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HomeMy WebLinkAbout09(A) - Consider Approval of a Resolution Authorizing the Competitive Negotiated Sale of General Obligation Bonds, Series 2021A and 2021B Report Finance Plan City of Prior Lake, Minnesota $6,240,000 General Obligation Bonds, Series 2021A May 17, 2021 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 Contents Executive Summary Issue Overview Purpose Authority Structure Security and Source of Repayment Plan Rationale Issuing Process Attachment 1 – Preliminary Debt Service Comparison Attachment 2 – Preliminary Debt Service Schedule Attachment 3 – Estimated Levy Schedule Attachment 4 – Related Considerations Bank Qualification Arbitrage Compliance Continuing Disclosure Premiums Rating Attachment 5 – Calendar of Events Attachment 6 - Risk Factors Northland Securities, Inc. Page 2 Executive Summary The following is a summary of the recommended terms for the issuance of $6,240,000 General Obligation Bonds, Series 2021A (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 4 – Related Considerations. Purpose Proceeds from the Bonds will be used to finance the City’s 2021 street reconstruction projects, the purchase of a fire pumper, and to refund the City’s General Obligation Bonds, Series 2011B; 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 and property tax levies for payment of the Bonds. Repayment Term The Bonds will mature annually each December 15 in the years 2021 through 2031. Interest on the Bonds will be payable on December 15, 2021 and semiannually thereafter on each June 15 and December 15. Estimated Interest Rate Average coupon: 1.07% True interest cost (TIC): 1.23% Prepayment Option Bonds maturing on and after December 15, 2030 will be subject to redemption on December 15, 2029 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 6. Type of Bond Sale Public Sale – Competitive Bids Proposals Received Monday, June 21, 2021 @ 10:00 A.M. Council Consideration Monday, June 21, 2021 @ 7:00 P.M. Northland Securities, Inc. Page 3 Issue Overview Purpose Proceeds from the Bonds will be used to finance the following: • the 2021 street reconstruction projects, which include multiple streets as provided in the City’s Street Reconstruction Plan adopted on November 16, 2020 (the “Street Reconstruction Portion”); • purchase of a fire pumper (the “Equipment Portion” and together with the Street Reconstruction Portion, the “New Money Portion”); • The current refunding of the 2021 through 2031 maturities of the City’s General Obligation Bonds, Series 2011B (the “Series 2011B Bonds”) on July 26, 2021, consisting of a Fire Hall Portion, an Improvement Portion and a Street Reconstruction Portion (the “Refunding Portion”). The proceeds will also be used to pay costs associated with issuing the Bonds. The Bonds have been sized based on cost estimates provided by City Staff and the proceeds required to call the Refunding Portion. The table below contains the estimated sources and uses of funds for the bond issue. The Series 2011B Bonds maturing on and after December 15, 2021 became eligible for call and prepayment on December 15, 2020. A portion of the proceeds will be wired to Northland Trust Services, Inc., Paying Agent on the Series 2011B Bonds, on July 15, 2021 and used to prepay the Series 2011B Bonds on July 26, 2021. Based on current market conditions, plus a rate cushion of 0.25%, we have estimated total combined savings of $279,467 with a present value of $264,661, for the refunding of the Series 2011B Bonds. The Debt Service Comparison can be found in Attachment 1. Authority The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 429 and 475, Sections 475.58, Subdivision 3b., 412.301, 469.174-469.1794, and 475.521. Street Reconstruction Portion 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, Street Reconstruction (Fish Point) Equipment (Fire Pumper) 2011B Refunding Portion (Fire Hall) 2011B Improvement Portion 2011B Street Reconstruct ion Portion Issue Summary Sources Of Funds Par Amount of Bonds $2,475,000.00 $550,000.00 $2,715,000.00 $375,000.00 $125,000.00 $6,240,000.00 Total Sources $2,475,000.00 $550,000.00 $2,715,000.00 $375,000.00 $125,000.00 $6,240,000.00 Uses Of Funds Deposit to Current Refunding Fund --2,668,898.99 370,958.66 120,310.92 3,160,168.57 Deposit to Project Construction Fund 2,420,839.00 537,000.00 ---2,957,839.00 Total Underwriter's Discount (0.900%)22,275.00 4,950.00 24,435.00 3,375.00 1,125.00 56,160.00 Costs of Issuance 19,823.02 4,405.11 21,745.23 3,003.48 1,001.16 49,978.00 Deposit to Capitalized Interest (CIF) Fund 9,471.88 1,977.08 ---11,448.96 Rounding Amount 2,591.10 1,667.81 (79.22)(2,337.14)2,562.92 