HomeMy WebLinkAbout9A Series 2018A Bond Issuance Report4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
PRESENTED
BY:
AGENDA ITEM:
DISCUSSION:
JUNE 18, 2018
9A
CATHY ERICKSON, FINANCE DIRECTOR
CATHY ERICKSON
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE COM-
PETITIVE NEGOTIATED SALE OF GENERAL OBLIGATION BONDS, SE-
RIES 2018A IN AN AMOUNT NIOT TO EXCEED $9,000,000
Introduction
The City’s municipal advisor, Tammy Omdal, from Northland Securities Inc.,
will be present at the meeting to present and answer questions related to the
Council approval of the sale of bonds for the following projects:
•Fire Pumper Replacement
•Fire Station #2 SCBA and Parking Lot Replacement
•2018 Street Improvement Projects
o Franklin Area
o Huron Area
•2018 Street Mill and Overlay Project
•Utility Funds - Automated Meter Reading System Replacement and
Huron Area Streets Utility Replacement
•2018 Street Reconstruction Projects
o Duluth Ave/TH 13
o County Wide Flashing Yellow Signal Conversion
A resolution is attached providing for the competitive negotiated sale of Gen-
eral Obligation Bonds, Series 2018A in an amount not-to-exceed $9.0 million.
This is $255,000 more than the Finance Plan shows for Total Uses to provide
the flexibility to increase the bond amount based on the project bid amount for
the Duluth Avenue/TH13/Duluth Avenue street reconstruction project. The
project bid authorization for the Duluth Avenue/TH13 project is expected in
July, with bid award expected in August. The final bond amount will be deter-
mined at the time of the sale on July 16.
History
The following table includes significant dates related to the projects included in
this bond issue:
2
Coun-
cil Ac-
tion
Equip-
ment-
Fire
Pumper
CIP-
Fire
Station
#2
SCBA
and
Parking
Lot
2018 Street
Improvement
Projects
(Franklin
Area and Hu-
ron Area)
2018
Street
Mill
and
Over-
lay
Utility Funds -
Automated
Meter Reading
System Re-
placement and
Huron Area
Streets Utility
Replacement
2018 Street Recon-
struction Projects:
Duluth Ave/TH 13
and County Wide
Flashing Yellow
Signal Conversion
Feasibil-
ity Re-
port Ac-
cepted
N/A N/A 11/20/17
Res 17-189
(Franklin)
Res 17-190 (Hu-
ron)
2/5/18
Res 18-
025
N/A
2/5/18: Res 18-024
(Duluth)
Public
Hearing 8/22/16
8/22/16
12/11/17 (Frank-
lin/ Huron) 4/16/18
8/22/16 (AMRS)
12/11/17 (Huron)
8/22/16 Res 16-110 and
1/8/18: Res 18-007
(Street Reconstruction
Plan)
4/16/18 (Duluth)
Im-
prove-
ment Or-
dered
12/11/2017
Res 17-
206
3/19/18
Res 18-
030
(SCBA)
12/11/17
Res 17-208 (Hu-
ron)
Res 17-211
(Franklin)
4/16/18
Res 18-054
12/11/17
Res 17-190 (Hu-
ron)
5/7/2018
Res 18-070
(AMRS)
2/5/18: Res 18-026
(Signal)
4/16/18: Res 18-055
(Duluth)
Contract
Awarded
12/11/2017
Res 17-
206
3/19/18
Res 18-
030
(SCBA)
Contract
award
in July
2018
(Parking
Lot)
4/16/18: Res 18-
057 (Frank-
lin/Huron)
6/4/2018
Res 18-088
4/16/18: Res 18-
057 (Huron)
6/4/18 Res 18-089
(AMRS)
3/19/18; Res 18-031
(Signal)
Tentative bid authoriza-
tion in July 2018 (Du-
luth)
Current Circumstances
As indicated in the table above, bids have been received, and contracts
awarded for the projects included in the bond issue except for the following:
• Fire Station #1 Parking Lot Replacement
• 2018 Street Reconstruction Project - Duluth Ave/TH 13
The contract award for the Fire Stations #1 parking lot is anticipated in July,
but no change in bond proceeds will be necessary for this project. Tentative
bid authorization for the Duluth Ave/TH13 project is anticipated in July, with a
contract award in August.
The City will use a competitive sale process to solicit proposals from under-
writers. The resolution providing for the sale of the bonds will set terms for the
bond issue. On July 16, the City will receive bids from interested underwriters
or underwriting groups. The low bid will be determined based on the true inter-
est cost (TIC) of the underwriter’s discount and interest expense. Closing on
the bonds is expected to occur by mid-August.
The structure of the bond issue itself will be based upon the following compo-
nents in rounded amounts for the new projects:
3
Attached is a Finance Plan Summary prepared by Northland Securities, that
provides additional detail with respect to the estimated sources and uses of
funds, interest rates, debt service principal/interest payments, and sources of
repayment. The three primary sources of repayment are property taxes, spe-
cial assessments, and water and sewer utility revenues.
The City’s bond counsel, Briggs & Morgan, has reviewed all the necessary
bond documents and has prepared the attached resolution providing for the is-
suance and sale of the general obligation bonds.
Prior to July 1, the City Manager, Finance Director, and Ms. Omdal will partici-
pate in a bond rating call with S&P Global. The City currently has a “AA+” rat-
ing from S&P Global and an “Aa2” rating from Moody’s Investors Service.
Conclusion
The City Council should adopt the attached resolution which provides for the
issuance and sale of bonds.
ISSUES: Due to the multiple purposes in this bond issue, the projects have gone to the
Council at varying times. The Duluth Avenue/TH13 street reconstruction pro-
ject, which is included in this bond issue will go to the Council for bid authori-
zation in July and for contract award in August.
FINANCIAL
IMPACT:
Road projects
The initial amount of the bond issue for the 2018 road projects in the approved
CIP was approximately $4.0 million with the tax levy supporting $2.9 million.
Based on these figures, the estimated annual tax levy was $348,000. The
proposed bond issue has been increased to reflect the cost estimates com-
pleted as part of each feasibility study, including revisions to the design and
property acquisition costs for the Duluth Avenue/TH13 project, and an in-
crease in the county wide flashing yellow signal conversion cost. The new
Equipment-
Fire Pumper
CIP-Fire
Station #2
SCBA and
Parking Lot
Improvement
Project -
Franklin
Area and
Huron Area
Streets
PIR Fund-
2018 Street
Overlay
Water- 50%
of AMRS
replacement
and Huron
Area Street
Utilities
replacement
Sewer- 50%
of AMRS
replacement
and Huron
Area Street
Utilities
replacement
Street
Reconstruction-
Duluth Ave/TH
13 and County
Wide Flashing
Yellow Signal
Conversion Total
Estimated Project Costs 665,000 620,000 4,910,000 625,000 1,300,000 1,300,000 2,410,000 11,830,000
Less: Water Fund (777,000) (777,000)
Less: Sewer Fund (846,000) (846,000)
Less: Storm Water Fund (347,000) (347,000)
Less: Other funding - General Fund Transfer (140,000) (140,000)
Less: Other funding - MnDot (710,000) (710,000)
Less: Other funding - MSA (400,000) (400,000)
Project Costs to Bond 665,000 620,000 2,940,000 485,000 1,300,000 1,300,000 1,300,000 8,610,000
Total Underwriter's Discount (0.800%)69,160
Costs of Issuance 64,775
Rounding Amount 1,065
Total New Money 8,745,000
4
total is expected to be about $4.2 million with the tax levy supporting about
$3.1 million. The average annual tax levy for the road projects is $380,000.
This is an additional annual cost of $32,000 as compared to the approved
CIP. Due to the multiple purposes of the bond issue and complexity of some
of the projects, staff expected that there would be variations from the ap-
proved CIP. However, most of the cost changes were contemplated in the
long-range financial plan.
Fire Station #1 Equipment and Capital Improvements
The amount of debt for the Fire Pumper and Fire Station #1 capital improve-
ments has not changed from the approved CIP. The average annual tax levy
to support these items is $160,000.
