HomeMy WebLinkAbout9A - Series 2019A Bond Issuance Agenda Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: APRIL 15, 2019
AGENDA #: 9A
PREPARED BY: CATHY ERICKSON, FINANCE DIRECTOR
PRESENTED
BY:
CATHY ERICKSON
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE COM-
PETITIVE NEGOTIATED SALE OF GENERAL OBLIGATION BONDS, SE-
RIES 2019A
DISCUSSION: Introduction
A representative of the City’s municipal advisor, Amy Steckelberg, from North-
land 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:
• 2019 Street Improvement Project
o 2019 Street Mill and Overlay Project
• 2019 Street Reconstruction Projects
o CR 21/ TH 13 / Main Ave / Arcadia
o Fish Point Road (Fawn Meadows to CR 21)
• Fire water tanker replacement
• Police encrypted radios
A resolution is attached providing for the competitive negotiated sale of Gen-
eral Obligation Bonds, Series 2019A in an amount not-to-exceed $2,670,000
The final bond amount will be determined at the time of the sale on June 3.
History
Bids have been received and contracts awarded for the Fish Point Road and
mill and overlay street projects. The contract has also been awarded for the
Fire water tanker.
Current Circumstances
The bidding and contract award process is not complete for the following two
projects included in the bond issue:
• CR 21/ TH 13 / Main Ave / Arcadia Street Reconstruction Projects
• Police encrypted radios
The CR21/TH13 street reconstruction project bidding process will start in April.
The contract award is anticipated in early June. The city received an updated
cost estimate from the county on April 4th which increased the city’s cost share
by approximately $400k as compared to what was originally presented to the
City Council in January. The project plans when presented to the Council in
2
January were 90% complete as compared to 100% complete now, and the
county has updated their pricing based on the bidding climate. We anticipate
funding half through MSA fund balance and half through additional tax levy of
$200,000. This will require us to increase our bonding for this project by
$200,000.
The final purchase agreement for the Police encrypted radios is anticipated by
the end of April but no cost changes are anticipated. This equipment pur-
chase will be brought back to the council for approval. If the council approves
the purchase, today’s resolution provides the flexibility to bond for the pur-
chase.
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 June 3, 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 the end of June.
The structure of the bond issue itself will be based upon the following compo-
nents in rounded amounts for the new projects:
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 two primary sources of repayment are property taxes and
special assessments.
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 June 1, the City Manager, Finance Director, and Ms. Omdal will partic-
ipate 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.
Street Reconstruction Equipment PIR Fund
CR 21/ TH 13 / Main
Ave / Arcadia and
Fish Point Rd (Fawn
Meadows to CR 21)
Fire Water Tanker
and Police
Encrypted Radios
2019 Street
Overlay Total
Estimated Project Costs 3,035,893 473,690 439,900 3,949,483
Less: Water Fund (100,000) (100,000)
Less: Sewer Fund (250,000) (250,000)
Less: Other funding - MSA (1,000,000) (1,000,000)
Project Costs to Bond 1,685,893 473,690 439,900 2,599,483
Costs of Issuance 30,560 8,567 8,037 47,165
Total Underwriter's Discount (0.700%)12,110 3,395 3,185 18,690
Rounding Amount 1,437 (652) 3,878 4,662
Total New Money 1,730,000 485,000 455,000 2,670,000
3
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 bidding process for the CR21/TH13 street re-
construction project will start in April. The contract award is anticipated in
early June. The cooperative agreement with the county for the CR21/TH13
street reconstruction project requires payment of the city’s portion within 30
days of the bid award, so the 2019 bond issue timing was determined to en-
sure the funds are available by the end of June. Since the bidding process
has not occurred, there is the risk that additional funds may be needed if the
project award is higher than planned. This may result in a request for addi-
tional bond proceeds later when the final project costs are known.
We anticipate that we will receive the final purchase agreement for the Police
encrypted radios by the end of April, but no cost change is anticipated.
FINANCIAL
IMPACT:
Road projects
The initial amount of the bond issue for the road projects in the approved CIP
was $1,636,000 with the tax levy supporting $1,572,000. Based on these fig-
ures, the estimated annual tax levy was $197,000. The proposed bond issue
has increased to $1,686,000 with the tax levy supporting about $1,634,000 or
$201,000 annually. This is an increase in annual cost of $4,000 from the origi-
nal CIP. The net increase in bonding needs of $50,000 is due to the follow-
ing:
• The updated cost estimate for the CR21/TH13 project resulted in an in-
crease in bonding of $200,000.
