A. Review Crossover Refunding of Library Bonds
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227,1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227,1170
Finance
Phone: 952.227.1140
Fax: 952,227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952,227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227,1400
Fax: 952,227.1404
Planning &
Natural Resources
Phone: 952,227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
A
-""'"
MEMORANDUM
TO:
Mayor & City Council Members
FROM:
&'1.
()~-
Greg Sticha, Finance Director
DATE:
February 9, 2009
SUBJ:
Crossover Refunding 2002A GO Library Bonds & Other
Financing Discussion
BACKGROUND
On the consent agenda later this evening, staff will be requesting that the City
Council call for the sale of $6,095,000 in Crossover Refunding Library Bonds,
Series 2002A.
An advanced refunding is a financing technique for municipal bonds that allows
an issuer to obtain the benefit of lower interest rates when the outstanding bonds
are not currently callable. The proceeds from the sale of the refunding bonds
are used to pur.chase taxable government securities, which are deposited in an
escrow account until the call date on the bonds. The escrow account is
structured so that the principal and interest earned on the securities are sufficient
to pay all principal and interest on the new bonds until the call date. At the call
date, the old bonds are paid off and the source's repayment (taxes or
revenue) previously pledged to the payment of old bonds are used to pay the
new bonds.
The outstanding debt is generally considered void (defeased) either legally or in
substance. A legal defeasance occurs when the covenants relating to the
outstanding bonds are satisfied with respect to the retirement of the debt. For
accounting and financial reporting purposes, the issue is treated as defeased
when the escrow account is comprised of direct obligations or obligations
guaranteed by the United States Government irrevocably pledged to the
retirement of such debt. The City's obligation to pay the debt, however, does
not go away until the bonds are officially paid off.
Our Financial Advisors from Ehler's & Associates will be here this evening to
answer any questions on crossover/advance refundings, and the positives and
negatives of doing such a refinancing of debt.
ATTACHMENT
1. Refunding Analysis done by Ehler's.
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Chanhassen, MN
Proposed Crossover Refunding of
$6,095,000 G.O. Library Bonds, Series 2002
Table of Contents
Report
!'z:i()r2.rigin!llDebt Service
Schedule
2
Sources & Uses
3
D~~t~erviceCol1lparisorl...
4
--- ---_.-._.-...,--'.-_.-_.--
Crossover Escrow Fund Cashflow
5
06 xover of Ser 02 $6.095 I SINGLE PURPOSE I 1/23/2009 I 2:48 PM
Ehlers and Associates, Inc.
Leaders in Public Finance
Chanhassen, MN
$6,095,000 G.O. Library Bonds, Series 2002
Prior Original Debt Service
Date
08/01/2009
02/01/2010
08/01/2010
02/01/2011
I
02/01/2012
08/01/2012
02/01/2013
08/01/2013
02/01/2014
08/01/2014
02/01/2015
08/01/2015
02/01/2016
08/01/2016
- --_..-------_...~
02/01/2017
08/01/2017
02/01/2018
08/01/2018
02/01/2019
.___n_ ._~___m____ .__~_____
08/01/2019
02/01/2020
08/01/2020
02/01/2021
08/01/2021
02/0 I /2022
Total
Yield Statistics
87,497.50 87,497.50
87,497.50 87,497.50
87,497.50 387,497.50
81,122.50 81,122.50
~I,I~~:?Q 396,!~2.50 ........ .... ...........4??,~4?:QQ
74,192.50 74,192.50
74,192.50 404,192.50
66,767.50 66,767.50
4.550% 66,767.50 411,767.50
... ...-___..._....___.S.~,~1.~:?s........._~2.I!.??__._.._ "',',..__..._.
4.600% 58,918.75 423,918.75
50,523.75 50,523.75
50,523.75 430,523.75
41,688.75 41,688.75
. ....__4L~~~}5 ...._.,_._ 446,688.75
32,171.25 32,171.25
32,171.25 457,171.25
22,077.50 22,077.50
22,077.50 467,077.50 489,155.00
.}1,~??:50 ........................ ............ ......1 I,~??:?Q. ... . ..... .. ....... .......... ....
