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01/28/1985 CONF - 5167L � FRIDLEY CITY COUNCIL CONFERENCE MEETING JANUARY 28, 1985 � 1. CURBSIDE RECYCLING 2, REFUNDING OF CENTER CITY BONDS 3. OTHER o�• � • oP'� � � � ;� � 4 ���� ' ' i CI!!-YID� Il001�10 NiawOolL ' ropul•etoo: j6r,2so Bou��Eold�: 120.000 (� untt� or l�a�) 8tart D�t�: (Dro) i-82 (Cit�-rid�)11-l3 Et. Loai� het iopul�tlop: �2.73� BouMeold�: 1t,000 (� unit• o� 1���) Start Dat�: cc..ol �aez (cse�-rsa) �-a� y...� coaec� topul�tion: �67,950 BoweeolAS: 1�0,000 (• uoil� or le��) Se.rt D.t�: 6-02 DOIDIISTLTIOr ►ROOtLO bOkia� topul�tlon: 15.?�0 RoweAolas: 900 (i +wit• or l��s) St�M D�t�: 9-!� tlo0tl�ld rop�.�ioo: �.�60 eou,eeolda: 3.5a6 (• unit• o� leu) St�re D�t�: q_8� 3halcopN topul�cion: 10,l30 6ow.nola.: �ye (� ualts or 1���) Start D�t�: s-!5 hislq f�opul�tloo: 29,750 9ow.eola: 7.�33 (� uaita or lus) Start Dal�s HS � maumoi r.s. , or � llaul�n dul�r ri�no� ulpNOt h�powipillt� �oaountln� Ouaatiq hveks hdio� St�twota 0�11�ot�0 hElioit� IM�tiap �ollov-up e.s. ro�oe 2o r•.r. �3-�• crya�. : : : : : : -ri.t e�a. -P�eYup -3 toa A�aya yo�oo 20 1M�+ 13-1• twolu = i i i i i -tl�t O�d� -ni�v -J too drp, !wlolles i� Tae� to tr�ow : s : : : : Onlialtb �nw,fl�t 0� -d�p• K=� 7 f�an � teveka = t i a = -ri.t e.a -�i. sc.� a rrin. c�a� -�ooMwak Lrnd[ s..r.am !� �.w t 1 eae croo�u s : : : : �nio�� o.a. bo�oo 20 �..r. t3-1t crudc. s s : : -tl�t l�ds -oiotup, -j too drps Mo�cliot 16 Tar� 20 truob : = s t a Onllait�d .tsu� -tlat Obs -drp� o. s. �o�o0 2p r.n 4c�clins 16 r�n Oolialt�d foluot�e� qH�d Croups !o� 3oouts 25 ��a» Q+p 3oout� 10 r�» Gteolic s ��w 3opool• Oroup i3-14 teuaks = -t��t O�da -vser�,P. -; too Drp� 20 tn+clu t -t�n+.f1�C !N� -A�apa tichuD Trudca ►Sckup Tetiois s s a s s ��� t 3-� levdcs s : s i s = : s : s s s s s • �� Coincid�eoe �� 2 ot j Y1tp Mtus� o �ec�,� �p� ot " ►��awe�� ri�n+v 000aio.r cic� rsc.tup sc.tt tueisosc� Monicone� w�e.�nc 000uotioa hrt. Conditlon of hv�id�d hw�ld�0 Snitial Ooot. St�treet• R�t• B�ule�� Epulp, hi� h�tial �nsai, .n : 3o ap. n , r.r. _ _ _ _ _ _ 3ne�al f.T. M�etR17 ao s jo dq� I2 t 1.l. = s t = _ _ 3e�en1 l.7. Moathl� �o : 30 dq� 12 t l.l. s = i t t s SN�ral �.t. Moecu� .e : 3o aqs �z t r.T. s : : : : : , �enl �.T. I IbaLN� �s s JO A,f� It 1 f.l. _ : s : s : II�t�ral DSaoat4l� „� � Moot,�l� eo s Diaontel� �� lbOChl� pp : s 10 Aa�� /t 2Gf ot oea s = = i = hnon� T1M j0 Aq� I2 1 I.7. s = s = _ 1 �.T. t 2 dq• H b 3tdt s ! � � : t s �o In�ol�wnt 1 daf /9�/�(t) t �.7. : : s s s s(/3) s(N) Ibnt�ll ao : : 1 dq f3,KaI6(2) 20f of ooe s : h�wn� Tis� IbOtEi� 00 s t 3 a.s. n , r.:. : : : : bt�: T!K Q!IC[ OT (1) IILCTC.DIC OMLIMI7ID N �Q.ORLCR OROOPS /3 TTTE /1 NlLR/DO!'fLLR/Gt3 l2) LVD 3C00T5 IS T!P[ /2 tIPLA/EOTTLLS/C�11S/ D02 SCOOis Ig �ora+aeaa oa • s��r�u� arnaic scxoa. tne 19 ��eae aa.t owoors �a trn �i sorts.rsicurs �a:awen.s oa a a��m tsrs /s auss aa.: ttes � m.a�vn an.: _ : � � � � � (8L-e5 Coatnct�) (sc�rt up ibol��) hp 3 0[ 3 ITotal ooat touaeAolda Co�t/Bouaebold Clt7 Co�nt1 !b!ro St�!• h0en1 Otp�r CITi-IfID� IROOWO Itiowpoli� �opul�tloo: �6�,250 BouNDola: t20,000 {i units or lus) Etart D�t�: ( D�o ) i-�!2 (Cit�-vid�)11-4 •C. I/oni� l�rk ropul�tioo: �z,7;o Bouaebold�: 12.000 (� uoit• o� l��a� at�rt D�t�: cw.o> >aez (csc�-vsa.) �-e� trw� Couat� Topulatiop: �67,950 dou�eDolds: 1�0,000 (� uoit• or 1���) Start D�N: 6-!t DOD�3TUTI0/ llOOlilO bpcin� topul�tloo: 1S.N0 Bou�epold�: 300 (� unl N o� 1���) st.rt D.t•: y.l� aioart•ia topul�tion: j'/,160 Bouse�ol0a: 3,506 (� unita o� lea�) Start D�t�: y-M �p�.cseo: �o.e3o 6o�..bola.: �ye (� unita or 3���) Etart D�t�: S•dg hldlq ' Popul�tioe: 29.T50 ���i�: Tr�33 (� uoit• or l�sa) 3tart D�t�: �-+S if.200/ /20.000 � .06 IbotL i0b��00/ iwr !