HomeMy WebLinkAbout10A - Sale of General Obligation Street Improvement Bonds of 2010
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
APRIL 19, 2010
10A
Jerilyn Erickson, Finance Director
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE
NEGOTIATED SALE OF $1,300,000 GENERAL OBLIGATION STREET
IMPROVEMENT BONDS OF 2010
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 $1,300,000 to
finance improvements associated with County Road 12 Phase III (Project 10-
011), McKenna & County Road 42 Intersection Signal (Project 09-003), 2010
Lords Street, Rustic Road, and Shady Beach Neighborhood Reconstruction
(Project 10-012), and the County Road 21 Extension-CR42 North (Project 08-
002).
The resolution includes a not-to-exceed amount of $1,300,000 to provide
flexibility in the amount to bond based on any last minute change orders,
change in funding, etc. Staff anticipates that the actual amount will be
$1,235,000 or less, dependent upon finalization of the Municipal State Aid
funding for three of the four projects. The State should make the final
determination of project expense eligibility within the next week or so.
Historv
The following table includes significant dates related to the projects included in
this bond issue:
Council Action CR12 McKenna 1 2010 Recon CR21
Phase III CR42 Shady 1 Rustic 1 Phase II
Lords
Feasibility 12/07/2009, N/A N/A N/A
Report Accepted Res 09-173
Public Hearing 01/19/2010 07/07/2008 07/07/2008 07/07/2008
for Improvement
Improvement 01/19/2010, 04/16/2009, 01/19/2010, 12/01/2008,
Ordered Res 10-004 Res 09-045 Res 10-014 Res 08-053
Contract Handled by 11/16/2009, 04/05/2010, Handled by
Awarded Scott County Res 09-156 Res 10-030 Scott County
The City Council accepted the feasibility report for the County Road 12 Phase
III improvement which is to be financed by a combination of general obligation
bonds and appropriations from the Water & Sewer Fund and the Water Quality
Fund.
Three of the four projects reference the City's 07/07/2008 Street
Reconstruction Program Public Hearing. These projects will utilize Street
www.cityofpriorlake.com
Phone 952.447.9800 I Fax 952.447.4245
Reconstruction Bonds as part of the City's Street Reconstruction Program. In
accordance with State Statute, the City identified these improvements in the
approved July 7,2008 Reconstruction Plan public hearing as required by law.
The improvements must be constructed within five years of the approval of the
plan.
Current Circumstances
In previous sales the Council has authorized negotiated bond sales directly
from Northland Securities. Based upon current market conditions Northland
Securities would be scheduling the actual sale for April 29 or 30, 2010.
By selling bonds before the construction season, when demand is at its
highest, the City anticipates avoiding 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:
I
I
I Less:
I Less:
I Less:
I Less:
I Less:
I
I
I
I
I
Total Project Costs
Utility Fund Contributions
Water Quality Fund Contribution
Street Oversizing Fund Contribution
Trunk Fund Contribution
Other Funding Sources
Net Bond Issue
Bond Issuance Costs
Rounding for $5000 Increments
Total Bond Issue
$ 3,406,000
< 864,200>
< 122,800>
< 100,000>
< 395,000>
< 722,000>
I
$ 1,202,000 I
31,000 I
2,000 I
$ 1,235,000 I
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.
The City Council will consider a resolution providing for the issuance and sale
of bonds at its May 3, 2010 regular meeting.
FINANCIAL
IMPACT:
Approximately 24% 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 3.23% with an average bond coupon rate of 2.99% would
probably be a close estimate of the rate we would receive. The bond issue will
be dated 5/15/10, 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
1 O-year property tax levy
Total
$ 402,000
$1,120,000
$1,522,000
The estimated annual special tax levy calculation associated with this bond
issue is $112,000 and will be added to the City's proposed special debt levies
for payable 2011 property taxes in December of this year.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Adopt a Resolution Authorizing the Negotiated Sale of $1,300,000 General
Obligation Street Improvement Bonds of 2010.
2. Table this item for a specific reason.
RECOMMENDED
MOTION:
Alternative 1.
1. A Resolution Authorizing the Negotiated Sale of $1,300,000 General Obligation
Street Improvement Bonds of 2010.
2. Northland Securities Bond Analysis
CERTIFICATION OF MINUTES
RELATING TO GENERAL OBLIGATION IMPROVEMENT BONDS,
SERIES 2010A
ISSUER:
City of Prior Lake, Minnesota
BODY:
City Council
KIND, DATE, TIME AND PLACE OF MEETING:
A regular meeting held on Monday, April 19, 2010, at 6:00 o'clock p.m., in the City
Offices
MEMBERS PRESENT:
MEMBERS ABSENT:
Documents Attached: Extract of Minutes of said meeting.
