7.4. SR 12-17-2007REQUEST FOR ACTION
To Item Number
Ci Council 7.4.
Agenda Section Meeting Date Prepared by
Administration December 17, 2007 Tim Simon, Finance Director
Item Description Reviewed by
Pre-Sale Report fox $2,000,000 G. O. Bonds, Series 2008 Lori ohnson, Ci Administrator
(YMCA Bonds) Reviewed by
Action Requested
The City Council is asked to review and approve the pre-sale report for the Sale of $2,000,000 G.O.
Bonds, Series 2008.
Background/Discussion
Bonds are being issued to finance the 55,000 square-foot recreational facility to be leased to the YMCA.
The Economic Development Authority (EDA) will be issuing the bonds due to the legal authority
necessary to utilize bond proceeds for a recreational facility leased to anon-profit. As you recall on
October 15, 2007 the EDA issued $10,000,000 of the total $12,000,000 in General Obligation bonds in
order to keep the bonds bank qualified. The remaining $2,000,000 will be issued on January 22, 2008.
Next Stews
January 22, 2008 -The EDA will issue the bonds and the City Council will approve a continuing
disclosure undertaking resolution.
Financial Impact
• $10,000,000 was issued on October 15, 2007 and $2,000,000 will be issued on January 22, 2008
for a total bond issue of $12,000,000.
• The EDA will levy for the debt service repayments which can be written down on an annual basis
from YMCA and County funding. The YMCA via lease payments will be responsible for 1 /3 of
the debt service payments.
Attachments
• Pre-sale report
Action Motion by Second by Vote
FO~~OW Up
S: \Council\Tim\YMCAbondpresale$2millionciry.doc
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY AND
CITY OF ELK RIVER, MINNE30TA
PRE-SALE REPORT
DECEMBER, 2007
Proposed Issue: $2,000,000 G.O. Bonds, Series 2008, to be issued by the Economic
Development Authority (EDA) and secured by the general obligation of the
taxpayers of the City of Elk River. The EDA is the issuer because of the
legal authority necessary to utilize bond proceeds for a recreational facility
leased to anon-profit.
Purpose: The Bonds will finance a 55,000 s.f. recreational facility to be leased to the
YMCA of Metropolitan Minneapolis pursuant to an election held on
September 12, 2006. The ballot language was:
"Shall the City of Elk River, Minnesota, be authorized to pledge its full faith,
credit and resources to bonds to be issued by the Economic Development
Authority of the City of Elk River in an amount not to exceed $12,000,000 to
defray the expense of the acquisition and betterment of a recreational facility
owned by the Authority and leased to the YMCA? The maximum amount of
increased levy as a percentage of market value is .052%. The maximum amount
that would be raised by the new referendum tax rate in first year if it were to be
levied is $902,982. NOTICE: BY VOTING "YES" ON THIS BALLOT
QUESTION, YOU ARE VOTING FOR A PROPERTY TAX INCREASE. The
Economic Development Authority of the City of Elk River anticipates entering
into a lease with The Young Men's Christian Association of Metropolitan
Minneapolis (the "YMCA") pursuant to which the YMCA will pay one-third of
the debt service of the bonds to be issued by the Economic Development Authority
of the City of Elk River."
The EDA sold the first $10,000,000 authorized under the referendum in
2007.
Description: The Bonds are being issued pursuant to Minnesota Statues, Chapter 469 and
475. The Bonds are anticipated to be rated by Moody's at an "Aa3" level.
Bank Qualification: Because the federal government restricts banks from investing in "non-bank
qualified bonds", the EDA sold the first bond issue for this project in 2007
with a principal amount of $10,000,000. The separation of the two issues
resulted in a savings of debt service of approximately $280,000 in present
value dollars. In 2008, the EDA is granted another bank qualified limit of
$10,000,000. We expect these bonds to be bank qualified as well.
Term/Call Feature: The combined amortization of the 2007 and 2008 Bonds is fora 25-year
period. The longer maturities were sold in the 2007 Bonds. Principal on
the 2008 Bonds will be due on February 1 in the years 2009 through 2015.
The Bonds will not be callable before maturity.
Funding Sources: The Bonds are general obligations of the EDA/City and as such are secured
by a pledge of the EDA/City's full faith, credit and taxing powers, with or
without payments from the YMCA. It is the intent of the EDA to levy
property taxes to support the two-thirds of the debt service beginning with
taxes payable in 2008 for the interest payment due August 1, 2008. The
bond resolution will show the EDA levying 100% of the debt service,
which can be written down an annual basis from YMCA and County
funding.
