HomeMy WebLinkAbout8A - Gerneral Obligation Bonds
3--0
STAFF AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
SEPTEMBER 18, 2000
8A
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF RESOLUTION oo-xx
AUTHORIZING NEGOTIATED SALE OF $1,125,000 GENERAL
OBLIGATION IMPROVEMENT BONDS OF 2000
DISCUSSION:
Introduction
The City's bond and fiscal consultant Steve Mattson from Juran &
Moody will be present during the Council meeting to request
Council approval to negotiate the sale of general obligation bonds in
the amount of $1,125,000 to finance improvements associated with
the Oak Ridge Court street reconstruction (Project J 2-00), Fish
PointlFairlawn Shores street overlay (Project J 3-00) and initial
paving of Linden Circle (Project J 4-00).
History
The City Council approved Resolution 99-79 on August 16, 1999
that accepted the feasibility report for a number of projects
identified for construction during 2000 that were to be financed by a
combination of general obligation bonds and trunk fund
appropriation. A summary of those improvements and their costs in
round numbers are listed below:
Project Description
Project Financin2
$1,125,000.00
$268,000.00
1.
Oak Ridge Court
street reconstruction
Fish Pt & Fairlawn
Shores mill & overlay
Linden Circle paving
G.O. Bonds ...
Trunk Reserve ...
2.
Project Totals...
$1,393,000.00
3.
Subsequently, the public hearing for these 2000 improvement
projects was conducted on September 20, 1999 and Resolution 99-
96 ordering the respective improvements was approved.
Current Circumstances
In previous sales the Council has authorized a negotiated bond sale
directly from Juran & Moody. Staff would propose a similar process
for this sale. The advantage of the negotiated sale method versus
public sale is the flexibility it affords the City because our fiscal
consultant, Steve Mattson would attempt to time the sale of bonds
with the market in an effort to obtain the lowest interest rate
possible. Also, the City saves itself the fiscal fee of $13,500.00.
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
T
H:\BONDSIAOOBONDS.DOC
The structure of the bond issue itself would be based upon the
following components in rounded amounts:
Construction Bid (City Proj 00-12,13,14)
Engineering (18% of $898,284 bid which
excl. trunk expenditure portion)
Administration (5% of $898,284 bid
which excl. trunk expenditure portion)
Financing (-4% of $898,284 bid which
exc!. trunk expenditure portion)
Project Total...
$1,156,680.00
$161,690.00
$44,915.00
$34,275.00
$1,397,560.00
Less... Trunk Reserve Fund Contribution
Plus ... Rounding/Contingency
<$268,490.00>
<$4,070.00>
Net Bond Issue Total...
$1,125,000.00
The above financing expenses represent approximately 4% of the
actual construction bid amounts of the city projects and are detailed
below:
Discount (1.96%)
Bond Rating
Bond Counsel
Official Statement Printing
Paying Agent Fees
$22,050.00
$6,000.00
$3,500.00
$500.00
$2,225.00
$34,275.00
Subtotal...
Approximately 45% 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 bid today, a net effective
interest rate of 5.05% with an average bond coupon rate of 4.72%
would probably be a close estimate.
The bond issue will probably be dated 10/1/00, with maturities each
year of December 1, depending upon the sale date, and will be
structured 10 years in length. The following is a schedule of tax
levies/assessment terms and their corresponding amounts necessary
to amortize the bond debt:
10 year assessment stream
10 year property tax levy
Total...
$512,000.00
$613,000.00
$1,125,000.00
Attached is a worksheet from Juran & Moody 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
H:\BONDSIAOOBONDS.DOC
ALTERNATIVES:
RECOMMENDED
MOTION:
REVIEWED BY:
Attachments:
plus it identifies the financing costs and other miscellaneous
information.
Financial Impact
The estimated special tax levy calculation associated with this bond
issue has already been factored in along with the City's proposed
general fund operating budget levy, revolving equipment fund levy
and other special debt levies for payable 2001 property taxes.
The following alternatives are available to the City Council:
1. Approve Resolution OO-XX Authorizing Negotiated Sale of
$1,125,000 General Obligation Improvement Bonds of2000.
2. Delay financing to a future time as determined by the City
Council.
Motion and second to approve Resolution OO-XX Authorizing
Negotiated Sale of $1,125,000 General Obligation Improvement
Bonds of 2000. Steve Mattson will be present at the meeting to
discuss the resolution and nswer any questions the Council may
have with respect t the bo issuance process.
1. Resolu' O-XX Authorizing Negotiated Sale of $1,125,000
General Obligation Improvement Bonds of 2000
2. Juran & Moody Bond Analysis
,
RESOLUTION 00' ~ z.
~ ~~
/IVNESO RESOLUTION AUTHORIZING NEGOTIATED SALE
OF $1,125,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 2000
MOTION BY: SECOND BY:
WHEREAS, The City of Prior Lake has conducted the appropriate public hearings to consider
comments regarding those public improvement projects deemed necessary for
construction in 2000; and
WHEREAS, The City Council has determined that such construction projects scheduled for 2000
are consistent with the City's Capital Improvement Plan (CIP); and
WHEREAS, The City of Prior Lake has complied with all requirements of Chapter 429 of
Minnesota State Statutes with respect to special assessment improvement projects;
and
WHEREAS, The City of Prior Lake has awarded the construction bids for Project 12-00 Oak
Ridge Court for street reconstruction, Project 13-00 Fish PointlFairlawn Shores
street overlay and Project 14-00 Linden Circle paving; and
WHEREAS, It is necessary to issue general obligation bonds for the purpose of financing these
construction improvements.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that it has
determined it is in the best interest of the City of Prior Lake to enter into a negotiated sale with Juran &
Moody, in an effort to obtain the lowest interest rate possible, for the issuance of $1,125,000 of general
obligation improvement bonds, and the City Manager is hereby authorized to convene a special meeting
to approve the bond sale pursuant to the procedural requirements of State law.
Passed and adopted this 18th day of September, 2000.
YES
NO
Mader
Ericson
Gundlach
Petersen
Vacant
Mader
Ericson
Gundlach
Petersen
Vacant
{Seal}
City Manager
City of Prior Lake
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
H:IBONDSlRESOODOC
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