11,397.50 481,397.50 492,795.00
$1,577,700.00 $5,357,700.00
Principal
Coupon
Interest
87,497.50
87,497.50
87,497.50
87,497.50
Total P+I
87,497.50
87,497.50
87,497.50
87,497.50
300,000.00
4.250%
...}I?,QQQ.OO
4.400%
330,000.00
4.500%
345,000.00
365,000.00
380,000.00
4.650%
405,000.00
4.700%
425,000.00
4.750%
445,000.00
4.800%
470,000.00
$3,780,000.00
..........................."".... -
4.850%
i\ver<ig,e},ife ....
Y!ei&J1te~i\ver<i!le IVlatllrity(Par.Basis)
Fiscal Total
174,995.00
174,995.00
174,995.00
474,995.00
478,385.00
478,535.00
482,837.50
481,047.50
.,____4~~,~?7:?0
489,342.50
8.911 Years
...._._-----_._--_.._..."._._-~~-_..._....__._- - - -- -.--- -- ---
I
Refunding Bond Information
R,eflln~ill!lJ:)a~~ ))ate...
Refunding Delivery Date
Ser 02 $6.095 Go Library I SINGLE PURPOSE I 1/23/2009 I 2:48 PM
2/0 I /2009
Ehlers and Associates, Inc.
Leaders in Public Finance Page 1
Chanhassen, MN
Proposed Crossover Refunding of
$6,095,000 G.O. Library Bonds, Series 2002
Debt Service Schedule
Date
.02/.01/2.0.09
.08/.0 1/2.0.09
.02/.0112.010
.08/.0112.010
.02/.01/2.011
.08/.01/2.011
.02/.01/2.012
.08/.01/2.012
.02/.0 1/2.0 13
Principal
Coupon
Interest
1.7.0.0%
41,495..0.0
41,495..0.0
41,495..0.0
. . ~1,~?~,QO.
41,495..0.0
41,495..0.0
41,495..0.0
41,495..0.0
310,.0.0.0..0.0
.02/.0 1/2.0 14
.08/.01/2.014
.02/.01/2.015
.08/.01/2.015
.02/.01/2.016
_.~-------
.08/.0112.016
.02/.01/2.017
.08/.01/2.017
.02/.01/2.018
.08/.01/2.018
.02/.01/2.019
.08/.01/2.019
.02/.0 1/2.02.0
.08/.0 1/2.02.0
.02/.0 1/2.021
.08/.01/2.021
.02/.0 1/2.022
Total
315,.0.0.0..0.0
1.7.0.0% 38,86.0..0.0
36,182.5.0
1.9.0.0% 36,182.5.0
33,142.5.0
. no . ~.0~0'Vo....... ._...13, li2.,~O...
29,76.0..0.0
2.2.0.0% 29,76.0..0.0
26,.02.0..0.0
2.4.0.0% 26,.02.0..0.0
. ................. ..z.L~OcDQ...._....n
2.6.0.0% 21,88.0..0.0
17,2.0.0..0.0
2.8.0.0% 17,2.0.0..0.0
12,.02.0..0.0
3..0.0.0% ............................. ..................I~,D~O:gO
6,32.0..0.0
3.2.0.0% 6,32.0..0.0
$774,730.00
32.0,.0.0.0..0.0
..33Q,g.oO.Q.o. .
34.0,.0.0.0..0.0
345,.0.0.0..0.0
36.0,.0.0.0..0.0
37.0,.0.0.0..0.0
. 38D,000,QO
395,.0.0.0..0.0
$3,465,000.00
Yield Statistics
Bond Year Dollars
lIlt:t.IlI~~t:~t<;~st(lIlIl:)...
.:rflJ.eJ!I~erest Cost <':rrfL.. ......
