5. EDSR 12-10-2007.^~/
City of
Elk -~-~
River
REQUEST FOR ACTION
To Item Numbe
EDA 5
Agenda Section Meeting Date Prepared by
Administration December 10, 2007 Tim Simon, Fin nce Director
Item Description Reviewed by
Resolution Providing for the Sale of $2,000,000 G. O. Bonds,
Series 2008. Reviewed by
Action Requested
1) Approve Resolution Providing for the Sale of $2,000,000 G.O. Bonds, S.
2) Call Special EDA Meeting for Tuesday, January 22, 2008 to Issue the $2,
Series 2008
Background/Discussion
Bonds are being issued to finance the 55,000 s.f. recreational facility to be leased to t
Economic Development Authority (EDA) will be issuing the bonds due to the legal
to utilize bond proceeds for a recreational facility leased to anon-profit. As you reca
2007 the EDA issued $10,000,000 of the total $12,000,000 in General Obligation bo:
the bonds bank qualified. The remaining $2,000,000 will be issued on January 22, 20
Next Stews
December 17, 2007 -City Council to review the pre-sale report
January 22, 2008 -The EDA and City Council will issue the bonds
Financial Impact
• $10,000,000 was issued on October 15, 2007 and $2,000,000 will be issued
for a total bond issue of $12,000,000.
• The EDA will levy for the debt service repayments which can be written d
from YMCA and County Funding. The YMCA via lease payments will be
the debt service payments.
Attachments
• Pre-sale report
• Resolution Providing for the Sale of $2,000,000 G.O. Bonds, Series 2008
2008
)00 G.O. Bonds,
YMCA. The
tnor>ry necessary
on October 15,
s in order to keep
January 22, 2008
on an annual basis
onsible for 1 /3 of
Action Motion by Second by Vote
Follow Up
S: \Council\Tim\
->
car o~
....-
.~...
V~>r
ELK RIPER ECONOMIC DEVELOPMENT AUTH
CITY OF ELK RIVER, MINNESOTA
PRE-SALE REPORT
DECEMBER, 2007
Proposed Issue: $2,000,000 G.O. Bonds, Series 2008, to be issued
Development Authority (EDA) and secured by the gene
taxpayers of the City of Elk River. The EDA is the is
legal authority necessary to utilize bond proceeds fora ~
leased to anon-profit.
AND
by the Economic
•al obligation of the
;uer because of the
ecreational facility
Purpose: The Bonds will finance a 55,000 s.f. recreational facilit to be leased to the
YMCA of Metropolitan Minneapolis pursuant to a election held on
September 12, 2006. The ballot language was:
"Shall the City of Elk River, Minnesota, be authorized t pledge its full faith,
credit and resources to bonds to be issued by the Eco omic Development
Authority of the City of Elk River in an amount not to e ceed $]2,000,000 to
defray the expense of the acquisition and betterment of recreational facility
owned by the Authority and leased to the YMCA? The aximum amount of
increased levy as a percentage of market value is .052%. T e maximum amount
that would be raised by the new referendum tax rate in firs year if it were to be
levied is $902,982. NOTICE: BY VOTING "YES" N THIS BALLOT
QUESTION, YOU ARE VOTING FOR A PROPERTY T X INCREASE. The
Economic Development Authority of the City of Elk Rive anticipates entering
into a lease with The Young Men's Christian Associat'on of Metropolitan
Minneapolis (the "YMCA") pursuant to which the YMCA ill pay one-third of
the debt service ofthe bonds to be issued by the Economic D velopment Authority
of the City of Elk River."
The EDA sold the first $10,000,000 authorized unde the referendum in
2007.
Description: The Bonds are being issued pursuant to Minnesota Statu s, Chapter 469 and
475. The Bonds are anticipated to be rated by Moody' at an "Aa3" level.
Bank Qualification: Because the federal government restricts banks from inv sting in "non-bank
qualified bonds", the EDA sold the first bond issue for his project in 2007
with a principal amount of $10,000,000. The separati n 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 ban qualified limit of
$10,000,000. We expect these bonds to be bank quali red as well.
Term/Call Feature: The combined amortization of the 2007 and 2008 Bo ds is fora 25-year
period. The longer maturities were sold in the 2007 onds. Principal on
the 2008 Bonds will be due on February 1 in the years 009 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 tax ng powers, with or
without payments from the YMCA. It is the intent f the EDA to levy
property taxes to support the two-thirds of the debt ser ice beginning with
taxes payable in 2008 for the interest payment due A gust 1, 2008. The
bond resolution will show the EDA levying 100% f the debt service,
which can be written down an annual basis from MCA and County
funding.
