CR 09-093 Authorize Call of a Serial Bond for Meadow Creek Condominium Project Area OneNovember 4, 2009 City of Hopkins Council Report 2009 -093
AUTHORIZE CALL OF A SERIAL BOND FOR
MEADOW CREEK CONDOMINIUM PROJECT AREA ONE
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution No. 2009 -60 authorizing the
redemption of callable Taxable General Obligation Housing Improvement Bond Series 1995 for the
Meadow Creek Condominium project.
Adoption of this motion will result in the bonds being called on February 1, 2010.
Overview
The City of Hopkins issued Taxable General Obligation Housing Improvement bonds, Series 1995 in
1995. Seven serial bonds issued are callable. The cost of calling one of the callable bonds is $85,000.
The debt service fund for these bonds has the capacity to call the bond this year and continue having
available funds for future debt and interest payments.
Primary Issues to Consider
The finance plan for the housing improvement project includes paying the association any excess fees
collected after payment of principal, interest and related costs of the bonds. In 2004 the city had collected
excess fees to enable one bond payment to be called early thereby eliminating two interest payments for this
bond issue. In addition to this savings, the city will be able to step up the bond payment schedule by one
year, having an overall savings impact of $51,000 by 2011. The bond to be called this year has an interest
rate of 8% and matures on February 1, 2011.
The unforeseen future rate of collection is the risk variable involved with the early redemption of this
bond. The current collection rate for this project is high at 98 %. In the event that collections decrease in
future years, there will be a fund balance that comprises 25% of any debt service payment to help offset a
bad collection year. By calling this bond early, the Meadow Creek Association will inherit a greater
amount of funds at the end of the debt service payments, allowing for future improvements to the
Meadow Creek Condominiums.
Staff Recommendation
Finance recommends adopting the resolution redeeming the callable bond described therein.
Supporting Information
• Resolution No. 2009 -060
Christine M Harkess, CPA, CGFM
Finance Director
Financial Impact: $ 51,000 savings overall Budgeted: Y X N Source: Spec Assmnts
Related Documents (CIP, ERP, etc.): Notes:
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2009 -060
RESOLUTION PROVIDING FOR THE CALL OF $85,000 TAXABLE GENERAL
OBLIGATION HOUSING IMPROVEMENT BOND, SERIES 1995
WHEREAS, the City Council of the City of Hopkins, Minnesota has determined that it is desirable
to redeem the City's $85,000 of callable Taxable General Obligation Housing Improvement
Bonds, Series 1995; and
WHEREAS, the City has identified the bond as CUSIP #439866 PG3 (185328622) dated issue of
September 1, 1995;
NOW, THEREFORE, BE IT RESOLVED by the City Council of Hopkins, Minnesota, as follows:
1. Authorization; The City Council hereby authorizes Bankers Trust to redeem in full the
callable Taxable General Obligation Housing Improvement Bond, Series 1995, dated
September 1, 1995, as described above.
2. Terms of the Bond. The terms and conditions of the Bond allow for the call of the serial
bond described above.
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 4th day of November 2009.
Eugene Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk