The Council is asked to adopt a resolution which authorizes the Scott County CDA to refinance approximately $4,015,000 million of general obligation bonds for the Northridge Apartments Project.

The intent of this refunding is to provide a cost savings to the CDA, as a result of lower interest rates to be paid.

The city has been contacted by representatives of the CDA regarding an opportunity to refund housing development revenue bonds which were used to construct Northridge Apartments Project. These bonds were originally issued in 2003, and funded the construction of a 58 unit multi-family senior rental housing community, which is located at 101 Fuller Street North, in the downtown.

Because of market conditions, the CDA has been advised that it will realize a projected savings by refinancing those bonds at a lower interest rate. At the time that the bonds were originally sold, in order to facilitate the project, the City Council agreed to pledge the City's full faith and credit to back those bonds. In other words, should revenues from the buildings's rents ever be insufficient to make payment on the bonds' interest and principal requirements, the City's general obligation credit would be used to make up the difference.

Nothing is proposed to be changed in the existing agreements concerning this refinancing. However, because the interest rates to be paid will be reduced, less overall revenue from the project will be needed to repay the remaining bonds. Therefore, the City's financial exposure is also going to be reduced as a result of this refunding. For that reason, it is a positive proposal for the City.