�-b5 rartioip�tioe buwbolda Cb�t/Orr/Mo./Kot � '1�r000 i .30 �r�00/ 12�000 a .20 IbOCh (2 tick ap�) hresotp.aon sou,.pola co.c�a.r�Mo.�not oO �ot �,eoo i .So c: nok u�.) �roridio� Y�nbouw i609.T50 1�0.000 + .�6 it5o/ 30o i .So IbeLe (2 �ict up�) hrtinip�tioo 4t� eot a�a11a01• �toa 35e6 i .03 MDOCO hrtioip�tion �at• eot ndl�bl• 0 �90 0 ��oa 7.�33 � .11 Ibsth s.lw 3a hresoswsioe ��/ T.�33 � .t0 Ibota 3of �uo.cios o� .eo.. (isW oa Mo�clia� OnllaltN hnposal) O�n�nl �IO,OOOtDro 1902) luoa• N.o00 (Joa trop�� il61) (1yM) � ss�.000(Dro t9623 »s2,000 �u:..r �,s,000c,9e+� (19e+1) c�«� fN -19l�) Cow+t� 1609.750 luadio� (Yut• Manaps�ot Doard) • t5.00o i20r00�� �10�000 i1.000� • i5.000 �5.000 �10,000 (DL�) bt�: • lAaiai�tnti�� Owt� tYOd�d b� elt� � � ' � "1 � � � v � CI1T OF FRIDLBY N 8 M 0 R l N D II M T0: AASIM !!. QDRESHI, CI4'Z NANAGER FRON: SZD INMAN� DIRECTOR OF CEI�ITRAI. SERVICES SIIBJECT: HRA RBFIINDIPG �� DeTE: aexvdxz t8, 1985 Over the last year, the HRA has been revierring the potential for refunding the current Center City Bonds. 1ie have provided the City Council xith information on this process earlier, but for their review I have attaehed all appropriate memorandums defining Wi�y they need to refund the bonds, hoW they ean do it� and diseussions as to the advantages of it. On January 10, 1985, the HRA formally approved the refunding of the bonds along xith the attached schedule. You will note that on February 25 and March 18, 1985, the schedule requires particular actions by the City Council. I am Dringing these to your attention at this time so that you can alert the Council in case they have any additional questions they may.xant to pose regardiag this aetion. If you have any questions regarding this information, please feel free to contact me. Attachments � , , . , S(��L'LE FOR FRIDL.El' TAX I?1CRE.�NT RE�iJ;1DING '.'.EVEIvJE BOI�JD SERIES 1°85 January 9 Set r.�etings with insurance ccrnpanies • lleeti.�g with 0' Connor � �-;annan Januazv 17 First draft of Indenture January 21 First drafting session and Official Sta�ement plann;.n� January 28 Firs� draft of Official Statement out January 30 Official Stater.►ent meeting, Second draft of Indentur�, etc. February �+ Second Official Stateme*�t meetin� Februa.�-y 6-8 r;eetings �•�ith instu�ance ca:►panies Febru�sy ? 2 Ir.forz:�ation on �la-�s to F��idley Febrtiary I4 P��� rx�dificatio:is for refundir�g approved by "riTZA � Fe�ruary 25 Plan m�dification approval by Council February 25 �•?ork with insurance cca.^.�anies ?Sam.h 1�+ Authorization to sign fiond Purchase AgreeJ-�nt by HFA Alarch 18 Final approval by (;ouncil �-- *'arc.�� 25 Closir� at 0'Connor & Hannan r . 0 M •' • 1� � MEMORAND�M '1�: 1�1.SIM M. 40RE.�I � CI't'Y MAI�9GER Fiif�'I: SID II�N, DIRDL'IOR CF C.EE[�TI�L SEft�TICF.S SZ7BJDC.T: HRA R�''[JADIIT D�ATE: J1�]�t 9, 1984 As you are aware, for the past three meetings, the HRA has been discussing the possibility of refunding the Center City Bonds. After reviewing the attached borxi cash flow analysis at the last HIZA meeting in December, they gave us preliminary approval to go forward with the process. At that time, they directec7 us to have Miller & Schroeder go ahead with developing the process for refunding the bonds with an additional $500.000 for upcaming project costs. Attachec7 is a schedule of the refimding process for you and the HRA to review. Please note that there is no additional formal action requirea by the HRA until February 14. 