6. EDSR 04-12-2010 - Laserfiche WebLink

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ITEM ~ 6. /i cty or El ,~ REQUEST FOR ACTION River To Item Number Economic Develo ment Authori Agenda Section Meeting Date Prepared by Administration Aril 12, 2010 Tim Simon, Finance Director Item Description Reviewed by Prepayment and Redemption of the 2002A and Defeasance , 2002B lease revenue bonds Reviewed by Action Requested The Economic Development Authority is asked to approve a Resolution Providing For The Defeasance, Prepayment And Redemption Of Certain Outstanding Bonds Of The Elk River Economic Development Authority, Minnesota, And Authorizing Execution Of Supplemental Indentures And An Escrow Agreement. Background/Discussion In 2002, the Economic Development Authority (EDA) issued lease revenue bonds for the construction of the public safety building where police and fire services are located (2002A bonds) and the City Hall expansion where Elk River Municipal Utilities (ERMU) located adjacent to City Hall (2002B bonds). The City and ERMU make rent payments (debt payments) to cover the principle and interest on the bonds. The City levies the debt service payments for the 2002A bonds and ERMU makes payments on the 2002B bonds allocated to the water and electric fund. The City has decided to terminate the Lease purchase agreement and purchase the City Hall Facility and the Public Safety Facility bonds by refunding the 2002A and 2002B bonds. The City on March 15, 2010 approved the sale of the General Obligation Capital Improvement Plan Bonds, Series 201-0A to refund the 2002A and 2002B bonds for interest cost savings. These bonds will be advance refunded ahead of the cross over date in 2013 and will remain with an escrow agent until such time as the old bonds axe defeased. In addition, the City bond rating was upgraded to AA+ when we had a rating call on the 2010A bonds. Financial Impact EDA - No financial impact since the City previously levied for the 2002A bonds and Elk River Municipal Utilities paid the principle and interest on the 2002B bonds. City - A principle and interest reduction of $325,734.03 over the remaining years of the bonds. The true interest cost on the 2010A bonds are 2.878 percent.