Discussion Issues: The Bonds will be deemed 501(c)(3) bonds due to the involvement of a
non-profit (the YMCA) in payment of the debt. The non-profit designation
requires a public hearing, limits costs of issuance to 2% paid from bond
proceeds, and changes restrictions on earning interest on the Bonds
(arbitrage).
Arbitrage: With increasing short-term investment rates, IRS rules regarding the
amount of interest that the City may earn on bond proceeds is more of a
concern. If the City spends the bond proceeds within 24 months according
to specific measurements each six months, interest earned on the proceeds
above the bond interest rate does not need to be rebated or repaid interest
(the excess interest earnings are known as arbitrage). The City will also
need to keep its debt service funds within IRS parameters to avoid penalties
on carrying too high of a balance during the life of the issue.
Schedule:
Pre-Sale Review by EDA:
Pre-Sale Review by Council:
Distribute Official Statement
Conference with Rating Agency
Bond Sale (EDA meeting to
award):
December 10, 2007
December 17, 2007
January 11, 2008
Week of January 14, 2008
January 22, 2008
Estimated Closing Date: Week of February 10, 2008
Attachments:
Sources and Uses and Debt Service Estimates
Ehlers Contacts:
Financial Advisors
Bond Analysts:
Bond Sale
Coordinator:
Mark Ruff (651) 697-8505
Sid Inman (651) 697-8507
Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Connie Kuck (651) 697-8527
The Official Statement for this financing will be mailed to the EDA Board Members and Council
Members at their home address for review prior to the sale date.
City of Elk River/Elk River EDA
$2,000,000 General Obligation Bonds, Series 2008
Sources & Uses
Dated 02/01/2008 ~ Delivered 02/01/2008
Sources Of Funds
Par Amount of Bonds $2,000,000.00
Total Sources $2,000,000.00
Uses Of Funds
Total Underwriter's Discount (1.000%) 20,000.00
Costs of Issuance 20,000.00
Deposit to Project Construction Fund 1,960,000.00
Total Uses $2,000,000.00
Ser 07 $10M GO Bds with $ ~ 2M ~ 12/ 2/2007 ~ 9:28 PM
• ~ ~
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City of Elk River/Elk River EDA
$2,000,000 General Obligation Bonds, Series 2008
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
02/01 /2008 - - - - -
08/01/2008 - - 37,220.00 37,220.00 -
02/01/2009 225,000.00 3.400% 37,220.00 262,220.00 299,440.00 ',
08/01/2009 - - 33,395.00 33,395.00 -
02/01/2010 265,000.00 3.500% 33,395.00 298,395.00 331,790.00
08/01/2010 - - 28,757.50 28,757.50 -
02/01/2011 275,000.00 3.600% 28,757.50 303,757.50 332,515.00
08/01/2011 - - 23,807.50 23,807.50 -
02/01/2012 290,000.00 3.700% 23,807.50 313,807.50 337,615.00
08/01/2012 - - 18,442.50 18,442.50 -
02/01/2013 300,000.00 3.800% 18,442.50 318,442.50 336,885.00
08/01/2013 - - 12,742.50 12,742.50 -
02/01/2014 315,000.00 3.900% 12,742.50 327,742.50 340,485.00
08/01/2014 - - 6,600.00 6,600.00 -
02/01/2015 330,000.00 4.000% 6,600.00 336,600.00 343,200.00
Total $2,000,000.00 - $321,930.00 $2,321,930.00 -
Yield Statistics
Bond Year Dollars $8,440.00
Average Life 4.220 Years
Average Coupon 3.8143365%
Net Interest Cost (NIC) 4.0513033%
True Interest Cost (TIC) 4.0736290%
Bond Yield for Arbitrage Purposes 4.1196747%
All Inclusive Cost (AIC) 4.3418978%
IRS Form 8038
Net Interest Cost 3.8143365%
Weighted Average Maturity 4.220 Years
Ser 07 $10M GO Bds with $ 12M 112/ 2/2007 ~ 9:28 PM
• ~ ~ ~
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City of Elk River/Elk River EDA
