G-1. Award of Bid, 2016A General Obligation Bonds0
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
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TO: Mayor & City Council Members
FROM: Greg Sticha, Finance Director^ '67
DATE: February 8, 2016 ow
SUBJ: Award of Bid, General Obligation Bonds,
Series 2016A
PROPOSED MOTION
"Staff recommends that the City Council award the bid for the General
Obligation Bonds Series 2016A, to the low bidder (to be announced at the
meeting)."
Approval of this resolution requires a simple majority vote of the City Council.
G-1
Finance
Phone: 952.227.1140
BACKGROUND
Fax: 952.227.1110
Park & Recreation
The issuance of this bond will accomplish two separate purposes or goals. The first is
Phone: 952.227.1120
to issue new funds for the water system improvements related to the 2016 street
Fax: 952.227.1110
reconstruction project and for painting the Lake Lucy Water Stand Pipe. The costs
associated with these two projects is approximately $1.68 million.
Recreation Center
2310 Coulter Boulevard
The other $5.47 million in proceeds is to refund the 2008A General Obligation bonds
Phone: 952.227.1400
Fax: 952.2227.140
used to finance the construction of the Public Works facility. Our financial advisors
at Ehlers and Associates recommend a "crossover" form of advanced refunding. The
Planning &
proceeds of the refunding bonds are invested in government securities and held in
Natural Resources
escrow. The money in the escrow is used to pay interest on the refunding bonds until
Phone: 952.227.1130
the call date. On the call date, the escrow pays off the 2008A Bonds and the City
Fax: 952.227.1110
crosses over to begin making payments on the new bonds. In other words, savings
will not be realized until after the February 1, 2018 call date.
Public Works
7901 Park Place
Phone: 952.227.1300 The interest rate on the obligations proposed to be refunded is 4.05% to 4.60%. The
Fax: 952.227.1310 refunding is structured for level annual debt service savings after the call date and is
expected to reduce overall debt service expense by approximately $690,000 over the
Senior Center next 14 years. The Net Present Value Benefit of the refunding is estimated to be
Phone: 952.227.1125
Fax: 952.227.1110 $590,000, or 10% of the refunded debt. The City's Debt Policy requires a minimum
of 4% present value savings.
Web Site
www.ci.chanhassen.mn.us During the past week, Standard & Poor's conducted a review process to determine the
city's bond rating. The results of that rating and the recommended low bidder will be
announced at the council meeting. Representatives from our Ehlers & Associates will
f:\gregs\bonding\2016 bonding\2016a award of bid bonds 2-8.doex
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Mayor & City Council
February 8, 2016
Page 2
be available to discuss the sale of the bonds at the meeting. Staff will bring all
documentation, including the resolution to award the bid, to the meeting that evening.
RECOMMENDATION
Staff recommends that the City Council award the bid for the General Obligation
Water Revenue Bonds, Series 2016A to the lowest bidder.
fAgregs\bonding\2016 bonding\2016a award of bid bonds 2-8.docx