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A-2. Discussion of Inter-Fund Loan related to Construction of Well No. 150 CITY OF MEMORANDUM CU MNSEN TO: Mayor & City Council 7700 Market Boulevard PO Box 147 FROM: Greg Sticha, Finance Director Chanhassen, MN 55317 DATE: January 26, 2015 Q , Administration Phone 952 2271100 SUBJ: Discussion of Inter -Fund Loan, Borrowing for Costs Related to Fax 952 2271110 Construction of Well No. 15 Building Inspections BACKGROUND Phone 952 2271180 Fax 952 2271190 Well No 15 is scheduled for construction in February of this year The plan for financing these costs was to issue bonds /debt. After internal discussions, staff began Engineering 2271 researching the possibility of doing internal financing (borrowing from one of the Phone 952 2271160 Fax 952 2271170 city's other funds to the water fund) in order to save on bond issuance costs and benefit from the interest paid on the issuance of the debt Finance Phone 952 2271140 Fax 952 2271110 Park & Recreation Phone 952 2271120 Fax 952 2271110 Recreation Center 2310 Coulter Boulevard Phone 952 2271400 Fax 952 2271404 Planning & Natural Resources Phone 952 2271130 Fax 952 2271110 Public Works 7901 Park Place Phone 952 2271300 Fax 952 2271310 Senior Center Phone 952 2271125 Fax 952 2271110 Website www ci chanhassen mn us A—d, It had been planned that the funds would be borrowed for a term of eight years, therefore the internal repayment would be planned for the same term. One hurdle that had to be researched was the potential impact on the city's bond rating from Standard & Poors if we used $14 million in cash to perform an internal financing. The city asked its financial advisory firm to analyze if there would be any negative impact on future bond ratings and issuances After their analysis, they concluded that there would be minimal to no impact on all of the rating criteria as demonstrated in the attached analysis and memo from Ehlers & Associates. Once that conclusion was made, staff began discussing which fund to borrow the funds from and how to repay them The only fund the city has that is capable of borrowing $1.4 million is the Capital Equipment Replacement fund That fund currently has cash reserves of approximately $16 million In order for the borrowing to be possible, a transfer of $14 million out of the Capital Equipment Replacement fund would be required, leaving cash reserves at approximately $200,000. Staff suggests that the 2014 General Fund surplus then temporarily be transferred to the Capital Equipment Replacement fund for cash reserve purposes Staff also recommends that the first repayments of principal and related interest then be repaid to the City's Revolving Assessment Construction Fund (historically where city council has directed the majority of General Fund Surplus in previous years). Interfund Loan, Well No. 15 Bond Issuance Costs $40,000 Interest Savings $110,000 Total Savings $150,000 Chanhassen is a Community for Life - Providing forTodayand Planning for Tomorrow Mr Todd Gerhardt January 26, 2015 Page 2 RECOMMENDATION Staff recommends that the City Council consider authorizing this internal financing and related transfers at its next meeting on Monday February 9, 2015. ATTACHMENT 1 Analysis from Ehlers & Associates 2 Loan Repayment Schedule f \gregs \bondmg\2015 bonding \analysis of internal financing of well #15 docx j� OTo Greg Sticha, City of Chanhassen, MN MFrom: Nick Anhut, Ehlers & Associates W Date January 14, 2015 MRe Rating Analysis Memo The City has asked Ehlers to perform an analysis of the use of City funds to finance $1,400,000 in water system improvements and the potential risk to the City's "AAA" bond rating from Standard and Poor's ( "S &P ") To help better understand the analysis and factors that most influence a rating with S &P, we have replicated the scoring of their new U S Local Governments General Obligation Rating Criteria The intent is to give the City of Chanhassen additional perspective on those key economic and financial metrics behind its current "AAA" rating and the score's sensitivity. The analysis