• There is an offsetting bonding reduction of $150,000 that resulted from
the Fish Point Rd reclamation project plans/specs and contract award
coming in lower than the original CIP estimate.
Equipment
Fire water tanker:
The approved CIP anticipated $325,000 for bonding for the water tanker. This
amount has been reduced to approximately $249,000 based on the contract
award. As a reminder, the water tanker is used to provide fire service to
Credit River and Spring Lake Townships, the equipment cost, and related debt
service are included in the annual fire contract calculation.
Police encrypted radios:
The police department needs to move all radios to encrypted radios by 2022.
The approved CIP anticipated purchasing the radios over a four-year period.
The city is partnering with Scott County to be included in their radio purchase
agreement with Motorola. This will lower the overall cost by $46,000 due to a
volume discount provided to the county. The anticipated cost is $225,000 for
the radios.
4
The annual tax levy to support the Fire and Police equipment items is $64,000
with a portion of the cost reimbursed by the townships as part of the fire ser-
vice contract. Per the fire service contract, equipment costs are amortized
over 15 years. Staff has included cost of bond issuance and interest in the
cost to be amortized.
2019 Street Overlay
The funding sources for the mill and overlay project are special assessments
with a five- year term and PIR Fund reserves.
The overall bonding for the special assessment portion is $50,000 lower than
planned in the CIP. The repayment source is primarily special assessments
and an annual average debt service tax levy of about $2,500.
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 financial plan. Staff estimated an average annual debt
service tax levy of $238,000 for the 2019 bond issue. The preliminary net an-
nual average debt service tax levy per the Finance Plan is about $267,000
over the first five years of the bonds, during which all thee portions are out-
standing.
Overall, the property tax levy for these bonds is higher by about $29,000 an-
nually than the original CIP estimate. Due to the multiple purposes of the
bond issue, inclusion of the bonding needs for the police encrypted radios,
and complexity of the CR21/TH13 project, staff expected that there would be
variations from the original approved CIP. These cost changes will be re-
flected in the long-range financial plan/financial model.
Special assessments
• Multiple special assessments support the repayment of this bond issu-
ance.
• For the Fish Point Rd. street improvement, the street assessments
have 10-year terms
• 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 2019A.
2. Motion and a second to table action and to provide direction to staff for
more information.
RECOMMENDED
MOTION:
Alternative 1.
11633003v1
EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL
CITY OF PRIOR LAKE, MINNESOTA
HELD: April 15, 2019
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 April 15,
2019, at 7:00 P.M. for the purpose in part of authorizing the competitive negotiated sale of the
$2,670,000 General Obligation Bonds, Series 2019A.
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 2019A
IN AN AMOUNT NOT TO EXCEED $2,670,000
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 2019A (the "Bonds"), pursuant to Minnesota Statutes, Chapters 429 and 475, Sections
412.301 and 475.58 (subd.3), in an amount not to exceed $2,670,000, to finance the purchase of
capital equipment, public improvement projects, and street reconstruction projects in the City;
and
B. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis,
Minnesota ("Northland"), as its independent municipal 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 Finance Director, or designee, shall open
proposals at the time and place specified in the Notice of Sale.
11633003v1
2
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.
11633003v1
3
STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting City Manager 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 2019A.
WITNESS my hand on April 15, 2019.
__________________________________
City Manager
11633003v1
A-1
EXHIBIT A
NOTICE OF SALE
$2,670,000*
GENERAL OBLIGATION BONDS, SERIES 2019A
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,
June 3, 2019 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, June 3, 2019, 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, June 3, 2019. 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.
11633003v1
A-2
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 June 27, 2019)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475 and 429, and Sections 412.301 and
475.58 (subd.3b). Proceeds will be used to finance street reconstruction projects, the purchase of capital
equipment, public improvements and to finance the costs associated with the issuance of the Bonds. The Bonds
are payable from special assessments against benefited property 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, 2020, 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
2020 $270,000 2025 $230,000
2021 305,000 2026 235,000
2022 305,000 2027 245,000
2023 320,000 2028 250,000
2024 320,000 2029 190,000
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
11633003v1
A-3
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
11633003v1
A-4
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.
11633003v1
A-5
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, 2028 through 2029 are subject to redemption and prepayment at the option of
the City on December 15, 2027 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.
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 $2,651,310 (99.30%) and accrued interest on the principal sum of $2,670,000 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 $53,400 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.
11633003v1
A-6
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
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.
