HomeMy WebLinkAbout7B - Gen. Obligation Bonds
AGENDA #:
PREPARED BY:
SUBJECT:
DATE:
INTRODUCTION:
BACKGROUND:
DISCUSSION:
7B
RALPH TESCHNER FINANCE DIRECTOR
CONSIDER APPROVAL OF RESOLUTION 96-46 AUTHORIZING
PUBLIC SALE OF $935,000 G.O. IMPROVEMENT BONDS OF 1996
MAY 6, 1996
The City's bond and fiscal consultant Steve Mattson from Juran & Yloody
will be present during the Council meeting to request Council approval for
a public sale of bonds in the amount of $935,000 to finance improvements
associated with Northwood Road - Project 94-02, Lakefront Park access
and parking, bituminous sealcoating and the City's cooperative agreement
share of improvement costs for CSAH 21.
The City Council approved Resolution 95-119 on December 4, 1995
which accepted the feasibility report for a number of projects identified for
construction during 1996 which were to be financed by a combination of
general obligation bonds and various fund appropriations. A summary of
those improvements are listed below:
Project Description
Project Financing
1. Northwood Road
G.O. Bonds -
(Trunk Reserve -
(Collector Street -
(MSA Funds -
$360,000
36,000)
$163,000)
$700,000)
2. CSAH 21 Improvements
3. Lakefront Park
4. Bituminous Sea1coating
G.O. Bonds -
G.O. Bonds -
G.O. Bonds -
$475,000
$50,000
$50,000
$935,000
Bond Total...
Subsequently, the public hearing for these 1996 improvement projects was
conducted on May 6, 1996 which earlier preceded this agenda item and
Resolution 96-46 ordering the respective improvements was approved.
The structure of the bond issue itself would be based upon the following
components:
N orthwood Road
Estimated Construction...
Engineering (18 % )
Administration (5%)
Financing (8%)
$274,809.00
49,466.00
13,740.00
21.985.00
$360,000.00
16200 Eagle Creek Ave. S.E.. Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
CSAH 21
Estimated Construction...
Engineering (13 % )
Contingency (5%)
Financing (8%)
$376,984.00
49,008.00
18,849.00
30.159.00
$475,000.00
Lakefront Park
Estimated Construction...
Engineering (15%)
Administration (5%)
Financing (8%)
$39,062.00
5,860.00
1,953.00
3.125.00
$50,000.00
Bituminous Sea1coating
Estimated Construction...
Engineering (15 % )
Administration (5%)
Financing (8%)
TOTAL...
$39,062.00
5,860.00
1,953.00
3.125.00
$50,000.00
$935,000.00
The above financing expenses represent approximately 8% of the
construction amount and are detailed below:
Bond Printing/Publishing ...
Bond Registration ...
Bond Counsel...
Bond Rating ...
Fiscal Fee ...
Capitalized interest (6 mos.) ...
Discount factor (1.90%) ...
1,000.00
2,500.00
4,000.00
5,500.00
13,500.00
14,400.00
17.765.00
Subtotal...
$58,665.00
Approximately 38% of the bonds will be recovered thru payment of
special assessments. The remainder will be levied against the overall
property taxes within the City. If bid today, a net effective interest rate of
5V4% would probably be a close estimate. The minimum interest rate of
8%, as per the City Assessment Policy, is to be charged on the Northwood
Road assessments.
The bond issue is to be dated 6/1/96 and will 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...
$358,000.00
$577.000.00
$935,000.00
TAX IMPACT:
The special levies associated with the 1996 construction improvements are
expected to generate the following estimated 1997 property tax increases
on homesteaded residential property:
Market Value: $85.000 $100.000 $120.000 $150.000 $175.000
Tax Increase:
$8.62
$11.26
$14.78
$20.06
$24.46
These levies would represent a projected 2lh increase in property taxes for
next year based upon a conservative 2% tax capacity valuation growth.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Approve Resolution 96-46 Authorizing Public Sale of $935,000
General Obligation Improvement Bonds of 1996.