$12,000,000 General Obligation Bonds, Estimated Combined Series 2007 and 2008
Debt Service Schedule Part 1 of 2
Date Principal Coupon Interest Total P+I Fiscal Total
11 /08/2007 - - - - -
O8/01/2008 - - 337,039.09 337,039.09 -
02/01/2009 225,000.00 3.400% 242,419.38 467,419.38 804,458.47
08/01/2009 - - 238,594.38 238,594.38 -
02/01/2010 265,000.00 3.500% 238,594.38 503,594.38 742,188.76
08/01/2010 - - 233,956.88 233,956.88 -
02/Ol/2011 275,000.00 3.600% 233,956.88 508,956.88 742,913.76
08/01/2011 - - 229,006.88 229,006.88 -
02/01/2012 290,000.00 3.700% 229,006.88 519,006.88 748,013.76
08/01/2012 - - 223,641.88 223,641.88 -
02/01/2013 300,000.00 3.800% 223,641.88 523,641.88 747,283.76
08/01/2013 - - 217,941.88 217,941.88 -
02/01/2014 315,000.00 3.900% 217,941.88 532,941.88 750,883.76
08/01/2014 - - 211,799.38 211,799.38 -
02/O1/2015 330,000.00 4.000% 211,799.38 541,799.38 753,598.76
08/01 /2015 - - 205,199.38 205,199.38 -
02/01/2016 380,000.00 3.800% 205,199.38 585,199.38 790,398.76
08/01/2016 - - 197,979.38 197,979.38
__ _ -
___
02/01/2017 395,000.00 3.800% 197,979.38 592,979.38 790,958.76
08/01/2017 - - 190,474.38 190,474.38 -
02/01/2018 410,000.00 3.800% 190,474.38 600,474.38 790,948.76
08/01/2018 - - 182,684.38 182,684.38 -
02/01/2019 430,000.00 3.850% 182,684.38 612,684.38 795,368.76
08/01/2019 - - 174,406.88 174,406.88 -
02/01/2020 445,000.00 3.900% 174,406.88 619,406.88 793,813.76
08/01/2020 - - 165,729.38 165,729.38 -
02/01/2021 465,000.00 3.950% 165,729.38 630,729.38 796,458.76
08/01/2021 - - 156,545.63 156,545.63 -
02/01/2022 485,000.00 4.000% 156,545.63 641,545.63 798,091.26
08/01/2022 - - 146,845.63 146,845.63 -
02/01/2023
505,000.00 __ _
4.050% _
146,845.63
651,845.63
798,691.26
08/01/2023 - - 136,619.38 136,619.38 -
02/01/2024 525,000.00 4.050% 136,619.38 661,619.38 798,238.76
08/01/2024 - - 125,988.13 125,988.13 -
02/01/2025 550,000.00 4.100% 125,988.13 675,988.13 801,976.26
08/01/2025 - - 114,713.13
_ 114,713.13
__ -
02/01/2026 __
575,000.00 4.125% _
114,713.13 689,713.13 804,426.26
08/01/2026 - - 102,853.75 102,853.75 -
02/01/2027 600,000.00 4.150% 102,853.75 702,853.75 805,707.50
08/01/2027 - - 90,403.75 90,403.75 -
02/01/2028 625,000.00 4.200% 90,403.75 715,403.75 805,807.50
08/01/2028 - - 77,278.75 77,278.75 -
02/01/2029 __._.
655,000.00
4.250%
77,278.75
732,278.75
809,557.50
08/01/2029 - - 63,360.00 63,360.00 -
Ser 07 $10M GO Bds with $ ~ Issue Summary ~ 12/ 22007 ~ 9:28 PM
City of Elk River/Elk River EDA
$12,000,000 General Obligation Bonds, Estimated Combined Series 2007 and 2008
Debt Service Schedule Part 2 of 2
Date Principal Coupon Interest Total P+I Fiscal Total
02/01/2030 690,000.00 4.250% 63,360.00 753,360.00 816,720.00
08/01/2030 - - 48,697.50 48,697.50 -
02/01/2031 720,000.00 4.300% 48,697.50 768,697.50 817,395.00
08/01/2031 - - 33,217.50 33,217.50 -
02/Ol/2032 755,000.00 4.300% 33,217.50 788,217.50 821,435.00
08/01/2032 - - 16,985.00 16,985.00 -
02/Ol/2033 790,000.00 4.300% 16,985.00 806,985.00 823,970.00
Total $12,000,000.00 - $7,749,304.89 $19,749,304.89 -
Yield Statistics
Bond Year Dollars $187,746.67
Average Life 15.646 Years
Average Coupon 4.1275326%
Net Interest Cost (NIC) 4.1381853%
True Interest Cost (TIC) 4.1348101
Bond Yield for Arbitrage Purposes 4.1196747%
All Inclusive Cost (AIC) 4.1499810%
IRS Form 8038
Net Interest Cost 4.1275326%
Weighted Average Maturity 15.646 Years
~~I
I
