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<br /> <br />REQUEST FOR COUNCIL CONSIDERATION <br /> <br />ITEM DESCRIPTION: CONSIDER RESOLUTION PROVIDING FOR THE PREPAYMENT AND REDEMPTION OF THE 2012A G. <br />O. IMPROVEMENT BONDS <br />DEPARTMENT HEAD’S APPROVAL: Brenda Davitt <br />CITY MANAGER’S APPROVAL: <br />No comments to supplement this report ___ Comments attached ___ <br /> <br />Recommendation: Approve the Resolution Providing for the Prepayment and Redemption of the <br />2012A G.O. Improvement Bonds. <br /> <br />Legislative History: The proceeds from the 2012A $2,705,000 G.O. Improvement Bonds were used <br />to finance the 2011 street reconstruction Improvement project, to refund the 2004A G.O. Tax <br />Increment Bonds, and to refund the 2004C G.O. Improvement Bonds issued to finance the the 2003 <br />and 2004 street reconstruction improvement projects. The refunded G.O. Tax Increment portion of <br />the bonds have been paid. The remaining street reconstruction portion of the bonds are general <br />obligations of the City payable from debt service tax levies. <br /> <br />Financial Impact: There is currently a balance of $230,000 outstanding for the 2012A G.O. <br />Improvement Bonds. The next scheduled principal payment is February 1, 2019, for $45,000. The last <br />scheduled payment date is February 1, 2023. The interest rate on the remaining principal is 2.35%. <br />The amount of interest payable from February 1, 2019, through the remaining life of the bond is <br />$13,207. <br /> <br />Explanation: The Closed Bond Fund is currently earning approximately 2.1%, while paying off <br />debt with and interest rate of 2.35%. With a full redemption of the bonds, the gross savings will be <br />the difference between the bond rate (2.35%) and the City’s portfolio yield rate (2.1%) along with the <br />ongoing maintenance cost savings of $1,025 annually. <br /> <br />Costs and Funding: A prepayment will require the use of $186,750 (outstanding principal plus <br />redemption costs) from the Closed Bond Fund for the 2012A G.O. Improvement Bond on February 1, <br />2019 instead of $195,775 over the next four years. <br /> <br /> <br />________________________ <br />Brenda Davitt, Finance Director <br /> <br />Attachments: Resolution <br />Agenda Section: Consent <br />Report Date: October 29, 2018 <br />Council Meeting Date: November 13, 2018