3.11. SR 06-18-2007
REQUEST FOR ACTION
To
Ci Council
Agenda Section
Consent
Item Description
Consider Intent to Enter into a Direct Loan Agreement with the
Minnesota Public Facilities Authority for the Financing of 193'd
Avenue Project.
Meeting Date
une 18, 2007
Item Number
3.11*
Prepared by
Tim Simon, Finance Director
Reviewed by
Lori ohnson, Ci Administrator
Reviewed by
Action Requested
Council is asked to approve the resolution to apply for a transportation revolving loan from the
Minnesota Public Facilities Authority (PF A) in the amount of $2,431,500 for the financing of the 193,d
Avenue project.
Background/Discussion
On February 20, 2007, the City Council approved proceeding with the 193'" Avenue improvement project
and committing a litde over 5 years (2008-2012) of Municipal State Aid (MSA) and Federal SAFETEA-
LV funds to finance the project. MN/DOT had $7.0 million (unleveraged) funds available in the
Transportation Revolving Loan Fund (TRLF) for projects that could start using the loan proceeds before
the end of calendar year 2008.
Since that time, staff has worked on various applications to fund the construction phase of this project
and on AprilS, 2007, The Central Minnesota Area Transportation Partnership (ATP) approved this
request and forwarded the application to MN/DOT's Office ofInvestrnent Management for approval,
which we found out on May 30, was certified to the Minnesota PF A. As part of the final application
process the Minnesota PF A would like a resolution passed to show that it is still the City's intent to
continue to go forward with the project. This resolution does not at this time commit the City to the
direct loan with the Minnesota PF A, but simply is part of the final application process. If approved by
the Minnesota PF A, future resolutions relating to the TRLF will be coming forward.
Once the final application is approved, the City will start finalizing the details of the direct loan with the
Minnesota PF A. Typically, a general obligation note is given to the Minnesota PF A in which interest
rates are based on the AAA scale. The Minnesota PF A will then meet to consider how much of a
discount below the AAA scale; the City could receive a discount of 1.5 percent.
Financial Impact
The repayment of the principal on the direct loan with the Minnesota PF A will be MSA allocations and
$996,000 SAFETEA-LV Surface Transportation Program (STP) funds over the next 5 years. Bond
counsel is researching to determine if future state-aid allotments can be used for the interest payments
with a transportation revolving loan. A complete financing package will be presented if our application is
accepted, along with repayment schedules and an interest rate.
s: \Counci1\'l'im \ 193applicationresolution.doc
Attachments
. Resolution of application for the TRLF
. Certification letter from MN/DOT to the Minnesota (PFA)
Action
Motion by_
Second by _
Vote
Follow Up
s: \Council\ Tim \ 193applicationtesolution.doc
RESOLUTION 07-_
A RESOLUTION OF THE CITY OF ELK RIVER
A RESOLUTION OF APPLICATION
WHEREAS, that the City of Elk River is hereby applying to the Minnesota Public
Facilities Authority for a loan to be used for the reimbursement of capital cost for the
described project: 193'd Avenue;
WHEREAS, that the City of Elk River estimates that it will require a loan in the maximum
principal amount of $2,431,500 for the project for the above stated purposes;
WHEREAS, that the City of Elk River has the legal authority to apply for the loan and the
capacity to ensure proper construction of the project and repayment of the loan;
NOW, THEREFORE, BE IT RESOLVED that the City of Elk River apply to the
Minnesota Public Facilities Authority for a loan for the 193'd Avenue project.
Passed and adopted this lS"day of June 2007.
Stephanie Klinzing, Mayor
A TIEST:
Tina Allard, City Clerk
s: \Rc~olutions \2007 Resolutions \ Unapproved\ 193avenuebondresolution.doc
"'~
t<~
Minnesota Department of Transportation
Office of Investment Management
Mail Slop 440
395 John Ireland Blvd.
SI. Paul, MN 55155
Office Telephone: (651) 366-3770
Fax: (651) 366-3790
May 30, 2007
ilN " 6 Zu07
...JIJ. ~ 1}
T~m Simon
City of Elk River
13065 Orono Parkway
ElkRiver, MN 55330
Re: Transportation Revolving Loan Fund (TRLF) Application
TRLF No.: 55
Dear Mr. Simon:
Please be advised that your TRLF application has been approved by the Minnesota Department of
Transportation (MnIDOT) for certification to the Minnesota Public Facilities Authority (pF A).
As previously indicated, such approval is on the condition that you be ready to submit your first
"Loan Disbursement Request Form" within 120 days from the date stated io your application that
you would first need loan proceeds. Applicants not ready to submit their first "Loan
Disbursement Request Form(s)" within 120 days from the date iodicated in their applications,
will not be certified to the PF A by MnlDOT and will have to reapply during a future TRLF
solicitation.
While MnlDOT has approved your proposed project as meeting its requirements, the PF A will
make the final decision on which applications receive loans usiog the fmancial evaluation criteria
set forth in Minn. R. 7380.0725, subp. 1 (1999). PFA will be contacting you to obtain additional
fmancial information and to discuss the loan terms. If you have any questions about the PF A's
loan approval process, please contact Becky Sabie at (651)297-3799 or
rebecca.sabielalstate.mn. us.
Thank you for your participation io the TRLF program. If you have any questions about
MnlDOT's TRLF processes, please contact Sue Thompson at (651)366-3785 or
susan. thomvsonlaldot.state.mn.us.
Siocerely,
IhJiJ;AjMe~
~~b~~~~e, Director
Office of Investment Management
cc:
Brad Larsen, OGR
Terry Maurer, City of Elk River
Steve Voss, District 3
Becky Sabie, PFA
Duane Leurquio, OIM
Bob Hofstad, OIM