City Council - 07/30/1991 • M I N U T E S
EDEN PRAIRIE CITY COUNCIL
TUESDAY, JULY 30, 1991 5:30 PM, CITY HALL COUNCIL CHAMBER
7600 Executive Drive
COUNCILMEMBERS: Mayor Douglas Tenpas, Richard
Anderson, Jean Harris, H. Martin
Jessen, and Patricia Pidcock
CITY COUNCIL STAFF: City Manager Carl J. Jullie,
Assistant to the City Manager Craig
Dawson, & Finance Director John D.
Frane
PLEDGE OF ALLEGIANCE
ROLL CALL
Councilmembers Harris, Jessen, and Pidcock were present.
I. CALL TO ORDER
Councilmember Pidcock presided over the meeting. She
called the meeting to order at '5:36 PM.
• II. APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS
Jessen moved and Harris seconded to approve the agenda as
presented. Motion approved 3 - 0.
III. CONSENT CALENDAR
A. Approval of Joint Powers Agreement No. 67724 for
Consultant Engineering Services for TH 5 from CSAH
17 to TH 41 (I.C. 52-238) Resolution .No. 91-173
Jessen moved and Harris seconded to approve the
Consent Calendar. Motion approved 3 - 0.
IV. OTHER BUSINESS
A. Resolution No. 91-174 Authorizing the Issuance of
General Obligation Equipment Certificates of
Indebtedness, Series 1991A• General Obligation
Improvement Bonds, Series 1991B• and General
Obligation Water and Sewer Revenue Bonds, Series
1991C
Dave MacGillivray of Springsted, Inc. , the City's
financial advisor, spoke to the Council about
• matters relating to the desirability of issuing
several series of bonds in the near term.
City Council Minutes
July 30, 1991 IV
Two
Specifically, the staff was recommending that the
Council set August 20, 1991 as the date of sale for
three series of bonds. Recently-adopted Federal
regulations required that these bonds be settled by
September 7, 1991 in order to retain their tax-
exempt status. Within a few months, staff would
speak with the Council about the possibility to
refund approximately $10 million of existing bonds
in order to achieve a substantially reduced
interest rate. The new Federal regulations did not
affect the tax-exempt status of these latter bonds.
General Obligation Equipment Certificates of
Indebtedness, Series 1991A, $1,800,000: These
bonds would be used to pay the accumulated debt of
capital outlays from 1989 through 1991 which are
eligible for this type of financing. By State
Statute, the maximum term on -these bonds is five
years.
General Obligation Improvement Bonds, Series 1991D,
$6, 050,000: The $6, 050, 000 figure is a net amount
of financing needed to cover costs already incurred •
on a number of projects in recent years. Issuance
of these bonds would result in a new property tax
requirement of $85,.000-$90,000 per year. This
amount was necessary in order to accommodate the
deferment of special assessments and the State
requirement that 105% of the principal and interest
due be available every year. If the cash balance
were sufficient going into the following year, then
the levy may be reduced or eliminated for that
year.
General Obligation Water and Sewer Revenue Bonds,
Series 1991C, $9,500,000: At year-end 1990, an
$8,500, 000 negative cash balance existed in the
water and sewer construction fund. Issuance of
$9,500,000 in bonds would bring this fund back to
zero. Staff would work to change the cash flow and
debt structure in this fund in order not to
continue the pattern of bond issuance to fund large
accumulated deficits. The structure would also
preserve cash balances in order that they would be
available to fund expansion of the water treatment
plant in the future.
•
City Council Minutes
• July 30, 1991
Page Three
Jessen asked how Federal arbitrage rules would
affect the bonds the City would issue.
MacGillivray replied that the Federal government
has a regulation in place that when a City issues
more than $5 million of bonds in a year, the
interest it earns from the bond proceeds cannot be
greater than the interest it pays on the bonds.
The difference would need to be remitted to the
Federal government. Generally speaking, some
payment will be made to the Federal government five
years from now because the interest the City would
expect to earn at this time should be greater than
the anticipated interest rate to pay on the bonds
it would issue.
MacGillivray also mentioned that there were six
outstanding bond issues which are candidates for
refunding. The outstanding principal on these
bonds is $9,150,000. The lower rate to be expected
from refunding the bonds would result in a net
savings of approximately $1.2 million (or
approximately $880, 000 in 1991 dollars) .
• Jessen moved and Harris seconded to approve
Resolution No. 91-174 authorizing the issuance of
General Obligation Debt, Series 1991A-C. Motion
approved 3 - 0.
V. ADJOURNMENT
Harris moved and Jessen seconded to adjourn the meeting
at 6: 00 PM. Motion passed unanimously.
•
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