Ser 07 $1 OM GO Bds with $ I Issue Summary 1 12/ 2/2007 1 9:25 PM
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City of Elk River/Elk River EDA
$10,000,000 General Obligation Bonds, Series 2007
Debt Service Schedule Part 1 of 2
Date Princioal COUOOn Interest Total P+I Fiscal Total
11 /08/2007 - - - - -
08/01/2008 - - 299,819.09 299,819.09 -
02/01 /2009 - - 205,199.38 205,199.38 505,018.47
08/01 /2009 - - 205,199.38 205,199.38 -
02/01 /2010 - - 205,199.38 205,199.38 410, 398.76
08/01 /2010 - - 205,199.38 205,199.38 -
02/01 /2011 205,199.38 205,199.38 410,398.76
08/01 /2011 - - 205,199.38 205,199.38 -
02/01 /2012 - - 205,199.38 205,199.38 410,398.76
08/01 /2012 - - 205,199.38 205,199.38 -
02/01/2013 - - 205,199.38 205,199.38 410,398.76
08/01/2013 - - 205,199.38 205,199.38 -
02/01/2014 - - 205,199.38 205,199.38 410,398.76
08/01 /2014 - - 205,199.38 205,199.38 -
02/01 /2015 - - 205,199.38 205,199.38 410, 398.76
08/01 /2015 - - 205,199.38 205,199.38 -
02/Ol/2016 380,000.00 3.800% 205,199.38 585,199.38 790,398.76
08/01/2016 - - 197,979.38 197,979.38 -
02/01/2017 395,000.00 3.800% 197,979.38 592,979.38 790,958.76
08/01/2017 - - 190,474.38 190,474.38 -
02/01/2018 410,000.00 3.800% 190,474.38 600,474.38 790,948.76
08/01/2018 - - 182,684.38 182,684.38 -
02/01/2019 430,000.00 3.850% 182,684.38 612,684.38 795,368.76
08/01/2019 - - 174,406.88 174,406.88 -
02/01/2020 445,000.00 3.900% 174,406.88 619,406.88 793,813.76
08/01/2020 - - 165,729.38 165,729.38 -
02/01/2021 465,000.00 3.950% 165,729.38 630,729.38 796,458.76
08/01/2021 - - 156,545.63 156,545.63 -
02/01/2022 485,000.00 4.000% 156,545.63 641,545.63 798,091.26
08/01/2022 - - 146,845.63 146,845.63 -
02/01/2023 505,000.00 4.050% 146,845.63 651,845.63 798,691.26
08/01/2023 - - 136,619.38 136,619.38 -
02/01/2024 525,000.00 4.050% 136,619.38 661,619.38 798,238.76
08/01/2024 - - 125,988.13 125,988.13 -
02/01/2025 550,000.00 4.100% 125,988.13 675,988.13 801,976.26
08/01/2025 - - 114,713.13 114,713.13
_.. _ -
02/01/2026 575,000.00 _
4.125% 114,713.13 689,713.13 804,426.26
08/01/2026 - - 102,853.75 102,853.75 -
02/01/2027 600,000.00 4.150% 102,853.75 702,853.75 805,707.50
08/01 /2027 - - 90,403.75 90,403.75 -
02/01/2028 625,000.00 4.200% 90,403.75 715,403.75 805,807.50
08/01/2028 - -
_ 77,278.75 77,278.75 -
__..
02/01/2029
655,000.00 _
_
4.250%
77,278.75
732,278.75
809,557.50
08/01/2029 - - 63,360.00 63,360.00 -
Ser 07 $10M GO Bds with $ ~ 10M ~ 12/ 2/2007 ~ 928 PM
City of Elk River/Elk River EDA
$10,000,000 General Obligation Bonds, Series 2007
Debt Service Schedule Part 2 of 2
Date Principal Coupon Interest Total P+I Fiscal Total
02/01/2030 690,000.00 4.250% 63,360.00 753,360.00 816,720.00
08/01/2030 - - 48,697.50 48,697.50 -
02/01/2031 720,000.00 4.300% 48,697.50 768,697.50 817,395.00
08/01/2031 - - 33,217.50 33,217.50 -
02/01/2032 755,000.00 4.300% 33,217.50 788,217.50 821,435.00
08/01/2032 - - 16,985.00 16,985.00 -
02/01/2033 790,000.00 4.300% 16,985.00 806,985.00 823,970.00
Total $10,000,000.00 - $7,427,374.89 $17,427,374.89 -
Yield Statistics
Bond Year Dollars $178,845.56
Average Life 17.885 Years
Average Coupon 4.1529547%
Net Interest Cost (NIC) 4.1529547%
True Interest Cost (TIC) 4.1384948%
Bond Yield for Arbitrage Purposes 4.1196747%
All Inclusive Cost (AIC) 4.1384948%
IRS Form 8038
Net Interest Cost 4.1529547%
Weighted Average Maturity 17.885 Years
Ser 07 $10M GO Bds with $ ~ 10M ~ 12/2/2007 ~ 9:28 PM
• ~ ~ ~
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