Agenda - Council - 08/24/2021 - Laserfiche WebLink

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EXECUTIVE SUMMARY OF PROPOSED DEBT Proposed Issue: $10,700,000 General Obligation Capital Improvement Plan Refunding Bonds Series 2021A Purposes: The proposed issue includes financing for a current refunding of the 2012A General Obligation Capital Improvement Plan Bonds which were previously issued for an advance refunding of the 2005A Public Project Lease Revenue Bonds used to finance construction of the City's Municipal Center. Debt service will be paid from ad valorem property taxes. Interest rates on the obligations proposed to be refunded are 3.000% to 3.375%. The refunding is expected to reduce debt service expense by approximately $1,047,892 over the next 10 years. The Net Present Value Benefit of the refunding is estimated to be $989,737 equal to 9.417% of the refunded principal. This proposed issue is considered a Current Refunding as the obligations being refunded are callable on December 15, 2021 and will be pre -payable within 90 days of the date of issue of the new Bonds. Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475 and Section 475.521, as amended. They will be general obligations of the City for which its full faith, credit and taxing powers are pledged. The Bonds count against the Net Debt Limit of 3% of the EMV of taxable property in the City. The total amount of outstanding debt may not exceed approximately $89.7 million. Since the City has $23,530,000 (inclusive of the proposed 2021A Bonds) of debt subject to the Net Debt Limit, the City is well under the maximum limit. Term/CaII Feature: The Bonds are being issued for a term of 10 years (remaining term of the existing bonds). Principal on the Bonds will be due on December 15 in the years 2022 through 2031. Interest is payable every six months beginning June 15, 2022. The Bonds will be subject to prepayment at the discretion of the City on December 15, 2028 or any date thereafter. Bank Qualification: Because the City is issuing more than $10,000,000 in tax-exempt obligations during the calendar year, the City will be not able to designate the Bonds as "bank qualified" obligations.