4,405.47 Total Uses $2,475,000.00 $550,000.00 $2,715,000.00 $375,000.00 $125,000.00 $6,240,000.00 Northland Securities, Inc. Page 4 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 then must pass a resolution approving the Street Reconstruction Plan and issuance of street reconstruction bonds. The City held the required public hearing and approved the Street Reconstruction Plan on November 16, 2020. Equipment Portion 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 2021 is $4,190,057,200 ($4,190,057,200 x 0.0025 = $10,475,143). Since the Equipment Portion of the Bonds does not exceed $10,475,143 the reverse referendum provision does not apply. Refunding Portion All requirements of Chapter 429, Section 475.521 and Section 475.58, Subdivision 3b were satisfied prior to the issuance of the Series 2011B Bonds. Structure The Street Reconstruction Portion of the Bonds are structured with relatively level debt service payments over 10 years. The Equipment Portion of the Bonds is structured with relatively level debt service payments over 9 years to be within the statutory maximum number of years. The Refunding Portion of the Bonds is structured to result in relatively level savings over the remaining life of the Refunding Bonds, preserving the original structure of the Series 2011B Bonds. The proposed structures for the bond issue and preliminary debt service projections for each portion of the bond issue are illustrated in Attachment 2 and the estimated levies are illustrated in Attachment 3. 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 expects to collect $20,015, inclusive of interest, in special assessment collections in 2021 and $19,277, inclusive of interest, in special assessments in 2022 for the 2011B Improvement Portion of the Bonds. In addition, although not pledged to the payment of the Bonds, the City anticipates levying $562,320 in special assessments to reduce the levy on the Street Reconstruction Portion of the Bonds. The special assessments will be assessed at a rate of 2% over the average coupon (currently estimated to be 3.05%) and spread over 10 years with equal annual principal payments. • 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 that for the Bonds, an annual net levy ranging from $448,471 to $749,269 is needed to meet the 105% Northland Securities, Inc. Page 5 statutory requirement. The levy may be adjusted annually based on actual monies in the debt service fund. The initial levy will be made in 2021 for taxes payable in 2022 for the New Money Portion of the Bonds. Given the timing of the initial revenue from the tax levy, capitalized interest will be included in the bond issue to cover New Money Portion of the first interest payment due on December 15, 2021, before the first tax collections are received for the New Money Portion of the Bonds. 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, June 21, 2021 at 10:00 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: Taft Stettinius & Hollister, LLP, Minneapolis, Minnesota Paying Agent: Northland Trust Services, Inc. Minneapolis, Minnesota Northland Securities, Inc. Page 6 Attachment 1 – Preliminary Debt Service Comparison Series 2011B Date Total P+I Net New D/S Old Net D/S Savings 12/15/2021 446,177.08 446,030.52 464,642.50 18,611.98 12/15/2022 475,085.00 475,085.00 505,045.00 29,960.00 12/15/2023 238,060.00 238,060.00 265,057.50 26,997.50 12/15/2024 251,985.00 251,985.00 280,182.50 28,197.50 12/15/2025 265,605.00 265,605.00 289,485.00 23,880.00 12/15/2026 268,890.00 268,890.00 293,160.00 24,270.00 12/15/2027 276,765.00 276,765.00 301,320.00 24,555.00 12/15/2028 284,165.00 284,165.00 308,670.00 24,505.00 12/15/2029 291,195.00 291,195.00 315,030.00 23,835.00 12/15/2030 292,835.00 292,835.00 320,910.00 28,075.00 12/15/2031 299,130.00 299,130.00 325,710.00 26,580.00 Total $3,389,892.08 $3,389,745.52 $3,669,212.50 $279,466.98 PV Analysis Summary (Net to Net) Gross PV Debt Service Savings.....................264,514.11 Net PV Cashflow Savings @ 1.062%(Bond Yield).....264,514.11 Contingency or Rounding Amount....................146.56 Net Present Value Benefit $264,660.67 Net PV Benefit / $3,480,174.80 PV Refunded Debt Service 7.605% Net PV Benefit / $3,150,000 Refunded Principal...8.402% Net PV Benefit / $3,215,000 Refunding Principal..8.232% Northland Securities, Inc. Page 7 Attachment 2 – Preliminary Debt Service Schedule Total Combined *Based on preliminary “AA+” rates as of May 7, plus 0.25%. Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 435,000.00 0.400%22,626.04 457,626.04 457,626.04 06/15/2022 --26,281.25 26,281.25 - 12/15/2022 750,000.00 0.450%26,281.25 776,281.25 802,562.50 06/15/2023 --24,593.75 24,593.75 - 12/15/2023 515,000.00 0.500%24,593.75 539,593.75 564,187.50 06/15/2024 --23,306.25 23,306.25 - 12/15/2024 530,000.00 0.600%23,306.25 553,306.25 576,612.50 06/15/2025 --21,716.25 21,716.25 - 12/15/2025 550,000.00 0.700%21,716.25 571,716.25 593,432.50 06/15/2026 --19,791.25 19,791.25 - 12/15/2026 555,000.00 0.850%19,791.25 574,791.25 594,582.50 06/15/2027 --17,432.50 17,432.50 - 12/15/2027 565,000.00 1.000%17,432.50 582,432.50 599,865.00 06/15/2028 --14,607.50 14,607.50 - 12/15/2028 580,000.00 1.100%14,607.50 594,607.50 609,215.00 06/15/2029 --11,417.50 11,417.50 - 12/15/2029 600,000.00 1.200%11,417.50 611,417.50 622,835.00 06/15/2030 --7,817.50 7,817.50 - 12/15/2030 605,000.00 1.300%7,817.50 612,817.50 620,635.00 06/15/2031 --3,885.00 3,885.00 - 12/15/2031 555,000.00 1.400%3,885.00 558,885.00 562,770.00 Total $6,240,000.00 -$364,323.54 $6,604,323.54 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $34,190.00 Average Life 5.479 Years Average Coupon 1.0655851% Net Interest Cost (NIC)1.2298436% True Interest Cost (TIC)1.2333944% All Inclusive Cost (AIC)1.3880332% Northland Securities, Inc. Page 8 Street Reconstruction Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 --9,471.88 9,471.88 9,471.88 06/15/2022 --11,366.25 11,366.25 - 12/15/2022 240,000.00 0.450%11,366.25 251,366.25 262,732.50 06/15/2023 --10,826.25 10,826.25 - 12/15/2023 240,000.00 0.500%10,826.25 250,826.25 261,652.50 06/15/2024 --10,226.25 10,226.25 - 12/15/2024 240,000.00 0.600%10,226.25 250,226.25 260,452.50 06/15/2025 --9,506.25 9,506.25 - 12/15/2025 245,000.00 0.700%9,506.25 254,506.25 264,012.50 06/15/2026 --8,648.75 8,648.75 - 12/15/2026 245,000.00 0.850%8,648.75 253,648.75 262,297.50 06/15/2027 --7,607.50 7,607.50 - 12/15/2027 245,000.00 1.000%7,607.50 252,607.50 260,215.00 06/15/2028 --6,382.50 6,382.50 - 12/15/2028 250,000.00 1.100%6,382.50 256,382.50 262,765.00 06/15/2029 --5,007.50 5,007.50 - 12/15/2029 255,000.00 1.200%5,007.50 260,007.50 265,015.00 06/15/2030 --3,477.50 3,477.50 - 12/15/2030 255,000.00 1.300%3,477.50 258,477.50 261,955.00 06/15/2031 --1,820.00 1,820.00 - 12/15/2031 260,000.00 1.400%1,820.00 261,820.00 263,640.00 Total $2,475,000.00 -$159,209.38 $2,634,209.38 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $14,831.25 Average Life 5.992 Years Average Coupon 1.0734724% Net Interest Cost (NIC)1.2236621% True Interest Cost (TIC)1.2267699% All Inclusive Cost (AIC)1.3680873% Northland Securities, Inc. Page 9 Equipment Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 --1,977.08 1,977.08 1,977.08 06/15/2022 --2,372.50 2,372.50 - 12/15/2022 60,000.00 0.450%2,372.50 62,372.50 64,745.00 06/15/2023 --2,237.50 2,237.50 - 12/15/2023 60,000.00 0.500%2,237.50 62,237.50 64,475.00 06/15/2024 --2,087.50 2,087.50 - 12/15/2024 60,000.00 0.600%2,087.50 62,087.50 64,175.00 06/15/2025 --1,907.50 1,907.50 - 12/15/2025 60,000.00 0.700%1,907.50 61,907.50 63,815.00 06/15/2026 --1,697.50 1,697.50 - 12/15/2026 60,000.00 0.850%1,697.50 61,697.50 63,395.00 06/15/2027 --1,442.50 1,442.50 - 12/15/2027 60,000.00 1.000%1,442.50 61,442.50 62,885.00 06/15/2028 --1,142.50 1,142.50 - 12/15/2028 60,000.00 1.100%1,142.50 61,142.50 62,285.00 06/15/2029 --812.50 812.50 - 12/15/2029 65,000.00 1.200%812.50 65,812.50 66,625.00 06/15/2030 --422.50 422.50 - 12/15/2030 65,000.00 1.300%422.50 65,422.50 65,845.00 Total $550,000.00 -$30,222.08 $580,222.08 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $3,014.17 Average Life 5.480 Years Average Coupon 1.0026678% Net Interest Cost (NIC)1.1668923% True Interest Cost (TIC)1.1704877% All Inclusive Cost (AIC)1.3241765% Northland Securities, Inc. Page 10 2011B Fire Hall Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 180,000.00 0.400%10,292.71 190,292.71 190,292.71 06/15/2022 --11,991.25 11,991.25 - 12/15/2022 205,000.00 0.450%11,991.25 216,991.25 228,982.50 06/15/2023 --11,530.00 11,530.00 - 12/15/2023 215,000.00 0.500%11,530.00 226,530.00 238,060.00 06/15/2024 --10,992.50 10,992.50 - 12/15/2024 230,000.00 0.600%10,992.50 240,992.50 251,985.00 06/15/2025 --10,302.50 10,302.50 - 12/15/2025 245,000.00 0.700%10,302.50 255,302.50 265,605.00 06/15/2026 --9,445.00 9,445.00 - 12/15/2026 250,000.00 0.850%9,445.00 259,445.00 268,890.00 06/15/2027 --8,382.50 8,382.50 - 12/15/2027 260,000.00 1.000%8,382.50 268,382.50 276,765.00 06/15/2028 --7,082.50 7,082.50 - 12/15/2028 270,000.00 1.100%7,082.50 277,082.50 284,165.00 06/15/2029 --5,597.50 5,597.50 - 12/15/2029 280,000.00 1.200%5,597.50 285,597.50 291,195.00 06/15/2030 --3,917.50 3,917.50 - 12/15/2030 285,000.00 1.300%3,917.50 288,917.50 292,835.00 06/15/2031 --2,065.00 2,065.00 - 12/15/2031 295,000.00 1.400%2,065.00 297,065.00 299,130.00 