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Executive Summary of Proposed Debt <br />Proposed Issue: <br />$555,000 General Obligation Improvement Bonus, Ser..ies 2018A <br />Purpose: <br />To finance the construction of the 2018:Scheuneman Road . Reconstruction <br />Project. in the City. <br />nebt service will be. paid from special assessments and property taxes to be <br />cancelled each year with . available sewer revenues and any future water <br />revenues. <br />Authority: <br />The Bonds.arebeing issued pursuant to Minnesota Statutes, Chapters: <br />• 429 (special assessment pledge) <br />• 475 (general bondirig.authoriry) <br />Because. the City is assessing .at least. 20% of the project costs, the Bonds can <br />be a general obligation without :a..referendum and will notcount against the <br />City'.s debt limit. <br />The -Bonds will be .general .obligations of the. City for which its fult faith, credit <br />and taxing powers are pledged, <br />Term/Call Feature: <br />The Bonds are behig issued for a 156year term: Principal on the. Bonds will be <br />due on February 1 in the years 2020 through 2034. Interest is .payable. every <br />six months. beginning February 1, 2019. A portion of the bond proceeds will <br />be used to make the.February 1-2..0.19.interest payment. <br />The Bonds maturing on and after. February 1, 2028 will be subject to <br />prepayment at the discretion: of the. City on February 1., 2027 or any date. <br />thereafter. <br />Bank Qualification: <br />Because the City. is expecting to issue no more than $10,000,000 in tax exempt <br />debt during the.calendar year, the City will .be able to designate the Bonds as. <br />"bank qualified" obligations. <br />Bank. qualified status broadens the market for the Bands, which can. result in <br />lower interest rates. <br />Rating: <br />The City is seeking state credit enhancement;.:as described below,. which will <br />provide :the. Bonds. with the same rating:as.the State of Minnesota's bonds. <br />If the winning bidder on. the Bonds elects to purchase bond. insurance, the <br />rating for the issue .may be higher than the City's bond: rating in the event that <br />the bond ratingof the insurer is higher than that of the City. <br />State Credit Enhancement: <br />City bond issues for water, sanitary sewer and. storm water facilities are now <br />authorized: to .receive credit enhancement from the State. Under :current bond <br />ratings, the: state. credit.. enhancement would bring a .Standard & Poor's "AA+" <br />rating or a Moody's "Aa2" because the .State guarantees the debt service <br />Presale Report May 15, 2018 <br />City of Gem Lake, Minnesota Page 1 <br />