Discussion Issues: The Bonds will be deemed 501(c)(3) bonds due to th involvement of a
non-profit (the YMCA) in payment of the debt. The no -profit designation
requires a public hearing, limits costs of issuance to % paid from bond
proceeds, and changes restrictions on earning inte est on the Bonds
(arbitrage).
Arbitrage: With increasing short-term investment rates, 1RS r
amount of interest that the City may earn on bond pry
concern. If the City spends the bond proceeds within 2~
to specific measurements each six months, interest earl
above the bond interest rate does not need to be rebate
(the excess interest earnings are known as arbitrage).
need to keep its debt service funds within IRS parameter
on carrying too high of a balance during the life of the
~-les regarding the
needs is more of a
l months according
ied on the proceeds
d or repaid interest
The City will also
•s to avoid penalties
issue.
Schedule:
Pre-Sale Review by EDA: December 10, 2007
Pre-Sale Review by Council:
Distribute Official Statement:
Conference with Rating Agency:
Bond Sale (EDA meeting to
award):
Estimated Closing Date
December 17, 2007
January 11, 2008
Week of January 14, 2008
January 22, 2008
Week of February 10, 2008
Attachments: Resolution Calling for Sale
Sources and Uses and Debt Service Estimates
Ehlers Contacts:
Financial Advisors: Mark Ruff (651) 697-8505
Sid Inman (651) 697-8507
Bond Analysts: Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Bond Sale
Coordinator: 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.
Resolution No.
Commissioner introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$2,000,000 G.O. Bonds, Series 2008
A. WHEREAS, the Board of Commissioners of the Elk River Economic Development Authority, has
heretofore determined that it is necessary and expedient to issue the $2,000,000 G.O. Bonds, Series
2008 (the "Bonds"), to fund a community center pursuant to a referendum and;
B. WHEREAS, the Economic Development Authority has retained Ehlers & Associates, Inc., in
Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is therefore
authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision
2(9);
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Elk River Economic
Development Authority, as follows:
1. Authorization; Findings. The Board hereby authorizes Ehlers to solicit proposals for the sale of the
Bonds.
2. Meeting; Proposal Opening. The Board shall meet at City Hall on January 22, 2008, for the
purpose of considering a resolution awarding the sale of the Bonds.
3. Official Statement. In connection with said sale, the officers or employees of the City and
Economic Development Authority are hereby authorized to cooperate with Ehlers and participate in
the preparation of an official statement for the Bonds and to execute and deliver it on behalf of the
Economic Development Authority upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by Commissioner
and, after full discussion thereof and upon a vote being taken thereon, the
following Commissioners voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
Dated this day of
I
City of Elk River/Elk River EDA
$2,000,000 General Obligation Bonds, Series 2008
Sources & Uses
Dated 02/01/2008 I Delivered 02/01/2008
Sources O1 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 $ i 2M i 12/ 2/2007 i 9:28 PM
• ~ ~ ~
.~~ ~ •
.~-
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/O1/2009 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/O1/2011 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
• ~ ~ ~
.~' ~ • .~_
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 - - - - -
08/01/2008 - - 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/O1/2011 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/O1/2023 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/O1/2028 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/ 2/2007 ~ 9:28 PM
City of Elk River/Elk River EDA
$12,000,000 General Obligation Bonds, Estimated Combined Series 2007 and 2008
i
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 $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
Ser 07 $10M GO Bds with $ I Issue Summary (12/ 2/2007 19:28 PM ill
• ~
• •
.~' ~ • ..-
City of Elk River/Elk River EDA
$10,000,000 General Obligation Bonds, Series 2007
Debt Service Schedule Part 1 of 2
Date Principal Coupon 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/O1/2022 485,000.00 4.000% 156,545.63 641,545.63 798,091.26
08/01/2022 - - 146,845.63 146,845.63 -
02/O1/2023 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/O1/2029 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 ~ 9:28 PM
City of Elk River/Elk River EDA
$10,000,000 General Obligation Bonds, Series 2007
Debt Service Schedule Part 2 of 2 it
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 $ 110M 1 12/2/2007 1 9'.28 PM
• ~ ~ ~
.~' ~ • .~-