5.1. & 5.2. SR 10-15-2007//
City of
Elk -~-~
River
REQUEST FOR ACTION
To Item Number
Ci Council 5.1. & 5.2.
Agenda Section Meeting Date Prepared by
oint Meetin with EDA October 15, 2007 Lori ohnson, Ci Administrator
Item Description Reviewed by
YMCA Bond Sale -Public Hearing to Designate Bonds as
501(c)(3) Bonds. Reviewed by
Action Requested
The Council is asked to hold a public hearing to designate the bonds to be issued by the Economic
Development Authority as 501(c)(3) bonds.
Background/Discussion
The City Council and Economic Development Authority each reviewed the bond pxesale report at
previous meetings. We axe now taking the final steps necessary to sell the first $10,000,000 in bonds fox
the construction of a recreational facility to be leased to the YMCA. The final $2,000,000 will be sold in
January, 2008.
First the City Council must hold a public heating to designate the bonds as 501(c)(3) bonds. Designation
of the 501(c)(3) bonds limits the issuance costs to two percent and changes restrictions on interest
earning on the bonds. Once the public hearing has been closed, the EDA will take action to adopt a
resolution accepting the offer on the sale of $10,000,000 of General Obligation Bonds, Series 2007,
providing for their issuance and levying a tax fox the payment thereof. Finally, following the EDA's
adoption of the resolution, the Council will proceed with agenda item 5.3 which is approval of the
ordinance authorizing the issuance of up to $12,000,000 of General Obligation Bonds by the EDA fox
the City and the resolution authorizing continuing disclosure undertaking.
Representatives from Ehlers & Associates will be present at Monday's meeting to present the results of
the sale and to answer questions about the process in which the city and EDA axe undertaking for the
sale of these bonds. They will also present information on the city's bond rating upgrade to Aa3 by
Moody's Investors Service. This was an unexpected rating increase that is obviously excellent news for
the city; it will result in an interest savings on this bond issue and future issues. In the past Moody's has
indicated that the city's overlapping debt and income demographics, two items out of the city's control,
where the reasons the rating committee would not increase out xadng. In discussing the upgrade with
Mark Ruff of Ehlers & Associates, he feels that Moody's may now put more emphasis the uty's strong
financial management and that is outweighing the overlapping debt and demographic factors. A copy of
Moody's rating report is included in the EDA packet fox your review.
Financial Impact
The financial impact of the EDA levy fox this issue has been discussed previously.
S:ACounul\Lon\2007\YMCA Bond Salc.doc
Attachments
^ Please see the Economic Development Authority packet fox the resolution accepting offer on
the sale of $10,000,000 General Obligation Bonds, Series 2007, providing for their issuance and
leaving a tax for the payment thereof.
Action Nlouon by Second by Vote _
Follow Up
S:\Comcil\Lun\2007\YMCA Bood Sale.doe