1985 when they will have to approve the plan modification for refunding and then on March 14, we will need their authorization to sign the the bond purchase agreenesit. Please forward this information to the HRA and if you have any questions, I will be available during the meeting to discuss it with theqn 9CI:sh 3/0/2/11 � 1 W N �o �O 6J� = O � � � � � ! � 41 < � � T n �p � x 9 s � � s g .� pp !'9 O O � i .� / 1 N i �1 1 1 O � O c Z O � � � � < f/'f /�1 T � '� f��7 � � �i = � _ s �+ v -+ a�i $ � O n -0 � � P � 611 s w �i �n s + M � M NM N M O O M p � o M +� N ` M m N M O M .O N � M � p r M � u a M O M O i � .o .o .o .a .o :o � :o .o :o .� .� .� .� .o � � .o.o.o.o.�.�.o�.o.ommmmm � .O m v P V1 1 ir+ N� O�O m V P N � ... � � ... � � + .,. 0p.000p�00p-0000000.0�.+ O� � p P OP- O� Op' ? o- P� a P m O�` V V V V V V V V V V V V V N i.� N tA t� W io1 H N W i� H i� W A1 m a a a� a.M � i ��� Jr a N m O O O O O O O O O O O O O O C O O O O O O O O O O O O O O � a a a a� a a� a a a w w w N t!1 L� P W CA � O N O�O V V� .e+vwu�.o.o.�+a a� vo�-a fJ� V N O` O N V V.O i.1 v G! � P m m O v N v t�A f.Nl� O m� v N� m P O O O O O O O O O O O O O O O � c •�-, � N � fN � T � v � � N � C � P7 � O� P �???? 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P? fJ� N i iff . cR N� cA cn 6I� a a a.► a+. a a w O � C a a V� i.� N m O` V(JI f,J� O` �� � V 1 .� Z V NI O�O N m V O� W r V N W O 1 r� a� a m P .� V v O` i� "" � � C�' trr m m O N V O V(.r �O O C� O � � f/f N N N+� V O�I N fJ� V V V N O 1 f.1� N 611 f.71 VI O iJ� S 61� O VI fJl N� 6A O; � ' ! � Z � .� � T O � v o a °o � �o � T � m O C � � l'7 < � � N � � = T S Z 0 M O � T � � � O � A1 G � � < O N N m � � C � N a T � T � T �... � _ � �e x � 7D v`� a N � T0: lrROH: CITZ OF FRIDLB? MB!!OR♦HDD!! NASIM M. QDRESRI� CIT? MIII�AGER SID INMAZI � DIRECTOR OF CENTRJIL SEit9ICES SZfB�TECT: HOIISDiG AIiD REDE9II.OPl�NT �UTBORITY REFONDI1tG D�TB: DECFrIDER 12� 1984 Attached ia some information regardiag the refunding of the Housing and Redevelopment Authority'a bonds. I Dave attached aome Dackground information regarding benefita of tde plan. During the last diacussion xe had With the HRA, they requested that we eva�uate the refunding in LWO fashions. One vas to refund the current existing bonds and additionally� add to that refunding a large emount� i.e., =2.000.000 or =3►000,000 of excess cash for the HRA to use. In reviexing this with Hiller i Schroeder they atrongly recommended against it in that xithout a pro�ect on line it is extremely hard to �ustify that large amount of cash. The aecond reQuested analysis xas for refunding the existing bonds vith �ust enough eash to operate on for s period of time until a project becomea available. Therefore� the analysis attached includes t�+o examples and they are �arked Exhibit "A" and "B". Exhibit "A" ahows the refunding iasue With a �500�000 excess for project costs if the refunding was done thia year. Exhibit "B" aboWS the aame process if the refunding Was done after the February payments xere made. A third analysis that the HRA asked us to make was to determine the cost of the refunding without any excess cash in a direct comparison as to xhat la going on now. The column entitled "Bond Payment" ahor+s exactly the exeess that the City of Fridley xould have if we continued to pay our debt aervice. Exhibit "C" shows the refunding with no cash for project costs. Therefore, it is a straight analysis of refunding versus the current aituation. Please note that the difference in annual surplus is approximately �75,000. Therefore� it Will cost the City of Fridley HRA approximately �75,000 more to release 9.2 million dollars in the next fourteen years. I Will be available Thursday night to diseuss this and any other lasues that the HRA may have about refunding. - SCI:SA �ttachments 3! 