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REQUEST FOR COUNCIL CONSIDERATION <br />ITEM DESCRIPTION: Consideration of Resolution Approving an Amendment to <br />General Obligation Tax Increment Refunding Bond, Series 2017A Bond <br />DEPARTMENT HEAD’S APPROVAL: Brenda Davitt <br />CITY MANAGER’S APPROVAL: <br />No comments to supplement this report ___ Comments attached ___ <br />Recommendation: <br />To Approve Resolution and Amendment to the General Obligation Tax Increment Refunding <br />Bond, Series 2017A Bond. <br />Legislative History: <br />On September 12, 2017, the City refunded $5,000,000 of the 2007B General Obligation Tax <br />Increment Bonds using a Direct Purchase method with Wells Fargo Bank. This method was new <br />to New Brighton and approved by Council over selling the bonds competitively due the net <br />present value savings incurred with less issuance costs. The Direct Purchase method did carry a <br />risk of an increased interest rate should the corporate tax rate decrease. <br />Explanation: <br />On December 22, 2017 a new tax law was signed which decreased the corporate tax rate from <br />30% to 21%. This event triggered the interest rate clause in the bond to go into effect, which <br />raised the interest rate from 1.73% to 2.10%. Due to New Brighton’s relationship with Wells <br />Fargo, our bankers worked very hard in getting the interest rate reduced to 1.99%. The new <br />negotiated interest rate is considered a “modification” to the original bond. <br />Financial Impact: <br />The impact of this amendment created an additional $45,155 in interest payments. Even with the <br />increased rate, the City realized a net present value benefit of $367,473 by refunding the <br />remaining 2007B General Obligation Tax Increment Bonds. The present value benefit as a <br />percentage of refunded principal is 7.35%, which is greater than the 3%, stated in the Debt <br />Management Policy. <br />________________________ <br />Brenda Davitt <br />Finance Director <br />Attachments: <br />Resolution <br />Amended and Restated General Obligation Tax Increment Refunding Bond, Series 2017A <br />Agenda Section: Consent <br />Report Date February 22, 2018 <br />Council Meeting Date February 27, 2018