2. Delay financing to a future time as determined by the City Council.
RECOMMENDATION: Staff would recommend the City Council to approve Resolution 96-46
Authorizing Public Sale of $935,000 General Obligation Bonds of 1996.
Steve Mattson will be present at the meeting to discuss the resolution and
answer any questions the Council may have with respect to the bond
issuance process.
REVIEWED BY:
ACTION REQUIRED:
A96116.WRT
~
"
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
PRIOR LAKE, MINNESOTA
HELD: May 6, 1996
Pursuant to due call and notice thereof, a regular meeting
of the City Council of the City of Prior Lake, Scott County,
Minnesota, was duly held at the City Hall in said City on Monday,
the 6th day of May, 1996, at o'clock _.M. for the purpose
in part of providing for the sale of the $935,000 General
Obligation Improvement Bonds of 1996 of said City.
The following members were present:
and the following were absent:
Member
resolution and moved its adoption:
introduced the following
Resolution Number 96-46
RESOLUTION PROVIDING FOR THE SALE
OF $935,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1996
A. WHEREAS, the City Council of the City of Prior
Lake, Minnesota (the "City"), has heretofore determined that it
is necessary and expedient to issue the City's $935,000 General
Obligation Improvement Bonds of 1996 (the "Bonds"), to finance
the construction of various improvements in the City; and
B. WHEREAS, the City has retained Juran & Moody,
Inc., in St. Paul, Minnesota ("Juran"), as its independent
financial advisor for the Bonds and is therefore authorized to
sell the Bonds by a private negotiation in accordance with
Minnesota Statutes, Section 475.60, Subdivision 2(9):
319480.1
STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting
Manager of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY
that I have carefully compared the attached and foregoing extract
of minutes with the original minutes of a meeting of the City
Council of said City duly called and held on the date therein
indicated, which are on file and of record in my office, and the
same is a full, true and complete transcript therefrom insofar as
the same relates to said City's $935,000 General Obligation
Improvement Bonds of 1996.
WITNESS my hand as such Manager this 6th day of May, 1996.
City Manager
319480.1
3
EXHIBIT A
OFFICIAL TERMS OF
BOND SALE
$935,000
GENERAL OBLIGATION IMPROVEMENT
BONDS OF 1996
CITY OF PRIOR .LAKE
SCOTT COUNTY
MINNESOTA
NOTICE IS HEREBY GIVEN that these bonds will be offered for sale
according to the following terms:
TIME AND PLACE:
Sealed proposals will be opened by the
City Manager, or designee, on Wednesday,
May 29, 1996, at 11:30 A.M., Central
Time, at the offices of Juran & Moody,
Inc., 400 North Robert Street, Suite
800, in Saint Paul, Minnesota 55101-
2091. Consideration of the proposals
for award of the sale will be by the
City Council at its meeting in the Prior
Lake Fire Hall beginning at ____ ____ _.M.,
on the same day.
TYPE OF BONDS:
Fully registered general obligation
bonds, $5,000 or larger denominations at
the option of the proposal maker.
DATE OF ORIGINAL
ISSUE OF BONDS:
June 1, 1996.
PURPOSE:
For the purpose of providing money to
finance the construction of various
improvements in the City.
INTEREST PAYMENTS:
June 1, 1997, and semiannually
thereafter on June 1 and December 1.
MATURITIES:
December 1 in each of the years and
amounts as follows:
319480.1
A-I
Year Amount
1997-1998 $ 75,000
1999 80,000
2000 85,000
2001 90,000
2002 95,000
2003 100,000
2004 105,000
2005 110,000
2006 120,000
All dates are inclusive.
Proposals for the bonds may contain a
maturity schedule providing for any
combination of serial bonds and term
bonds, subject to mandatory redemption,
so long as the amount of principal
maturing or subject to mandatory
redemption in each year conforms to the
maturity schedule set forth above.