AMRS and Huron area utilities
The budget for the Utility automated meter reading system (AMRS) is $1.7M.
The contract awarded came in at about $224,000 below the budget amount.
Some of this savings is offset by increased cost for the water utility work as
compared to the budget amount. The annual debt service to support this
these items is $310,000 split equally between the water and the sewer funds.
The source of repayment is water and sewer utility revenues.
2018 Street Overlay
The mill and overlay project for 2018 will be supported by special assess-
ments with a five- year term and a transfer from the General Fund.
Debt service tax levy impact on the financial plan-Preliminary
As updated project plan information is received, we update the estimated debt
service tax levy in the long-range financial plan. Staff estimated an average
annual debt service tax levy of $537,000 for the 2018 bond issue. The prelim-
inary net annual average debt service tax levy per the Finance Plan is about
$540,000.
Special assessments
Multiple special assessments support the repayment of this bond issuance.
• For the Franklin Area and Huron Area street improvement, the street
and storm water assessments have 10-year terms and the water and
sewer assessments have 20-year terms.
• The Duluth Avenue/TH13 street reconstruction is supported by special
assessments with a ten-year term.
• The mill and overlay project will be supported by special assessments
with a five-year term.
ALTERNATIVES: The following alternatives are available to the City Council:
1. Motion and a second to Adopt the Resolution Authorizing the Issuance
of General Obligation Bonds, Series 2018A as recommended.
2. Motion and a second to table action and to provide direction to staff for
more information.
RECOMMENDED
MOTION:
Alternative 1.
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EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL
CITY OF PRIOR LAKE, MINNESOTA
HELD: June 18, 2018
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Prior Lake, Scott County, Minnesota, was duly held at the City Hall on June 18,
2018, at 7:00 P.M. for the purpose in part of authorizing the competitive negotiated sale of the
$8,745,000 General Obligation Bonds, Series 2018A.
The following members were present:
and the following were absent:
Member _______________ introduced the following resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF
GENERAL OBLIGATION BONDS, SERIES 2018A
IN AN AMOUNT NOT TO EXCEED $9,000,000
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 General Obligation Bonds,
Series 2018A (the "Bonds"), pursuant to Minnesota Statutes, Chapters 429, 444 and 475 and
Sections 412.301 and 475.521, in an amount not to exceed $9,000,000, to finance the purchase of
equipment, a capital improvement plan project, an improvement project, a permanent
improvement revolving fund, a water project, a sewer project and a street reconstruction project
in the City; and
B. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis,
Minnesota ("Northland"), as its independent financial advisor and is therefore authorized to sell
the Bonds by competitive negotiated sale in accordance with Minnesota Statutes, Section 475.60,
Subdivision 2(9); and
C. WHEREAS, the City has retained Briggs and Morgan, Professional Association,
in Minneapolis, Minnesota as its bond counsel for purposes of this financing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota, as follows:
1. Authorization. The City Council hereby authorizes Northland to solicit proposals
for the competitive negotiated sale of the Bonds.
2. Meeting; Proposal Opening. The City Council shall meet at the time and place
specified in the Notice of Sale attached hereto as Exhibit A for the purpose of considering sealed
proposals for and awarding the sale of the Bonds. The City Finance Director, or designee, shall
open proposals at the time and place specified in the Notice of Sale.
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3. Notice of Sale. The terms and conditions of the Bonds and the negotiation thereof
are fully set forth in the Notice of Sale attached hereto as Exhibit A and hereby approved and
made a part hereof.
4. Official Statement. In connection with the competitive negotiated sale of the
Bonds, the City Finance Director and other officers or employees of the City are hereby
authorized to cooperate with Northland and participate in the preparation of an official statement
for the Bonds, and to execute and deliver it on behalf of the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by member
_______________ and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
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STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting City Finance Director of the City
of Prior Lake, Minnesota, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the same is a
full, true and complete transcript of the minutes of a meeting of the City Council duly called and
held on the date therein indicated, insofar as such minutes relate to the City's General Obligation
Bonds, Series 2018A.
WITNESS my hand on June 18, 2018.
__________________________________
City Finance Director
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EXHIBIT A
NOTICE OF SALE
$8,745,000*
GENERAL OBLIGATION BONDS, SERIES 2018A
CITY OF PRIOR LAKE, MINNESOTA
(Book-Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals (also referred to herein as “bids”) will be opened by the Finance Director, or designee, on Monday,
July 16, 2018 at 10:30 A.M., CT, at the offices of Northland Securities, Inc. (the City’s “Municipal Advisor”),
150 South 5th Street, Suite 3300, Minneapolis, Minnesota 55402. Consideration of the Proposals for award of
the sale will be by the City Council at its meeting at the City Offices beginning Monday, July 16, 2018, at 7:00
P.M., CT.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.,
b) faxed to Northland Securities, Inc. at 612-851-5918,
c) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to Northland
Securities, Inc. by telephone at 612-851-5900 or 612-851-4945, or
d) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the manner
described below, until 10:30 A.M., CT, on Monday, July 16, 2018. Proposals may be submitted electronically
via PARITY™ or its successor, pursuant to this Notice until 10:30 A.M., CT, but no Proposal will be received
after the time for receiving Proposals specified above. To the extent any instructions or directions set forth in
PARITY™, or its successor, conflict with this Notice, the terms of this Notice shall control. For further
information about PARITY™, or its successor, potential bidders may contact Northland Securities, Inc. or i-
Deal at 1359 Broadway, 2nd floor, New York, NY 10018, telephone 212-849-5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY™ or its
successor. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted.
BOOK-ENTRY SYSTEM
The Bonds will be issued by means of a book-entry system with no physical distribution of bond certificates
made to the public. The Bonds will be issued in fully registered form and one bond certificate, representing the
aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as
nominee of Depository Trust Company (“DTC”), New York, New York, which will act as securities depository
of the Bonds.
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be
made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be adjusted
to maintain the same gross spread.
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Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a
single maturity through book entries made on the books and records of DTC and its participants. Principal and
interest are payable by the City through Northland Trust Services, Inc. Minneapolis, Minnesota (the “Paying
Agent/Registrar”), to DTC, or its nominee as registered owner of the Bonds. Transfer of principal and interest
payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments
to beneficial owners by participants will be the responsibility of such participants and other nominees of
beneficial owners. The successful bidder, as a condition of delivery of the Bonds, will be required to deposit the
bond certificates with DTC. The City will pay reasonable and customary charges for the services of the Paying
Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
Date of Delivery (Estimated to be August 15, 2018)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444 and 475 and Sections 412.301
and 475.521. Proceeds will be used to finance the purchase of equipment, a capital improvement plan project,
an improvement project, a permanent improvement revolving fund, a water project, a sewer project, a street
reconstruction project and to finance the costs associated with the issuance of the Bonds. The Bonds are payable
from special assessments against benefited property, water revenues, sewer revenues and additionally secured
by ad valorem taxes on all taxable property within the City. The full faith and credit of the City is pledged to
their payment and the City has validly obligated itself to levy ad valorem taxes in the event of any deficiency in
the debt service account established for this issue.
INTEREST PAYMENTS
Interest is due semiannually on each June 15 and December 15, commencing June 15, 2019, to registered owners
of the Bonds appearing of record in the Bond Register as of the close of business on the first day (whether or not
a business day) of the calendar month of such interest payment date.
MATURITIES
Principal is due annually on December 15, inclusive, in each of the years and amounts as follows:
Year Amount Year Amount Year Amount
2019 $760,000 2023 $925,000 2026 $890,000
2020 860,000 2024 855,000 2027 920,000
2021 885,000 2025 875,000 2028 860,000
2022 915,000
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.
INTEREST RATES
All rates must be in integral multiples of 1/20th or 1/8th of 1%. Rates must be in level or ascending order. All
Bonds of the same maturity must bear a single uniform rate from date of issue to maturity.