uses information from the City's most recent 2014 S &P rating report, 2013 audited financial statements, Minnesota Department of Revenue records for Economic Market Value, and U S Census population data It is important to note that S &P has reserved the right to adjust actual ratings from the indicated rating by one notch. S &P's criteria also include several qualitative factors where we believe the City can further reinforce its credit status Details of the scoring are included in the replicated scorecard attached to this memo S &P Rating Criteria S &P evaluates the creditworthiness of municipalities using seven key factors scored 1 to 5, each carrying their own assigned weighting. An overall indicative rating results from the weighted average score of the seven factors The scoring of each factor is based on defined quantitative indicators and qualitative adjustments Below, we have replicated the results of the City's last rating evaluation in 2014. S & P's Seven Rating Factors 2014 Score Weighting Weighted Score Institutional Framework 200 10% 020 Economy 1.00 30% 030 Management 100 20% 020 Financial - Budgetary Flexibility 100 10% 0.10 Financial - Budgetary Performance 200 10% 020 Financial - Liquidity 100 10% 010 Debt & Contingent Liabilities 300 10% 0.30 Total Weighted Score 0 140 S &P's Indicative Rating Scale Score Range Indicative Rating 1.00-1.64 AAA (City's indicated score. 1.40) 1 65 - 1 94 AA+ 1 95 - 234 AA wvv\n/. ers >- inc.c,orn EHLERSMinnesota phone 651- 697 -8500 3060 Centre Pointe Drive LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651 -697 -8555 Roseville, MN 55113 -1122 fall free 800 - 552 -1171 Chanhassen, MN Analysis and Sensitivity Significant changes in one or more of the seven factors may result in moving the rating up or down The following analysis looks at the likely scoring impact of the choice to use internal funds to finance the 2015 water system improvements. We are assuming the source of the $1,400,000 mterfund loan will come from capital funds outside of the existing general fund balance Economy: No Impact While this score holds the highest weighting, Chanhassen scores in the top category and it is unlikely that City actions can have any significant impact to income and value measures in the short-term Additionally, the scoring is primarily based on residents' income and property valuation which is not directly impacted by choice of funding for the water improvements. Management: No Impact Chanhassen's top score in Management is based on the stable set of financial tools, policies, and reporting practices in place at the City. The City's choice to engage in inter fund borrowing as an overall cost saving mechanism likely further solidifies this score Institutional Framework: No Impact The Institutional Framework score of "2" is a standard score S &P gives to all MN cities to reflect the legal and financial framework they operate within This score is re- evaluated internally by S &P's analysts and published annually. Budgetary Flexibility: No Impact S &P's criteria attempts to measure the degree of flexibility the City can look to in times of stress. S &P uses the most recent audited information and is measured as available fund balance as a percentage of general fund expenditures. S &P considers available balances those of the general fund and other governmental funds as long as they are unrestricted and legally available to support operations The City's most recent rating achieved the top score of "1" by maintaining available fund balance above S &P's threshold of 30% of operating expenditures In 2013, the City reported an unassigned general fund balance at $5,274,584 This figure alone represents 51 % of S &P's calculated operating expenditures. The City would likely utilize balances from other capital funds to finance the interfund loan S &P does not currently include any capital funds balances in its calculation of the City's score To the extent the City intends to utilize capital funds outside of the general fund, the current score would not be impacted Budgetary Performance: Minimal Impact S &P's criterion attempts to measure fiscal balance in both a general fund and total governmental funds perspective using net revenues above or below expenditures The fiscal net result of each is calculated as a percentage of expenditures. The City scored a "2" in this category based off of the 2013 audit and projected 2014 results The transfer of $14 million in governmental funds to source the water loan could increase S &P's calculation for total expenditures and decrease net revenues, but would not change the general fund calculation. The impact is minimal as the city's score would remain at "2 " An important consideration is the criteria attempts to gain a more sustainable view of performance by smoothing out onetime revenues and expenditures such as capital outlays or capital transfers If the City chooses to internally fund the water system improvements using governmental funds, it will be an important discussion point during a future rating call to walk the analyst through the onetime nature of this activity. Liquidity: Minimal Impact This category measures the ability of the City's unrestricted cash and cash - equivalents to cover expenditures. First compared to annual total governmental expenditures, and then compared to annual debt service Chanhassen again receives the top score of "1" based on maintaining liquid assets well above S &P's thresholds of 15% of total governmental expenditures and 120% of annual debt service. The City anticipates a reduction of $1.5 million in cash in 2014 due to the prepayment of the 2004B Bonds Regardless of source, the use of cash to fund the water improvements would represent another $1,400,000 decrease in S &P's measure of cash or cash - equivalents and potentially a corresponding increase in expenditures as a transfer out of governmental funds Due to the magnitude of the City's cash position, this decline poses no risk for the City's liquidity score. Debt and Contingent Liabilities: Minimal Impact S &P's debt criteria focus on two measures- total general obligation principal outstanding as a percent of total governmental funds' annual revenues and total governmental funds' annual debt service as a percent of expenditures The City current score of "3" is based on sitting dust above the 60% threshold of net debt as a percent of revenues, with debt service at 12% of calculated expenditures. Choosing to loan internally instead of issue new debt generally solidifies this score An important consideration is that S &P nets out any G.O. debt that it considers "self- supporting," or 100% repaid by non - property tax based revenues such as a utility or other essential service enterprise. When issuing debt for the utility systems, the City traditionally pledges to repay the debt with utility revenues It is unlikely a new G O bond issue for the water system would impact the City's debt score given this exemption. Therefore, the lone debt scoring consideration is whether the reduction in capital funds on hand due to this project creates the need to borrow for other potential projects prior to loan repayment I look forward to discussing these results with you. Standard Poor's New Criteria Estimate City of Chanhassen, MN - General Obligation S&P U.S. Local Governments Rating Methodology: Rating Summary (Assumes data from City's 2013 audit and S &P's 2014 Rating Report) S &P's Seven Rating Factors 2014 Score Weighting Weighted Score Institutional Framework 2.00 10% 0.20 Economy 1.00 30% 0.30 Management 1.00 20% 0.20 Financial Budgetary Flexibility 1.00 10% 0.10 Financial Budgetary Performance 2.00 10% 0.20 Financial Liquidity 1.00 10% 0.10 Debt & Contingent Liabilities 3.00 10% 0.30 Total Weighted Score 1.40 Overriding Factors: Positive Overriding Factors High Income Levels (EBI > 225% or >300% U.S.) 1 or 2 notch adjustment High Available General Fund Balance AA+ 75% of GF expenditures (current and projected) 1 notch adjustment Negative Overriding Factors Weak Liquidity (score of 4 or 5) Caps Rating at BBB+or BB+ Weak Management (score of 4 or 5) Caps Rating at A or BBB Lack of Willingness to Pay Obligations Caps