EHLERS TEAM LEAD: Brian Reilly
TIME FRAME: 2015
CLIENT CONTACT:

Capturing $5 Million in Accreted Value for Capital Projects

CASE STUDY: St. Paul, Minnesota

The Goal

The City’s HRA issued sales tax revenue bonds in 1993 to fund improvements to the then St. Paul Civic Center, which bonds were subsequently refunded and escrowed to maturity in 1996. The escrowed proceeds were invested in U.S. Treasury securities and the City entered into a related forward purchase agreement, or float contract to deal with timing differences in maturities of the escrowed securities and payments on the refunded bonds. The City advance refunded the 1996 Bonds in 2014 with taxable obligations, thus allowing the City to opt in to proposed U.S. Treasury regulations without having to issue taxable refunding bonds in concert with the unwinding of the escrow. The City then sought to terminate the float agreement and liquidate the escrow portfolio securities. to make over $5 million available for capital improvements. 

The Solution

County officials engaged Ehlers to provide debt issuance services. Ehlers and Cityview Capital Solutions, LLC, of New Jersey, assisted the City as co-advisors to manage the process of liquidation of the escrow securities in an effort to recognize the net benefit of accreted market value upon optional redemption of the 1996 Bonds. Ehlers assembled the finance team, managed the project timeline, coordinated transaction participats and assisted with document review and transaction summary. Cityview assisted with terminating the float agreement and liquidation of the portfolio securities. 

The Results

The City realized a net benefit of over $5 million that was made available for capital improvements.