ESTABLISHMENT OF ISSUE PRICE
(HOLD-THE-OFFERING-PRICE RULE MAY APPLY – BIDS NOT CANCELLABLE)
The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver
to the City at closing an “issue price” or similar certificate setting forth the reasonably expected initial offering
10834915v1
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price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or
equivalent communications, substantially in the form attached hereto as Exhibit A, with such modifications as
may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel.
All actions to be taken by the City under this Notice of Sale to establish the issue price of the Bonds may be
taken on behalf of the City by the City’s Municipal Advisor and any notice or report to be provided to the City
may be provided to the City’s Municipal Advisor.
The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining “competitive sale”
for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the
“competitive sale requirements”) because:
(1) the City shall disseminate this Notice of Sale to potential underwriters in a manner that is reasonably
designed to reach potential underwriters;
(2) all bidders shall have an equal opportunity to bid;
(3) the City may receive bids from at least three underwriters of municipal bonds who have established
industry reputations for underwriting new issuances of municipal bonds; and
(4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase
the Bonds at the highest price (or lowest cost), as set forth in this Notice of Sale.
Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase of the
Bonds, as specified in the bid.
In the event that the competitive sale requirements are not satisfied, the City shall promptly so advise the winning
bidder. The City may then determine to treat the initial offering price to the public as of the award date of the
Bonds as the issue price of each maturity by imposing on the winning bidder the Hold-the-Offering-Price Rule
as described in the following paragraph (the “Hold-the-Offering-Price Rule”). Bids will not be subject to
cancellation in the event that the City determines to apply the Hold-the-Offering-Price Rule to the Bonds.
Bidders should prepare their bids on the assumption that the Bonds will be subject to the Hold-the-
Offering-Price Rule in order to establish the issue price of the Bonds.
By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the
Bonds to the public on or before the date of award at the offering price or prices (the “Initial Offering Price”),
or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on
behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor
sell unsold Bonds of any maturity to which the Hold-the-Offering Price Rule shall apply to any person at a price
that is higher than the Initial Offering Price to the public during the period starting on the award date for the
Bonds and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the award date; or
(2) the date on which the underwriters have sold at least 10% of a maturity of the Bonds to the public at a
price that is no higher than the Initial Offering Price to the public (the “10% Test”), at which time only
that particular maturity will no longer be subject to the Hold-the-Offering-Price Rule.
The City acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the
agreement of each underwriter to comply with the Hold-the-Offering-Price Rule, as set forth in an agreement
among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection
with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group
to comply with the Hold-the-Offering-Price Rule, as set forth in a selling group agreement and the related pricing
wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in
connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to
such agreement to comply with the Hold-the-Offering-Price Rule, as set forth in the retail distribution agreement
and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its
failure to comply with its agreement regarding the Hold-the-Offering-Price Rule and that no underwriter shall
be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any
broker-dealer that is a party to a retail distribution agreement to comply with its corresponding agreement
regarding the Hold-the-Offering-Price Rule as applicable to the Bonds.
By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group
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agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the
Bonds to the public, together with the related pricing wires, contains or will contain language obligating each
underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such
retail distribution agreement, as applicable, to comply with the Hold-the-Offering-Price Rule, if applicable, in
each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and
(ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the
related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail
distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require
each broker-dealer that is a party to such retail distribution agreement to comply with the Hold-the-Offering-
Price Rule, if applicable, in each case if and for so long as directed by the winning bidder or such underwriter
and as set forth in the related pricing wires.
Notes: Sales of any Bonds to any person that is a related party to an underwriter shall not constitute sales to
the public for purposes of this Notice of Sale. Further, for purposes of this Notice of Sale:
(1) “public” means any person other than an underwriter or a related party,
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with
the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a
person described in clause (A) to participate in the initial sale of the Bonds to the public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial sale
of the Bonds to the public).
(3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the
purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power
or the total value of their stock, if both entities are corporations (including direct ownership by one
corporation or another), (ii) more than 50% common ownership of their capital interests or profits
interests, if both entities are partnerships (including direct ownership by one partnership of another),
or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or
the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation
and the other entity is a partnership (including direct ownership of the applicable stock or interests by
one entity of the other), and
(4) “sale date” means the date that the Bonds are awarded by the City to the winning bidder.
ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER PROPOSALS
The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or
decrease will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the
purchase price will also be adjusted to maintain the same gross spread. Such adjustments shall be made promptly
after the sale and prior to the award of Proposals by the City and shall be at the sole discretion of the City. The
successful bidder may not withdraw or modify its Proposal once submitted to the City for any reason, including
post-sale adjustment. Any adjustment shall be conclusive and shall be binding upon the successful bidder.
OPTIONAL REDEMPTION
Bonds maturing on December 15, 2027 through 2028 are subject to redemption and prepayment at the option of
the City on December 15, 2026 and any date thereafter, at a price of par plus accrued interest. Redemption may
be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and principal
amounts within each maturity to be redeemed shall be determined by the City 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 Bond Registrar.
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CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither
the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a
failure or refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with
terms of the purchase contract. The CUSIP Service Bureau charge for the assignment of CUSIP identification
numbers shall be paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within forty days after award, subject to an approving legal opinion by Briggs and
Morgan, Professional Association, Bond Counsel. The legal opinion will be paid by the City and delivery will
be anywhere in the continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $8,675,040(99.20%) and accrued interest on the principal sum of $8,745,000 must be
filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to legality.
Proposals for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
Cathy Erickson, Finance Director
Prior Lake City Hall
4646 Dakota Avenue Street SE
Prior Lake, Minnesota 55372
A good faith deposit (the “Deposit”) in the amount of $174,900 in the form of a federal wire transfer (payable
to the order of the City) is only required from the apparent winning bidder, and must be received within two
hours after the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of
the wire instructions from the Municipal Advisor promptly after the sale. If the Deposit is not received from the
apparent winning bidder in the time allotted, the City may choose to reject their Proposal and then proceed to
offer the Bonds to the next lowest bidder based on the terms of their original proposal, so long as said bidder
wires funds for the Deposit amount within two hours of said offer.
The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement and
no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with the
accepted Proposal, said amount will be retained by the City. No Proposal can be withdrawn after the time set for
receiving Proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or
continued to another date without award of the Bonds having been made.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC)
basis. The City’s computation of the interest rate of each Proposal, in accordance with customary practice, will
be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City will reserve the right
to: (i) waive non-substantive informalities of any Proposal or of matters relating to the receipt of Proposals and
award of the Bonds, (ii) reject all Proposals without cause, and (iii) reject any Proposal which the City determines
to have failed to comply with the terms herein.
INFORMATION FROM SUCCESSFUL BIDDER
10834915v1
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The successful bidder will be 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.
OFFICIAL STATEMENT
By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City
agrees that, no more than seven business days after the date of such award, it shall provide to the senior managing
underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an electronic format
as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be provided, annual financial information, including audited financial
statements of the City, and notices of certain material events, as required by SEC Rule 15c2-12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER’S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option
of the successful bidder, the purchase of any such insurance policy or the issuance of any such commitment shall
be at the sole option and expense of the successful bidder of the Bonds. Any increase in the costs of issuance of
the Bonds resulting from such purchase of insurance shall be paid by the successful bidder, except that, if the
City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee.
Any other rating agency fees shall be the responsibility of the successful bidder. Failure of the municipal bond
insurer to issue the policy after the Bonds have been awarded to the successful bidder shall not constitute cause
for failure or refusal by the successful bidder to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
Dated: June 18, 2018 BY ORDER OF THE PRIOR LAKE CITY COUNCIL
/s/ Cathy Erickson
Finance Director
Additional information may be obtained from:
Northland Securities, Inc.
150 South 5th Street, Suite 3300
Minneapolis, Minnesota 55402
Telephone No.: 612-851-5900
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EXHIBIT A
(ISSUE PRICE CERTIFICATE – COMPETITIVE SALE SATISFIED)
The undersigned, on behalf of ______________________________ (the "Underwriter"), hereby certifies as
set forth below with respect to the sale of the General Obligation Bonds, Series 2018A (the "Bonds") of the City of
Prior Lake, Minnesota (the "Issuer").
1. Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by
the Underwriter are the prices listed in Schedule A (the "Expected Offering Prices"). The Expected Offering Prices
are the prices for the Maturities of the Bonds used by the Underwriter in formulating its bid to purchase the Bonds.
Attached as Schedule B is a true and correct copy of the bid provided by the Underwriter to purchase the Bonds.
(b) The Underwriter was not given the opportunity to review other bids prior to submitting its bid.
(c) The bid submitted by the Underwriter constituted a firm offer to purchase the Bonds.
2. Defined Terms.
(a) "Maturity" means Bonds with the same credit and payment terms. Bonds with different maturity
dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(b) "Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party"
for purposes of this certificate generally means any two or more persons who have greater than 50 percent commo n
ownership, directly or indirectly.
(c) "Sale Date" means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is _________________.
(d) "Underwriter" means (i) any person that agrees p ursuant to a written contract with the Issuer (or
with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the
Public, and (ii) any person that agrees pursuant to a written contract directly or indirec tly with a person described in
clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a
selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate
represents the Underwriter's interpretation of any laws, including specifically Sections 103 and 148 of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that
the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in
the Nonarbitrage Certificate and with respect to compliance with the federal income tax rules affecting the Bonds,
and by Briggs and Morgan, Professional Association, Bond Counsel in connection with rendering its opinion that
the interest on the Bonds is excluded from gross income for federa l income tax purposes, the preparation of the
Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time
to time relating to the Bonds.
Dated: _________________.
10834915v1
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(ISSUE PRICE CERTIFICATE – HOLD THE PRICE)
The undersigned, on behalf of ________________________________(the "Underwriter"), on behalf of
itself, hereby certifies as set forth below with respect to the sale and issuance of General Obligation
_____________________ Bonds, Series _______________ (the "Bonds") of the City of ___________________,
Minnesota (the "Issuer").
1. Initial Offering Price of the Bonds.
(a) The Underwriter offered each Maturity of the Bonds to the Public for purchase at the respective
initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the
pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Notice of Sale, the Underwriter has agreed in wr iting that, (i) for each Maturity
of the Bonds, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher
than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the "ho ld-the-offering-
price rule"), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the
selling group, and any retail distribution agreement shall contain the agreement of each broker -dealer who is a party
to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no
Underwriter (as defined below) has offered or sold any Maturity of the Bonds at a price that is higher than the
respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
2. Defined Terms.
(a) "Holding Period" means, for each Maturity of the Bonds, the period starting on the Sale Date and
ending on the earlier of (i) the close of the fifth business day after the Sale Date (________________), or (ii) the date
on which the Underwriter has sold at least 10% of such Maturity of the Bonds to the Public at prices that are no higher
than the Initial Offering Price for such Maturity.
(b) "Maturity" means Bonds with the same credit and payment terms. Bonds with different maturity
dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) "Public" means any person (including an individual, trust, estate, partnership, association, company,
or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party" for purposes
of this certificate generally means any two or more persons who have greater than 50 percent common ownership,
directly or indirectly.
(d) "Sale Date" means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is _______________, 2018.
(e) "Underwriter" means (i) any person that agrees pursuant to a written co ntract with the Issuer (or
with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public,
and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i)
of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or
a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate
represents the Representative's interpretation of any laws, including specifically Sections 103 and 148 of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the
foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the
Nonarbitrage Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by
Briggs and Morgan, Professional Association, Bond Counsel, in connection with rendering its opinion that the interest
on the Bonds is excluded from gross income for federal income tax purpo ses, the preparation of the Internal Revenue
10834915v1
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Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to
the Bonds.
Dated: _______________, 2018
Finance Plan
Prior Lake, Minnesota
$8,745,000
General Obligation Bonds,
Series 2018A
June 18, 2018
150 South 5th Street, Suite 3300
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
NorthlandSecurities,Inc.Page2
Contents
Executive Summary ...................................................................................................................................................1
Issue Overview ............................................................................................................................................................2
Purpose ................................................................................................................................................................2
Authority .............................................................................................................................................................2
Structure ..............................................................................................................................................................3
Security and Source of Repayment ........................................................................................................3
Plan Rationale ...................................................................................................................................................4
Issuing Process .................................................................................................................................................4
Attachment 1 – Preliminary Debt Service Schedule......................................................................................5
Total Combined 2018A .................................................................................................................................5
Equipment Portion .........................................................................................................................................5
Capital Improvement Plan Portion ........................................................................................................6
Improvement Portion....................................................................................................................................6
Water Portion ....................................................................................................................................................7
Sewer Portion ....................................................................................................................................................8
Street Reconstruction Portion ...................................................................................................................8
Attachment 2 – Estimated Levy Schedule..........................................................................................................9
Equipment Portion .........................................................................................................................................9
CIP Portion .........................................................................................................................................................9
Improvement Portion....................................................................................................................................9
PIR Fund Portion...........................................................................................................................................10
Street Reconstruction Portion .................................................................................................................10
Attachment 3 – Related Considerations ..........................................................................................................11
Bank Qualification ................................................................................................................................11
Arbitrage Compliance.........................................................................................................................11
Continuing Disclosure ........................................................................................................................11
NorthlandSecurities,Inc.Page3
Premiums ..................................................................................................................................................12
Rating ..........................................................................................................................................................12
Attachment 4 – Calendar of Events ...................................................................................................................13
Attachment 5 - Risk Factors..................................................................................................................................14
Northland Securities, Inc.Page 1
Executive Summary
The following is a summary of the recommended terms for the issuance of $8,745,000 General
Obligation Bonds, Series 2018A (the “Bonds”). Additional information on the proposed finance
plan and issuing process can be found after the Executive Summary, in the Issue Overview and
Attachment 3 – Related Considerations.
Purpose Proceeds from the Bonds will be used to purchase equipment;
to finance a capital improvement plan project,an improvement
project, a permanent improvement revolving fund project, a
water project, a sewer project,a street reconstruction project
and to finance the costs associated with the issuance of the
Bonds.
Security The Bonds will be a General Obligation of the City. The City
will pledge special assessments collected from benefitted
properties for payment of the Improvement Portion and PIR
Fund Portion of the Bonds, property tax levies for payment of
the CIP Portion, Equipment Portion and the Street
Reconstruction Portion of the Bonds, net revenues of the water
utility system for payment of the Water Portion of the Bonds
and net revenues of the sewer utility system for payment of the
Sewer Portion of the Bonds.
Repayment Term The Bonds will mature annually each December 15 in the years
2019 through 2028. Interest on the Bonds will be payable on
June 15, 2019 and semiannually thereafter on each June 15 and
December 15.
Estimated Interest Rate Average coupon:2.79%
True interest cost (TIC): 2.93%
Prepayment Option Bonds maturing on and after December 15, 2027 will be subject
to redemption on December 15, 2026 and any day thereafter at
a price of par plus accrued interest.
Rating A rating will be requested from Standard and Poor’s (S&P).
The City’s general obligation debt is currently rated "AA+" by
S&P.
Tax Status The Bonds will be tax-exempt, bank qualified obligations.
Risk Factors There are certain risks associated with all debt. Risk factors
related to the Bonds are discussed in Attachment 5.
Type of Bond Sale Public Sale – Competitive Bids
Proposals Received Monday, July 16, 2018 @ 10:30 A.M.
Council Consideration Monday, July 16, 2018 @ 7:00 P.M.