Rating at B for debt not in default Available Fund Balance < $500,000 1 notch adjustment Market Value per Capita < $30,000 1 notch adjustment 2 -year Structural Imbalance no plan to restore Caps Rating at BBB+ Negative General Fund. Balance, 4.75-4.94 < -10% of GF expenditures Caps Rating at A+ < -5% of GF expenditures for 2 yrs Caps Rating at A- <-5% of GF expenditures for 3 yrs Caps Rating at BBB 1) Institalionai Framework - 14% Potential Wataf Loan impact: Norte All governments of the same type within the some state receive one score Factors Predictability the extent to which a local government can forecast its revenues and expenditures on an ongoing basis Revenue and Expenditure Balance the extent to which a local governments have the ability to finance the services they provide Transparency and Accountability the overall institutional framework's role in encouraging the transparency and comparability of relative financial information Systemic Support the extent to which local governments receive extraordinary support from a state government when the local government is under extreme stress. Factors. 2014 Economic Market Value (2013/14)* 3,692,988,746 Population estimate (2013) ** 23,642 Projected Per Capita Income as %of US 188% Market Value per Capita 156,205 Indicative Rating Outcomes from 7 Factors Score Range -- indicative Rating 1-1.64 AAA 1.65-1.94 AA+ 1.95-2.34 AA 2.35-2.84 AA- 2.85-3.24 A+ 3.25-3.64 A 3.65-3.94 A- 3.95 -4.24 BBB+ 4.25 -4.54 BBB 4.55 -4.74 BBB- 4.75-4.94 BB Category 4.95-5.00 B Category Key =Base score indication UNW=Potential score w/ adjustment factors Score Range Institutional Framework Score 1 1.5 1 175 275 2 3.0 375 3 4.0 4.5 4 475 5.0 5 Per Capita Income As %of US Market Value per Capita >$195,000 $195K -$100K $100K -80K $80K -55K I <$55K >150 1.5 2 2.5 3 110 150 1.5 2 2.5 3 3.5 85110 2 2.5 3 3.5 4 7085 2.5 3 3.5 4 4.5 <70 1 3 3.5 4 4.5 5 `Participation in larger /diversified economy (MSA level) S &P uses Per Capita Effective Buying Income (EBI) * MN Dept of Revenue includes portions attibutable to Hennepin and Carver Counties * *U.S Census Bureau Note Rating and scoring are estimates only and do riot include qualitative assessments with which the Rating Agency may adjust the rating up or clown Prepared by Ehlers 1/14/2015 Standard Poor's New Criteria Estimate 3) Managerrtent,f., j 2Q% _ Poietrtiai v�ater loan impact: Past FMA "Strong" (2014) Topics (Policies) Examined. Weighting. Revenue & Expenditure Assumptions High Importance Budget Amendments & Updates High Importance Long Term Financial Planning Average Importance Long Term Capital Planning Less Importance Investment Management Policies Less Importance Debt Management Policies Less Importance Reserve & Liquidity Policies Average Importance Overall assessments are communicated using the following terminology The term "Good ", in addition to the terms "Strong', "Standard ", and "Vulnerable" is used to further differentiate governments The difference in degrees of Importance is limited, however, so that each factor's contribution to the assessment is meaningful Rounded Score Characteristics 1 FMA Score of "Strong" and none of the factors in score 4 or 5 are present 2 FMA Score of "Good" and none of the factors in score 4 or 5 are present 3 FMA Score of "Standard" and none of the factors in score 4 or 5 are present 4 FMA Score of Vulnerable' or any fin reporting restatement with material negative impact any score 5 condition last 3 years, structural imbalance, or General Fund Expenditures ** 1 very high pension, OPEB, and debt burden w/o plans to address 5 Regardless of FMA Score any of the following present Management team that lacks relevant skills resulting in a weak 51.97% capacity for planning, monitoring, and management An auditor has delivered a going concern opinion* The government is actively considering bankruptcy in the near term, or The government has shown an unwillingness to support a debt or capital lease obligation 4j Bridget �lewbilitYi :," 10% P Potential Water l loati Analyzes most recent, current, and following year 2 2014 Available