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HomeMy WebLinkAbout09(A) - Resolution Authorizing the Competitive Negotiated Sale of General Obligation Bonds, Series 2024A Report Finance Plan City of Prior Lake, Minnesota $4,055,000 General Obligation Bonds, Series 2024A June 25, 2024 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 ........................................................................................................................................................... 2 Issue Overview .................................................................................................................................................................... 3 Purpose ................................................................................................................................................................ 3 Authority ............................................................................................................................................................. 3 Structure .............................................................................................................................................................. 4 Security and Source of Repayment ........................................................................................................ 4 Plan Rationale ................................................................................................................................................... 4 Issuing Process ................................................................................................................................................. 5 Attachment 1 – Preliminary Debt Service Schedules ........................................................................................ 6 Attachment 2 – Estimated Levy Schedule ............................................................................................................... 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 ......................................................................................................................................... 14 Northland Securities, Inc. Page 2 Executive Summary The following is a summary of the recommended terms for the issuance of $4,055,000 General Obligation Bonds, Series 2024A (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 finance storm water improvements, various capital improvement projects, a permanent improvement revolving fund 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 net revenues of the storm water system, special assessments levied against benefitted properties and property tax levies for payment of the Bonds. Repayment Term The Bonds will mature annually each December 15 in the years 2025 through 2044. Interest on the Bonds will be payable on June 15, 2025, and semiannually thereafter on each June 15 and December 15. Estimated Interest Rate True interest cost (TIC): 3.99 % Prepayment Option Bonds maturing on and after December 15, 2033, will be subject to redemption on December 15, 2032, 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 "AAA" 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 Tuesday, July 23, 2024 @ 10:00 A.M. Council Consideration Tuesday, July 23, 2024 @ 7:00 P.M. Northland Securities, Inc. Page 3 Issue Overview Purpose Proceeds from the Bonds will be used to finance the following: • Storm water improvements (the “Storm Water Portion”) • various capital improvement projects as described in the City’s Capital Improvement Plan adopted on August 16, 2021 (the “CIP Portion”), and • a permanent improvement revolving fund (the “PIR Fund Portion”). Proceeds of the Bonds 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. 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 429, 444 and 475 and Section 475.521. Revenue Portion Under Chapter 444, general obligation utility revenue bonds may be issued to build, construct, reconstruct, repair, enlarge, improve, or in any other manner obtain sanitary sewer, water and storm sewer facilities, and maintain and operate the facilities inside or outside a city’s corporate limits. CIP Portion Under Section 475.521, a capital improvement is a major expenditure of City funds for the acquisition or betterment of public lands, buildings, or other improvements used, such as a city hall, library, public safety, or public works facility, which has a useful life of five years or more. The maximum amount of principal and interest for capital improvement bonds cannot exceed 0.16% of the estimated market value of taxable property in the City. The City’s 2024 estimated market value is $5,605,339,200 ($5,605,339,200 x 0.0016 = $8,968,542). A portion of the City’s 2018A, 2021A and 2021B Bonds are all subject to the limit. The maximum amount of principal and interest on a