Northland Securities, Inc.Page 2
Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the following projects (together, the “Projects”):
purchase of various equipment (the “Equipment Portion”)
a capital improvement plan project for a fire hall (the “CIP Portion”)
an improvement project, which includes the Franklin Trail project, and Huron project
(the “Improvement Portion”)
a permanent improvement revolving fund project (the “PIR Fund Portion”)
a water project, which includes a portion of the Huron project (the “Water Portion”)
a sewer project, which includes a portion of the Huron project (the “Sewer Portion”)
a street project, which includes the TH13 Duluth project and county wide yellow
flashing signal project (the Street Reconstruction Portion”)
The proceeds will also be used to pay costs associated with issuing the Bonds. The Bonds have
been sized based on estimates provided by City Staff. The table below contains the estimated
sources and uses of funds for the bond issue.
Authority
The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 475, 429, 444
and Sections 412.301 and 475.521.
Under Section 412.301, Capital Equipment includes, but is not limited to, road construction and
maintenance equipment, public safety equipment and computer hardware and software, which
must have a useful life at least as long as the term of the debt issued to finance the equipment.
The term of the Bonds cannot exceed 10 years from the date of issuance.
If the amount of the Equipment Portion of the Bonds exceeds 0.25% of the estimated market
value of the taxable property in the City, a reverse referendum provision applies. The City’s
estimated market value for taxes payable in 2018 is $3,393,205,600 ($3,393,205,600 x 0.0025 =
$8,483,014). Since the Equipment Portion of the Bonds does not exceed $8,483,014 the reverse
referendum provision does not apply.
Equipment CIP Improvement PIRFund Water Sewer
Street
Reconstruction
Issue
Summary
Sources Of Funds
Par Amount of Bonds $680,000.00 $630,000.00 $2,985,000.00 $490,000.00 $1,320,000.00 $1,320,000.00 $1,320,000.00 $8,745,000.00
Total Sources $680,000.00 $630,000.00 $2,985,000.00 $490,000.00 $1,320,000.00 $1,320,000.00 $1,320,000.00 $8,745,000.00
Uses Of Funds
Total Underwriter's Discount (0.800%)5,440.00 5,040.00 23,880.00 3,920.00 10,560.00 10,560.00 10,560.00 69,960.00
Costs of Issuance 4,996.40 4,629.01 21,932.66 3,600.35 9,698.86 9,698.86 9,698.86 64,255.00
Deposit to Project Construction Fund 665,000.00 620,000.00 2,940,000.00 485,000.00 1,300,000.00 1,300,000.00 1,300,000.00 8,610,000.00
Rounding Amount 4,563.60 330.99 (812.66)(2,520.35)(258.86)(258.86)(258.86)785.00
Total Uses $680,000.00 $630,000.00 $2,985,000.00 $490,000.00 $1,320,000.00 $1,320,000.00 $1,320,000.00 $8,745,000.00
Northland Securities, Inc.Page 3
Under Section 475.521, a Capital Improvement is a major expenditure of City funds for the
acquisition or betterment of public lands, buildings, or other improvements used, such as a city
hall, library, public safety, or public works facility, which has a useful life of five years or more.
Before issuing bonds under a Capital Improvement Plan (“CIP”), the City must hold a public
hearing on the CIP and the proposed bonds, and must then approve the CIP and authorize the
issuance of the bonds by at least a 3/5 majority. The public hearing was held on August 22, 2016
and the CIP was approved.
Under Chapter 429, an Improvement means any type of improvement made under authority
granted by section 429.021, which includes, but is not limited to, improvements to streets and
sidewalks, storm and sanitary sewer systems, and street lighting systems.
Before issuing bonds under Chapter 429, the City must hold a public hearing on the
Improvements and the proposed bonds, and must then pass a resolution ordering the
improvements by at least a 4/5 majority. The City has held the required public hearings and all
resolutions ordering the improvements have passed by the required 4/5 majority.
Under Section 475.58, Subdivision 3b. street reconstruction bonds can be used to finance the
reconstruction and bituminous overlay of existing city streets. Eligible improvements may
include turn lanes and other improvements having a substantial public safety function,
realignments, other modifications to intersect with state and county roads and the local share of
state and county road projects. Eligible improvements do not include the portion of project cost
allocable to widening a street or adding curbs and gutters where none previously existed.
Before issuing street reconstruction bonds, the City must hold a public hearing on the street
reconstruction project and the proposed bonds, and must then pass a resolution approving the
Street Reconstruction Plan and issuance of street reconstruction bonds.
Structure
The Capital Improvement Plan Portion, the Improvement Portion, the Water Portion, the Sewer
Portion and the Street Reconstruction Portion of the Bonds have been structured over 10 years,
with relatively level annual debt service payments. The Equipment Portion has been structured
over nine years, with relatively level annual debt service payments. The PIR Fund Portion has
been structured over five years with relatively level annual debt service payments.
The proposed structure for the bond issue and preliminary debt service projections for each of
the seven portions of the bond issue are illustrated in Attachment 1 and the estimated levies are
illustrated in Attachment 2.
Security and Source of Repayment
The Bonds will be general obligations of the City. The finance plan relies on the following
assumptions for the revenues used to pay debt service, as provided by City staff:
Special Assessments. The City is expected to levy special assessments against benefited
properties in the amount of $984,405 for the Improvement Portion of the Bonds. The
assessments will be payable over 10 years, with an interest rate of 2.00% over the net
interest cost on the Improvement Portion of the Bonds (currently assumed to be 4.95%),
and structured for level annual payments of principal and interest. The Finance Plan
assumes that the assessments will be levied in 2018 for initial payment in 2019.
The City is expected to levy special assessments against benefited properties in the
amount of $490,000 (100% of the PIR Fund Portion) for the PIR Fund portion of the
Bonds. The assessments will be payable over five years with an interest rate of 2.00%
over the net interest cost on the PIR Fund Portion of the Bonds (currently assumed to be
Northland Securities, Inc.Page 4
4.75%), and structured for level annual payments of principal and interest. The Finance
Plan assumes that the assessments will be levied in 2018 for initial payment in 2019.
Utility Revenues. Net revenues of the City’s sewer and water utilities will be pledged for
payment of the Water and Sewer Portions of the Bonds. The City will covenant to adopt
water and sewer rates and charges that are sufficient to produce net revenues equal to at
least 105% of the debt service requirements on the Water and Sewer Portions of the
Bonds. In the event there is a deficiency in the amount of net revenues available for
payment of debt service, the City may levy taxes to cover the insufficiency, but only on a
temporary basis until rates are adjusted.
Property Taxes. The remaining revenues needed to pay debt service on the Bonds are
expected to come from property tax levies. The initial projections show an annual net
levy averaging $561,619 is needed to produce the statutory requirement of 105% of debt
service for the term of the bond issuance, after accounting for assessments and utility
revenues. The levy may be adjusted annually based on actual special assessment
collections and additional monies in the debt service fund. The initial levy will be made
in 2018 for taxes payable in 2019. Although not pledged, the City anticipates using special
assessments levied against benefited properties to reduce the annual net levy of the Street
Reconstruction portion, reducing the overall annual net levy average to $540,514 for the
bond issuance.
Plan Rationale
The Finance Plan recommended in this report is based on a variety of factors and information
provided by the City related to the financed project and City objectives, Northland’s knowledge
of the City and our experience in working with similar cities and projects. The issuance of
General Obligation Bonds provides the best means of achieving the City’s objectives and cost
effective financing. The City has successfully issued and managed this type of debt for previous
projects.
Issuing Process
Northland will receive bids from underwriters to purchase the Bonds on Monday, July 16, 2018
at 10:30 AM. Market conditions and the marketability of the Bonds support issuance through a
competitive sale. This process has been chosen as it is intended to produce the lowest
combination of interest expense and underwriting expense on the structure, date and time set to
receive bids. The calendar of events for the issuing process can be found in Attachment 4.
