HomeMy WebLinkAbout5.F.5. Bond Redemption
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CITY OF SHAKOPEE
Memorandum ~In !1'~\ "'''''''
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TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Bond Redemption
DATE: February 3, 2009
Introduction
Council is requested to consider calling three outstanding bond issues for early payment.
Back~round
The reasons for early redemption of bonds are: reduce net interest cost, reduce administrative effort
and post issuance compliance in the future, improve the financial position of the city in the view of
investors and to It clean up the books".
1. The 2002A bond issue has a final maturity on 2/1/2012. There will be sufficient money on hand
to payoff the bonds on 8/1/210 in the amount of $275,000. Remaining funds to be transferred
to the Capital Improvement Fund (ClF) per past practice.
2. The 2002B bond issue has a final maturity on 2/1/2013. There will be sufficient money on hand
to payoff the bonds on 8/1/210 in the amount of $595,000. Remaining funds to be transferred
to the CIF per past practice.
3. The 2003A bond issue has a final maturity on 2/1/2014. These bonds can be called on 2/1/2011
in the amount of $665,000. There is not sufficient money on hand nor is there likely to be in the
future to payoff the bonds due to deferred assessments. The options for Council are to levy
taxes to pay the bonds, transfer in money from the General Fund or the Capital Improvement
Fund (ClF), or to have the CIF swap cash for the deferred assessments.
Past practice has been for the CIF to swap cash for assessments. There will probably need to be
additional cash transferred from the CIF in January 2011 to pay for the bonds. This additional
amount is more than offset by the unrecognized accrued interest on the assessments and the
remaining cash balance ($250,000 - $330,000) from the 2002A and 2002B debt service funds.
If council concurs with calling the bonds, a resolution will need to be adopted at a subsequent meeting
to initiate the redemption process.
Action Requested
Move to call the 2002A, 20028 and 2003A bonds for early redemption.
G~Xland
Finance Director