5. EDSR 12-10-2007 - Laserfiche WebLink

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Description: The Bonds are being issued pursuant to Minnesota Statu s, Chapter 469 and 475. The Bonds are anticipated to be rated by Moody' at an "Aa3" level. Bank Qualification: Because the federal government restricts banks from inv sting in "non-bank qualified bonds", the EDA sold the first bond issue for his project in 2007 with a principal amount of $10,000,000. The separati n of the two issues resulted in a savings of debt service of approximately 280,000 in present value dollars. In 2008, the EDA is granted another ban qualified limit of $10,000,000. We expect these bonds to be bank quali red as well. Term/Call Feature: The combined amortization of the 2007 and 2008 Bo ds is fora 25-year period. The longer maturities were sold in the 2007 onds. Principal on the 2008 Bonds will be due on February 1 in the years 009 through 2015. The Bonds will not be callable before maturity. Funding Sources: The Bonds are general obligations of the EDA/City and as such are secured by a pledge of the EDA/City's full faith, credit and tax ng powers, with or without payments from the YMCA. It is the intent f the EDA to levy property taxes to support the two-thirds of the debt ser ice beginning with taxes payable in 2008 for the interest payment due A gust 1, 2008. The bond resolution will show the EDA levying 100% f the debt service, which can be written down an annual basis from MCA and County funding. Discussion Issues: The Bonds will be deemed 501(c)(3) bonds due to th involvement of a non-profit (the YMCA) in payment of the debt. The no -profit designation requires a public hearing, limits costs of issuance to % paid from bond proceeds, and changes restrictions on earning inte est on the Bonds (arbitrage). Arbitrage: With increasing short-term investment rates, 1RS r amount of interest that the City may earn on bond pry concern. If the City spends the bond proceeds within 2~ to specific measurements each six months, interest earl above the bond interest rate does not need to be rebate (the excess interest earnings are known as arbitrage). need to keep its debt service funds within IRS parameter on carrying too high of a balance during the life of the ~-les regarding the needs is more of a l months according ied on the proceeds d or repaid interest The City will also •s to avoid penalties issue.