11633003v1
A-7
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
Dated: April 15, 2019 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
11633003v1
A-8
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 2019A (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
common 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 pursuant 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 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 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 federal 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: _________________, 2019.
11633003v1
A-9
____________________________________________
By__________________________________
Its ________________________________________
(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 2019A (the "Bonds") of the City of Prior Lake, 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 writing 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
"hold-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 _______________, 2019.
(e) "Underwriter" means (i) any person that agrees pursuant 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 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
11633003v1
A-10
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
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: _______________, 2019
______________________________________
By: _________________________________________
Its: _____________________________________
Finance Plan
Prior Lake, Minnesota
$2,670,000
General Obligation Bonds, Series 2019A
April 15, 2019
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
Northland Securities, Inc. Page 2
Contents
Executive Summary ................................................................................................................................................... 1
Issue Overview ............................................................................................................................................................ 2
Purpose ................................................................................................................................................................ 2
Authority ............................................................................................................................................................. 2
Structure .............................................................................................................................................................. 3
Security and Source of Repayment ........................................................................................................ 3
Plan Rationale ................................................................................................................................................... 3
Issuing Process ................................................................................................................................................. 4
Attachment 1 – Preliminary Debt Service Schedule ...................................................................................... 5
Total Combined 2019A ................................................................................................................................. 5
Street Reconstruction Portion ................................................................................................................... 5
Equipment Portion ......................................................................................................................................... 7
Attachment 2 – Estimated Levy Schedule.......................................................................................................... 9
Street Reconstruction Portion ................................................................................................................... 9
Equipment Portion ......................................................................................................................................... 9
PIR Fund Portion ............................................................................................................................................. 9
Attachment 3 – Related Considerations .......................................................................................................... 10
Bank Qualification ................................................................................................................................ 10
Arbitrage Compliance ......................................................................................................................... 10
Continuing Disclosure ........................................................................................................................ 10
Premiums .................................................................................................................................................. 10
Rating .......................................................................................................................................................... 11
Attachment 4 – Calendar of Events ................................................................................................................... 12
Attachment 5 - Risk Factors.................................................................................................................................. 13
Northland Securities, Inc. Page 1
Executive Summary
The following is a summary of the recommended terms for the issuance of $2,670,000 General
Obligation Bonds, Series 2019A (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;
finance a street reconstruction project, and a permanent
improvement revolving fund 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 PIR Fund Portion of the Bonds
and property tax levies for payment of the Equipment Portion
and the Street Reconstruction Portion of the Bonds.
Repayment Term The Bonds will mature annually each December 15 in the years
2020 through 2029. Interest on the Bonds will be payable on
June 15, 2020 and semiannually thereafter on each June 15 and
December 15.
Estimated Interest Rate Average coupon: 2.23%
True interest cost (TIC): 2.35%
Prepayment Option Bonds maturing on and after December 15, 2028 will be subject
to redemption on December 15, 2027 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, June 3, 2019 @ 10:30 A.M.
Council Consideration Monday, June 3, 2019 @ 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”):
• a street reconstruction project, which includes County Road 21/Trunk Highway 13 and
Fish Point Road area streets (the “Street Reconstruction Portion”)
• purchase of a water tanker and police encrypted radios (the “Equipment Portion”)
• a permanent improvement revolving fund for the 2019 mill and overlay project (the
“PIR Fund 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,
and Sections 412.301 and 475.58.
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 2019 is $3,583,744,800 ($3,583,744,800 x 0.0025 =
$8,959,362). Since the Equipment Portion of the Bonds does not exceed $8,959,362 the reverse
referendum provision does not apply.
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.
Street
Reconstruction
Portion
Equipment
Portion PIR Portion
Issue
Summary
Sources Of Funds
Par Amount of Bonds $1,730,000.00 $485,000.00 $455,000.00 $2,670,000.00
Total Sources $1,730,000.00 $485,000.00 $455,000.00 $2,670,000.00
Uses Of Funds
Deposit to Project Construction Fund 1,685,893.00 473,690.00 439,900.00 2,599,483.00
Costs of Issuance 30,560.09 8,567.43 8,037.48 47,165.00
Total Underwriter's Discount (0.700%)12,110.00 3,395.00 3,185.00 18,690.00
Rounding Amount 1,436.91 (652.43)3,877.52 4,662.00
Total Uses $1,730,000.00 $485,000.00 $455,000.00 $2,670,000.00
Northland Securities, Inc. Page 3
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. The City has held the
required public hearing and approved the Street Reconstruction Plan on August 22, 2016 and
approved an amendment to the Street Reconstruction Plan on January 8, 2018.
