7.2. SR 06-20-2005 - Laserfiche WebLink

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Item 7.2. MEMORANDUM TO: Mayor and City Council FROM: Lori Johnson, Finance and Administrative Services Director DATE: June 20, 2005 SUBJECT: Consider Resolution Providing for the Issuance and Sale of the City's $1,200,000 Liquor Store Revenue Bonds, Series 2005C; Fixing it's Form and Specifications; Directing its Execution and Delivery; and Providing for its Payment Attached is a resolution authorizing the issuance of $1,200,000 in revenue bonds to pay for the construction of Westbound Liquor. These bonds are being purchased by The Bank of Elk River and First National Bank of Elk River with each bank taking $600,000 at an interest rate of 4.5% for a ten year term with fInal maturity in 2015. The 1997 liquor revenue bonds issued to fInance Northbound Liquor were pre-paid in full on June 15, 2005. The 1997 bonds carried an interest rate of 6.35%. That prepayment provision allowed for the prepayment only for the purpose of fInancing the construction of a second liquor store. The 2005C bonds have a prepayment provision allowing for prepayment for any reason beginning July 1, 2012. Principal payments on the 2005C issue have been structured to coincide with sales and cash flow projections for the fIrst several years of operation. The fIrst principal payment in 2007 is $50,000 with payments accelerating to $200,000 in 2015. Although this structure results in additional interest costs, it helps to ensure that adequate revenues will be available to meet debt service costs while still maintaining the reserves necessary to fund annual transfers to other funds. Action Reauest The City Council is asked to approve the attached resolution providing for the issuance and sale of the city's $1,200,000 liquor store revenue bonds, series 2005C; fixing its form and specifIcations; directing its execution and delivery; and providing for its payment. S:\Council\Lori\2005\Revenue Bonds Lqour Store. doc