01-18-82 agenda•
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 22
Agenda January 18, 1982
The Honorable I~iayor
and
Alembers of the City Council
City of Richf field
Council Members:
Subject: Bond Issue for HRA
There is an item scheduled for the concurrent HRA/City Council
meeting of January 18, 1982 providing for consideration of a res-
olution authorizing a-sale of bonds. The HRA in late November,
1981, requested the city council to authorize the sale of
$2,450,000 general obligation redevelopment bonds, primarily to
recover the HRA's costs incurred for land acquisitions and re-
lated activities of the Knutson-Lake Shore Drive Condominium and
the Lyndale Garden Center projects. Although the council author-
ized this bond sale, major fluctuations in the bond market rlade
it impossible for potential buyers to purchase the bonds at an in-
terest rate of less than 12 percent, which is the maximum interest
rate that the city can pay under state law.
The city staff has been re-analyzing the proposed bond issue
in an effort to ma]{e modifications which would make the bond more
marl~etable. The city's financial consultants have suggested that
a 13-14 year bond trather than the 20-year life originally prop-
osed) is considerably more likely to find a purchaser willing to
charge an interest rate of less than 12 percent. However, a shorter
term bond will require higher yearly debt service payments from
the tax increment flow and may not prove to be feasible. The
staff is analyzing the impact now and will plan to present alter-
natives to the HRA on Monday night.
Respectfully submitted,
Karl Nollenberger
City Manager
cc: Director Administrative Services
Director Community Development
HRA Commissioners
s