Agenda - Council - 05/22/2018 - Laserfiche WebLink

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Basis for Recommendation: 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 its 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. Method of In order to obtain the lowest interest cost to the City, we will competitively bid the Sale/Placement: purchase of the Bonds from local and national underwriters/banks We have included an allowance for discount bidding equal to 1.20000% 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 reduce the size of the issue. The adjustments may slightly change the true interest cost of the original bid, either up or down. You have the choice to limit the amount of premium in the bid specifications. This may result in fewer bids, but it may also eliminate large adjustments on the day of sale and other uncertainties. Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there are no refunding opportunities at this time. We will continue to monitor the market and the call dates for the City's outstanding debt and will alert you to any future refunding opportunities. Presale Report City of Ramsey, Minnesota May 22, 2018 Page 2