Structure
The Street Reconstruction Portion of the Bonds has 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 three 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 $439,900 (100% of the PIR Fund Portion project costs) for the
PIR Fund portion of the Bonds. The assessments will be payable over five years with
level annual principal payments and interest charged at a rate of 2.00% over the net
interest cost on the PIR Fund Portion of the Bonds (currently assumed to be 4.00%). The
Finance Plan assumes that the assessments will be levied in 2019 for initial payment in
2020.
Although not pledged, the City anticipates levying $51,430 (plus interest thereon) of
special assessments against benefited properties, which could be used to reduce the
annual net levy of the Street Reconstruction portion.
• 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 $273,860 over the first five years of the Bonds, during which all three
portions are outstanding, is needed to produce the statutory requirement of 105% of debt
service, after accounting for assessments on the PIR portion of the Bonds. After
application of the anticipated assessments on the Street Reconstruction Portion, the
annual net levy average is expected to be reduced to approximately $266,928 over the
first five years of the Bonds. 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 2019 for taxes payable in 2020.
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
Northland Securities, Inc. Page 4
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, June 3, 2019
at 10:30 A.M. 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 2019A
*Based on preliminary “AA+” rates as of March 22, 2019, plus 0.25%.
Date Principal Coupon Interest Total P+I Fiscal Total
06/27/2019 -----
06/15/2020 --54,768.92 54,768.92 -
12/15/2020 270,000.00 1.850%28,328.75 298,328.75 353,097.67
06/15/2021 --25,831.25 25,831.25 -
12/15/2021 305,000.00 1.900%25,831.25 330,831.25 356,662.50
06/15/2022 --22,933.75 22,933.75 -
12/15/2022 305,000.00 1.950%22,933.75 327,933.75 350,867.50
06/15/2023 --19,960.00 19,960.00 -
12/15/2023 320,000.00 2.000%19,960.00 339,960.00 359,920.00
06/15/2024 --16,760.00 16,760.00 -
12/15/2024 320,000.00 2.050%16,760.00 336,760.00 353,520.00
06/15/2025 --13,480.00 13,480.00 -
12/15/2025 230,000.00 2.150%13,480.00 243,480.00 256,960.00
06/15/2026 --11,007.50 11,007.50 -
12/15/2026 235,000.00 2.250%11,007.50 246,007.50 257,015.00
06/15/2027 --8,363.75 8,363.75 -
12/15/2027 245,000.00 2.350%8,363.75 253,363.75 261,727.50
06/15/2028 --5,485.00 5,485.00 -
12/15/2028 250,000.00 2.450%5,485.00 255,485.00 260,970.00
06/15/2029 --2,422.50 2,422.50 -
12/15/2029 190,000.00 2.550%2,422.50 192,422.50 194,845.00
Total $2,670,000.00 -$335,585.17 $3,005,585.17 -
Date And Term Structure
Dated 6/27/2019
Delivery Date 6/27/2019
First available call date 12/15/2027
Call Price 100.000%
Yield Statistics
Bond Year Dollars $15,056.00
Average Life 5.639 Years
Average Coupon 2.2289132%
Net Interest Cost (NIC)2.3530497%
True Interest Cost (TIC)2.3558287%
All Inclusive Cost (AIC)2.7019957%
Northland Securities, Inc. Page 6
Street Reconstruction Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/27/2019 -----
06/15/2020 --36,237.92 36,237.92 -
12/15/2020 140,000.00 1.850%18,743.75 158,743.75 194,981.67
06/15/2021 --17,448.75 17,448.75 -
12/15/2021 165,000.00 1.900%17,448.75 182,448.75 199,897.50
06/15/2022 --15,881.25 15,881.25 -
12/15/2022 165,000.00 1.950%15,881.25 180,881.25 196,762.50
06/15/2023 --14,272.50 14,272.50 -
12/15/2023 170,000.00 2.000%14,272.50 184,272.50 198,545.00
06/15/2024 --12,572.50 12,572.50 -
12/15/2024 170,000.00 2.050%12,572.50 182,572.50 195,145.00
06/15/2025 --10,830.00 10,830.00 -
12/15/2025 175,000.00 2.150%10,830.00 185,830.00 196,660.00
06/15/2026 --8,948.75 8,948.75 -
12/15/2026 180,000.00 2.250%8,948.75 188,948.75 197,897.50
06/15/2027 --6,923.75 6,923.75 -
12/15/2027 185,000.00 2.350%6,923.75 191,923.75 198,847.50
