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City of <br /> Elk - Request for Action <br /> River O. <br /> To Item Number <br /> Mayor and City Council 8.1 <br /> Agenda Section Meeting Date Prepared by <br /> General Business June 16, 2014 Tim Simon, Finance Director <br /> Item Description Reviewed by <br /> Resolution Authorizing the Bond Sale for Cal Portner, City Administrator <br /> Wastewater Treatment Facility Improvement Bonds Reviewed by <br /> Action Requested <br /> Adopt,by motion,a resolution providing for the competitive negotiated sale of$10,000,000 General <br /> Obligation Sewer Revenue Bonds, Series 2014B <br /> Background/Discussion <br /> Earlier this year,the Council discussed improvements needed at the Waste Water Treatment Facility <br /> (WWTF). The facility is debt free as the 2005 refunding bonds were paid off early on February 1, 2014. <br /> $11,237,050 in bonds are needed to fund the project,but federal law limits tax exemption to $10 million <br /> in a single year. We will authorize $10 million this year to ensure the best rate and make the bonds tax- <br /> exempt. Based on updated cash flows we anticipate issuing$1,237,050 in 2016 unless reserves and <br /> revenues are sufficient. <br /> Staff has requested the call date be set for the 8-year mark, so if we have a significant increase in <br /> development or connection fees, the city would be able to call them in early or anytime until they mature. <br /> Terri Heaton of Springsted,will be at the meeting to answer any questions. <br /> All cash flows were updated to reflect the annual debt service payment in the Sewer Enterprise Fund and <br /> projections show the city still maintains reserve requirements for the fund. This project is expected to <br /> last well beyond the 20-year life of the bonds,aside from possible modifications in future years. <br /> The true interest cost (TIC) is estimated at 3.20% over the 20 years. For comparison,the last-issued <br /> WWTF bonds (1996) had a TIC of 5.73%,which was later refunded down to 3.60%in 2005, and <br /> subsequently paid off early in 2014. <br /> Next steps <br /> • July 8"', 2014—rating tour and conference are conducted <br /> • July 21", 2014—competitive bids are received <br /> • August 21, 2014—proceeds received <br /> P a w E A E U s r <br /> Template Updated 4/14 INIM UREI <br />