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<br />Rate Covenant: The City covenants to cause to be established, charged and <br />collected such lawfully established rates and charges for the services provided by <br />the Public Utility so that net revenues (Le. gross revenues derived from said rates <br />and charges less all costs of operation and maintenance, exclusive of debt service <br />and depreciation) will be sufficient to pay at least 110% of the average annual <br />principal and interest coming due on all outstanding bonds each year. <br /> <br />Because the cashflow of the electric utility is very strong, the covenants do not <br />pose a problem for the City at this time. <br /> <br />Other Issues: <br /> <br />The bonds are expected to be rated by Moody's at an "A2" level. They may be <br />considered for bond insurance up to a "Aaa" level if qualified by private <br />insurance companies and if the winning bidder chooses to purchase bond <br />insurance. <br /> <br />Because the City expects to issue more than $5,000,000 in tax-exempt <br />obligations in 2007, the Bonds will be subject to arbitrage rebate. By meeting <br />certain spend-down requirements, the bond issue can earn as much interest as <br />possible on the construction proceeds. The debt service reserve fund will be <br />subject to rebate of any interest earnings higher than the bond yield. <br /> <br />Because the City expects to issue more than $10,000,000 in tax-exempt <br />obligations in 2007, the Bonds will not be bank qualified, which carries a slightly <br />higher interest rate. <br /> <br />Schedule: <br /> <br />Pre-Sale Report and Call for Sale by <br />Council and Approval of Bonds by <br />Utility Commission: <br /> <br />February 20, 2007 <br /> <br />Distribute Official Statement: <br /> <br />Week of February 26 , 2007 <br /> <br />Conference call with Moody's: <br /> <br />February 27, 2007 <br /> <br />City Council Resolution approving <br />Bonds: <br /> <br />March 5, 2007 <br /> <br />Estimated Closing Date: <br /> <br />Week of March 26, 2007 <br /> <br />Attachment: <br /> <br />Resolution authorizing Ehlers to proceed with bond sale <br />Preliminary debt service schedules and sources and uses <br /> <br />Ehlers Contacts: <br /> <br />Financial Advisors: <br /> <br />Bond Sale Coordinator: <br /> <br />Mark Ruff(651)697-8505 <br />Sid Inman (651)697-8507 <br />Diana Lockard (651) 697-8534 <br />Debbie Holmes (651) 697-8536 <br />Connie Kuck (651) 697-8527 <br /> <br />Bond Analysts: <br /> <br />The Official Statement for this financing will be mailed to the Council Members at their home address for review <br />prior to the sale date. <br /> <br />. <br /> <br />EHLERS <br /> <br />& ASSOC',us tHC <br />