Total $2,715,000.00 -$172,905.21 $2,887,905.21 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $15,891.25 Average Life 5.853 Years Average Coupon 1.0880529% Net Interest Cost (NIC)1.2418168% True Interest Cost (TIC)1.2453892% All Inclusive Cost (AIC)1.3903651% Northland Securities, Inc. Page 11 2011B Improvement Portion 2011B Street Reconstruction Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 190,000.00 0.400%663.54 190,663.54 190,663.54 06/15/2022 --416.25 416.25 - 12/15/2022 185,000.00 0.450%416.25 185,416.25 185,832.50 Total $375,000.00 -$1,496.04 $376,496.04 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $341.25 Average Life 0.910 Years Average Coupon 0.4384000% Net Interest Cost (NIC)1.4274110% True Interest Cost (TIC)1.4394696% All Inclusive Cost (AIC)2.3446215% Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2021 ----- 12/15/2021 65,000.00 0.400%220.83 65,220.83 65,220.83 06/15/2022 --135.00 135.00 - 12/15/2022 60,000.00 0.450%135.00 60,135.00 60,270.00 Total $125,000.00 -$490.83 $125,490.83 - Date And Term Structure Dated 7/15/2021 Delivery Date 7/15/2021 First available call date 12/15/2029 Call Price 100.000% Yield Statistics Bond Year Dollars $112.08 Average Life 0.897 Years Average Coupon 0.4379152% Net Interest Cost (NIC)1.4416327% True Interest Cost (TIC)1.4539216% All Inclusive Cost (AIC)2.3727118% Northland Securities, Inc. Page 12 Attachment 3 – Estimated Levy Schedule Street Reconstruction Portion Equipment Portion 2011B Refunding Portion (Fire Hall) Date Total P+I CIF 105% Levy Less: Special Assessment Revenue*Net Levy Levy Year Collection Year 12/15/2021 9,471.88 (9,471.88)--- 12/15/2022 262,732.50 -275,869.13 74,145.02 201,724.11 2021 2022 12/15/2023 261,652.50 -274,735.13 71,667.68 203,067.45 2022 2023 12/15/2024 260,452.50 -273,475.13 69,952.60 203,522.53 2023 2024 12/15/2025 264,012.50 -277,213.13 68,237.54 208,975.59 2024 2025 12/15/2026 262,297.50 -275,412.38 66,522.46 208,889.92 2025 2026 12/15/2027 260,215.00 -273,225.75 64,807.38 208,418.37 2026 2027 12/15/2028 262,765.00 -275,903.25 63,092.30 212,810.95 2027 2028 12/15/2029 265,015.00 -278,265.75 61,377.22 216,888.53 2028 2029 12/15/2030 261,955.00 -275,052.75 59,662.16 215,390.59 2029 2030 12/15/2031 263,640.00 -276,822.00 57,947.08 218,874.92 2030 2031 Total $2,634,209.38 (9,471.88)$2,755,974.38 $657,411.44 $2,098,562.94 The City anticipates levying special assessments for the Street Reconstruction Portion of the Bonds. Special assessment revenue is based on assessments totaling $562,320 assessed at a rate of 3.05% (2% over the average coupon), with equal principal payments spread over 10 years. Date Total P+I CIF 105% Levy Levy Year Collection Year 12/15/2021 1,977.08 (1,977.08)- 12/15/2022 64,745.00 -67,982.25 2021 2022 12/15/2023 64,475.00 -67,698.75 2022 2023 12/15/2024 64,175.00 -67,383.75 2023 2024 12/15/2025 63,815.00 -67,005.75 2024 2025 12/15/2026 63,395.00 -66,564.75 2025 2026 12/15/2027 62,885.00 -66,029.25 2026 2027 12/15/2028 62,285.00 -65,399.25 2027 2028 12/15/2029 66,625.00 -69,956.25 2028 2029 12/15/2030 65,845.00 -69,137.25 2029 2030 Total $580,222.08 (1,977.08)$607,157.25 Date Total P+I 105% Levy Levy Year Collection Year 12/15/2021 190,292.71 199,807.35 2020 2021 12/15/2022 228,982.50 240,431.63 2021 2022 12/15/2023 238,060.00 249,963.00 2022 2023 12/15/2024 251,985.00 264,584.25 2023 2024 12/15/2025 265,605.00 278,885.25 2024 2025 12/15/2026 268,890.00 282,334.50 2025 2026 12/15/2027 276,765.00 290,603.25 2026 2027 12/15/2028 284,165.00 298,373.25 2027 2028 12/15/2029 291,195.00 305,754.75 2028 2029 12/15/2030 292,835.00 307,476.75 2029 2030 12/15/2031 299,130.00 314,086.50 2030 2031 Total $2,887,905.21 $3,032,300.47 Northland Securities, Inc. Page 13 2011B Improvement Portion 2011B Street Reconstruction Portion Date Total P+I 105% Levy Less: Special Assessment Revenue*Net Levy Levy Year Collection Year 12/15/2021 190,663.54 200,196.72 20,015.00 180,181.72 2020 2021 12/15/2022 185,832.50 195,124.13 19,277.00 175,847.13 2021 2022 Total $376,496.04 $395,320.84 $39,292.00 $356,028.84 The City expects special assessment collections for the remaining two years of the 2011B Improvement portion to be $20,015 in 2021 and $19,277 in 2022, inclusive of principal and interest. Date Total P+I 105% Levy Levy Year Collection Year 12/15/2021 65,220.83 68,481.87 2020 2021 12/15/2022 60,270.00 63,283.50 2021 2022 Total $125,490.83 $131,765.37 Northland Securities, Inc. Page 14 Attachment 4 – 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. The Refunding Portion of the Bonds, along with the General Obligation Refunding Bonds, Series 2021B that will be issued by the City will be “deemed designated Bank Qualified,” with their original Bank Qualified status carrying forward. Since the size of the New Money Portion of the bonds is less than $10,000,000, it can be designated in the current calendar year as Bank Qualified. Therefore, the both the Series 2021A and 2021B Bond issues will be “bank qualified” obligations pursuant to Federal Tax Law, despite a combined issuance size that exceeds $10,000,000. 