01-27-1992 Council Packet - Laserfiche WebLink

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Crossover Advance Ref undi ng -- Here the issuer issues a new set of bonds to replace the callable bonds. The issuer continues to pay on the old bonds until the call dale. On this date the old bonds are retired and the issuer "crosses over" and begins paying on the refunding bonds. This approach substantially eliminates the cash over-issuance problem created by arbitrage limitations. Savings are realized after the call date. There is no net present value savings test under Minnesota law for a crossover advance refunding. Several factors need to be analyzed when reviewing your outstanding debt issues for possible refunding candidates. As a general "rule of thumb;" There should bo about a 2% spread in interest rates between the old and new issues. The closer to the call date, the less spread needed. The call date should be within three to four years The net present value savings should be at least 1 .5 times the issue related expenses. The net present value savings when compared to the present value of the debt service on the old issue should be in the 3% to 6% range. Possibilities for combining new money with the refunding issue should be explored .o share Issue-related expenses thus increasing the savings on the refunding portion of the issue. Without cost or obligation. Ehlers and Associates is available to review your current financing needs and to analyze the feasibility of refunding any of your outstanding debt issues. DO YOU QUALIFY FOR A SPECIAL GRANT OR LOAN? Take advantage of special grants and loans available to you. Dave Maroney in our Minneapolis office recently coordinated a unique financing package for the City of Waverly, Minnesota. The City and several State agencies determined that the City wastewater collection and treatment system was detrimental to public health and the welfare of the community. The system was in violation of MPCA guidelines and standards, lacked capacity, and contributed to the problem of contaminated private wells. In addition the system did not have the capacity to serve homes on Waverly Lake which were discharging wastewater into the Lake. This problem needed immediate attention to minimize environmental concerns. The financial feasibility study determined that funding the entire project from the obvious revenue sources, i.e. sewer rates, special assessments, and tax levies would render the prmect unaffordable to the community. Therefore, to minimize the impact to the residents of Waverly, Dave was able to coordinate a unique combination of the following federal and state grants and loans to make this project a reality for the City of Waverly. The sources and terms follow: Farmers Home Administration Loan (30 years <§> 6.75%) Minnesota Pollution Control Agency Grant Environmental Protection Agency Grant Small Cities Development Program Grant Public Facilities Autnority Loan (20 years @ 2.64®o) Recognizing the fact that programs vary from state to state, call Ehlers and Associates for Information regarding sources of public loans and grants, assistance in qualifying for them, and for creative solutions to your financing needs.