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<br />. <br /> <br />. <br /> <br />. <br /> <br />City of Elk River, Minnesota <br />May 5, 1999 <br /> <br />Water and Sewer Portions of the Bond Issue <br /> <br />The water fund provides both an up-front cash contribution and a portion of the debt service <br />payments on the bonds. Pages 10 and 11 show that portion of the bonds to be repaid from <br />net revenues of the City's water and sewer funds. Together the water and sewer utilities will <br />cover approximately $750,000 of the total principal and interest payments due over the term of <br />the bonds. <br /> <br />Tax Increment Revenue Portion of Bond Issue <br /> <br />The TIF 19 Project Budget provides for a $630,000 principal contribution to this project. <br />Page 12 shows the tax increment portion of the bonds. As discussed above, tax increment <br />revenues from TIF 19 are not expected to be received until 2002. As shown in column 7 <br />capitalized interest will make the interest payment due on February 1, 2000. Column 8 shows <br />the assessment income that will be used to make interest payments due on this portion of the <br />bond issue from August 1, 2000 through February 1, 2002. (Please see paragraph below for a <br />discussion of the cash flow of TIF 19.) <br /> <br />The City has established redevelopment district TIF 19 in the Highway 10 development area in <br />order to finance some of the public improvements necessary for this development. The cash <br />flow analysis for TIF 19, prepared by Springsted, is shown on pages 14 and 15. The projected <br />annual tax increment revenues from TIF 19, shown on page 14, are based on build-out <br />assumptions provided by the developer. The revenue assumptions also assume a <br />commercial/industrial property class rate of 3.0%. Although the current commercial/industrial <br />property class rate is 3.5% for taxes payable in 1999, there are indications the State legislature <br />may continue to reduce the class rate in future years. The net tax increment revenues <br />available for debt service, after payment of City administration expenses and the State Auditor, <br />is shown in column 8. <br /> <br />Page 15 summarizes the expenditures to be made from TIF 19 over the term of the District. <br />Column 9a shows the projected debt service on the tax increment portion of this issue from <br />page 12, column 10. Columns 9b through column 10 on page 15 show the projected debt <br />service on future obligations that will be issued to finance additional improvements within <br />TIF 19. Column 11 shows the surplus of projected tax increment income after the issuance of <br />the debt obligations to be repaid from TIF 19 in columns 9a through column 10. If a positive <br />surplus is realized, as shown in column 11, the City expects to further issue various obligations <br />as shown in columns 12a through 13. <br /> <br />This project has been under discussion by the City for a considerable period of time. We <br />appreciate being of service to the City. <br /> <br />J;;;;~ej~J4/ <br /> <br />SPRINGSTED Incorporated <br /> <br />jan <br />Provided to Staff: <br />a) Summary of Arbitrage Rules <br />b) Arbitrage Rebate Addendum to the Contract <br />c) Continuing Disclosure Amendment to Addendum to the Contract <br /> <br />Page 6 <br />