REDEMPTION:
At the option of the Issuer, bonds
maturing on or after December 1, 2000
shall be subject to prior payment, on
December 1, 1999 and any interest
payment date thereafter, at a price of
par and accrued interest. Redemption
may be in whole or in part of the bonds
subject to prepayment. If redemption is
in part, the bonds remaining unpaid
which have the latest maturity date
shall be prepaid first and if only part
of the bonds having a common maturity
date are called for prepayment the
specific bonds to be prepaid shall be
chosen by lot by the Registrar.
BOND REGISTRAR:
Principal will be payable at the main
corporate office of First Trust National
Association, in St. Paul, Minnesota (the
"Registrar"). Interest will be payable
by check or draft of the Registrar
mailed to the registered holder of the
bond at his address as it appears on the
books of the Registrar. The Issuer will
pay reasonable and customary charges for
the services of the Registrar.
319480.1
A-2
Ralph Teschner
Finance Director
Prior Lake City Hall
16200 Eagle Creek Avenue
Prior Lake, Minnesota 55372-1714
If a Financial Surety Bond is used, it
must be from an insurance company
licensed to issue such a bond in the
State of Minnesota, and preapproved by
the Issuer. Such bond must be submitted
to Juran & Moody, Inc. prior to the
opening of the proposals. The Financial
Surety Bond must identify each proposal
maker whose Deposit is guaranteed by
such Financial Surety Bond. If the
bonds are awarded to a proposal maker
using a Financial Surety Bond, then that
purchaser is required to submit its
Deposit to Juran & Moody, Inc. in the
form of a certified or cashier's check
or wire transfer as instructed by Juran
& Moody, Inc. not later than 3:30 P.M.,
Central Time, on the next business day
following the award. If such Deposit is
not received by that time, the Financial
Surety Bond may be drawn by the Issuer
to satisfy the Deposit requirement. The
Issuer will deposit the check of the
purchaser, the amount of which will be
deducted at settlement and no interest
will accrue to the purchaser. In the
event the purchaser fails to comply with
the accepted proposal, said amount will
be retained by the Issuer. No proposal
can be withdrawn after the time set for
receiving proposals unless the meeting
of the Issuer scheduled for award of the
bonds is adjourned, recessed, or
continued to another date without award
of the bonds having been made.
RATES:
All rates must be in integral multiples
of 1/20th or 1/8th of 1%. No limitation
is placed upon the number of rates which
may be used. All bonds of the same
maturity must bear a single uniform rate
from date of issue to maturity and no
rate of any maturity may be lower than
319480.1
A-4
the highest rate applicable to bonds of
any preceding maturities.
INFORMATION FROM The successful purchaser will be
PURCHASER: required to provide, in a timely manner,
certain information relating to the
initial offering price of the bonds
necessary to compute the yield on the
bonds pursuant to the provisions of the
Internal Revenue Code of 1986, as
amended.
QUALIFIED TAX The Issuer will designate the
EXEMPT OBLIGATIONS: bonds as qualified tax exempt
obligations for purposes of Section
265(b) (3) of the Internal Revenue Code
of 1986, as amended.
NO CONTINUING The bonds are exempt from continuing
DISCLOSURE UNDERTAKING: disclosure requirements of Rule 15c2-12
of the Securities and Exchange
Commission (as recently amended and
supplemented) because the bonds are
issued in the aggregate principal amount
of less than $1,000,000. Consequently,
the Issuer is not covenanting to provide
and will not provide annual financial
information, notices of certain material
events or any other disclosure or
information which would otherwise be
required by that Rule.
AWARD: Award will be made solely on the basis
of lowest dollar interest cost,
determined by addition of any discount
to and deduction of any premium from the
total interest on all bonds from their
date to their stated maturity.
319480 . 1 A - 5