to the investor, resulting in a price paid that is greater than the face value of the bonds. The sum of the amounts paid in excess of face value is considered "reoffering premium." The amount of the premium varies, but it is not uncommon to see premiums for new issues in the range of 2.00% to 10.00% of the face amount of the issue. This means that an issuer with a $2,000,000 offering may receive bids that result in proceeds of $2,040,000 to $2,200,000. For this issue of Bonds we have been directed to use the premium to increase the net proceeds for the project. The adjustments may slightly change the true interest cost of the original bid, either up or down. Presale Report City of Ramsey, Minnesota June 27, 2017 Page 2