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� <br />� <br />� <br />• • '� <br />MEMORANDUM <br />DATE; <br />T0: <br />FROM <br />SUBJECT <br />March 29, 2012 <br />Pequot Lakes City Council <br />Sandy Peine, City Clerk <br />Paul Steinman, Vice President/Client Representative <br />Springsted Incorporated <br />380 Jackson Street, Suite 300 <br />Saint Paul, MN 55101-2887 <br />Tel: 651-223-3000 <br />Fax: 651-223-3002 <br />www.springsted.com <br />Crow Wing County HRA 2003A Bond Refunding for West Grove Townhomes <br />The purpose of this memo is to describe the refuntling opportunity before the Crow Wing County HRA (CWCHRA) at <br />this time, which impacts West Grove Townhomes and the Pequot Lakes HRA (PLHRA). For the refunding to be able <br />to proceetl, the PLHRA will need to consider and approve a Resolution pledging the PLHRA levy, and the City <br />Council needs to consider and approve a Resolution agreeing to levy that amount which is requested by the PLHRA <br />related to the bonds for the project. These Resolutions and related bond documents are drafted by Crow Wing <br />County HRA bond counsel Steve Bubul at Kennedy & Graven. Springsted is Financial Advisor to the Crow Wing <br />County HRA on this transaction. <br />The Proiect <br />As we are all aware, the West Grove Townhome project financing is thin, leaving little if any room for vacancies or <br />atltlitional costs related to the housing project. Income from the project plus the PLHRA levy is currently supporting <br />the annual tlebt service payment on the bonds. The bonds are currently structured with increasing principal <br />payments, from $20,000/yr in 2013 to $115,000/yr in 2034, the final year of the term. Given the challenge of ineeting <br />current debt service requirements, the future increasing payment schedule would eventually require the CWCHRA to <br />levy to assist the project with paying debt service. <br />US Bank is the Trustee for the bonds. The Trustee is responsible for ensuring the debt service payments are made. <br />The PLHRA sends money monthly to US Bank to be deposited in the Debt Service Fund in preparation for making <br />the tlebt service payment when due. As of March 14, the Debt Service Fund had $18,375 collectetl toward the July <br />1, 2012 debt service requirement. Money's that are deposited in the Debt Service Fund over and above what is <br />required, flow into other fund accounts managed by the Trustee. Current balances include the Debt Service Reserve <br />Fund at $108,000 plus interest and the Repair and Replacement Fund at $53,445. The remaining funds inclutling the <br />Public Sector Advisors <br />