5.1. SR 05-10-1999 - Laserfiche WebLink

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. . . of the receipt of the revenues are known at this time. The assumptions made include tax increment revenues based on construction values and a build-out schedule provided by the developer, green acre deferrals of $420,420, of which $207,600 would be deferred seven years and $212,820 deferred 14 years, Trott Brook special assessment prepayments based on a seven year build-out as estimated by the developer, and timely payment of all special assessments. Any changes in these assumptions will, of course, affect the revenue stream available to meet debt service. The most important issue is that the construction of the commercial properties within TIF District 19 remain on schedule and at the values indicated by the developer. Page 13 of the Recommendations indicates the property tax levy which will be certified to the county auditor as a requirement of the bond issuance. Based on preliminary estimates, a small portion (principal of approximately $145,000) may be required to be financed through property tax levies if other sources do not become available. This tax levy must be identified as a revenue source because estimated deferrals in special assessment payments cause a cash flow shortage. If sufficient revenues are available to meet debt service, the property tax levies may be cancelled by the council on an annual basis. The first scheduled levy is for collection in the year 2000. This levy will be reviewed during the adoption of the levy resolution in September, 1999, to determine if it can be canceled. This is the largest public improvement bond that the city has issued. In the past several years of working on this project, there have been numerous discussions regarding the possibility of tax levies to meet debt service, the bond issue size, and the city's credit rating. The credit rating applied to this issue is very important as it affects the interest rate of the bonds. Moody's, the city's bond rating agency, will be visiting Elk River on June 15 in anticipation of rating this bond issue. At that time a Moody's representative will meet key department heads, the city administrator, the mayor, and other elected officials, after which she will take a tour of the city and the East Elk River development area. This tour is intended to give Moody's an idea of the level of growth in the city, how the growth has been handled, and the city's plans to accommodate future growth. In addition to this on site visit, we will be holding a teleconference with Moody's to provide additional data on the city, its financial condition, and detailed background information on this project. As you know, when Moody's reviews a credit rating, the total debt burden placed on the taxpayers, including city, county and school district debt, is considered. Because of this area's rapid growth there is considerable school debt with anticipation of additional school debt in the near future. The city also has slightly above average debt; however, most of it is special assessment and revenue debt. The city does not have much tax supported debt. The strong possibility of future city debt to facilitate infrastructure improvements necessary for growth will also be a rating consideration.