0/2/ 18 ' .,/� � . . � . '10: .. •. - •• !lEMORP►NDOM N�SIY. M. �JRFSHI, CITY NAT�iR !RO'7: SID II�II��At7, DIRDC'IpR C�' Ci��L �ICES btJBJDCT: C�JI£R CITY TAX INQi�?gNT GATE: MAR�I 8, 1984 During the reoent dicusssions cn the develop�ent of the property north of City Hall, ve had again a nunber of questions regarding Where the increment generated frm the Target Project will go and ha+ long will it oontinue. The specific questions again revolve around the ability of the School Districts and other taxing jurisdictions to receive the benefit of the project. As you are aaare, all of the incr�t Within the Center �ity Tax Increment Financing District have been, pledged to any existing or future bonds in the area. Zt�is was a result of the la�+ that was enforoe at the tir�e the incre:�ent districts Were set up and the method in �►hich the resolutions were dra�n regarding the sale of the first 2.2 million dollar bond. Therefore, any increnent that is generated either through increased values of existing properties, or ne�. c3evelo�ent within the Center City must go into the Debt Servioe Fund and is not available to the HRf+ for any other use, including turning back portions to the other taxing jurisdictions. As long as there are existing bonds on arty Center City Project, all incre�ents in the future must be put into the Debt Serviae Acao�ts. The HRA does have the flexibility to issue neW bonds either using the incra�ent develope� throu� a new project, or by excess incre-�ents that exi�t due to the increased value of existing projects. Therefore, the only flexibility the HRA has in the Center City for a�ssisting c3evelopers is through existing cash b�alanoes within the Construction F�cis or additional bonding. Tt�is situation obviously limits the flexibility that the I� has in assisting developers in the Center City Area. Therefore, I been reviewing various methods of alleviating this situation. A preliminary investigations indicate that the i�iA Aas three p�ssible aptions: a.. �e first optior� is to do nothing and to oontinue to allo�r the increment to f1vW ir�to the Debt Servioe F�d �til sa�e time in the future vhen all bcn�s are paid off. Zhis is probably the least advantageous method in that there vi11 be large s�r.is of ineney residing in the Debt Service Funds vhich are not available for use by the HRF► or the other taxing j ur i sdictions. �� �`@.7FR C`I TY TAX INC�tII'�T —2— W4Rai 8,19 84 b. �► second alternative Whid� is being investigated is the possibility of ref�ding the existing three bonds for the Center City under a new set of resolutions Which vould alla+ for additional or new incre�nent to be directed in whatever fashion the i�tA chooses. If this �rere to happen, the boncis would be oar�ined into one single bond and would ocntinuhe to exist as an HRA obligation. Zl�,e advantage would be that additional increJr,ents oould be us,ed either for future direct enhancements to developers, or turned back to other taxing jurisd�ctions at the