8.1. SR 07-15-2019 - Laserfiche WebLink

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Lake Orono park improvements; Dredging of Lake Orono; Various trail improvements; capitalized interest/working capital; and Related costs of issuance AUTHORITY: Statutory Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475, Minnesota Laws 2019, First Special Session, Chapter 6, Article 6, Section 17 and a voter approved referendum held on November 6, 2018. Voters approved the authorization to impose a sales and use tax of one-half of one percent (0.05%) for approximately 25 years for issuance of bonds to finance $35,000,000 plus an amount equal to interest and the costs of issuance to finance the acquisition and betterment of any or all of the projects as detailed above. The ballot question passed with votes of 6,827in favor and 3,702 opposed. SECURITY AND The Bonds will be a general obligation of the City, secured by its full faith and credit and taxing power. The Bonds will be repaid from a sales and use tax of one-half of one percent SOURCE OF (0.50%). PAYMENT: Additionally, the Bonds are secured by bond funded proceeds for capitalized interest or working capital of approximately $700,000. These monies will be used as needed to pay debt service due to any shortfall of sales tax revenues before any levy would be required. STRUCTURING In consultation with the City, the Bonds have been structured with a repayment term of 25 SUMMARY: years to match the projected annual sales tax revenues. Any such shortfall of sales tax revenue will be paid from the bond funded capitalized interest/working capital or a tax levy as needed. The City has provided historical annual sales tax for years 2012-2017. Based on 2017 total sales tax of the City, 0.05% would be $2,073,978 assumed the sales tax revenue would remain at the 2017 level. Minnesota statute limits the purchase price (the principal amount of the issue plus any premium generated ) of the Bonds to the amount authorized by voter referendum, plus up to 2 percent. The current bond structure presented herein are structured assuming premium pricing based on current market conditions and have been structured to maximize project proceeds of $35M and a capital reserve fund taking into account the statutory limit and the referendum authorizing $35,000,000 plus the costs of issuance. The Bonds may be issued in one or more series depending on the final review of bond counsel and the determination of use of proceeds, which may result issuing some or all of the bonds as 501(c)3 bonds. This allows bonds to be issued as tax-exempt bonds subject to annual reporting on private usage to assure that users are qualified 501c (3) users rather than private for-profit usage. Should a determination be made to issue 501(c)3 bonds for the ice improvements, the bonds may be issued in two series to minimize the restrictions to only the $27,500,000 ice improvements with the remaining $7.5 million for public improvements issued as tax-exempt. Page 3