06/15/2028 --4,750.00 4,750.00 -
12/15/2028 190,000.00 2.450%4,750.00 194,750.00 199,500.00
06/15/2029 --2,422.50 2,422.50 -
12/15/2029 190,000.00 2.550%2,422.50 192,422.50 194,845.00
Total $1,730,000.00 -$243,081.67 $1,973,081.67 -
Date And Term Structure
Dated 6/27/2019
Delivery Date 6/27/2019
First available call date 12/15/2027
Call Price 100.000%
Yield Statistics
Bond Year Dollars $10,702.33
Average Life 6.186 Years
Average Coupon 2.2712960%
Net Interest Cost (NIC)2.3844489%
True Interest Cost (TIC)2.3873697%
All Inclusive Cost (AIC)2.7049640%
Northland Securities, Inc. Page 7
Equipment Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/27/2019 -----
06/15/2020 --9,942.17 9,942.17 -
12/15/2020 45,000.00 1.850%5,142.50 50,142.50 60,084.67
06/15/2021 --4,726.25 4,726.25 -
12/15/2021 50,000.00 1.900%4,726.25 54,726.25 59,452.50
06/15/2022 --4,251.25 4,251.25 -
12/15/2022 50,000.00 1.950%4,251.25 54,251.25 58,502.50
06/15/2023 --3,763.75 3,763.75 -
12/15/2023 55,000.00 2.000%3,763.75 58,763.75 62,527.50
06/15/2024 --3,213.75 3,213.75 -
12/15/2024 55,000.00 2.050%3,213.75 58,213.75 61,427.50
06/15/2025 --2,650.00 2,650.00 -
12/15/2025 55,000.00 2.150%2,650.00 57,650.00 60,300.00
06/15/2026 --2,058.75 2,058.75 -
12/15/2026 55,000.00 2.250%2,058.75 57,058.75 59,117.50
06/15/2027 --1,440.00 1,440.00 -
12/15/2027 60,000.00 2.350%1,440.00 61,440.00 62,880.00
06/15/2028 --735.00 735.00 -
12/15/2028 60,000.00 2.450%735.00 60,735.00 61,470.00
Total $485,000.00 -$60,762.17 $545,762.17 -
Date And Term Structure
Dated 6/27/2019
Delivery Date 6/27/2019
First available call date 12/15/2027
Call Price 100.000%
Yield Statistics
Bond Year Dollars $2,751.33
Average Life 5.673 Years
Average Coupon 2.2084627%
Net Interest Cost (NIC)2.3318574%
True Interest Cost (TIC)2.3358583%
All Inclusive Cost (AIC)2.6791030%
Northland Securities, Inc. Page 8
PIR Fund Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/27/2019 -----
06/15/2020 --8,588.83 8,588.83 -
12/15/2020 85,000.00 1.850%4,442.50 89,442.50 98,031.33
06/15/2021 --3,656.25 3,656.25 -
12/15/2021 90,000.00 1.900%3,656.25 93,656.25 97,312.50
06/15/2022 --2,801.25 2,801.25 -
12/15/2022 90,000.00 1.950%2,801.25 92,801.25 95,602.50
06/15/2023 --1,923.75 1,923.75 -
12/15/2023 95,000.00 2.000%1,923.75 96,923.75 98,847.50
06/15/2024 --973.75 973.75 -
12/15/2024 95,000.00 2.050%973.75 95,973.75 96,947.50
Total $455,000.00 -$31,741.33 $486,741.33 -
Date And Term Structure
Dated 6/27/2019
Delivery Date 6/27/2019
First available call date 12/15/2027
Call Price 100.000%
Yield Statistics
Bond Year Dollars $1,602.33
Average Life 3.522 Years
Average Coupon 1.9809442%
Net Interest Cost (NIC)2.1797169%
True Interest Cost (TIC)2.1860944%
All Inclusive Cost (AIC)2.7209727%
Northland Securities, Inc. Page 9
Attachment 2 – Estimated Levy Schedule
Street Reconstruction Portion
Equipment Portion
PIR Fund Portion
Date Total P+I 105% Levy
Less:
Special
Assessment
Revenue*Net Levy Levy Year
Collection
Year
12/15/2019 ----
12/15/2020 194,981.67 204,730.75 7,452.78 197,277.97 2019 2020
12/15/2021 199,897.50 209,892.38 7,133.34 202,759.04 2020 2021
12/15/2022 196,762.50 206,600.63 6,912.20 199,688.43 2021 2022
12/15/2023 198,545.00 208,472.25 6,691.04 201,781.21 2022 2023
12/15/2024 195,145.00 204,902.25 6,469.90 198,432.35 2023 2024
12/15/2025 196,660.00 206,493.00 6,248.74 200,244.26 2024 2025
12/15/2026 197,897.50 207,792.38 6,027.60 201,764.78 2025 2026
12/15/2027 198,847.50 208,789.88 5,806.44 202,983.44 2026 2027
12/15/2028 199,500.00 209,475.00 5,585.30 203,889.70 2027 2028
12/15/2029 194,845.00 204,587.25 5,364.14 199,223.11 2028 2029
Total $1,973,081.67 $2,071,735.75 $63,691.48 $2,008,044.27
*The City anticipates using special assessments to reduce the overall levy. Special assessment revenue is based
on assessments totaling $51,430 assessed at a rate of 4.30% (2% over the average coupon), with equal annual
principal payments.