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 “24-month spending exception” for the New Money Portion and the “6-month spending exception” for the Refunding Portion. 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, Inc. 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, Public Finance Authority loans and lease agreements) must be reported within ten days of occurrence. Northland currently serves as dissemination agent for the City. We will assist with getting your annual report filed in compliance with full continuing disclosure regulations. Northland Securities, Inc. Page 15 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 of the New Money Portions 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 16 Attachment 5 – 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 April 14 General Information Certificate Sent to City Northland April 15 City confirms project costs to be financed and source of payment and plans for use of any premium that may be bid City Staff April 23 City Returns Completed General Information Certificate City Staff May 11 Set Sale Resolutions and Finance Plans Sent to City Northland, Bond Counsel May 12 Rating Request sent to S&P. Preliminary Official Statements Sent to City for Sign Off 2021A (includes new money and current refunding of Series 2011B) 2021B (includes current refunding of Series 2012A and 2014A) Northland, City May 17 Set Sale Resolutions Adopted and Review of Finance Plans Northland, Bond Counsel, City Council Action Week of May 17 or May 24 Rating Call Northland, City, Rating Agency April 2021 May 2021 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 1 4 5 6 7 8 9 10 2 3 4 5 6 7 8 11 12 13 14 15 16 17 9 10 11 12 13 14 15 18 19 20 21 22 23 24 16 17 18 19 20 21 22 25 26 27 28 29 30 23 24 25 26 27 28 29 30 31 June 2021 July 2021 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 1 2 3 6 7 8 9 10 11 12 4 5 6 7 8 9 10 13 14 15 16 17 18 19 11 12 13 14 15 16 17 20 21 22 23 24 25 26 18 19 20 21 22 23 24 27 28 29 30 25 26 27 28 29 30 31 Holiday Action Date Northland Securities, Inc. Page 17 Date Action Responsible Party June 4 Rating Received Northland, City, Rating Agency June 15 Awarding Resolutions sent to City Northland, Bond Counsel June 21 Bond Sales at 10:00 a.m. (Series 2021A and 2021B) Bond Proposals Signed and Awarding Resolutions adopted – 7:00 p.m. Northland, City Council Action July 15 Closing on the Series 2021A Bonds (Proceeds Available) Proceeds for Series 2011B Refunding Wired to Paying Agent. Northland, City Staff, Bd Counsel July 26 Closing on the Series 2021B Bonds. Proceeds for Series 2012A and Series 2014A Wired to Paying Agent. Series 2011B, 2012A and 2014A Bonds Called for Redemption Paying Agent Northland Securities, Inc. Page 18 Attachment 6 - 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 c alculation 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 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. Finance Plan City of Prior Lake, Minnesota $6,995,000 General Obligation Refunding Bonds, Series 2021B May 17, 2021 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 Contents Executive Summary Issue Overview Purpose Authority Structure Security and Source of Repayment Plan Rationale Issuing Process Attachment 1 – Preliminary Debt Service Comparison Attachment 2 – Preliminary Debt Service Schedules Attachment 3 – Preliminary Levy Schedules Attachment 4 – Related Considerations Bank Qualification Arbitrage Compliance Continuing Disclosure Premiums Rating Attachment 5 – Calendar of Events Attachment 6 - Risk Factors Northland Securities, Inc. Page 2 Executive Summary The following is a summary of the recommended terms for the issuance of $6,995,000 General Obligation Refunding Bonds, Series 2021B (the “Bonds”). This issue will be sold concurrently with the City’s Series 2021A Bonds, described in a separate Finance Plan. Additional information on the proposed finance plan and issuing process can be found after the Executive Summary, in the Issue Overview and Attachment 5 – Related Considerations. Purpose Proceeds from the Bonds will be used to current refund the outstanding maturities of the City’s General Obligation Capital Improvement Plan Bonds Series 2012A and the outstanding maturities of the City’s General Obligation Bonds, Series 2014A on July 26, 2021, and to pay costs associated with the issuance of the Bonds. Security The Bonds will be a general obligation of the City. The City will pledge ad valorem taxes for payment of the Bonds. Repayment Term The Bonds will mature annually each December 15 in the years 2021 through 2029. Interest on the Bonds will be payable on December 15, 2021 and semiannually thereafter on each June 15 and December 15. Estimated Interest Rate Average coupon: 0.91% True interest cost (TIC): 1.13% Prepayment Option The Bonds will not be subject to prepayment prior to maturity. Rating A rating will be requested from Standard & Poor’s Rating Agency. 