HomeMy WebLinkAbout10A - Sale of General Obligation Improvement Bonds of 2009
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
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CITY COUNCIL AGENDA REPORT
APRIL 20, 2009
10A
Jerilyn Erickson, Finance Director
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE
NEGOTIATED SALE OF $1,710,000 GENERAL OBLIGATION STREET
IMPROVEMENT BONDS OF 2009
Introduction
The City's bond and financial advisor, Steve Mattson from Northland Securities
Inc., will be present during the Council meeting to request Council approval for
the negotiated sale of general obligation bonds in the amount of $1,710,000 to
finance improvements associated with Brooksville Hills Phase II street
reconstruction (Project 09-11), Maple Glen Second Addition (Project 05-101)
and County Road 21-Franklin/Fish Point (final invoice from Scott County).
Historv
The following table includes significant dates related to the projects included in
this bond issue:
Council Action
Maple Glen 2na
Addition
12/15/2008,
Res 08-156
01/20/2009,
Res 09-020
Brooksville Hills
Phase II
11/17/2008,
Res 08-149
12/15/2008,
Res 08-160
Feasibility Report
Accepted
Public Hearing for
Improvement &
Improvement Ordered
Contract Awarded
04/06/2009,
Res 09-050
Anticipated in
May 2009
The City Council accepted the feasibility reports for the above referenced
improvements which are to be financed by a combination of general obligation
bonds and appropriations from the Water & Sewer Fund and the Water Quality
Fund.
The County Road 21-Franklin/Fish Point project was substantially completed in
2008. Scott County has notified the City what the final payment will be based
on the cost-sharing agreement. The final amount is consistent with the original
cooperative agreement for the project and has been included in this bond
issuance. The City has not received an invoice from Scott County for the final
payment. Upon receipt but prior to making the final payment, a final project
closeout will be prepared and presented to the City Council.
Current Circumstances
In previous sales the Council has authorized negotiated bond sales directly
from Northland Securiti~s. Ba~ed upon current market conditions Northland
www.cltyofpnorlake.com
Phot;le .952.447.Q~OO./ Fax 952,44},4~45
FINANCIAL
IMPACT:
ALTERNATIVES:
Securities is scheduling the actual sale for April 29 or 30, 2009.
By selling bonds before the construction season, when demand is at its
highest, the City avoids higher interest rates due to an increase in the supply
of bonds.
Another factor is the economic market climate. Interest rates have been
trending lower due to Federal Reserve rate cuts and a general decline in the
economy. As a result, we anticipate the market to be very favorable for the
issuance of low cost bonds. Ultimately, the final purchase price will be subject
to Council approval.
The structure of the bond issue itself will be based upon the following
components in rounded amounts:
Total Project Costs*
Less: Utility Fund Contributions
Less: Water Quality Fund Contribution
Less: Other Funding Sources
Net Bond Issue Total...
*Includes bond issuance costs.
$ 2,113,500
< 277,000>
< 36,500>
< 90,000>
$ 1,710,000
Attached is a worksheet from Northland Securities Inc. that provides additional
detail with respect to debt service principal/interest payments, projected
assessment stream and annual special tax levies necessary to amortize this
bond issue. The second page lists the estimated coupon and net effective
interest rates for this bond issue plus it identifies the financing costs and other
miscellaneous information.
The city's bond counsel, Briggs & Morgan has reviewed all of the necessary
bond documents and has prepared the attached resolution providing for the
issuance and sale of the general obligation improvement bonds.
Approximately 30% of the bonds will be recovered through special
assessments. The remainder of the bonds will be levied against the overall
property taxes within the City. If the bonds were sold today, a net effective
interest rate of 3.38% with an average bond coupon rate of 3.14% would
probably be a close estimate of the rate we would receive. The bond issue will
be dated 5/15/09, have maturities on December 15 of each year, and will be
structured with a 1 O-year term. The following is a schedule of tax
levies/assessment terms and their corresponding amounts necessary to
amortize the bond debt.
1 O-year assessment stream
10-year property tax levy
Total...
$ 678,850
$1,440,000
$2,118,850
The estimated annual special tax levy calculation associated with this bond
issue is $144,000 and will be added to the City's proposed special debt levies
for payable 2010 property taxes in December of this year.
The following alternatives are available to the City Council:
RECOMMENDED
MOTION:
1. Adopt A Resolution Authorizing the Negotiated Sale of $1,710,000
General Obligation Street Reconstruction Bonds of 2009.
