10.8 Request to Complete Financing Applicatiomn for Snowplow Truck

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2021/Pay 2022 Estimated Market Value $ 314,907,9800 Multiplier: X .0025 Statutory Limit $ 9,414,334 Certificate Amount $ 175,000 This issuance does not require publication for the equipment certificate. Equipment Certificates also count against the City's net debt limits. Payment and Revenue Requirements The proposed issue will have annual debt service payment of approximately$24,300 per year for an 8- year term. These payments will be funded by tax levies. This payment and term is consistent with the City's capital financial plan. Please refer to the attached exhibit for bond details. $175,000 General Obligation Equipment Certificates,2022A If the Council chooses to fund this project in the manner proposed, David Drown Associates,Inc.,we recommend these bonds should be placed through a direct bank placement with the Minnesota Rural Water Association as a MICRO loan. Due to the relatively small bond amount and shorter term, controlling issuance costs for the City will be very important. The MRWA programs have additional benefits,such as: 1. Open ended&easy application process: The City can apply at any time during the year,and the application probably only takes about 15 minutes to complete(see attached). In a conventional sale there is MUCH more work for City staff in helping prepare disclosure documents and working with rating agencies,etc. 2. No risk application process: Once the City supplies an application,we provide a locked in proposal within a few days. Should the City choose to reject the offer,we could cancel the deal for no cost. If you were pursuing a conventional sale, however,you very well could be stuck with a rating fee(about$10,000)if the project cratered. With the MRWA Loan option there is no risk of that. 3. Flexible prepayment options: With a MICRO Loan the deal can be prepaid on any payment date (with only a small penalty in the first two years). On standard conventional bond sale,the City would likely not be allowed to prepay AT ALL for the term of the financing. 4. Lower issuance costs: As noted above,controlling issuance costs on this relatively small bond is very important. The MICRO loan costs approximately$5,000 lower than a negotiated sale which means less debt needs to be issued. We avoid the need for a placement agent,rating agency and pay agent with this program. Also,there are NO annual fees with the MICRO Loan. A standard bond issue would have an invoicing fee of nearly$500 per year. Key elements of this financing would be: • 8-year term • Payment amount is consistent with City's capital financial plan • Annual Audits upon request from the program lender