HIiA's direction. e. Zl�,e third option is the prooess of defeasanoe. In defeasanoe, an analysis is made of the a�no�t of money that will be needed over the life of the existing bonds to p3y principal and interest pa}�ents. Then the excess cash balance in the Debt Service F1a�ds is invested at�a rate which equal the princip3l ar�d intere�t peyr�ents wer that period of time. �is entire process is then turned over to a third party trustee and that person pays the Debt Service paynents out of the interest generated fror� the investment. In this process, the entire bonds are removed as an obligation to the t�A ar�d it gives then full flexibility to proceed with developnent using the incre�ent in any fashion in vhich they see f it. �he disadvantage of this is that it will prohably take the HRA tWO to three years to aoquire enough excess cash balance to acoonplish this process. I Will oontinue to evaluate these options and vill hopefully be making a reco�endation to you in the rear future as to which is the most advantageou� for the 1�tA in tems of financial responsibility and continued flexibility. If you have any questions regarding these op�cions, please feel free to let me knaa. SCI:sh f/0/4/4 '10: �E- ��� M�M �t �!i �! � !lEMORANDDIrI I�SIM M. ¢JRFS'HI, QTY M{ANAGi�t �� � � • � �• � •:� • ra ►• • ti�- •�. �.7DCT: ffiiA HC[�IDII� L1ATE: JULY 10, 1984 ZYie HRA has discussed on a number of occasions, two garticular problens regarding borxiing and the Centet City. 1. ZYie early bond resolutions required that all excess increment renain in debt servioe f�ds �mtil all bonds are paid. What can be done to change this. 2. How can the HRA borc3 to maintain sane additional reserve balance using the inczeznent that will be generated from the Targe t Project? I have attached a copy af a mer�or and�n f ran Mr . J im 0' Mea r a to Mr. Dick Graves at 0`Connor & Hann�n regarding the tax increnent within the Center City. As you can see, it is clearly their opinion that all excess increnent must go into the bonc3 f�d. I addressed this issue to Ehlers & Associates and you can see the attached response fran Mr. Dick Ehlers. Using the typical ref unding method, it would require that we also pledge the increment from the Target Project in order to refund these issues. While this would alleviate the problem with requiring that all excess increnents go to the c3ebt servioe f�d, it would lock out the Z`arget increnent for other future bor�din9. I addressed the same issue to Mr. Jim Casserly, who is now working with Miller & Schroeder M�icipals, Inc. He identif ied to me that there are a n�anber of cities existing under the same types of resolutions and the same problems. His f irm has developed a method around this and is now going through the legal discussions with various underwriters to determine how the method should proceed. In its simplest form, the City of Fridley I�tA would issue a revenue borri and pledge the existing increments thus releaving the requirement that all f uture increnents go towards debt service. Additionally, they issue additional ano�ts of money over and above the existing debt service using the Target increnent. It appears that this metha7 would acoomplish both objectives by alleviating the requirement on increnents and also allvwing for sane additional cash to be plaoed in the HIZA funds for future development of the Center City. Mr. Casserly will be prepared shortly to make a presentation to you and or the HIZA at your oonvenience. Could you please review the information at your earliest o�nvenience. 