Municipal Advisor:Northland Securities, Inc., Minneapolis, Minnesota
Bond Counsel:Briggs and Morgan, Professional Association, Minneapolis, Minnesota
Paying Agent:Northland Trust Services, Inc. Minneapolis, Minnesota
Northland Securities, Inc.Page 5
Attachment 1 – Preliminary Debt Service Schedule
Total Combined 2018A
Equipment Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --194,960.40 194,960.40 -
12/15/2019 760,000.00 2.300%116,976.25 876,976.25 1,071,936.65
06/15/2020 --108,236.25 108,236.25 -
12/15/2020 860,000.00 2.400%108,236.25 968,236.25 1,076,472.50
06/15/2021 --97,916.25 97,916.25 -
12/15/2021 885,000.00 2.450%97,916.25 982,916.25 1,080,832.50
06/15/2022 --87,075.00 87,075.00 -
12/15/2022 915,000.00 2.500%87,075.00 1,002,075.00 1,089,150.00
06/15/2023 --75,637.50 75,637.50 -
12/15/2023 925,000.00 2.600%75,637.50 1,000,637.50 1,076,275.00
06/15/2024 --63,612.50 63,612.50 -
12/15/2024 855,000.00 2.700%63,612.50 918,612.50 982,225.00
06/15/2025 --52,070.00 52,070.00 -
12/15/2025 875,000.00 2.800%52,070.00 927,070.00 979,140.00
06/15/2026 --39,820.00 39,820.00 -
12/15/2026 890,000.00 2.900%39,820.00 929,820.00 969,640.00
06/15/2027 --26,915.00 26,915.00 -
12/15/2027 920,000.00 3.000%26,915.00 946,915.00 973,830.00
06/15/2028 --13,115.00 13,115.00 -
12/15/2028 860,000.00 3.050%13,115.00 873,115.00 886,230.00
Total $8,745,000.00 - $1,440,731.65 $10,185,731.65 -
Date And Term Structure
Dated 8/15/2018
Delivery Date 8/15/2018
First available call date 12/15/2026
Call Price 100.000%
Yield Statistics
Bond Year Dollars $51,590.00
Average Life 5.899 Years
Average Coupon 2.7926568%
Net Interest Cost (NIC)2.9282645%
True Interest Cost (TIC)2.9343286%
All Inclusive Cost (AIC)3.0744283%
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --14,987.50 14,987.50 -
12/15/2019 65,000.00 2.300%8,992.50 73,992.50 88,980.00
06/15/2020 --8,245.00 8,245.00 -
12/15/2020 70,000.00 2.400%8,245.00 78,245.00 86,490.00
06/15/2021 --7,405.00 7,405.00 -
12/15/2021 70,000.00 2.450%7,405.00 77,405.00 84,810.00
06/15/2022 --6,547.50 6,547.50 -
12/15/2022 75,000.00 2.500%6,547.50 81,547.50 88,095.00
06/15/2023 --5,610.00 5,610.00 -
12/15/2023 75,000.00 2.600%5,610.00 80,610.00 86,220.00
06/15/2024 --4,635.00 4,635.00 -
12/15/2024 80,000.00 2.700%4,635.00 84,635.00 89,270.00
06/15/2025 --3,555.00 3,555.00 -
12/15/2025 80,000.00 2.800%3,555.00 83,555.00 87,110.00
06/15/2026 --2,435.00 2,435.00 -
12/15/2026 80,000.00 2.900%2,435.00 82,435.00 84,870.00
06/15/2027 --1,275.00 1,275.00 -
12/15/2027 85,000.00 3.000%1,275.00 86,275.00 87,550.00
Total $680,000.00 - $103,395.00 $783,395.00 -
Northland Securities, Inc.Page 6
Capital Improvement Plan Portion
Improvement Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --14,133.33 14,133.33 -
12/15/2019 50,000.00 2.300%8,480.00 58,480.00 72,613.33
06/15/2020 --7,905.00 7,905.00 -
12/15/2020 60,000.00 2.400%7,905.00 67,905.00 75,810.00
06/15/2021 --7,185.00 7,185.00 -
12/15/2021 60,000.00 2.450%7,185.00 67,185.00 74,370.00
06/15/2022 --6,450.00 6,450.00 -
12/15/2022 60,000.00 2.500%6,450.00 66,450.00 72,900.00
06/15/2023 --5,700.00 5,700.00 -
12/15/2023 60,000.00 2.600%5,700.00 65,700.00 71,400.00
06/15/2024 --4,920.00 4,920.00 -
12/15/2024 65,000.00 2.700%4,920.00 69,920.00 74,840.00
06/15/2025 --4,042.50 4,042.50 -
12/15/2025 65,000.00 2.800%4,042.50 69,042.50 73,085.00
06/15/2026 --3,132.50 3,132.50 -
12/15/2026 70,000.00 2.900%3,132.50 73,132.50 76,265.00
06/15/2027 --2,117.50 2,117.50 -
12/15/2027 70,000.00 3.000%2,117.50 72,117.50 74,235.00
06/15/2028 --1,067.50 1,067.50 -
12/15/2028 70,000.00 3.050%1,067.50 71,067.50 72,135.00
Total $630,000.00 - $107,653.33 $737,653.33 -
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --66,970.83 66,970.83 -
12/15/2019 240,000.00 2.300%40,182.50 280,182.50 347,153.33
06/15/2020 --37,422.50 37,422.50 -
12/15/2020 275,000.00 2.400%37,422.50 312,422.50 349,845.00
06/15/2021 --34,122.50 34,122.50 -
12/15/2021 280,000.00 2.450%34,122.50 314,122.50 348,245.00
06/15/2022 --30,692.50 30,692.50 -
12/15/2022 290,000.00 2.500%30,692.50 320,692.50 351,385.00
06/15/2023 --27,067.50 27,067.50 -
12/15/2023 295,000.00 2.600%27,067.50 322,067.50 349,135.00
06/15/2024 --23,232.50 23,232.50 -
12/15/2024 305,000.00 2.700%23,232.50 328,232.50 351,465.00
06/15/2025 --19,115.00 19,115.00 -
12/15/2025 310,000.00 2.800%19,115.00 329,115.00 348,230.00
06/15/2026 --14,775.00 14,775.00 -
12/15/2026 320,000.00 2.900%14,775.00 334,775.00 349,550.00
06/15/2027 --10,135.00 10,135.00 -
12/15/2027 330,000.00 3.000%10,135.00 340,135.00 350,270.00
06/15/2028 --5,185.00 5,185.00 -
12/15/2028 340,000.00 3.050%5,185.00 345,185.00 350,370.00
Total $2,985,000.00 - $510,648.33 $3,495,648.33 -
Northland Securities, Inc.Page 7
PIR Fund Portion
Water Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --10,025.00 10,025.00 -
12/15/2019 90,000.00 2.300%6,015.00 96,015.00 106,040.00
06/15/2020 --4,980.00 4,980.00 -
12/15/2020 95,000.00 2.400%4,980.00 99,980.00 104,960.00
06/15/2021 --3,840.00 3,840.00 -
12/15/2021 100,000.00 2.450%3,840.00 103,840.00 107,680.00
06/15/2022 --2,615.00 2,615.00 -
12/15/2022 100,000.00 2.500%2,615.00 102,615.00 105,230.00
06/15/2023 --1,365.00 1,365.00 -
12/15/2023 105,000.00 2.600%1,365.00 106,365.00 107,730.00
Total $490,000.00 - $41,640.00 $531,640.00 -
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --29,614.58 29,614.58 -
12/15/2019 105,000.00 2.300%17,768.75 122,768.75 152,383.33
06/15/2020 --16,561.25 16,561.25 -
12/15/2020 120,000.00 2.400%16,561.25 136,561.25 153,122.50
06/15/2021 --15,121.25 15,121.25 -
