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<br /> I <br /> ...~" I <br /> JViemo "'-'t~~of!'li.Uf~)1.rrtf <br /> -I <br /> To: Terry Post <br /> From: Steve Apfelbacher/ Mark Ruff I <br /> Subject: City of Arden HilIs Bond Rating <br /> Date: March 12, 1997 . <br /> , <br /> As we discussed. if the City were to issue debt, we would recommend that the City secure a bond I <br /> rating. A bond rating will increase the demand for the bonds and the number of bidders on the <br /> issue both of which should result in a lower interest cost to the City. I <br /> .~ <br /> :1> <br /> , <br /> Bond ratings vary between municipalities but can be anywhere from a Aaa to a Baa. The fee to <br /> the bond rating agency, which would be paid by the City, would be paid from bond proceeds. I <br /> Fecs for a bond rating range from $3,000 to $7,500 for up to a $5,000,000 issue. The bond rating <br /> fee is substantially offset by the lower interest cost received on a rated vs. non-rated bond issue. <br /> The two most widely recognized firms who provide credit ratings to the municipal bond market I <br /> are Moody's Investors Service and Standard and Poor's Corporation. Our understanding is that <br /> Arden Hills was rated A-I by Moody's at one time, This strong rating would attract interest from .. <br /> many bidders. We recommend that you secure a rating from only one firm. Ratings from both <br /> firms arc not needed for the type of debt you are issuing and would not be cost effective. <br /> Once you select a rating agency, you should continue to use that firm for subsequent issues. Very I <br /> seldom do cities change rating agencies. As a rcsult, we believe that we should talk with both <br /> rating agencies about the City before a selection is made. We have talked to both about visiting I <br /> Arden Hills. There is a chance that Pat South of Moody's will be available May 27 or 28. Kevin <br /> Taylor of Standard and Poor's will be in the Twin Cities the week of June 3rd and June 10th. <br /> Based on the visit or a phone conversation if the visit is not possible, we should base our I <br /> selection. <br /> I <br /> I <br /> Ehlers and Associates, Inc, I <br /> 2950 Norwest Center ~ 90 South Seventh Street <br /> Minneapolis. Minnesota 55402 I <br /> (612) 339-8291 ~ FAX (612) 339-0854 <br /> Steve@ehlers-inc.com .. <br /> I <br />