5.3a ERMUSR 03-09-2021 - Laserfiche WebLink

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Parity Bonds. The current amount on deposit in the Reserve Account is $1,261,359.The difference of $640,135 will be funded with proceeds of the Bonds. SECURITY ANDThe Bonds will be special limited obligations of the City payable solely from net revenues of the City’s Electric System. SOURCE OF PAYMENT: The Bonds are being issued as Additional Bonds, on parity with the outstanding Parity Bondsas listed above. STRUCTURINGIn consultation with the Utility, the Bonds have been structured to provide for SUMMARY: approximately level annual debt service over a term of 30years. SCHEDULESSchedules attached include (i) sources and uses, (ii) debt service, given the current interest rate environment, (iii) proof of reserve requirement, (iv) coverage ratioand ATTACHED: additional bonds test, and (v) aggregate electric parity debt service including the Bonds. RISKS/SPECIALThe outcome of this financing will rely on the market conditions at the time of the sale. CONSIDERATIONS: Any projections included herein are estimates based on current market conditions. The Bonds are payable solely from net revenues of the City’s Electric Fund. The City and Utility will need to continually review the Electric Fund budget, and user fees and charges, to ensure annual net revenues of the Electric Fund are not less than 110% of the average annual debt service on the Bonds and Parity Bonds. SALE TERMS ANDVariability of Issue Size:A specific provision in the sale terms permits modifications to MARKETING:the issue size and/or maturity structure to customize the issue once the price and interest rates are set on the day of sale. Prepayment Provisions:Bonds maturing on or after August 1, 2032may be prepaid at a price of par plus accrued interest on or after August1, 2031. Bank Qualification:The City expects to issue more than $10 million in tax-exempt obligations in 2018; therefore the Bonds are not designated as bank qualified. Post Issuance Compliance POST ISSUANCEThe issuance of the Bonds will result in post-issuance compliance responsibilities. The responsibilities arein two primary areas: (i)compliance with federal arbitrage COMPLIANCE: requirements and (ii)compliance with secondary disclosure requirements. Federal arbitrage requirementsinclude a wide range of implications that have been taken into account as this issue has been structured. Post-issuance compliance responsibilities for thistax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any “excess earnings” will need to be paid to the IRS to maintain thetax-exempt status of the Bonds.Any interest earnings on gross bond proceeds or debt service funds should not be spent until it has been determined based on actual facts that they are not “excess earnings” as defined by the IRS Code. The arbitrage rules provide for spend-down exceptions for proceeds that are spent within either a 6-month, 18-month or, for certain construction issues, a 24-month period each in Page 3 331