6.5. ERMUSR 10-15-2003 Elk River
Municipal Utilities
322 King Avenue
Elk River,MN 55330 phone: 763.441.2020
Fax:763.441.8099
October 8, 2003
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Takle
James Tralle
From: Bryan C. Adams
Subject: Water Bond Refinancing
At the May 13, 2003 meeting, authorization was given to proceed with construction of
Well #8 and associated facilities and utilize water revenue bonds to pay for the
improvement. The City's financial advisors, Ehlers & Assoc., are also recommending we
refinance Series 1993B and Series I994D, water revenue bonds as well. By this
refinancing, we can save approximately $35,000 to $40,000 and levelize our debt
payments. Attached for your reference is, Ehlers & Assoc., Pre-Sale Report and Debt
Service Schedule.
The city council will be acting on this issue at their October 13, 2003 meeting, contingent
upon this commission's approval. Staff recommends approval of this sale.
City of Elk River, Minnesota
Pre-Sale Report
October 13, 2003
Proposed Issue: $2,020,000 General Obligation Water Revenue and Refunding Bonds,Series 2003B
Purpose: To fund$975,000 in new project costs for various water main construction
projects currently refund on February I,2004, 5475,000 of the water geO. and
PIR
portion Series 19938, and $510,000 of the G.O. Water Revenue Bonds, Series 1994D.
Attached is an exhibit which demonstrates the breakdown of the sources and uses of
funds for the proceeds.
Term: The total term of the Bonds will be 10 years of a
on August I,2004,and the final February n ont with the 4.interest payment
principal payment on Feb 1,2014. The new money
portion of the bond issue will not commence principal payments until February 1,2010 to
allow for adequate debt service coverage in the next few years.
Call Feature: The Bonds maturing in 2012 and later can be called on February 1,2011.
Rating: The Bonds are expected to be rated by Moody's Investors Service at an"A2"level.
Funding Sources: Water revenues are expected to cover 100%of the debt service.
Bank Qualification: The City does not expect to issue more than$10,000,000 in the calendar year 2003 and
has not issued any conduit financing which would exceed the limit. Therefore the Bonds
are expected to be bank qualified.
Discussion Issues: The current rates on the two issues being refunded are up to 5.2%in 2009 for the 1993B
Bonds and 6.5% in 2010 for the 199413 Bonds. The new bonds are expected to have
coupons in 2009 of 3.75% and 4.15% in 2010. The present value savings after all fees
expected on the refundings is$35,000 to$40,000 plus the benefit of reducing the costs of
issuance for the new money portion and reducing paying agent fees from three issues to
one combined issue.
Schedule:
Pre-Sale Review by City Council: October 13,2003
Review by Elk River Municipal Utilities: October 15,2003
Distribute Official Statement: Week of October 27,2003
Conference with Rating Agency: Week of November 3,2003
Bond Sale: November 10,2003
Estimated Closing Date: Week of December 1,2003
Attachments:
Sources and Uses of Funds
Proposed Debt Service Schedule
Resolution authorizing Ehlers to proceed with bond sale
Ehlers Contacts:
Financial Advisor Mark Ruff(651)697-8505
Bond Analysts: Diana Lockard(651)697-8534
Bond Sale Coordinator: Connie Kuck(651)97-52736
The Official Statement for this financing will be mailed to the Council Members at their home address for review
prior to the sale date.
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