112706 EDA Min
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CITY OF SHOREWOOD
ECONOMIC DEVELOPMENT AUTHORITY MEETING
MONDAY, NOVEMBER 27, 2006
5755 COUNTRY CLUB ROAD
COUNCIL CHAMBERS
Immediately Following
Regular Council Meeting
SCANNED
MINUTES
1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING
President Love called the meeting to order at 8: 14 P.M.
A.
Roll Call
Present:
President Love; Boardmembers Callies, Lizee, Turgeon, and Wellens; Executive Director
Dawson; Assistant Executive Director Nielsen; Attorney Keane
Absent:
None
B.
Review Agenda
Without objection from the Board, President Love proceeded with the Agenda for the meeting.
2. APPROVAL OF MINUTES
A. EDA Minutes of September 11,2006
Wellens moved, Lizee seconded, Approving the EDA Meeting Minutes Of September 11, 2006, as
presented. Motion passed 5/0.
3. NEW BUSINESS
A. Refinancing Bonds for Public Safety Facilities
Director Dawson provided an overview of the possible advanced refunding of the bonds for the Public
Safety facilities; the call dates for the bonds were 2009 and 2010. He stated the market was at a 40-year
low with regard to the interest rates for those types of bonds. When the bonds were originally sold the
interest rates were 5% - 5.5%, which at that time were reasonable interest rates. The bonds are callable,
which meant that anyone with a bond beyond that call date had been notified that the EDA could consider
the possible refunding of the bonds.
Dawson explained a bond refunding was to do it at the call date, and an advanced refunding that was
recommended. Advance refunding allowed the current borrowing rate to be locked in for a future
refinancing. The new refinancing rates would actually begin at the call date of the old issues. The savings
would occur after the call date, because that was when the old issues were technically being replaced with
the new issues. The proceeds of the new issue would be placed in an escrow account until the old issues
call date, and the proceeds would be invested at the yield being paid on the old issues (therefore it was a
break even). Northland Securities, the financial advisor, recommended using the negotiated sale method
for the bond refunding (the same method that was used for the 2002 and 2003 issues). Dawson agreed
with that recommendation. Using that method better allowed the terms of financing to be structured to
achieve the net savings objective.
CITY OF SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY MEETING MINUTES
November 27, 2006
Page 2 of2
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Dawson stated the projected net savings from refunding only the 2002 issues would be approximately
$512,873, while the net savings from refunding the 2002 and 2003 issues would be approximately
$571,245. The EFD Board, SLMPD Board, the Deephaven City Council, and the Shorewood City
Council had approved resolutions giving preliminary authorization to the Shorewood EDA to refinance
either the 2002 issues or both the 2002 and 2003 issues, provided the minimum savings would be the
previously stated amounts.
Dawson explained refinancing the 2002 issues would be approximately $8.2 million, while refinancing
both the 2002 and 2003 issues would be $10 million. The key threshold (known as the bank-qualification
threshold) for bond issues for the City and the EDA was $10 million. Any bonds issued in excess of $10
million amount would no longer be bank-qualified and therefore they could incur a higher interest rate.
Bonds not exceeding the $10 million threshold would be non-taxable; there would be more competitors
for those bonds. He noted if the bonds were IS-year bonds today there would not be any difference in the
bank-qualified versus non-bank-qualified bonds, but for 20-year bonds the difference would be a 20 basis
points (.2%) premium.
Dawson then explained if the EDA refinanced the entire $10 million, then any additional bonds issued by
the City would not be bank-qualified. Because the City had no plans to issue any bonds in 2007, it
appeared that it would be prudent to authorize the entire $10 million. The City would benefit from
approximately 48% of the annual net savings. He noted the savings would not begin to be realized until
2009 and 2010. He stated all the affected parties would benefit from the refunding. He clarified the bond
ending terms would remain the same, and no fees would be incurred unless the refunding transaction had
been completed.
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Boardmember Turgeon stated although there could be a slight risk with refunding the entire $10 million,
she would support refunding the entire amount. President Love stated the risk would be managed risk,
and the savings would outweigh the risk.
Wellens moved, Lizee seconded, Adopting RESOLUTION NO. 06-01, "A Resolution Giving
Preliminary Approval to Issuance of Refunding Bonds Issued in 2002 and 2003 Related to Certain
Public Safety Facilities using the Negotiated Sale Method." Motion passed 5/0.
4. ADJOURN
Wellens moved, Callies, seconded, Adjourning the Shorewood Economic Development Authority
Meeting of November 27, 2006, at 8:26 P.M. Motion passed 5/0.
RESPECTFULLY SUBMITTED,
Christine Freeman, Recorder
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ATTEST:
Woody Love, President
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Craig W. Dawson, Executive Director