9Q:sh 3/0/2,/14 _ . .( O'CONNOR & HANNAN MEMORANDUM CATE: Mazch 24, 1983 TO: Dick Graves �tOM: Jim O'Meara suB�ECT: Fridley Center City Project * �' 0 I've zeviewed Fridley City Council Resolutions 126-1980, 5-1981, 54-1982 and B1-1982, which concern the sale of the City's 52,200,000 G.O. Tax Increment Redevelopment Bonds of 1981, S625,000 G.O. Tax Zncrement Redevelopment Bonds of 1982, and $600,000 G.O. Tax Increment Redevelopment Bonds of 1982, Series II, respectively, all issued to finance redevelopment costs in the Fridley HRA's Centez City redevel- opment project area, pursuant to a tax increment financing agreement between the City and the HRA, dated September 13, 1979. Attached as Exhibit A to Resolution 126-1960 is the City/HRA Cooperation Agreement, which recites in part that the HRA has "desiq- nated the area described in Exhibit A" as the Cer�ter City Redevelop- ment Area (this Exhibit A is not attached, but I am assuming that it simply gives the legal descriptions of the parcels in the project area but does not define this project area to include subsequent enlarqements thezeof; if it did, many of the legal conclusions in this memorandum would not apply). This City/HRA agreement also provides in pazagraph 5(b) that "the City shall aqzee to pledge and . apply all tax increments zeceived from the Authority pursuant to this agreement to the payment of such bonds and the interest thereon." � - _ : . , `� ( . The "such bonds" refers to any tax increment bonds issued by the City in aid of financing development within this presumably defined and fixed project area. The first bond issue establishes a sinking fund fos all such bonds issued to finance zedevelopment costs in the Center City project area. It also pledges to this sinking fund, for the security of the first series of bonds and any additional bonds issued for similar purposes, all tax increments derived from the project area. The subseqUent two bond issues are governed by similar provisions. In other words, all tax increments derived from this particular district go into the sinkinq fund until all bonds issued for improvements to the district aze paid. Aowever, the increments are not earmarked for any bond issue particulazly, and the City has the authority to issue additional series of bonds, also to be secured by increments in the sinking fund, for eligible redevelogment projects in the project area. In my opinion, (1) the City can issue additional bonds for further project improvements to the particular project area, payable in part from tax increments derived from the project area and depo- sited into the sinking fund, without in any way compromising the pledged security for the pzevious three bond issues; and (2) the City may enlarge the Center City project area without compromising the availability of the tax increments which would or could be de- rived from the additional property. Simply stated,the only restric- tion is that all tax increments from the oriqinal Center City project area must be deposited in, and are pledgecl to, the �ebt service sink- ir.q fund for any and all outstanding bonds issued oz to be issued to finance improvements to that original area. , 2 ' � � '• � EHLERS AND ASSOCIATES, INC. FINANCIAL SPEC�ALISTS I FiAST 140TiON�I•SOG UNE CONCGURSE S07 MARpUETTE AYE. M�NNfAPOl15. M+NNf50TA S5d02 339-829'1 IOAEA COOE 6�?1 !!ay 30. i9a� llr. Sid Ia�a�n Dir�ctor of Centr�l Ser�ic�s CitT of Fridle� 