2. Table this item for a specific reason.
Alternative 1.
ReVi~7 ~
Frank Soyles, City Manager
ATTACHMENTS:
1. A Resolution Authorizing the Negotiated Sale of $1,710,000 General Obligation
Street Reconstruction Bonds of 2009.
2. Northland Securities Bond Analysis
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY
OF PRIOR LAKE, MINNESOTA
HELD: APRIL 20, 2009
Pursuant to due call and notice thereof, a regular meeting of the City Council (the "Council") of
the City of Prior Lake (the "City"), Scott County, Minnesota, was duly called and held at Prior Lake City
Hall in said City on April 20, 2009, at 6:00 P.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION NO.
RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$1,710,000 GENERAL OBLIGATION STREET IMPROVEMENT BONDS OF 2009, SERIES A
WHEREAS, the City has an upcoming issuance of approximately $1,710,000 General Obligation
Street Improvement Bonds of2009, dated May 15,2009, (the Bonds) and
WHEREAS, Northland Securities, Inc. (NSI) has indicated a willingness to purchase the Bonds
upon receipt from the City, County, and School District of various required information, and
WHEREAS, the City desires to effectuate the transaction with NSI whenever market conditions
are appropriate and NSI has received the required information.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
1. That Mayor Jack Haugen and Manager Frank Boyles are hereby jointly authorized to
approve the sale of certain Bonds to NSI in the amount illustrated to this Council on this
date at such time as NSI advises that it is appropriate to market said Bonds.
2. The City Council will meet to adopt the necessary approval resolution drafted by bond
counsel at a regular meeting date of Monday, May 4,2009.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
The motion for the adoption of the foregoing resolution was duly seconded by Member
. and upon voted being taken thereon, the following voted in favor thereof:
and the following voted against the same:
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
Whereupon said resolution was declared duly passed and adopted on April 20, 2009.
Mayor
Attest:
City Manager
CERTIFICATION
STATE OF MINNESOTA
)SS
COUNTY OF Scott
I, the undersigned, being the duly qualified and acting Manager of the City of Prior Lake, Scott
County, Minnesota, DO HEREBY CERTIFY, that I have carefully compared the preceding extract of
minutes of a meeting of the City Council of said City held on the date therein indicated with the original
minutes thereof on file in my office and that the same is a full, true and correct transcript thereof insofar
as said minutes relate to the topic described in the title of the resolution set forth in the extract.
WITNESS my hand officially and the official seal of the City on April 20, 2009.
City Manager
(SEAL)
APPLICA nON OF FUNDS (ESTIMATED COSTSl
EST. CONSTRUCTION COSTS (INCLUDING ENGINEERING & ADMIN.)
BROOKVILLE HILLS PHASE 2
COUNTY ROAD #21
MAPLE GLEN 2ND ADDITION
TOTAL EST. HARD COSTS
ADD: (SOFf COSTS)
ESTIMATED UlGAL OPINION
ESTIMATED OFFICIAL STATEMENT PRINTING
EST. REGISTRATION PIA (pREPAID TO CALL)
CAPITAL INTEREST (0 MONTHS)
ESTIMATED FISCAL FEE
ESTIMATED BOND RATING FEE
ESTIMATED FAIRNESS OPINION
ESTIMATED MlSC. FEES
EST. DISCOUNT FACTOR (1.45% OF PAR)
TOTAL SOFT COSTS OF ISSUANCE
GRAND TOTAL
ROUNDED FOR ISSUANCE
""'-"--'1'"
1.160,000.00
375,000.00
138.120.00
5,250.00
150.00
3,020.00
0.00
0.00
3,450.00
1,250.00
0.00
24,795.00
1,673,120.00
37,915.00
1,711,035.00
$1.710.000.00
CITY OF PRIOR LAKE, MINNESOTA
GENERAL OBLIGATION STREET IMPROVEMENT BONDS, SERIES 2009A
I'AR AMOUNT: $1,710,000
YEAR AMOUNT BONDS DATED:
2009
2010 150,000
2011 150,000
2012 175,000
2013 175,000
2014 175,000
2015 175,000
2016 175,000
2017 175,000
2018 175,000
2019 185,000
2020 0
2021 0
2022 0
2023 0
2024 0
2025 0
2026 0
2027 0
TOTALS 51,710,000
BONDS MATURE:
INTEREST:
OPTION:
PURCHASE PRICE:
EST. AVERAGE COUPON RATE:
EST. NET EFFECTIVE RATE:
PAYING AGENT &
REGISTRAR:
BOND SALE TRIGGER DATE:
BOND SALE DATE:
EST. BOND CLOSING DATE:
PRELIM. ANALYSIS
MAY 15,2009
DECEMBER 15, 2010 THROUGH 2019
DECEMBER 15,2009 AND SEMIANNUALLY TIiEREAFTER ON EACH
JUNE 15 AND DECEMBER 15.