Fund Balance (unrestricted)* 5 5,274,SS4 Available f General Fund Expenditures ** 1 10,148,479 Available fund balance as %of Expenditures 5 51.97% re 1 2 3 4 5 *General Fund and any other balance legally available for operations Omits assigned balances within other funds ($3 7m) ** S &P's calculation includes transfers out as expenditures e ,5} Budgetary Performance - 10% Potential Water bati € mpact:' M€ urnal Analyzes most recent, current, and following year 2014 Water Loan Adjusted General Fund Expenditures* F 10,148,479 Total Governmental Funds Net Result ( %) General Fund Net Revenues (net of transfers)* (17,466) General Fund Limited Balanced Pressured I Significant General Fund Net Result (%) 0.17% Net Result ( %) > 1% 1 to 5% 5 to 10% 30 to 15* < 15% Limited ( >5) 1 2 3 3 4 Adjusted Governmental Funds Expenditures* SS,135,140 19,535,140 1 Balanced ( 1 to 5) 2 3 3 4 5 Total Governmental Funds Net Revenues* 1 2,297,5101 897 510 Pressured (< 1) 3 4 4 5 5 Total Governmental Funds Net Result (%) 12.67% 4.59% *Adjusting for onetime expenditures relating to TH capital improvements and unrealized net change in fair value of investments 6).Uquidity, -.. 10% ; Potential Water Loan €t Tact Minimal Analyzes most recent, current, and following year 2014 Water Loan Total Government Cash and cash equivalents* Adjusted Governmental Funds Expenditures Total Cash as a % of Total Governmental Funds Expenditures Total Government Cash and cash equivalents* Total Governmental Funds Debt Service Total Government Cash as a % of Total Governmental Funds Debt Service 31,163,984 29 763,984 Total Cash %of Total Total Government Cash as a %of Total Governmental 18,135,140 19,535,140 Governmental Funds Debt Service 171.84% 152.36% Fund Expenditures >120 1 120 100 100 80 80 40 1 <40 >15 1 2 3 4 5 31,163,984 29 763,954 8 15 2 2 3 4 5 2,189,487 1 2,189,487 4 8 3 3 3 4 5 1 4 4 4 4 4 5 1423.35% 1359.40% <1 5 5 5 5 5 *Includes Deposits petty cash and liquid investments (< 1 year maturity).Excludes restricted funds 7} Debt&IContingentlaabU €ties 10%" FotetttialWater Loan Inv act Mirtitital As of the end of 2014 2014 Water Loan Revenues Governmental Funds* 19,398,869 Total Governmental Net Direct Debt ** 11,890,000 Net Direct Debt As % of Total Gov't Fd Revenue 61.29* Asa %of Expenditures Governmental Funds 18,135,140 19,535,140 Total Governmental Funds Debt Service 2,189,487 2,189,487 Total Gov't Fund Debt Service % of Expenditures 12.07% 11.21% * Adjusted for onetime revenues related to TH capital improvements ** Total direct debt adjusted for non -tax based self supporting debt Water Improvement Bond Issue (if levy supported) 1,455,000 Resulting Debt %of Total Gov't Fund Revenue 68 79% Resulting Debt Service as %of Expenditures 12.21% Funds Debt Service Net Direct Debt As % of Total Governmental Funds Total Governmental Revenue Funds Expenditures <30 30 60 60 120 120 180 >180 <8 1 2 3 4 5 8 15 2 4 4 5 15 25 3 4 5 5 5 25 35 4 4 5 5 5 >35 4 5 5 5 5 M> 65% total direct debt coming due in 10 years (excludes balloon maturities) Note Rating and scoring are es iniates only and do not include qualitative a55es5ments with which the Rating Agency may adjust the rating up or down Prepared by Ehlers 1/14/2015 *General Fund and any other balance legally available for operations Omits assigned balances within other funds ($3 7m) ** S &P's calculation includes transfers out as expenditures e ,5} Budgetary Performance - 10% Potential Water bati € mpact:' M€ urnal Analyzes most recent, current, and following year 2014 Water Loan Adjusted General Fund Expenditures* F 10,148,479 Total Governmental Funds Net Result ( %) General Fund Net Revenues (net of transfers)* (17,466) General Fund Limited Balanced Pressured I Significant General Fund Net Result (%) 0.17% Net Result ( %) > 1% 1 to 5% 5 to 10% 30 to 15* < 15% Limited ( >5) 1 2 3 3 4 Adjusted Governmental Funds Expenditures* SS,135,140 19,535,140 1 Balanced ( 1 to 5) 2 3 3 4 5 Total Governmental Funds Net Revenues* 1 2,297,5101 897 510 Pressured (< 1) 3 4 4 5 5 Total Governmental Funds Net Result (%) 12.67% 4.59% *Adjusting for onetime expenditures relating to TH capital improvements and unrealized net change in fair value of investments 6).Uquidity, -.. 