12/15/2021 125,000.00 2.450%15,121.25 140,121.25 155,242.50
06/15/2022 --13,590.00 13,590.00 -
12/15/2022 130,000.00 2.500%13,590.00 143,590.00 157,180.00
06/15/2023 --11,965.00 11,965.00 -
12/15/2023 130,000.00 2.600%11,965.00 141,965.00 153,930.00
06/15/2024 --10,275.00 10,275.00 -
12/15/2024 135,000.00 2.700%10,275.00 145,275.00 155,550.00
06/15/2025 --8,452.50 8,452.50 -
12/15/2025 140,000.00 2.800%8,452.50 148,452.50 156,905.00
06/15/2026 --6,492.50 6,492.50 -
12/15/2026 140,000.00 2.900%6,492.50 146,492.50 152,985.00
06/15/2027 --4,462.50 4,462.50 -
12/15/2027 145,000.00 3.000%4,462.50 149,462.50 153,925.00
06/15/2028 --2,287.50 2,287.50 -
12/15/2028 150,000.00 3.050%2,287.50 152,287.50 154,575.00
Total $1,320,000.00 - $225,798.33 $1,545,798.33 -
Northland Securities, Inc.Page 8
Sewer Portion
Street Reconstruction Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --29,614.58 29,614.58 -
12/15/2019 105,000.00 2.300%17,768.75 122,768.75 152,383.33
06/15/2020 --16,561.25 16,561.25 -
12/15/2020 120,000.00 2.400%16,561.25 136,561.25 153,122.50
06/15/2021 --15,121.25 15,121.25 -
12/15/2021 125,000.00 2.450%15,121.25 140,121.25 155,242.50
06/15/2022 --13,590.00 13,590.00 -
12/15/2022 130,000.00 2.500%13,590.00 143,590.00 157,180.00
06/15/2023 --11,965.00 11,965.00 -
12/15/2023 130,000.00 2.600%11,965.00 141,965.00 153,930.00
06/15/2024 --10,275.00 10,275.00 -
12/15/2024 135,000.00 2.700%10,275.00 145,275.00 155,550.00
06/15/2025 --8,452.50 8,452.50 -
12/15/2025 140,000.00 2.800%8,452.50 148,452.50 156,905.00
06/15/2026 --6,492.50 6,492.50 -
12/15/2026 140,000.00 2.900%6,492.50 146,492.50 152,985.00
06/15/2027 --4,462.50 4,462.50 -
12/15/2027 145,000.00 3.000%4,462.50 149,462.50 153,925.00
06/15/2028 --2,287.50 2,287.50 -
12/15/2028 150,000.00 3.050%2,287.50 152,287.50 154,575.00
Total $1,320,000.00 - $225,798.33 $1,545,798.33 -
Date Principal Coupon Interest Total P+I Fiscal Total
08/15/2018 -----
06/15/2019 --29,614.58 29,614.58 -
12/15/2019 105,000.00 2.300%17,768.75 122,768.75 152,383.33
06/15/2020 --16,561.25 16,561.25 -
12/15/2020 120,000.00 2.400%16,561.25 136,561.25 153,122.50
06/15/2021 --15,121.25 15,121.25 -
12/15/2021 125,000.00 2.450%15,121.25 140,121.25 155,242.50
06/15/2022 --13,590.00 13,590.00 -
12/15/2022 130,000.00 2.500%13,590.00 143,590.00 157,180.00
06/15/2023 --11,965.00 11,965.00 -
12/15/2023 130,000.00 2.600%11,965.00 141,965.00 153,930.00
06/15/2024 --10,275.00 10,275.00 -
12/15/2024 135,000.00 2.700%10,275.00 145,275.00 155,550.00
06/15/2025 --8,452.50 8,452.50 -
12/15/2025 140,000.00 2.800%8,452.50 148,452.50 156,905.00
06/15/2026 --6,492.50 6,492.50 -
12/15/2026 140,000.00 2.900%6,492.50 146,492.50 152,985.00
06/15/2027 --4,462.50 4,462.50 -
12/15/2027 145,000.00 3.000%4,462.50 149,462.50 153,925.00
06/15/2028 --2,287.50 2,287.50 -
12/15/2028 150,000.00 3.050%2,287.50 152,287.50 154,575.00
Total $1,320,000.00 - $225,798.33 $1,545,798.33 -
Northland Securities, Inc.Page 9
Attachment 2 – Estimated Levy Schedule
Equipment Portion
CIP Portion
Improvement Portion
Date Total P+I 105%Levy Levy Year
Collection
Year
12/15/2018 --
12/15/2019 88,980.00 93,429.00 2018 2019
12/15/2020 86,490.00 90,814.50 2019 2020
12/15/2021 84,810.00 89,050.50 2020 2021
12/15/2022 88,095.00 92,499.75 2021 2022
12/15/2023 86,220.00 90,531.00 2022 2023
12/15/2024 89,270.00 93,733.50 2023 2024
12/15/2025 87,110.00 91,465.50 2024 2025
12/15/2026 84,870.00 89,113.50 2025 2026
12/15/2027 87,550.00 91,927.50 2026 2027
Total $783,395.00 $822,564.75
Date Total P+I 105%Levy Levy Year
Collection
Year
12/15/2018 --
12/15/2019 72,613.33 76,244.00 2018 2019
12/15/2020 75,810.00 79,600.50 2019 2020
12/15/2021 74,370.00 78,088.50 2020 2021
12/15/2022 72,900.00 76,545.00 2021 2022
12/15/2023 71,400.00 74,970.00 2022 2023
12/15/2024 74,840.00 78,582.00 2023 2024
12/15/2025 73,085.00 76,739.25 2024 2025
12/15/2026 76,265.00 80,078.25 2025 2026
12/15/2027 74,235.00 77,946.75 2026 2027
12/15/2028 72,135.00 75,741.75 2027 2028
Total $737,653.33 $774,536.00
Date Total P+I 105%Levy
Less: Special
Assessment
Revenue* Net Levy Levy Year
Collection
Year
12/15/2018 ----
12/15/2019 347,153.33 364,511.00 127,442.18 237,068.82 2018 2019
12/15/2020 349,845.00 367,337.25 127,442.17 239,895.08 2019 2020
12/15/2021 348,245.00 365,657.25 127,442.17 238,215.08 2020 2021
12/15/2022 351,385.00 368,954.25 127,442.17 241,512.08 2021 2022
12/15/2023 349,135.00 366,591.75 127,442.18 239,149.57 2022 2023
12/15/2024 351,465.00 369,038.25 127,442.17 241,596.08 2023 2024
12/15/2025 348,230.00 365,641.50 127,442.18 238,199.32 2024 2025
12/15/2026 349,550.00 367,027.50 127,442.18 239,585.32 2025 2026
12/15/2027 350,270.00 367,783.50 127,442.18 240,341.32 2026 2027
12/15/2028 350,370.00 367,888.50 127,442.18 240,446.32 2027 2028
Total $3,495,648.33 $3,670,430.75 $1,274,421.76 $2,396,008.99
*Specialassessment revenue is based on assessments totaling $984,405 assessed at a rate of 4.95% (2% over
the net interest cost), with equalannualpayments.
Northland Securities, Inc.Page 10
PIR Fund Portion
Street Reconstruction Portion
Date Total P+I 105%Levy Revenue Net Levy Levy Year
Collection
Year
12/15/2018 ----
12/15/2019 106,040.00 111,342.00 112,623.16 -2018 2019
12/15/2020 104,960.00 110,208.00 112,623.16 -2019 2020
12/15/2021 107,680.00 113,064.00 112,623.16 -2020 2021
12/15/2022 105,230.00 110,491.50 112,623.17 -2021 2022
12/15/2023 107,730.00 113,116.50 112,623.17 -2022 2023
Total $531,640.00 $558,222.00 $563,115.82 -
*Specialassessment revenue is based on assessments totaling $490,000assessed at a rate of 4.75% (2% over
the net interest cost), with equalannualpayments.