calendar year basis when combined with the CIP Portions of the 2018A, 2021A and 2021B Bonds is expected to be approximately $1,201,173, which is less than $8,968,542. Before issuing bonds under a Capital Improvement Plan (“CIP”), the City must hold a public hearing on the CIP and the proposed bonds and must then approve the CIP and authorize the Storm Water CIP PIR Fund Issue Summary Sources Of Funds Par Amount of Bonds $1,240,000.00 $1,130,000.00 $1,685,000.00 $4,055,000.00 Total Sources $1,240,000.00 $1,130,000.00 $1,685,000.00 $4,055,000.00 Uses Of Funds Deposit to Project Construction Fund 1,201,500.00 1,100,000.00 1,640,000.00 3,941,500.00 Costs of Issuance 17,810.12 16,230.20 24,201.68 58,242.00 Total Underwriter's Discount (1.350%)16,740.00 15,255.00 22,747.50 54,742.50 Rounding Amount 3,949.88 (1,485.20) (1,949.18)515.50 Total Uses $1,240,000.00 $1,130,000.00 $1,685,000.00 $4,055,000.00 Northland Securities, Inc. Page 4 issuance of the bonds by at least a 3/5 majority. The City held the required public hearing and approved the CIP on August 16, 2021. PIR Portion 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. A public hearing was held for the PIR Fund and the resolution ordering the improvements was adopted with at least a 4/5 majority at the meeting. Structure The Storm Water Portion of the Bonds has been structured to result in relatively level annual payments over 20 years. The CIP Portion has been structured to result in relatively level annual payments over 15 years. The PIR Portion of the Bonds has been structured to result in relatively level annual payments over 5 years. The proposed structure for the bond issue and preliminary debt service projections are illustrated in Attachment 1 and the estimated levies 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: • System Revenues. Net revenues of the City’s storm water system (operating funds) will be pledged for payment of the Storm Water Portion of the Bonds. The City will covenant to adopt storm water rates and charges that are sufficient to produce net revenues equal to at least 105% of the debt service requirements on the Storm Water Portion of the Bonds. In the event there is a deficiency in the amount of net revenues available for payment of debt service, the City may levy taxes to cover the insufficiency, but only on a temporary basis until rates are adjusted. • Special Assessments. The City is expected to levy special assessments against benefited properties in the amount of $1,640,000 (100% of the project) for the PIR Portion of the Bonds, with an interest rate of 5.20%, as provided by the City, and spread over the life of the Bonds with equal annual principal payments, resulting in an increasing levy. The Plan assumes that the assessments will be levied in 2024 for initial payment in 2025. • Property Taxes. The remaining revenues needed to pay debt service on the Bonds are expected to come from property taxes. The initial projections show that an average annual net levy of approximately $106,076 for the CIP Portion of the Bonds and that an annual levy ranging from approximately $448 to $51,416 for the PIR Portion of the Bonds is needed to meet the 105% statutory requirement. The full 105% levy will need to be certified by the City but may be adjusted or canceled annually based on actual monies in the debt service fund. Actual monies may vary depending on timing of collection of special assessments. The initial levies will be made in 2024 for taxes payable in 2025. 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 Northland Securities, Inc. Page 5 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 Tuesday, July 23, 2024, 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 Schedules Combined Debt Service Schedule *Based on preliminary “AAA” rates as of June 14, 2024, plus 0.25%. Date Principal Coupon Interest Total P+I Fiscal Total 08/20/2024 ----- 06/15/2025 --120,773.83 120,773.83 - 12/15/2025 375,000.00 3.550%73,692.50 448,692.50 569,466.33 06/15/2026 --67,036.25 67,036.25 - 12/15/2026 435,000.00 3.450%67,036.25 502,036.25 569,072.50 06/15/2027 --59,532.50 59,532.50 - 12/15/2027 450,000.00 3.450%59,532.50 509,532.50 569,065.00 06/15/2028 --51,770.00 51,770.00 - 12/15/2028 465,000.00 3.450%51,770.00 516,770.00 568,540.00 06/15/2029 --43,748.75 43,748.75 - 12/15/2029 485,000.00 3.450%43,748.75 528,748.75 572,497.50 06/15/2030 --35,382.50 35,382.50 - 12/15/2030 120,000.00 3.450%35,382.50 155,382.50 190,765.00 06/15/2031 --33,312.50 33,312.50 - 12/15/2031 125,000.00 3.450%33,312.50 158,312.50 191,625.00 06/15/2032 --31,156.25 31,156.25 - 12/15/2032 130,000.00 3.500%31,156.25 161,156.25 192,312.50 06/15/2033 --28,881.25 28,881.25 - 12/15/2033 140,000.00 3.550%28,881.25 168,881.25 197,762.50 06/15/2034 --26,396.25 26,396.25 - 12/15/2034 140,000.00 3.650%26,396.25 166,396.25 