10% ; Potential Water Loan €t Tact Minimal Analyzes most recent, current, and following year 2014 Water Loan Total Government Cash and cash equivalents* Adjusted Governmental Funds Expenditures Total Cash as a % of Total Governmental Funds Expenditures Total Government Cash and cash equivalents* Total Governmental Funds Debt Service Total Government Cash as a % of Total Governmental Funds Debt Service 31,163,984 29 763,984 Total Cash %of Total Total Government Cash as a %of Total Governmental 18,135,140 19,535,140 Governmental Funds Debt Service 171.84% 152.36% Fund Expenditures >120 1 120 100 100 80 80 40 1 <40 >15 1 2 3 4 5 31,163,984 29 763,954 8 15 2 2 3 4 5 2,189,487 1 2,189,487 4 8 3 3 3 4 5 1 4 4 4 4 4 5 1423.35% 1359.40% <1 5 5 5 5 5 *Includes Deposits petty cash and liquid investments (< 1 year maturity).Excludes restricted funds 7} Debt&IContingentlaabU €ties 10%" FotetttialWater Loan Inv act Mirtitital As of the end of 2014 2014 Water Loan Revenues Governmental Funds* 19,398,869 Total Governmental Net Direct Debt ** 11,890,000 Net Direct Debt As % of Total Gov't Fd Revenue 61.29* Asa %of Expenditures Governmental Funds 18,135,140 19,535,140 Total Governmental Funds Debt Service 2,189,487 2,189,487 Total Gov't Fund Debt Service % of Expenditures 12.07% 11.21% * Adjusted for onetime revenues related to TH capital improvements ** Total direct debt adjusted for non -tax based self supporting debt Water Improvement Bond Issue (if levy supported) 1,455,000 Resulting Debt %of Total Gov't Fund Revenue 68 79% Resulting Debt Service as %of Expenditures 12.21% Funds Debt Service Net Direct Debt As % of Total Governmental Funds Total Governmental Revenue Funds Expenditures <30 30 60 60 120 120 180 >180 <8 1 2 3 4 5 8 15 2 4 4 5 15 25 3 4 5 5 5 25 35 4 4 5 5 5 >35 4 5 5 5 5 M> 65% total direct debt coming due in 10 years (excludes balloon maturities) Note Rating and scoring are es iniates only and do not include qualitative a55es5ments with which the Rating Agency may adjust the rating up or down Prepared by Ehlers 1/14/2015 *Adjusting for onetime expenditures relating to TH capital improvements and unrealized net change in fair value of investments 6).Uquidity, -.. 10% ; Potential Water Loan €t Tact Minimal Analyzes most recent, current, and following year 2014 Water Loan Total Government Cash and cash equivalents* Adjusted Governmental Funds Expenditures Total Cash as a % of Total Governmental Funds Expenditures Total Government Cash and cash equivalents* Total Governmental Funds Debt Service Total Government Cash as a % of Total Governmental Funds Debt Service 31,163,984 29 763,984 Total Cash %of Total Total Government Cash as a %of Total Governmental 18,135,140 19,535,140 Governmental Funds Debt Service 171.84% 152.36% Fund Expenditures >120 1 120 100 100 80 80 40 1 <40 >15 1 2 3 4 5 31,163,984 29 763,954 8 15 2 2 3 4 5 2,189,487 1 2,189,487 4 8 3 3 3 4 5 1 4 4 4 4 4 5 1423.35% 1359.40% <1 5 5 5 5 5 *Includes Deposits petty cash and liquid investments (< 1 year maturity).Excludes restricted funds 7} Debt&IContingentlaabU €ties 10%" FotetttialWater Loan Inv act Mirtitital As of the end of 2014 2014 Water Loan Revenues Governmental Funds* 19,398,869 Total Governmental Net Direct Debt ** 11,890,000 Net Direct Debt As % of Total Gov't Fd Revenue 61.29* Asa %of Expenditures Governmental Funds 18,135,140 19,535,140 Total Governmental Funds Debt Service 2,189,487 2,189,487 Total Gov't Fund Debt Service % of Expenditures 12.07% 11.21% * Adjusted for onetime revenues related to TH capital improvements ** Total direct debt adjusted for non -tax based self supporting debt Water Improvement Bond Issue (if levy supported) 1,455,000 Resulting Debt %of Total Gov't Fund Revenue 68 79% Resulting Debt Service as %of Expenditures 12.21% Funds Debt Service Net Direct Debt As % of Total Governmental Funds Total Governmental Revenue Funds Expenditures <30 30 60 60 120 120 180 >180 <8 1 2 3 4 5 8 15 2 4 4 5 15 25 3 4 5 5 5 25 35 4 4 5 5 5 >35 