.~()!I~. ~:i.e~<I!.Cl.I"~.I"bi!r.lIg.t:P.lIIJ>~ses. .
AIIIlIcI\JsiYt:l:(Js.!(A!<;)
IRS Form 8038
Net Interest Cost
.__no .....................__,......_".._,_,............._ .................. n._,_""._".
Weighted Average Maturity
06 xover of Ser 02 $6.095 I SINGLE PURPOSE I 1/23/2009 I 2:48 PM
Total P+I
Fiscal Total
41,495..0.0
41,495..0.0
41,495..0.0
..................~I,~.9.~:QO...
41,495..0.0
41,495..0.0
41,495..0.0
351,495..0.0
82,99.0..0.0
_...~.~!~?OcOQ.
82,99.0..0.0
392,99.0..0.0
353,86.0..0.0 392,72.0..0.0
36,182.5.0
356,182.5.0 392,365..0.0
33,142.5.0
..~!?.3,!~1.~.o......__..3.9.6,28~:00
29,76.0..0.0
369,76.0..0.0 399,52.0..0.0
26,.02.0..0.0
371,.02.0..0.0 397,.04.0..0.0
..21..88.0..00........._.....___.....
381,88.0..0.0 4.03,76.0..0.0
17,2.0.0..0.0
387,2.0.0..0.0 4.04,4.0.0..0.0
12,.02.0..0.0
392,.02.0..0.0 . .... .......................... . ...~Q~,Q~Q:Q.O..
6,32.0..0.0
4.01,32.0..0.0 4.07,64.0..0.0
$4,239,730.00
~...__.... $3D,1~~Dg
2.654.0433%
........... ----...........-.....
2.65.0358.0%
2.7715243%
2.5623615%
8.726 Years
Ehlers and Associates, Inc.
Leaders in Public Finance Page 2
Chanhassen, MN
Proposed Crossover Refunding of
$6,095,000 G.O. Library Bonds, Series 2002
Sources & Uses
Dated 02101/2009 I Delivered 02101/2009
Sources Of Funds
Par Amount of Bonds
--.----~--_.~.---._, --
Transfers from Prior Issue Debt
.. m _~~,~~,()()_OcOQ
Total
..._~,!}20.00 _
Total Uses
$3,965,000.00
06 xover of Ser 02 $6.095 I SINGLE PURPOSE I 1/2312009 I 2:48 PM
Ehlers and Associates, Inc.
Leaders In Public Finance Page 3
Chanhassen, MN
Proposed Crossover Refunding of
$6,095,000 G.O. Library Bonds, Series 2002
Debt Service Comparison
Date Total P+I PCF Existing DIS Net New DIS Old Net DIS Savings
02/01/2009 (1,168.64) 1,168.64
02/01/2010 82,990.00 (82,990.00) 174,995.00 174,995.00 174,995.00
02/01/2011 82,990.00 (82,990.00) 174,995.00 174,995.00 174,995.00
02/01/2012 82,990.00 (82,990.00) 174,995.00 174,995.00 174,995.00
02/01/2013 39~,?90.00 (3.,?~I,.~?5:g0) 3,8~?,~97.50 438,99~:?O 474,2?5.00 ..... .~~,QQ~JJL
02/01/2014 392,720.00 392,720.00 477,245.00 84,525.00
02/01/2015 392,365.00 392,365.00 478,385.00 86,020.00
02/01/2016 396,285.00 396,285.00 478,535.00 82,250.00
02/01/2017 399,520.00 399,520.00 482,837.50 83,317.50
02/01/2018 ...................... ....}2?,Q~g:gQ .. ............. ..}??,Q~Q:QQ 481,047.50 ?~,QQ?:?Q..
