5.1. SR 05-10-1999 - Laserfiche WebLink

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RECOMMENDATIONS . Re: Recommendations for the Issuance of $5,725,000 General Obligation Bonds, Series 1999A INTRODUCTION The City has initiated a substantial expansion of its infrastructure to assist development of approximately 1,000 acres in the east Highway 10 area. These bonds will fund in part this expansion and will be repaid from a variety of revenue sources including special assessments, net revenues of the City's water and sewer utilities, and tax increment revenues from the City's Tax Increment Financing District No. 19. Development within the Highway 10 area has not yet begun. Therefore, assumptions regarding the projected revenue streams being used to repay the bonds are based on build-out projections and other assumptions provided by City staff. The bonds are backed by the City's general obligation pledge to levy ad valorem taxes in the event revenue collections are not received as anticipated. A detailed discussion of the various revenue streams being used to repay the bonds are described in the Discussion section later in these recommendations. To the extent the City does not meet the assumptions in either amount or timing, substantial financial impacts could occur. We recommend the following for the bonds: 1. Action Requested To establish the date and time of receiving bids and establish the terms and conditions of the offering. Monday, June 28,1999 at 10:00 A.M., with award by the City Council at 6:00 P.M. that same day. . 2. Sale Date and Time 3. Authority and Purpose for the Bond Issue The bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444, 469, and 475. The bonds are being issued to finance various public improvements within the City's new Highway 10 development area. 4. Principal Amount of Offering $5,725,000 5. Term Bonds We have included in the Terms of Proposal a provision to permit the underwriters bidding on the bonds to combine multiple maturities into a single term bond, subject to mandatory redemption on the same maturity schedule provided in the Terms of Proposal. The advantage to the underwriter is that it provides them the flexibility to create a large block of bonds that are more attractive to bond funds and certain pension funds that deal with only larger blocks of bonds. This in turn is a benefit to the City since selling the larger blocks of bonds reduces the risk to the underwriter, allowing them to lower their costs and the interest coupons. Since the bonds are being awarded on a .