2015-01460 - Passage of a Resolution authorizing the issuance of a $25 million General Obligation Tax-Exempt Term Loan for the Nicollet Mall project.  File.

The Nicollet Mall project is currently under construction.  In December of 2015, the City issued a $25 million General Obligation term loan to provide temporary construction financing on a draw down basis to reimburse construction costs.  This note is backed with special assessments which have been levied for collection beginning with the 2017 property taxes.  At this time, the Finance & Property Services Department is planning a bond sale in early May to refund and convert $17 million of the note from variable rate financing to fixed rate financing with a permanent bond amortization structure.  The remaining balance of the loan will continue to be utilized for construction expenses in 2017.

This bond refunding will be completed in conjunction with additional tax-exempt bonds for other special assessment projects and additional bonds for general infrastructure projects totaling $23 million for a total bond series of $40 million.

The Finance & Property Services Department has determined that it will be more cost effective to issue this series of bonds with two bond ratings instead of three which have been used historically.  Consultations with registered municipal advisors have indicated that bond interest rates are not significantly impacted by having two ratings versus three.  In addition several large local bond issuers including Hennepin County, Metropolitan Airports Commission and the City of St. Paul have reduced their rating agencies to two per bond sale.  For this upcoming sale, Moodys Investors Service will not be utilized.