5.5. ERMUSR 05-10-2016 - Laserfiche WebLink

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STRUCTURING At the direction of the Utility, the Series 2016A Bonds have been structured to provide for SUMMARY: approximately level annual debt service over a term of 20 years. SCHEDULES Schedules attached include: MMPA buy-in analysis, sources and uses of funds and net debt ATTACHED: service requirements,given the current interest rate environment. $1,460,000 Electric Revenue Refunding Bonds, Series 2016B Description of Issue PURPOSE: Proceeds of the Series 2016B Bonds, together with $287,500 available in the Reserve Account and $30,700 held in the debt service fund, will be used to (i)refund the February 1,2017 through 2022 maturities of the City's Electric Revenue Bonds, Series 2007A (the "Prior Bonds"),dated March 28,2007; (ii)fund a deposit to the Reserve Account;and (iii)pay costs of issuance.The issuance of the Series 2016B Bonds is being conducted as a"current" refunding, in which the proceeds of the Series 2016B Bonds are used within ninety days of bond settlement to redeem the outstanding principal of the Prior Bonds. The maturities to be refunded are currently outstanding in the aggregate principal amount of$1,535,000. The purpose of the refunding is to achieve interest cost savings. The Prior Bonds were originally issued to finance improvements and extensions to the City's Electric Utility system and to fund a deposit to the Reserve Account. STRUCTURING At the direction of the Utility, the Series 2016A Bonds have been structured to provide for SUMMARY: approximately level annual savings over a term of matching the remaining term of the Prior Bonds. On August 1, 2016 the Utility will use the $30,700 held in the debt service fund to pay the interest due on the Prior Bonds. On Septermber 1,2016, the Utility will use the proceeds of the Series 2016B Bonds and the $287,500 transfer from the Debt Service Reserve Account to redeem the remaining $1,535,000 outstanding principal on the Prior Bonds and to pay interest accrued thereon from August 1,2016. Beginning with the February 1,2017 principal and interest payment, the Utility will begin to make debt service payments on the Series 2016B Bonds,realizing the interest cost savings. Based on current interest rates, this refunding is projected to result in total future value savings of approximately $56,284, with a net present value of$58,277. These savings are after payment of all expenses related to the transaction. SCHEDULES Schedules attached include: a preliminary feasibility summary, estimated net debt service ATTACHED: requirements and interest cost savings, given the current interest rate environment, aggregate Electric System debt service after issuance of the Bonds, and proof of the debt service reserve requirement. RISKS/SPECIAL The outcome of this financing will rely on the market conditions at the time of the sale. Any CONSIDERATION: projections included herein are estimates based on current market conditions. Springsted Page5 170