5.1. & 5.2. SR 10-15-2007 - Laserfiche WebLink

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// City of Elk -~-~ River REQUEST FOR ACTION To Item Number Ci Council 5.1. & 5.2. Agenda Section Meeting Date Prepared by oint Meetin with EDA October 15, 2007 Lori ohnson, Ci Administrator Item Description Reviewed by YMCA Bond Sale -Public Hearing to Designate Bonds as 501(c)(3) Bonds. Reviewed by Action Requested The Council is asked to hold a public hearing to designate the bonds to be issued by the Economic Development Authority as 501(c)(3) bonds. Background/Discussion The City Council and Economic Development Authority each reviewed the bond pxesale report at previous meetings. We axe now taking the final steps necessary to sell the first $10,000,000 in bonds fox the construction of a recreational facility to be leased to the YMCA. The final $2,000,000 will be sold in January, 2008. First the City Council must hold a public heating to designate the bonds as 501(c)(3) bonds. Designation of the 501(c)(3) bonds limits the issuance costs to two percent and changes restrictions on interest earning on the bonds. Once the public hearing has been closed, the EDA will take action to adopt a resolution accepting the offer on the sale of $10,000,000 of General Obligation Bonds, Series 2007, providing for their issuance and levying a tax fox the payment thereof. Finally, following the EDA's adoption of the resolution, the Council will proceed with agenda item 5.3 which is approval of the ordinance authorizing the issuance of up to $12,000,000 of General Obligation Bonds by the EDA fox the City and the resolution authorizing continuing disclosure undertaking. Representatives from Ehlers & Associates will be present at Monday's meeting to present the results of the sale and to answer questions about the process in which the city and EDA axe undertaking for the sale of these bonds. They will also present information on the city's bond rating upgrade to Aa3 by Moody's Investors Service. This was an unexpected rating increase that is obviously excellent news for the city; it will result in an interest savings on this bond issue and future issues. In the past Moody's has indicated that the city's overlapping debt and income demographics, two items out of the city's control, where the reasons the rating committee would not increase out xadng. In discussing the upgrade with Mark Ruff of Ehlers & Associates, he feels that Moody's may now put more emphasis the uty's strong financial management and that is outweighing the overlapping debt and demographic factors. A copy of Moody's rating report is included in the EDA packet fox your review. Financial Impact The financial impact of the EDA levy fox this issue has been discussed previously. S:ACounul\Lon\2007\YMCA Bond Salc.doc