HomeMy WebLinkAbout10G - Resolution RE: Sale of General Obligation Refunding Fire Station Bonds
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING SALE OF $945,000
GENERAL OBLIGATION REFUNDING FIRE STATION BONDS, SERIES
2008A
DISCUSSION: Introduction
The purpose of this agenda item is to receive City Council approval of a
resolution approving a privately negotiated refunding of $945,000 Fire Station
No. 1 General Obligation Bonds.
Historv
In 1993, a $2.1 million referendum was passed by the voting public for the
construction of Fire Station No. 1 and purchase of fire trucks. The City sold
general obligation bonds which were to be repaid over 20 years. To save
interest costs, we refunded the original bonds in February 1999. We have been
paying the debt service on those bonds ever since.
Current Circumstances
As is our practice, we monitor the interest rates on outstanding bonds to
determine if a savings can be achieved. The average interest rate on the
outstanding bonds is $4.325%. Steve Mattson of Northland Securities has been
working to refund the bonds to maximize the savings to the public. He has
successfully negotiated a refunding agreement with Prior Lake State Bank at a
rate of 2.6209% scheduled for payoff in 2013. It is estimated that the taxpayer
savings through this refunding is $30,851.00.
Conclusion
The City Council should determine if it wishes to approve this refunding as
proposed.
While we cannot predict the market with 100% accuracy, we believe that the
interest rate which has been negotiated represents a maximum savings both
because of the negotiated interest rate and because we are retaining the original
payoff date. An additional benefit of the refunding is that Prior Lake State Bank,
a local business, purchased the bonds.
ISSUES:
FINANCIAL
IMPACT:
ALTERNATIVES:
A savings to the taxpayer of $30,851.00 less than the existing debt service
schedule.
1. Adopt the refunding resolution (to be provided to the City Council as soon as
we receive it.)
2. Take no action.
RECOMMENDED Alternative #1.
MOTION:
www.cityofpriorlake.com
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