5.9. SR 09-13-1999 - Laserfiche WebLink

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. . . City of Elk River September 9, 1999 DISCUSSION The proceeds of the Bonds will be used to refund in advance of maturity the 2002 through 2011 maturities of the City's $3,495,000 General Obligation Improvement Bonds, Series 1994A, dated June 1, 1994. The composition of the Bonds is as follows: Deposit to Escrow Fund Costs of Issuance Underwriter's Discount Rounding Amount Subtotal Less: Accrued Interest Issuer Contribution Total Bond Issue $1,695,864.38 22,300.00 5,175.00 2.831.29 $1,726,170.67 (1,170.67) (1.150.000.00) $575,000.00 This type of refunding is known as a "crossover" refunding, in which the proceeds of the Bonds and the City's cash contribution of $1,150,000 are placed in an escrow account with a major bank and invested in government securities. These securities and their earnings are structured in such a way as to pay the interest on the Bonds until the call date of the Series 1994 Bonds, February 1, 2001. On the call date, the securities in the escrow account will mature and will cross over to prepay the refunded maturities of the Series 1994A Bonds. The City will continue to pay the original debt service on the Series 1994A Bonds until the call date. Beginning with the August 1, 2001 interest payment, the City will cross over and begin to make the reduced debt service payments on this issue. We have attached a summary of the refunding, with our estimate of savings. Page 5 shows the feasibility summary. Page 6 shows the current debt service requirement for the Series 1994A Bonds. Page 7 shows the total principal being refunded on the call date. Page 8 shows the principal and projected interest to be paid on this new issue. The estimated semi-annual interest payments totaling $32,925 due August 1, 2000 and February 1, 2001 will be paid by the escrow account. Page 9 compares the existing debt service with the lower new debt service and provides the estimated annual savings after the call date shown in the last column. The Bonds are expected to be sold at a true interest cost of approximately 4.8394%, resulting in estimated net present value savings to the City of approximately $70,152. In addition, the City is also in the process of using excess cash to defease its $1,550,000 General Obligation Improvement Bonds, Series 1994E. Springsted is assisting on the full defeasance of that issue as well. We are pleased to again be of service to the City of Elk River. Respectfully submitted, /~~ SPRINGSTED Incorporated Page 4