CR 2003-009 Authorize Call Of Serial Bond In TIF District 1-1
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CITY OF
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January 7, 2003
HOPKINS
Council Report 03-009
AUTHORIZE CALL OF A SERIAL BOND IN TIF DISTRICT 1-1
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution No. 03-004 authorizing the
redeemtion of callable General Obligation Redevelopment Refundin~ Bond. Series 1993C, in Tax
Increment District 1-1.
Adoption of this motion will result in the bonds being called on February 1,2003.
Overview
The City of Hopkins issued General Obligation Redevelopment Refunding bonds, Series 1993C in 1993.
Three of the serial bonds issued are callable. The cost of calling one out of the three callable bonds is
$630,000. Tax Increment District 1-] has the capacity to call this bond this year and continue operating in a
positive cash environment. The savings of interest un this bond is $115,920. The lost earning potentia] of
using the funds to call the bond is approximately $75.600. This is a net savings of approximately $40,320.
Primary Issues to Consider
The financing of the serial bonds, issued in 1993 from TIF ] -], was done with the intention of redeemil1g
callable bonds early if enough tax increment revenues are generated in the appropriate amount of time. Tax
Increment Financing District 1-1 has the working capital available to redeem one of the callable bonds and to
maintain a healthy balance for future debt service payments. The bond that is callable has an interest rate of
4.6% and matures on February 1, 2007. By redeeming this bond we are saving the difference between what
finance can earn on the investment of the principal amount of the bonds and what the interest rate on the
bonds is. Currently, investments are earning about 1.5% with long-term investments eaming up to 3%
interest. As stated previously, the approximate savings' is $40,320.
The unforeseen cost is the lost opportunity to utilize these funds for pooling in other districts. When the
classification rates changed and the school district levy changed in 2002, TIF districts experienced a decrease
in TIF revenues. The state is allowing us to pool districts to meet obligations. Finance has analyzed the
other districts and detemuncd that it is unlikely to have funding sh0l1falls of any significance in the near
future.
A goal the city would like to accomplish is to decertify TIF district ] ~ 1 earlier than the mandatOlY
decertification date of 2009. By call ing this bond early, we continue the process of accOlnplishing this goal.
If funding sh0111'alls for other districts becol11Gs an issue we may look at extending TIP district 1-1 to the
decertification date of 2009.
Staff Recommendation
Finance recommends adopting the resolution redeeming the callable bond described therein.
SUPIlortin2 Information
. Reso1ution No. 01- 04
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CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 03-004
RESOLUTION PROVIDING FOR THE CALL OF $630,000 GENERAL OBLIGATION
REDEVELOPMENT REFUNDING BOND, SERIES 1993C
WHEREAS, the City Council oftbe City of Hopkins, Minnesota has determined that it is desirable
to redeem the City's $630,000 of callable General Obligation Redevelopment Refunding Bond,
Series 1993C; and
WHEREAS, the City has identified the bond as CUSJP #439866NG(5) dated issue of October 15,
1993;
NOW, THEREFORE, BE IT RESOLVED by the City Council of Hopkins, MiImesota, as follows:
1. Authorization; The City Council hereby authorizes Bankers Trust to redeem in full the
callable General Obligation Redevelopment Refunding Bond, Series 1993C, dated October
15, 1993, as described above.
2. Tenns of the Bond. The terms and conditions of the Bond allow for the call of the serial
bond described above.
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Intent. It is the intent of the City of Hopkins to call such bond as it deems appropriate and
desirable.
Adopted by the City Council of the City of Hopkins held this 7th day of Janumy, 2003.
Eugene Maxwell, Mayor
ATTEST:
TelTY Obennaier, City Clerk
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