2018-09-12 CC Packet - Laserfiche WebLink

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We will discuss the purpose and funding sources for each of these bonds. With each bond issue there is a pledge of revenue for repayment. General Obligation (GO) bond issues may have revenues from special assessments, property sales, utility revenues or other funding sources in addition to general tax levies. If those sources are not sufficient to pay off the bonds, then the city pledges its full faith and credit and taxing authority to repay the bonds. Minnesota law requires that the annual tax levy for the bonds be equal to at least 105% of the annual debt service payment. This additional amount should cover the city if all taxes are not paid on time. A certificate is filed with Anoka County for each new GO issue committing the city to levy the scheduled amounts unless other funds have been irrevocably transferred to the debt service fund for payment of the bonds in accordance with MN Statutes 475.61. Fund 308 is an issue to cover the costs of the Centennial Lakes Police Station. It is fully supported by a tax levy. Fund 348 provides repayment for the costs associated with Commerce Drive. There are substantial debt levies that have not been made in this fund based on large special assessments against the Sheehy property and the pledge of property sale revenues going toward payment of the debt. Those assessments were substantially reduced by the court and prepaid by Sheehy. The only remaining portion is spreading unpaid interest on that assessment over the next five years. While we may anticipate additional property sales, we would potentially violate state statute and our bond indenture if we entirely cancel all those levies prior to actual sales that provide sufficient cash into the debt service fund. We are proposing that the bond levies be adjusted upward this year and downward in future years to level out the total amount of debt service. This schedule still levies sufficient money to fully fund the bonds. If we do close additional property sales, then those future levies can be reduced and the bonds called after 2/1/2020. Fund 349 refunds the bond issues for the 2004 and 2007 street reconstruction projects. For some reason, the bonds end prior to the special assessments coming in. The actual special assessments are also not sufficient to pay off the bonds with the scheduled tax levies. We are suggesting an additional tax levy of$53,000 that will be sufficient to pay off the bonds while the special assessments roll in through 2023. Please understand that this still requires a short-term loan (due to/due from on the financial statements) or transfer of just under $14,000 until the special assessments are completely paid. Fund 351 has served two purposes —originally covering debt service for the 2009A Street Improvement bonds until they were advance refunded by the 2016A bonds. Advance refunding allows you to take advantage of low interest rates before your debt can be prepaid. The odd thing about advanced refunding is that you actually have two bond issues outstanding at the same time for the same debt. As part of that refunding, an escrow was established to pay off the remaining 2009A bonds when they became callable on February 1, 2018. That was offset by an escrow account that had sufficient funds, along with interest earnings, to pay off the refunded debt at the moment it became callable. While this fund has five special assessments pledged toward repayment, those assessments are dwarfed by the general tax levies. Those levies are unique in that they 3