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 21, 2021 @ 10:00 A.M. Council Consideration Monday, June 21, 2021 @ 7:00 P.M. Northland Securities, Inc. Page 3 Issue Overview Purpose Proceeds from the Bonds will be used to finance the following: • a current refunding of the 2021 through 2029 maturities of the City’s General Obligation Capital Improvement Plan Bonds, Series 2012A (the “Series 2012A Bonds”) on July 26, 2021 (the “Series 2012A Portion”); • a current refunding of the 2021 through 2024 maturities of the City’s General Obligation Bonds, Series 2014A (the “Series 2014A Bonds” and together with the Series 2012A Bonds, the “Refunded Bonds”) on July 26, 2021 (the “Series 2014A Portion)”. Proceeds will also be used to pay costs associated with issuing the Bonds. The Series 2014A Bonds originally consisted of a street reconstruction portion and a refunding portion. The refunding portion of the Series 2014A Bonds has since matured. The Bonds have been sized based on proceeds required to refund the outstanding maturities of the Refunded Bonds. The table below contains the sources and uses of funds for the bond issue. The Series 2012A Bonds became eligible for prepayment on December 15, 2020. The 2021 through 2029 maturities will be called for prepayment on July 26, 2021 (the “2012A Call Date”). A portion of the proceeds of the Bonds will be wired to Northland Trust Services, Inc., the Paying Agent on the Series 2012A Bonds, on July 15, 2021 to prepay the outstanding principal and accrued interest on the Series 2012A Bonds. The Series 2014A Bonds became eligible for prepayment on December 15, 2020. The 2021 through 2024 maturities will be called for prepayment on July 26, 2021 (the “2014A Call Date”). A portion of the proceeds of the Bonds will be wired to Northland Trust Services, Inc., the Paying Agent on the Series 2014A Bonds, on July 26, 2021 to prepay the outstanding principal and accrued interest on the Series 2014A Bonds. Based on current market conditions, plus a rate cushion of 0.25%, we have estimated total combined savings of $353,725 with a present value of $341,297, for the refunding of the Series 2012A Bonds and the Series 2014A Bonds. The projected annual savings are shown in Attachment 1. 2012A CIP Refunding 2014A Street Reconstruction Portion Issue Summary Sources Of Funds Par Amount of Bonds $6,035,000.00 $960,000.00 $6,995,000.00 Total Sources $6,035,000.00 $960,000.00 $6,995,000.00 Uses Of Funds Deposit to Current Refunding Fund 5,940,700.44 947,425.83 6,888,126.27 Total Underwriter's Discount (0.900%)54,315.00 8,640.00 62,955.00 Costs of Issuance 37,510.18 5,966.82 43,477.00 Rounding Amount 2,474.38 (2,032.65)441.73 Total Uses $6,035,000.00 $960,000.00 $6,995,000.00 Northland Securities, Inc. Page 4 Authority The Bonds will be issued pursuant to the authority of Minnesota Statutes, Sections 475.58, Sub. 3b and 475.521 and Chapter 475. The City satisfied the requirements of Sections 475.58, Sub. 3b and 475.521 prior to the i ssuance of the Refunded Bonds. Structure The Bonds have been structured to result in relatively level annual savings for each of the Refunded Bond issues, preserving the original structures of the Refunded Bonds. The proposed structure for the bond issue and preliminary debt service projections are illustrated in Attachment 2 and the estimated levies are illustrated in Attachment 3. 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: • Property Taxes. The revenues needed to pay debt service on the Bonds are expected to come from property tax levies. The initial projections show an annual tax levy ranging from approximately $607,131 in the first year to approximately $823,515 in the last year for the Series 2012A Portion of the Bonds and an average annual levy of $254,546 for the Series 2014A Portion of the Bonds is needed to produce the statutory requirement of 105% of debt service. The levy may be adjusted annually based on actual monies in the debt service fund. The initial tax levy will be made in 2021 for taxes payable in 2022. 