6�31 Uni�ersity �venue N.E. lridl�y. !W 55�3� YE: C�nter Cit� Tas Increment District D�ar 1lr. InmsA: In responee to tbe Fridley Housin6 and Redevelopment •utAority's request. I am writin6 concernin6 tAe posaiDility ot restructurinb tAe debt of tAe Cent�r City ?ai Increment District to aDsorb eices� increroent •c it comes due. tDua retirin6 the deDt •arly. IL is my understandin6 that one of tAe primary toncerns of the HRA ia the proviaion ia esistinb bond reaolutiona requirinb thet 100Z of Las increment revenue De applied to debt service vith any remeinin6 Dalsnce accumulated in the debt service fund in order to e�ll outatandin6 debt for redemption vhen it becomes callaDle. IL it 1oy underatandin6 that thet HRA vould prefer to distriDute any tas increment cevenue receipts ia e:ceai of current debt service retirement� to LDe other ta:inb jurisdictions. aecause tAe Dond reaolutions constitute a contract vitA the pondAolders. the only way to chan6e Lt�e provitione of tboae resolutiona is to defeaae tbose Dond6 Oy creatinb an eacrov (funded with U.S. 6overnment oDli6ations) vDich vill pay off the Donda a6 tDey come due and call Lhe remainin6 Donda at the eall date. ?Ais �scro� i: aormslly created Dy usin6 funds on D�nd plua LAe proceeds of a refundin6 Dond issue. Under Xinnesota lav. novever. there are certain testt tAai nust De met io order to iasue refundinb Donds for 6eneral obli6atioa deDt. In order to isaue sucA Donds. tAe averabe maturity of tAe debt must be •itended at leact tive yeara. or LDe refundin6 must �chieve a SS savin6a in interest e:penae. ?Aua� since Lhere is no thoubht of estendinb the life of these Dond isauea� ve must be able to 6enerate •i6nificsnt savinb6 ia interest espense in order to accomplish tbe refundinb ot theae Donda. 2hia �aviA6a eould be bad by s�orteninb the maturit� schedule to take advanta6e ot projected taz increment revenues o�er aad aDove tbe debt service requicements of t�e curreat debt. � � � � • - � _, �Ir. Sid Iman Xay 30. 198� Fridl��. !al P�6e � If • rtfundin6 i�sue vere structured uain6 all �vailable incr�ment tit�cludin6 tb� L�r6et project). �11 outBtandia6 deDt could De refunded vitA ta i�sue vDich vould be retired in nine year�. iDii short maturity schedule thould c�sult in the required S'L •avin6g. allovin6 ua to accompli:h tl�e refuadinb. If. sovever, the tar6et project is �scluded from the calcul�tion. tAere doea aot appear to be sufficient increment a�ailable to retire tDe current out�tandia6 deDt faster tDan it curr�ntl� anticipated. I Dope tDis answers �our question�. If tAere are any futAer QuestioAS or coromenta. pleaae don'L Deaitate to eall. Very trul� yours, EHLERS AAID ASSOCIATES, INC. �f ,���/� � a _ f < < : : ✓� � . tticAard E. Ehlers REE:�cb 0020j � �• . • , . BENEFITS OF A TAX IlVCREIMENT REVENUE BOND RFFUNDWG 1. Elimination oi General Obligation Bond Debt The elimination oi approximately $3,375,000 in general obligation bonded debt which may enhance the City's credit rating. The City can tell its taxpayers that undec no set of circumstances would they ever be liable fa financing the City's developme�t activities, and fucthermore that any incentives provided for development must eithe� be self-supporting or they would not be given. 