ALL BONDS MATURING IN THE YEARS 2015 THROUGH 2019 ARE
CALLABLE@ THE OPTION OF THE CITY ON DECEMBER 15, 2014 @ PAR
$1,685,205
3.1439%
3.3768%
NORTHLAND TRUST SERVICES
APRIL 20, 2009
MAY 4, 2009
MAY 28, 2009
DATE OF ANALYSIS: Apr-8.2009 Name of Issuer CITY OF PRIOR LAKE, MINNESOTA
DATED DATE OF BOND ISSUE: May-I 5-2009 Type of Bond GENERAL OBLIGATION STREET IMPROVEMENT BONDS, SERIES 2009A PRELIM. ANALYSIS
I/FiLE:'< ^,u',," uAKE 429 2009 F II PAR AMOUNT: S 1,710,000
EST. TOTALSTATUATORY eAPIT ALIZED ASSESSMENTS ANNUAL
(12-15) INTEREST DEBT COVERAGE INTEREST ASSESSMENT INTEREST @ ASSESSMENT TAX SURPLUS CUMULATIVE
YEAR PRINCIPAL RATES INTEREST SERVICE (alI05.00% o MONTHS PRINCIPAL 6.00% INCOME LEVY /DEFICIT BALANCE
I FUNDED BY CITY I
2009 28,998.96 28,998.96 28,998.96 $28.998.96 0.00 0.00
2010 150,000.00 2.00% 49,712.50 199,712.50 209,698.13 $50,660.40 $35,462.28 $86,122.68 144,000.00 20.424.55 20,424.55
2011 150,000.00 2.25% 46,712.50 196,712.50 206,548.13 50,660.40 27,356.62 78,017.02 144,000.00 15,468.89 35,893.44
2012 175,000.00 2.45% 43,337.50 218,337.50 229,254.38 50.660.40 24,316.99 74,977.39 144,000.00 (10.276.99) 25,616.45
2013 175,000.00 2.65% 39,050.00 214,050.00 224.752.50 50,660.40 21,277.37 71,937.77 144,000.00 (8,814.73) 16,801.72
2014 175,000.00 2.80% 34,412.50 209,412.50 219,883.13 50,660.40 18,237.74 68,898.14 144,000.00 (6,984.99) 9,816.73
2015 175,000.00 3.00% 29,512.50 204,512.50 214.738.13 50,660.40 15,198.12 65.858.52 144,000,00 (4,879.61) 4,937.12
2016 175,000.00 3.15% 24,262.50 199,262.50 209,225.63 50,660.40 12,158.50 62,818.90 144,000.00 (2,406.73) 2,530.39
2017 175,000.00 325% 18,750.00 193,750.00 203,437.50 50,660.40 9,118.87 59,779.27 144,000.00 341.77 2,872.16
2018 175,000.00 3.50% 13,062.50 188,062.50 197.465.63 50,660.40 6,079.25 56,739.65 144,000.00 3,274.02 6,146.18
2019 185,000.00 3.75% 6,937.50 191,937.50 20 I ,534.38 50,660.40 3,039.62 53,700.02 144,000.00 (3,834.36) 2.3LI.82
2020 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.311.82
2021 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.311.82
2022 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,311.82
2023 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,311.82
2024 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00 2,311 .82
2G25 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,311.82
2G26 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,311.82
2027 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,311.82
1,710,000.00 334,748.96 2,044,748.96 2.145,536.50 28,998.96 506,604.00 172,245.36 678,849.36 51,440,000.00 $2,311.82
(-) (+) (+) (+)
AMOUNT OF ASSESSMENTS: $506,604.00 N()RTHLAND OSEe URITlES
PERCENTAGE OF ISSUE ASSESSED: 29.63% NORTHLAND SECURITIES INC.
INTEREST RATE ON ASSESSMENTS: 6.00"10 STEVEN J. MATTSON
FIRST INSTALLMENT COLLECfION: 2010 EXECUTIVE VICE PRESIDENT
# OF ANNUAL INSTALLMENTS: 10 61Z-851-5919
START DATE OF ASSESSMENTS: 11/1/2009
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