6.1. SR 12-10-2012 - Laserfiche WebLink

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Debt Isstia.nce Service ..... ....... ...................................... ............. .......................-........ s,..............................................-............................................................................................. .................... ................ ......................................................... .................... Executive Summary of Proposed Debt Proposed Issue: $9,965,000 General Obligation Refunding Bonds, Series 2013A. Purposes/Funding Sources: In 2006, voters approved a referendum to offer the City's General Obligation pledge toward the Economic Development Authority's (EDA) issuance of$12 million in bonds to acquire and renovated a recreational facility owned by the Authority and leased to the Young Men's Christian Association (YMCA) of Metropolitan Minneapolis. The structure assumed that the YMCA pay one-third of the debt service of the bonds issued, with the remaining two-thirds to come from an annual tax levy. The EDA issued two sets of bonds: $10 million in 2007 and $2 million in 2008. Splitting the issues enabled interest savings by remaining below the $10 million annual tax exempt issuance threshold required by the federal government for issuers to designate "bank qualified" bonds. The 2007 Bonds were structured so principal payment would not start until 2016, after the 2008 Bonds would mature in 2015, Because of the short duration, the 2008 Bonds were not offered with the option for early redemption (prepayment). However, the 2018 to 2033 maturities of the 2007 Bonds are callable for early redemption at the discretion of the EDA on February 1, 2017 or any date thereafter. The proposed issue includes financing to execute the advance refunding of the EDA's General Obligation Bonds, Series 2007, There is $9,225,000 in principal eligible for prepayment on or after the February 1, 2017 call date. This refunding is considered an advance refunding as the new 2013A Bonds will be issued more than 90 days prior to the call date of the obligations being refunded. As required by law, in an advance refunding proceeds of the Bonds are invested in government securities and held in escrow until the call date. In a crossover refunding, the money in the escrow is used to pay interest on the refunding Bonds through February 1, 2017, The EDA will continue its original schedule of payments on the 2007 Bonds through February 1, 2017. After this call date, and the 2007 Bonds are extinguished, the FDA's payments will "crossover" to the new refunding Bonds. In other words, savings will not be experienced until after February 1, 2017. We have limited the issuance amount to $10 million in order to preserve bank qualification, and structured the payments to maintain the same term as the original 2007 Bonds and provide level annual savings. Using the $10 million limit, a $9.64 million crossover refunding can refund the 2018 to 2033 maturities of the existing 2007 Bonds._ Presale Report December 10, 2012 City of Elk River Economic Development Authority, Minnesota Page 1