4 5 5 5 5 M> 65% total direct debt coming due in 10 years (excludes balloon maturities) Note Rating and scoring are es iniates only and do not include qualitative a55es5ments with which the Rating Agency may adjust the rating up or down Prepared by Ehlers 1/14/2015 *Includes Deposits petty cash and liquid investments (< 1 year maturity).Excludes restricted funds 7} Debt&IContingentlaabU €ties 10%" FotetttialWater Loan Inv act Mirtitital As of the end of 2014 2014 Water Loan Revenues Governmental Funds* 19,398,869 Total Governmental Net Direct Debt ** 11,890,000 Net Direct Debt As % of Total Gov't Fd Revenue 61.29* Asa %of Expenditures Governmental Funds 18,135,140 19,535,140 Total Governmental Funds Debt Service 2,189,487 2,189,487 Total Gov't Fund Debt Service % of Expenditures 12.07% 11.21% * Adjusted for onetime revenues related to TH capital improvements ** Total direct debt adjusted for non -tax based self supporting debt Water Improvement Bond Issue (if levy supported) 1,455,000 Resulting Debt %of Total Gov't Fund Revenue 68 79% Resulting Debt Service as %of Expenditures 12.21% Funds Debt Service Net Direct Debt As % of Total Governmental Funds Total Governmental Revenue Funds Expenditures <30 30 60 60 120 120 180 >180 <8 1 2 3 4 5 8 15 2 4 4 5 15 25 3 4 5 5 5 25 35 4 4 5 5 5 >35 4 5 5 5 5 M> 65% total direct debt coming due in 10 years (excludes balloon maturities) Note Rating and scoring are es iniates only and do not include qualitative a55es5ments with which the Rating Agency may adjust the rating up or down Prepared by Ehlers 1/14/2015 M> 65% total direct debt coming due in 10 years (excludes balloon maturities) Note Rating and scoring are es iniates only and do not include qualitative a55es5ments with which the Rating Agency may adjust the rating up or down Prepared by Ehlers 1/14/2015 CITY OF CHANHASSEN $1,400,000 Water System Interfund Loan, Series 2015 2015 Water Capital Improvement Projects - 8 years Sources & Uses Dated 03/09/20151 Delivered 03/09/2015 Sources Of Funds Capital Equipment Replacement Reserve Interfund Loan $1,400,000 00 Total Sources $1,400,000 00 Uses Of Funds Deposit to Project Construction Fund 1,400,000 00 Total Uses $1,400,000.00 Chanhassen Series 2015 We I SINGLE PURPOSE 1 2/10/2015 1 2:34 PM tA EHLER Page 1 CITY OF CHL NHASSEN $1,400,000 Water System Interfund Loan, Series 2015 2015 Water Capital Improvement Projects - 8 years Debt Service Schedule Date Principal Coupon Interest Total P +I 02/01/2016 163,446 04 2500% 31,305 56 194 751 60 02/01/2017 163,837 75 2500% 30,913 85 194,751 60 02/01/2018 167,933 69 2500% 26,817 91 194,751 60 02/01/2019 172,132 03 2500% 22,619 56 194,751 59 02/01/2020 176,43534 .. .............._.._......._................._._................._......__...._...._..._......_......................._........._._....._........_.........._..._. 2500% 18,316 26 194,751 60 _.._..................... —..... 02/01/2021 180,846 22 2 500% 13,905 38 194,751 60 02/01/2022 185,367 37 2500% 9,38422 194,751 59 02/01/2023 190,001 56 2500% 4,75004 194,751 60 Total $1,400,000.00 - $158,012.78 $1,558,012 78 Yield Statistics Bond Year Dollars $6,32051 Average Life 4 515 Years Average Coupon 2 5000001% Net Interest Cost (NIC) --.._._._ .............................__._._..__........ .....................__.. —.._.. ............... ..._..........................— - ._..... ........ 2 5000001 % _ - ..................__.............. Tr..._ue Int........erest ._._. Cost (T....IC _ ................................ ............._..._............. _.._...........__.— ......__ ......_....._......_..... ._ .. ...... ... .. .... . 24852462% Bond Yield for Arbitrage Pur)oses ...... ..............._._..._......... 2 4852462% ..... ......_..........._..........._ _ .............. ..... .._ .................... ----....._.._.—.._.__...__ .._.....................— All Inclusive Cost (AIC) .... -- .._—...._._.......—.................................... 2 4852462% IRS Form 8038 Net Interest Cost 2 5000001 % Weighted Average Maturity 4 515 Years Chanhassen Series 2015 We I SINGLE PURPOSE 1 2/10/2015 i 2:34 PM Page 2