2. Elimination of Rest�ictive Indentures P�esently the City can use its tax increment in Tax Increment District No. 1 only for th� payment of debt service on bonds issued for project improvemenu in that District. My �xcess increme�ts are trapped since the largest bond issue cannot be redeemed until February 1, 1990. The refunding would permit increments to be used anywhere within the Redevelopment Project Area. 3. Flexibility in Financial hlanagement Th� primary b�efit of the refunding is the flexibility gained in the use of revenues currently being generated within the tax increment districts and the possibility ior greater efficiency in project finance. The City should establish a Development Account which would operate like a permanent improvement revolving fund tor street paving in reducing the amount of project �evenues (tax increment included) that is used to pay the capitalized interesc on bonds. Presently, the unobligated income within Tax Inc�ement District No. 1 may not in any way be shared witfi oc loaned to ather projects. After the �efunding, the City will be able, in effect� to pool the revenues of all of the participating districts. Debt service payments on the refunding bonds, may be contributed by any participating district, or a disvict's tax increment may be used for any project activities a other purposes, such as repayment of loans, or return of unneeded tax increment to other taxing jurisdictions. If the tax increment is not needed foc project activities or other purposes, the district may be decertified. The reiunding allows the City to restructure its debt payment schedule and, through more efficient use of project revenues, reduce oc eliminate the reliance on funding future development activity with general obtigation bonds. 4. Oppatunity foc Comprehensive Planning and Prioritization of Piroject Activities At the present time, planning and decision making fot any particular tax increment district is limited to the extent to which its tax increment generating capacity exceeds its debt service. Project activity that has relatively low priaity citywide may be implemented because the rtsou�ces exist within that district, while needs of higher citywide priority in o!her districts may go unattended because of a lack of financing capacity within that distcict. The cefunding and the flexibility provided by the refunding will improve the City's ability to initiate proje�t activities in response to the City's own prio�ities rather than having financing constraints limit the pursuit of development goals. S. Assurance and Benefit to Other TaxinA 7urisdictie�s 7i�e City can structure th� refunding issue so that the net effect on other taxing ju�isdictions wi11 not be adverse. The refunding offers the potential for improved management and financial efficiencies of tax increment districu, and eliminates re- � x • Page Two strictions against decertification and return of tax increment, so other taxing jurisdictions may benefit. Of course, at a minimum, otfier taxing jurisdictions ate assured of ceceiving taxes based on the frozen base valuation of the dist�icts over the life of the districts. 6. Taxes Resultint� From Developm�nt Outside Districts The refunding wili increase tfie City's ability to finance redeveloQme�t activities outside of the existing certified districu. The �xisting Redevelopment Piroject may be expanded without expanding a tax inc�ement district, and activities may be financed in the new pation oi the Project outside the districts using revenues �eleased by the flexibility the reiunding provides. The taxes generated by new development that xcurs in an expanded Project outside certified districts will immediately be available to all taxing jurisdictions.