Date Total P+I 105%Levy
Less: Special
Assessment
Revenue* Net Levy* Levy Year
Collection
Year
12/15/2018 ----
12/15/2019 152,383.33 160,002.50 21,105.40 138,897.10 2018 2019
12/15/2020 153,122.50 160,778.63 21,105.40 139,673.23 2019 2020
12/15/2021 155,242.50 163,004.63 21,105.40 141,899.23 2020 2021
12/15/2022 157,180.00 165,039.00 21,105.39 143,933.61 2021 2022
12/15/2023 153,930.00 161,626.50 21,105.40 140,521.10 2022 2023
12/15/2024 155,550.00 163,327.50 21,105.40 142,222.10 2023 2024
12/15/2025 156,905.00 164,750.25 21,105.40 143,644.85 2024 2025
12/15/2026 152,985.00 160,634.25 21,105.40 139,528.85 2025 2026
12/15/2027 153,925.00 161,621.25 21,105.40 140,515.85 2026 2027
12/15/2028 154,575.00 162,303.75 21,105.40 141,198.35 2027 2028
Total $1,545,798.33 $1,623,088.25 $211,053.99 $1,412,034.26
*The City anticipates reducing the levy with specialassessment revenue. Specialassessment revenue is based on
assessments totaling $163,025assessed at a rate of 4.95(2% over the net interest cost) with equalannualpayments.
Northland Securities, Inc.Page 11
Attachment 3 – Related Considerations
Bank Qualification
We understand the City (in combination with any subordinate taxing jurisdictions or debt
issued in the City’s name by 501(c)3 corporations) anticipates issuing $10,000,000 or less in tax-
exempt debt during this calendar year. Therefore the Bonds will be designated as “bank
qualified” obligations pursuant to Federal Tax Law.
Arbitrage Compliance
The Equipment Portion of the Bonds are expected to qualify for the “18 month spending
exemption” while the remaining portions of the Bonds are expected to qualify for the “24 month
spending exception” related to arbitrage rebate.
Other aspects of arbitrage regulations will apply to the investment of bond proceeds and the
debt service fund.
Project/Construction Fund. All tax-exempt bond issues are subject to federal rebate
requirements which require all arbitrage earned to be rebated to the U.S. Treasury. The rebate
exemptions the City expects to qualify for is the “18 month spending exemption” for the
Equipment Portion of the Bonds and the “24 month spending exemption” for the remaining
portions of the Bonds.
Debt Service Fund. The City must maintain a bona fide debt service fund for the Bonds or be
subject to yield restriction in the debt service fund. A bona fide debt service fund involves an
equal matching of revenues to debt service expense with a balance forward permitted equal to
the greater of the investment earnings in the fund during that year or 1/12 of the debt service of
that year.
The City should become familiar with the various Arbitrage Compliance requirements for this
bond issue. The Resolution for the Bonds prepared by Bond Counsel explains the requirements
in greater detail.
Continuing Disclosure
Type: Full
Dissemination Agent: Northland Securities
The requirements for continuing disclosure are governed by SEC Rule 15c2-12. The primary
requirements of Rule 15c2-12 actually fall on underwriters. The Rule sets forth due diligence
needed prior to the underwriter’s purchase of municipal securities. Part of this requirement is
obtaining commitment from the issuer to provide continuing disclosure. The document
describing the continuing disclosure commitments (the “Undertaking”) is contained in the
Official Statement that will be prepared to offer the Bonds to investors.
The City has more than $10,000,000 of outstanding debt and is required to undertake “full”
continuing disclosure. Full disclosure requires annual posting of the audit and a separate
continuing disclosure report, as well as the reporting of certain “material events.” Material
events set forth in the Rule, including, but not limited to, bond rating changes and call notices,
must be reported within ten days of occurrence. The report contains annual financial
information and operating data that “mirrors” material information presented in the Official
Statement. The specific contents of the annual report will be described in the Undertaking that
appears in the appendix of the Official Statement. Northland currently serves as dissemination
Northland Securities, Inc.Page 12
agent for the City, assisting with the annual reporting. The information for the Bonds will be
incorporated into our reporting.
Premiums
In the current market environment, it is likely that bids received from underwriters will include
premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the
par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums
reflects the bidder’s view on future market conditions, tax considerations for investors and
other factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid,
regardless of premium.
A premium bid produces additional funds that can be used in several ways:
The premium means that the City needs less bond proceeds and can reduce the size of
the issue by the amount of the premium.
The premium can be deposited in the Construction Fund and used to pay additional
project costs, rather than used to reduce the size of the issue.
The premium can be deposited in the Debt Service Fund and used to pay principal and
interest.
Northland will work with City staff prior to the sale day to determine use of premium (if any).
Rating
A rating will be requested from Standard and Poor’s (S&P). The City’s general obligation debt is
currently rated "AA+" by S&P. The rating process will include a conference call with the rating
analyst. Northland will assist City staff in preparing for and conducting the rating call.
Northland Securities, Inc.Page 13
Attachment 4 – Calendar of Events
The following checklist of items denotes each milestone activity as well as the members of the
finance team who will have the responsibility to complete it.Please note this proposed timetable
assumes regularly scheduled City Council meetings.
Date Action Responsible Party
June 11 Finance Plan and Set Sale Resolution Sent to the City Northland, Bond
Counsel
June 12 Preliminary Official Statement Sent to S&P and to City
for Sign Off
Northland, City
June 18 Set Sale Resolution Adopted City Council Action
Week of June 18 or
June 25
Rating Call Northland, City,
Rating Agency
July 5 City confirms project costs to be financed and source of
payment
City Staff, Northland
July 6 Rating Received Northland, City,
Rating Agency
July 10 Awarding Resolution sent to City Northland, Bond
Counsel
July 16 Sale Date
Bond Purchase Contract Signed and Awarding
Resolution adopted – 7:00 p.m.
Northland,City
Council Action
August 15 Closing on the Bonds (Proceeds Available)Northland, City Staff,
Bond Counsel
May 2018 June 2018
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 1 2
6 7 8 9 10 11 12 3 4 5 6 7 8 9
13 14 15 16 17 18 19 10 11 12 13 14 15 16
20 21 22 23 24 25 26 17 18 19 20 21 22 23
27 28 29 30 31 24 25 26 27 28 29 30
July 2018 August 2018
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7 1 2 3 4
8 9 10 11 12 13 14 5 6 7 8 9 10 11
15 16 17 18 19 20 21 12 13 14 15 16 17 18
22 23 24 25 26 27 28 19 20 21 22 23 24 25
29 30 31 26 27 28 29 30 31
Northland Securities, Inc.Page 14
Attachment 5 - Risk Factors
Property Taxes: Property tax levies shown in this Finance Plan are based on projected debt
service and other revenues. Final levies will be set based on the results of sale. Levies should be
reviewed annually and adjusted as needed. The debt service levy must be included in the
preliminary levy for annual Truth in Taxation hearings. Future Legislative changes in the
property tax system, including the imposition of levy limits and changes in calculation of
property values, would affect plans for payment of debt service. Delinquent payment of
property taxes would reduce revenues available to pay debt service.
Special Assessments: Special assessments for the financed project have not been levied at this
time. This Finance Plan is based on the assumptions listed earlier in this report. Changes in the
terms and timing for the actual assessments will alter the projected flow of funds for payment of
debt service on the Bonds. Also, special assessments may be prepaid. It is likely that the income
earned on the investment of prepaid assessments will be less than the interest paid if the
assessments remained outstanding. Delinquencies in assessment collections would reduce
revenues needed to pay debt service. The collection of deferred assessments, if any, has not
been included in the revenue projections. Projected assessment income should be reviewed
annually and adjusted as needed.
Utility Revenues: The City pledges the net revenues of the sewer and water utilities to the
payment of principal and interest on the Bonds. The failure to adjust rates and charges as
needed and the loss of significant customers will affect available net revenues. If the net
revenues are insufficient, the City is required to levy property taxes or use other revenues to
cover the deficiency. Property taxes can only be used on a temporary basis and may not be an
ongoing source of revenue to pay debt service.
General: In addition to the risks described above, there are certain general risks associated with
the issuance of bonds. These risks include, but are not limited to:
Failure to comply with covenants in bond resolution.
Failure to comply with Undertaking for continuing disclosure.
Failure to comply with IRS regulations, including regulations related to use of the proceeds
and arbitrage/rebate. The IRS regulations govern the ability of the City to issue its bonds as
tax-exempt securities and failure to comply with the IRS regulations may lead to loss of tax-
exemption.