RESOLUTION APPROVING THE ISSUANCE OF
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2010A
I, the undersigned, being the duly qualified and acting recording officer of the public corporation
issuing the obligations referred to in the title of this certificate, certify that the documents
attached hereto, as described above, have been carefully compared with the original records of
said corporation in my legal custody, from which they have been transcribed; that said
documents are a correct and complete transcript of the minutes of a meeting of the governing
body of said corporation, and correct and complete copies of all resolutions and other actions
taken and of all documents approved by the governing body at said meeting, so far as they relate
to said obligations; and that said meeting was duly held by the governing body at the time and
place and was attended throughout by the members indicated above, pursuant to call and notice
of such meeting given as required by law.
WITNESS MY HAND officially as such recording officer on April_, 2010.
City Manager
www.cityofpriorlake.com
Phone 952.447.9800 I Fax 952.447.4245
EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, STATE OF MINNESOTA
HELD: Monday, April 19, 2010
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Prior Lake, Minnesota, was duly held on Monday, April 19, 2010 at 6:00 o'clock p.m.
Member
introduced the following resolution and moved its
adoption:
RESOLUTION lO-xxx APPROVING THE ISSUANCE OF
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2010A
BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota (herein, the
"City"), as follows:
1. The City Council hereby finds and declares that it is necessary and expedient for the City
to sell and issue its fully registered general obligation bonds in the total aggregate
principal amount of not-to-exceed $1,300,000 (currently expected to be approximately
$1,235,000), herein referred to as the "Bonds". The proceeds of the Bonds will be used,
together with any additional funds of the City which might be required, to (i) finance the
costs of assessable improvements within the City and (ii) to pay the costs associated with
issuing the Series 201 OA Bonds.
2. The City desires to proceed with the sale of the Bonds by direct negotiation with
Northland Securities, Inc. (herein, "NSI").
3. The Mayor and the City Manager are hereby authorized to approve the sale of the Bonds
in an aggregate principal amount of not-to-exceed $1,300,000 and to execute a bond
purchase agreement for the purchase of the Bonds with NSI, provided the net effective
rate is less than %.
4. Upon approval of the sale of the Bonds by the Mayor and the City Manager, the City
Council will take action at its next regularly scheduled meeting thereafter to adopt the
necessary approving resolutions as prepared by the City's bond counsel.
5. NSI is authorized to prepare an Official Statement related to the sale of the Bonds.
6. If the Mayor and the City Manager have not approved the sale of the Bonds to NSI and
executed the related bond purchase agreement by June 30, 2010, this resolution shall
expIre.
The motion for the adoption of the foregoing resolution was duly seconded by Member
. and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
DATE OF ANALYSIS: Apr-12-2010 Name of fsslIel" CITY OF PRIOlt LAKE, MINNESOTA
DATED DATE OF BOND ISSUE: May-I 5-20 10 Type of Bond GENERAL OIlLlGATION STREET IMPROVEMENT BONDS, SERIES 2010A PRELIM. ANAL VSIS
~LE: PRIOR LAKE 429 2010 B II PAR AMOUNT 51,235,000
EST. TOTAL STATUATORY CAPITALIZED ASSESSMENTS ANNUAL
(12-15) INTEREST DEBT COVERAGE INTEREST ASSESSMENT INTEREST @ ASSESSMENT TAX SURPLUS CUMULATIVE
YEAR PR[NCIPAL RATES INTEREST SERVICE (ii! [05.00% o MONTHS PR[NC[PAL 6.00% INCOME LEVY !DEFICIT BALANCE