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 Refunding 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 to purchase the Bonds on Monday, June 21, 2021 at 10:00 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 date and time set to receive bids. The calendar of events for the issuing process can be found in Attachment 6. Municipal Advisor: Northland Securities, Inc., Minneapolis, Minnesota Bond Counsel: Taft Stettinius & Hollister LLP, Minneapolis, Minnesota Paying Agent: Northland Trust Services, Inc., Minnesota Northland Securities, Inc. Page 5 Attachment 1 – Preliminary Debt Service Comparison Total Combined 2021A Bonds Date Total P+I Net New D/S Old Net D/S Savings 12/15/2021 815,030.48 814,588.75 854,578.75 39,990.00 12/15/2022 898,697.50 898,697.50 943,657.50 44,960.00 12/15/2023 909,872.50 909,872.50 952,657.50 42,785.00 12/15/2024 930,547.50 930,547.50 969,982.50 39,435.00 12/15/2025 700,207.50 700,207.50 735,635.00 35,427.50 12/15/2026 725,552.50 725,552.50 760,800.00 35,247.50 12/15/2027 739,645.00 739,645.00 779,360.00 39,715.00 12/15/2028 762,495.00 762,495.00 801,360.00 38,865.00 12/15/2029 784,300.00 784,300.00 821,600.00 37,300.00 Total $7,266,347.98 $7,265,906.25 $7,619,631.25 $353,725.00 PV Analysis Summary (Net to Net) Gross PV Debt Service Savings.....................340,855.63 Net PV Cashflow Savings @ 0.908%(Bond Yield).....340,855.63 Contingency or Rounding Amount....................441.73 Net Present Value Benefit $341,297.36 Net PV Benefit / $7,335,855.63 PV Refunded Debt Service 4.652% Net PV Benefit / $6,870,000 Refunded Principal...4.968% Net PV Benefit / $6,995,000 Refunding Principal..4.879% Northland Securities, Inc. Page 6 Attachment 2 – Preliminary Debt Service Schedules Total Combined 2021A Bonds *Assumes “AA+” Rates as of May 7, 2021, plus 0.25% Date Principal Coupon Interest Total P+I Fiscal Total 07/26/2021 ----- 12/15/2021 795,000.00 0.400%20,030.48 815,030.48 815,030.48 06/15/2022 --24,348.75 24,348.75 - 12/15/2022 850,000.00 0.450%24,348.75 874,348.75 898,697.50 06/15/2023 --22,436.25 22,436.25 - 12/15/2023 865,000.00 0.500%22,436.25 887,436.25 909,872.50 06/15/2024 --20,273.75 20,273.75 - 12/15/2024 890,000.00 0.600%20,273.75 910,273.75 930,547.50 06/15/2025 --17,603.75 17,603.75 - 12/15/2025 665,000.00 0.700%17,603.75 682,603.75 700,207.50 06/15/2026 --15,276.25 15,276.25 - 12/15/2026 695,000.00 0.850%15,276.25 710,276.25 725,552.50 06/15/2027 --12,322.50 12,322.50 - 12/15/2027 715,000.00 1.000%12,322.50 727,322.50 739,645.00 06/15/2028 --8,747.50 8,747.50 - 12/15/2028 745,000.00 1.100%8,747.50 753,747.50 762,495.00 06/15/2029 --4,650.00 4,650.00 - 12/15/2029 775,000.00 1.200%4,650.00 779,650.00 784,300.00 Total $6,995,000.00 -$271,347.98 $7,266,347.98 - Date And Term Structure Dated 7/26/2021 Delivery Date 7/26/2021 First available call date Non-Callable Call Price Yield Statistics Bond Year Dollars $29,790.85 Average Life 4.259 Years Average Coupon 0.9108434% Net Interest Cost (NIC)1.1221667% True Interest Cost (TIC)1.1268022% All Inclusive Cost (AIC)1.2793558% Northland Securities, Inc. Page 7 Series 2012A Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/26/2021 ----- 12/15/2021 560,000.00 0.400%18,219.62 578,219.62 578,219.62 06/15/2022 --22,473.75 22,473.75 - 12/15/2022 610,000.00 0.450%22,473.75 632,473.75 654,947.50 06/15/2023 --21,101.25 21,101.25 - 12/15/2023 625,000.00 0.500%21,101.25 646,101.25 667,202.50 06/15/2024 --19,538.75 19,538.75 - 12/15/2024 645,000.00 0.600%19,538.75 664,538.75 684,077.50 06/15/2025 --17,603.75 17,603.75 - 12/15/2025 665,000.00 0.700%17,603.75 682,603.75 700,207.50 06/15/2026 --15,276.25 15,276.25 - 12/15/2026 695,000.00 0.850%15,276.25 710,276.25 725,552.50 06/15/2027 --12,322.50 12,322.50 - 12/15/2027 715,000.00 1.000%12,322.50 727,322.50 739,645.00 06/15/2028 --8,747.50 8,747.50 - 12/15/2028 745,000.00 1.100%8,747.50 753,747.50 762,495.00 06/15/2029 --4,650.00 4,650.00 - 12/15/2029 775,000.00 1.200%4,650.00 779,650.00 784,300.00 Total $6,035,000.00 -$261,647.12 $6,296,647.12 - Date And Term Structure Dated 7/26/2021 Delivery Date 7/26/2021 First available call date Non-Callable Call Price Yield Statistics Bond Year Dollars $27,965.18 Average Life 4.634 Years Average Coupon 0.9356175% Net Interest Cost (NIC)1.1298412% True Interest Cost (TIC)1.1344407% All Inclusive Cost (AIC)1.2748125% Northland Securities, Inc. Page 8 Series 2014A Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/26/2021 ----- 12/15/2021 235,000.00 0.400%1,810.86 236,810.86 236,810.86 06/15/2022 --1,875.00 1,875.00 - 12/15/2022 240,000.00 0.450%1,875.00 241,875.00 243,750.00 06/15/2023 --1,335.00 1,335.00 - 12/15/2023 240,000.00 0.500%1,335.00 241,335.00 242,670.00 06/15/2024 --735.00 735.00 - 12/15/2024 245,000.00 0.600%735.00 245,735.00 246,470.00 Total $960,000.00 -$9,700.86 $969,700.86 - Date And Term Structure Dated 7/26/2021 Delivery Date 7/26/2021 First available call date Non-Callable Call Price Yield Statistics Bond Year Dollars $1,825.67 Average Life 1.902 Years Average Coupon 0.5313599% Net Interest Cost (NIC)1.0046116% True Interest Cost (TIC)1.0117138% All Inclusive Cost (AIC)1.3476706% Northland Securities, Inc. Page 9 Attachment 3 – Preliminary Levy Schedules Series 2012A Portion Series 2014A Portion Date Total P+I 105% Levy Levy Year Collection Year 12/15/2021 578,219.62 607,130.60 2020 2021 12/15/2022 654,947.50 687,694.88 2021 2022 12/15/2023 667,202.50 700,562.63 2022 2023 12/15/2024 684,077.50 718,281.38 2023 2024 12/15/2025 700,207.50 735,217.88 2024 2025 12/15/2026 725,552.50 761,830.13 2025 2026 12/15/2027 739,645.00 776,627.25 2026 2027 12/15/2028 762,495.00 800,619.75 2027 2028 12/15/2029 784,300.00 823,515.00 2028 2029 Total $6,296,647.12 $6,611,479.48 Date Total P+I 105% Levy Levy Year Collection Year 12/15/2021 236,810.86 248,651.40 2020 2021 12/15/2022 243,750.00 255,937.50 2021 2022 12/15/2023 242,670.00 254,803.50 2022 2023 12/15/2024 246,470.00 258,793.50 2023 2024 Total $969,700.86 $1,018,185.90 Northland Securities, Inc. Page 10 Attachment 4 – 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. The Bonds, along with the Refunding Portion of the General Obligation Bonds, Series 2021A that will be issued concurrently by the City will be “deemed designated Bank Qualified,” with their original Bank Qualified status carrying forward. Therefore, the Bonds will be designated as “bank qualified” obligations pursuant to Federal Tax Law. Arbitrage Compliance All tax-exempt bond issues are subject to federal rebate requirements which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate exemption the City expects to qualify for is the “6-month spending 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, Public Finance Authority loans , and lease agreements), 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. Northland Securities, Inc. Page 11 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 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). A consideration for use of premium is the bank qualification of the Bonds. Rating A rating will be requested from Standard and Poor’s Rating Agency. 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 5 – 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 April 14 General Information Certificate Sent to City Northland April 15 City confirms project costs to be financed and source of payment and plans for use of any premium that may be bid City Staff April 23 City Returns Completed General Information Certificate City Staff May 11 Set Sale Resolutions and Finance Plans Sent to City Northland, Bond Counsel May 12 Rating Request sent to S&P. Preliminary Official Statements Sent to City for Sign Off 2021A (includes new money and current refunding of Series 2011B) 2021B (includes current refunding of Series 2012A and 2014A) Northland, City May 17 Set Sale Resolutions Adopted and Review of Finance Plans Northland, Bond Counsel, City Council Action Week of May 17 or May 24 Rating Call Northland, City, Rating Agency April 2021 May 2021 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 1 4 5 6 7 8 9 10 2 3 4 5 6 7 8 11 12 13 14 15 16 17 9 10 11 12 13 14 15 18 19 20 21 22 23 24 16 17 18 19 20 21 22 25 26 27 28 29 30 23 24 25 26 27 28 29 30 31 June 2021 July 2021 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 1 2 3 6 7 8 9 10 11 12 4 5 6 7 8 9 10 13 14 15 16 17 18 19 11 12 13 14 15 16 17 20 21 22 23 24 25 26 18 19 20 21 22 23 24 27 28 29 30 25 26 27 28 29 30 31 Holiday Action Date Northland Securities, Inc. Page 13 Date Action Responsible Party June 4 Rating Received Northland, City, Rating Agency June 15 Awarding Resolutions sent to City Northland, Bond Counsel June 21 Bond Sales at 10:00 a.m. (Series 2021A and 2021B) Bond Proposals Signed and Awarding Resolutions adopted – 7:00 p.m. Northland, City Council Action July 15 Closing on the Series 2021A Bonds (Proceeds Available) Proceeds for Series 2011B Refunding Wired to Paying Agent. Northland, City Staff, Bd Counsel July 26 Closing on the Series 2021B Bonds. Proceeds for Series 2012A and Series 2014A Wired to Paying Agent. Series 2011B, 2012A and 2014A Bonds Called for Redemption Paying Agent Northland Securities, Inc. Page 14 Attachment 6 - 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. 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.