Date Total P+I 105% Levy Levy Year
Collection
Year
12/15/2019 --
12/15/2020 60,084.67 63,088.90 2019 2020
12/15/2021 59,452.50 62,425.13 2020 2021
12/15/2022 58,502.50 61,427.63 2021 2022
12/15/2023 62,527.50 65,653.88 2022 2023
12/15/2024 61,427.50 64,498.88 2023 2024
12/15/2025 60,300.00 63,315.00 2024 2025
12/15/2026 59,117.50 62,073.38 2025 2026
12/15/2027 62,880.00 66,024.00 2026 2027
12/15/2028 61,470.00 64,543.50 2027 2028
Total $545,762.17 $573,050.28
Date Total P+I 105% Levy
Less:
Special
Assessment
Revenue*Net Levy Levy Year
Collection
Year
12/15/2019 ----
12/15/2020 98,031.33 102,932.90 106,358.04 (3,425.14)2019 2020
12/15/2021 97,312.50 102,178.13 102,056.80 121.32 2020 2021
12/15/2022 95,602.50 100,382.63 98,537.60 1,845.03 2021 2022
12/15/2023 98,847.50 103,789.88 95,018.40 8,771.48 2022 2023
12/15/2024 96,947.50 101,794.88 91,499.20 10,295.68 2023 2024
Total $486,741.33 $511,078.40 $493,470.04 $17,608.36
*Special assessment revenue is based on assessments totaling $439,900 assessed at a rate of 4.00% (2% over
the average coupon), with equal annual principal payments. City may determine to use other revenue to cancel
all or a portion of the net levy on an annual basis.
Northland Securities, Inc. Page 10
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
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 “small issuer exception.”
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, call notices and
issuance of “financial obligations” (such as USDA loans, PFA loans and leases) 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 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
Northland Securities, Inc. Page 11
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 12
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
March 18 Construction Bid Award City Council Action
April 8 Set Sale Resolution and Finance Plan Sent to City Northland, Bond
Counsel
April 15 Set Sale Resolution Adopted and Review of Finance
Plan
Northland, Bond
Counsel, City Council
Action
May 2 Rating Request sent to S&P. Preliminary Official
Statement Sent to City for Sign Off
Northland, City
Week of May 13 Rating Call Northland, City,
Rating Agency
May 15 City confirms project costs to be financed and source of
payment
City Staff
May 24 Rating Received
City confirms how to handle potential premium and
unused discount they may have on Sale Day
Northland, City,
Rating Agency
May 28 Awarding Resolution sent to City Northland, Bond
Counsel
June 3 Bond Sale at 10:30 a.m.
Bond Proposal Signed and Awarding Resolution
adopted – 7:00 p.m.
Northland, City
Council Action
June 27
Closing on the Bonds (Proceeds Available) Northland, City Staff,
Bond Counsel
March 2019 April 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 1 2 3 4 5 6
3 4 5 6 7 8 9 7 8 9 10 11 12 13
10 11 12 13 14 15 16 14 15 16 17 18 19 20
17 18 19 20 21 22 23 21 22 23 24 25 26 27
24 25 26 27 28 29 30 28 29 30
31
May 2019 June 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 1
5 6 7 8 9 10 11 2 3 4 5 6 7 8
12 13 14 15 16 17 18 9 10 11 12 13 14 15
19 20 21 22 23 24 25 16 17 18 19 20 21 22
26 27 28 29 30 31 23 24 25 26 27 28 29
30
Northland Securities, Inc. Page 13
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 projects 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.
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.