02/01/2019 403,760.00 403,760.00 488,377.50 84,617.50
02/01/2020 404,400.00 404,400.00 489,342.50 84,942.50
02/01/2021 404,040.00 404,040.00 489,155.00 85,115.00
02/01/2022 407,640.00 407,640.00 492,795.00 85,155.00
Total $4,239,730.00 (4,070,465.00) $4,392,482.50 $4,560,578.86 $5,357,700.00 $797,121.14
PV Analysis Summary (Net to Net)
Gr()".sYV D.e!Jtl'ervice S~,,~n.gs...........:...:......
N~!RY<::!I.s~.f1~~~!I"in.g.s@~:?~?'70(~~n.4yi~14):::::
. .. ................................... ..~~!,!??:~I
Transfers from Prior Issue Debt Service Fund......
_.......__............ - _.................__''m...._....._....._........ ......__..____....... _.............._...__........
<::~n.tin.g~n.(;y~~~~1ln.4in.g}.rn.~1ln.!::::::::::::::::::::
Net Present Value Benefit
.................____ ...._....__._J~QQ,Q90.0..Ql.
.. ............. 1,.I..6.?:~~
.....__.... .... ..J!~~?~~.6.:.9..?.
N~tRY~~n.~fl!/J3,8~2,2~.?:~.3f'.y.~<:flln.4~d.l.)~~t~~~ic~
.N~t..RY..~en.~tit/~~,?s.Q,Q.QQ~~ft1n.4l:.d.Rrin.cipal::: .....
N~tRY~enetit/~~,4~5,QOQ~eft1n.4in.gRrincip!lI::
3.716%
..............---.......--....-..-.................----
3.765%
4.108%
Refunding Bond Information
Refunding Delivery Date
2/01/2009
06 xover of Ser 02 $6.095 I SINGLE PURPOSE I 1/23/2009 I 2:48 PM
Ehlers and Associates, Inc.
Leaders in Public Finance Page 4
Chanhassen, MN
Proposed Crossover Refunding of
$6,095,000 G.O. Library Bonds, Series 2002
Crossover Escrow Fund Cashflow
Date
02/01/2009
08/01/2009
02/01/2010
08/01/2010
02/01/2011
--............................................
08/01/20 II
02/0112012
08/01/2012
Principal Rate
Interest + Transfers Receipts Disbursements Cash Balance
0.36 0.36
21,105.48 20,390.32 41,495.80 41,495.00 1.16
21,105.48 20,389.79 41,495.27 41,495.00 1.43
21,105.48 20,388.98 41,494.46 41,495.00 0.89
_~I,lQ~'~.L .}Q,~??:?~ ~I,~2~,~Q ~1,~?5.00 1.29
21,105.48 20,389.55 41,495.03 41,495.00 1.32
21,105.48 20,388.94 41,494.42 41,495.00 0.74
21,105.48 396,277. 78 3,821,494.26 3,821,495.00
$147,738.36 $518,615.28 $4,070,465.00 $4,070,465.00
Total
3,404,111.00 1.240%
$3,404,111.00
Investment Parameters
Il1v~~!J1!el1tM()c1eIJPy:, (}IC;,o.r~e(;\lI'i!iesl..
i2~j'llll.l!in.'1tls.tIl1el1t)'il:lc1.!a,rget
Bond Yield
Cost ofInvestments Purchased with Fund Transfers
.._.._...}gg~QQoQQ..
.c:.a,s.~i2l:(l<l.sit ... _" ___ ".. ..... . _
Cost of Investments Purchased with Bond Proceeds
..._.n... _~___
Total Cost ofInvestments
0.36
.. _}"i04, III :9,0_
. ......~~,?Q~,lll}~
!llrget.C;()st.()j'II1'1l:stl11entsat~()I1c1)'il:ld
!\(;tlllll(lositi'll:()r(l1eglltive)l\I'~itrllgl:
.~~,~?~,Q?I,?~
. (I~?,Q~?,~Q)
State and Local Government Series (SLGS) rates for
1/21/2009
06 xover of Ser 02 $6.095 I SINGLE PURPOSE I 1/2312009 I 2:48 PM
Ehlers and Associates, Inc.
Leaders in Public Finance Page 5