Agenda - Council - 10/27/2020 - Laserfiche WebLink

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EXECUTIVE SUMMARY OF PROPOSED DEBT Proposed Issue: $9,935,000 General Obligation Capital Improvement Plan Bonds, Series 2020A Purposes: The proposed issue includes financing to fund the construction of a new public works facility utilizing General Obligation Bonds authorized through a Capital Improvement Plan. Debt service will be paid from ad valorem property taxes. Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475.521. The Bonds count against the City's net debt limit. The City may not incur debt in excess of 3% of assessor's estimated market value for the City. In the City, the EMV for pay 2020 is $1,650,987,200. Therefore, the total amount of outstanding debt cannot exceed $49,529,616. As of October 14, 2020, the City has $26,135,000 subject to the legal debt limit. This figure is inclusive of the proposed 2020A Bonds. In addition, a separate limitation under the CIP Act is that, without referendum, the total amount of principal and interest in any single year payable on all CIP Bonds issued by the City cannot exceed 0.16% of the total estimated market value in the municipality. In the City, that maximum annual debt service amount is $2,641,580 for pay 2020 tax year ($1,650,987,200 x .0016). The highest annual principal and interest payments on the City's existing CIP Bonds plus those proposed to be issued under this CIP are estimated to be approximately $1,136,865. As such, debt service on the CIP Bonds will be within the annual limits under the CIP Act. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. Term/Call Feature: The Bonds are being issued for a term of 21 years (10 years of principle payments), with interest only payments through 2031 to wrap around existing Municipal Center debt. Principal on the Bonds will be due on December 15 in the years 2032 through 2041. Interest is payable every six months beginning June 15, 2021. The Bonds will be subject to prepayment at the discretion of the City on December 15, 2030 or any date thereafter.