6.1. SR 12-10-2012 - Laserfiche WebLink

Home Browse Search

55 ; ... ebt Issuance Services ......... i....m..,..>:....E..J....0........ ., ...._.. .............. ................ ............. ............... ........... ... ......... .............. ........... ...........,.. ......... ............. Interest rates on this portion of the obligation average 4.2%. Interest rates on the new Bonds are projected to average 2.1%, The crossover refunding is expected to reduce total payments by more than $850,000 over the next 20 years. The net present value benefit of the crossover refunding is estimated to be over $750,000, equal to over 7% of the refunded debt. As a benchmark test, Minnesota statutes require at least 3% net present value benefit to advance refund an obligation. Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475 and 469. The Bonds will be issued by the EDA but, as is the case for the 2007 Bonds, the 2013A Bonds will also be general obligations of the City, for which its full faith, credit and taxing powers are pledged. The 2/3r`, portion of the 2013A Bonds not covered by YMCA lease payments count against the City's debt limit of 3% of market value. Term/Call Feature The Bonds are being issued for a 20 year term. For a crossover refunding, principal on the Bonds will be due on February 1 in the years 2018 through 2033. Interest is payable every six months beginning August 1, 2013. Regardless of the escrow, the Bonds maturing February 1, 2024, and thereafter will be subject to prepayment at the discretion of the City on February 1, 2023 or any date thereafter. Bank Qualification Because the City and EDA are issuing less than $10,000,000 in the calendar year, the City will be able to designate the Bonds as "bank qualified" obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Rating: The City's most recent General Obligation 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, Method of Bale/Placement: In order to obtain the lowest interest cost to the EDA, we will solicit competitive bids for purchase of the Bonds from local banks in your area and regional and national underwriters. We have included an allowance for discount bidding equal to 1.0% 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 its 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 Presale'Report Dec ember 10, 2012 City of Elk River Economic Development Authority, Minnesota Page 2