IFUNDED BY CITY I
2010 18,582.08 18,582.08 18,582.08 $]8.582.08 000 0.00
201 I 120,000.00 0.90% 3 I .855.00 151,855.00 [59,447.75 530,000.00 521,000.00 55],000.00 112,000.00 3.55225 3.552.25
2012 120,000.00 J.35% 30,775.00 150,775.00 [58.3 ]3.75 30,000.00 ] 6.200.00 46,200.00 112,000.00 (I ]3.75) 3,43850
2013 [20.000.00 1.75% 29,155.00 149,155.00 156,6]2.75 30,000.00 ]4,400.00 44,400.00 112,000.00 (2]2.75) 3,22575
2014 120.000.00 210% 27.055.00 [47,055.00 154,407.75 30,000.00 12,600.00 42.600.00 111,000.00 19225 3,4[800
2015 120,000.00 2.70% 24,535.00 144,535.00 15],761.75 30,000.00 10,800.00 40,800.00 1I2,000.00 1,038.25 4,45625
2016 125,000.00 300% 21,295.00 146.295.00 153.609.75 30.000 .00 9,000.00 39,000.00 112,000.00 (2.609.75) 1,846.50
2017 125,000.00 3.20% 17,545.00 142.545.00 149,67225 30,000.00 7,200.00 37,200.00 112,000.00 (472.25) 1,374.25
2018 125,000.00 3.40% 13,545.00 138,545.00 145,472.25 30,000.00 5.400.00 35,400.00 I ! 2,000.00 1,927.75 3,30200
2019 130,00000 3.50% 9,295.00 139,295.00 146,259.75 30,000.00 3,600.00 33.600.00 112,000.00 (659.75) 2,642.25
2020 130,000.00 3.65% 4.745.00 134,745.00 14],482.25 30.000.00 1.800.00 31.800.00 112,000.00 2,317..75 4.960.00
2021 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4,960.00
2022 0.00 0.00% 0.00 0.00 0.00 000 000 0.00 0.00 0.00 4.960.00
2023 000 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4,960.00
2024 0.00 0.00% 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4,96000
2025 0.00 0.00% 0.00 0.00 0.00 000 0.00 0.00 0.00 0.00 4,960.00
2026 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.960.00
2027 0.00 0.00% 000 0.00 0.00 0.00 0.00 0.00 000 000 4,960.00
2028 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4,960 00
1,235,000.00 228,382.08 1,463,382.08 1,535,622.08 18,582.08 300.000.00 102,000.00 402,000.00 $] .120,000.00 54,960.00
(-) (+) (+) (+)
AMOUNT OF ASSESSMENTS: 5300,000.00 NORTH LAND" SE CURl TIES
PERCENTAGE Of ISSUE ASSESSED: 24.29% NORTHLAND SECURITIES INC.
INTEREST RATE ON ASSESSMENTS; 6.00% STEVEN .J. MATrSON
FJRST INSTALLMENT COLLECT]ON: 2011 EXECUTIVE VICE I'RESIDENT
# OF ANNUAL INSTALLMENTS' 10 612-851-5919
START DATE OF ASSESSMENTS: 11/1/2010
APPLICATION OF FUNDS (ESTIMATED COSTS)
EST. CONSTRUCTION COSTS (INCLUDING ENGINEERING & ADMIN.)
COUNTY #42IMCKENNA SIGNAL 50,000.00
RECONSTR OF SHADY, RUSTlC & LORDS 584,000.00
COUNTY #12 PHASE 1II 513,000.00
COUNTY #21 PHASE II 55.000.00
TOTAL EST. HARD COSTS 1,202,00000
ADD: (SOFT COSTS)
ESTIMATED LEGAL OPINION
ESTIMATED OFFICIAL STATEMENT PRINTING
EST REGISTRA TlON PIA (PREPAID TO CALL)
CAPITAL INTEREST (0 MONTHS)
ESTIMATED FISCAL FEE
ESTIMATED 1l0ND RATING FEE
ESTIMA TED FAIRNESS OPINION
ESTIMATED MISC. FEES
EST. DISCOUNT FACTOR (1.45% OF PAR)
TOTAL SOFT COSTS OF ISSUANCE
GRAND TOTAL
ROUNDED FOR ISSUANCE
5,25000
150.00
3,020.00
0.00
0.00
3,450.00
1.250.00
000
17,90750
31.027.50
1.233.02750
$1.235.00~
CITY OF PRIOR LAKE, MINNESOTA
GENERAL OBLIGATION STREET IMPROVEMENT nONI)S, SERIES 20lDA
PAR AMOllNT: 51,235,000
YEAR AMOUNT
2010
20 II 120,000
2012 120,000
2013 120,000
2014 120,000
2015 120,000
2016 125,000
2017 125,000
20 I 8 125,000
2019 130,000
2020 130,000
2021 0
2022 0
2023 0
2024 0
2025 0
2026 0
2027 0
2028 0
TOTALS S I ,235,000
BONDS DATED'
BONDS MATURE:
INTEREST:
OPTION:
PURCHASE PI~ICE:
EST. AVERAGE COUPON RATE:
EST. NET EFFECTIVE RA TE:
PA YING AGENT &
REGISTRAR:
BOND SALE TRIGGER DATE:
BOND SALE DATE:
EST. BOND CLOSING DATE:
PRELIM. ANALYSIS
MAY 15.2010
DECEMBER 15,201 t THROUGH 2020
DECEMBER 15,2010 AND SEMIANNUALLY THEREAFTER ON EACH
JUNE 15 AND DECEMBER 15.
ALL BONDS MATURING IN THE YEARS 2016 THROUGH 2020 ARE
CALLABLE@THEOPTIONOFTHECITYONDECEMllER 15,2015@PAR
$1,217,093
2.9989'11.
3.2341"("
NORTHLAND TRUST SERVICES
APRIL 19,2010
MAY 3, 2010
MA Y 26, 2010