6.5. SR 05-05-1997.~y of
River
MEMORANDUM
Item # 6.5.
TO: Mayor & City Council
FROM: Lori Johnson, Asst. City Administrator/
Finance Director
DATE: May 5, 1997
SUBJECT: Liquor Store Financing
At last Monday's meeting I gave you a brief overview of the information that
had been received regarding the liquor revenue bond. The information was
based on Springsted's analysis of the two bank proposals (The Bank of Elk
River and First National together bid two interest rate options) and an
estimated underwriter's bid. Springsted's summary indicated that the
interest cost would be higher if the banks purchased the bond. However, as
we discussed, this was based on an assumed rate from the underwriter and
this amount could increase or decrease based on the actual bid.
At the meeting Councilmember Thompson questioned whether or not we
could get a firm bid from the underwriter. Although this is unusual and not
always appropriate, Springsted did call Dougherty Dawkins and request a
firm bid. We felt this information was necessary for the Council to make an
informed decision.
We now have more accurate discount and rate information, but not all of the
other provisions are known. Based on Dougherty's bid, the difference in the
total costs of two issues is minimal, less than $5,000. What this comparison
does not take into consideration is the additional staff time that may be
required to prepare documents for Dougherty Dawkins that may not be
required by the local banks. Also, as I mentioned earlier, at this time I do not
know whether the Dougherty Dawkins issue would have any stipulations
relating to construction of the Westbound store.
Action Requested
The Council should authorize staff to proceed with the sale of Liquor Store
Revenue bonds to The Bank of Elk River and First National Bank of Elk
River.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425