192,792.50 06/15/2035 --23,841.25 23,841.25 - 12/15/2035 145,000.00 3.750%23,841.25 168,841.25 192,682.50 06/15/2036 --21,122.50 21,122.50 - 12/15/2036 150,000.00 3.850%21,122.50 171,122.50 192,245.00 06/15/2037 --18,235.00 18,235.00 - 12/15/2037 155,000.00 3.950%18,235.00 173,235.00 191,470.00 06/15/2038 --15,173.75 15,173.75 - 12/15/2038 165,000.00 4.000%15,173.75 180,173.75 195,347.50 06/15/2039 --11,873.75 11,873.75 - 12/15/2039 165,000.00 4.050%11,873.75 176,873.75 188,747.50 06/15/2040 --8,532.50 8,532.50 - 12/15/2040 75,000.00 4.100%8,532.50 83,532.50 92,065.00 06/15/2041 --6,995.00 6,995.00 - 12/15/2041 80,000.00 4.150%6,995.00 86,995.00 93,990.00 06/15/2042 --5,335.00 5,335.00 - 12/15/2042 80,000.00 4.150%5,335.00 85,335.00 90,670.00 06/15/2043 --3,675.00 3,675.00 - 12/15/2043 85,000.00 4.200%3,675.00 88,675.00 92,350.00 06/15/2044 --1,890.00 1,890.00 - 12/15/2044 90,000.00 4.200%1,890.00 91,890.00 93,780.00 Total $4,055,000.00 -$1,182,246.33 $5,237,246.33 - Yield Statistics Bond Year Dollars $31,080.35 Average Life 7.665 Years Average Coupon 3.8038389% Net Interest Cost (NIC)3.9799711% True Interest Cost (TIC)3.9924591% Bond Yield for Arbitrage Purposes 3.7740582% All Inclusive Cost (AIC)4.2303638% IRS Form 8038 Net Interest Cost 3.8038389% Weighted Average Maturity 7.665 Years Optional Redemption 12/15/2032 @100.000% Northland Securities, Inc. Page 7 Storm Water Portion Date Principal Coupon Interest Total P+I Fiscal Total 08/20/2024 ----- 06/15/2025 --38,929.76 38,929.76 - 12/15/2025 30,000.00 3.550%23,753.75 53,753.75 92,683.51 06/15/2026 --23,221.25 23,221.25 - 12/15/2026 45,000.00 3.450%23,221.25 68,221.25 91,442.50 06/15/2027 --22,445.00 22,445.00 - 12/15/2027 45,000.00 3.450%22,445.00 67,445.00 89,890.00 06/15/2028 --21,668.75 21,668.75 - 12/15/2028 50,000.00 3.450%21,668.75 71,668.75 93,337.50 06/15/2029 --20,806.25 20,806.25 - 12/15/2029 50,000.00 3.450%20,806.25 70,806.25 91,612.50 06/15/2030 --19,943.75 19,943.75 - 12/15/2030 50,000.00 3.450%19,943.75 69,943.75 89,887.50 06/15/2031 --19,081.25 19,081.25 - 12/15/2031 55,000.00 3.450%19,081.25 74,081.25 93,162.50 06/15/2032 --18,132.50 18,132.50 - 12/15/2032 55,000.00 3.500%18,132.50 73,132.50 91,265.00 06/15/2033 --17,170.00 17,170.00 - 12/15/2033 60,000.00 3.550%17,170.00 77,170.00 94,340.00 06/15/2034 --16,105.00 16,105.00 - 12/15/2034 60,000.00 3.650%16,105.00 76,105.00 92,210.00 06/15/2035 --15,010.00 15,010.00 - 12/15/2035 60,000.00 3.750%15,010.00 75,010.00 90,020.00 06/15/2036 --13,885.00 13,885.00 - 12/15/2036 65,000.00 3.850%13,885.00 78,885.00 92,770.00 06/15/2037 --12,633.75 12,633.75 - 12/15/2037 65,000.00 3.950%12,633.75 77,633.75 90,267.50 06/15/2038 --11,350.00 11,350.00 - 12/15/2038 70,000.00 4.000%11,350.00 81,350.00 92,700.00 06/15/2039 --9,950.00 9,950.00 - 12/15/2039 70,000.00 4.050%9,950.00 79,950.00 89,900.00 06/15/2040 --8,532.50 8,532.50 - 12/15/2040 75,000.00 4.100%8,532.50 83,532.50 92,065.00 06/15/2041 --6,995.00 6,995.00 - 12/15/2041 80,000.00 4.150%6,995.00 86,995.00 93,990.00 06/15/2042 --5,335.00 5,335.00 - 12/15/2042 80,000.00 4.150%5,335.00 85,335.00 90,670.00 06/15/2043 --3,675.00 3,675.00 - 12/15/2043 85,000.00 4.200%3,675.00 88,675.00 92,350.00 06/15/2044 --1,890.00 1,890.00 - 12/15/2044 90,000.00 4.200%1,890.00 91,890.00 93,780.00 Total $1,240,000.00 -$598,343.51 $1,838,343.51 - Northland Securities, Inc. Page 8 CIP Portion PIR Portion Date Principal Coupon Interest Total P+I Fiscal Total 08/20/2024 ----- 06/15/2025 --33,961.88 33,961.88 - 12/15/2025 45,000.00 3.550%20,722.50 65,722.50 99,684.38 06/15/2026 --19,923.75 19,923.75 - 12/15/2026 60,000.00 3.450%19,923.75 79,923.75 99,847.50 06/15/2027 --18,888.75 18,888.75 - 12/15/2027 65,000.00 3.450%18,888.75 83,888.75 102,777.50 06/15/2028 --17,767.50 17,767.50 - 12/15/2028 65,000.00 3.450%17,767.50 82,767.50 100,535.00 06/15/2029 --16,646.25 16,646.25 - 12/15/2029 70,000.00 3.450%16,646.25 86,646.25 103,292.50 06/15/2030 --15,438.75 15,438.75 - 12/15/2030 70,000.00 3.450%15,438.75 85,438.75 100,877.50 06/15/2031 --14,231.25 14,231.25 - 12/15/2031 70,000.00 3.450%14,231.25 84,231.25 98,462.50 06/15/2032 --13,023.75 13,023.75 - 12/15/2032 75,000.00 3.500%13,023.75 88,023.75 101,047.50 06/15/2033 --11,711.25 11,711.25 - 12/15/2033 80,000.00 3.550%11,711.25 91,711.25 103,422.50 06/15/2034 --10,291.25 10,291.25 - 12/15/2034 80,000.00 3.650%10,291.25 90,291.25 100,582.50 06/15/2035 --8,831.25 8,831.25 - 12/15/2035 85,000.00 3.750%8,831.25 93,831.25 102,662.50 06/15/2036 --7,237.50 7,237.50 - 12/15/2036 85,000.00 3.850%7,237.50 92,237.50 99,475.00 06/15/2037 --5,601.25 5,601.25 - 12/15/2037 90,000.00 3.950%5,601.25 95,601.25 101,202.50 06/15/2038 --3,823.75 3,823.75 - 12/15/2038 95,000.00 4.000%3,823.75 98,823.75 102,647.50 06/15/2039 --1,923.75 1,923.75 - 12/15/2039 95,000.00 4.050%1,923.75 96,923.75 98,847.50 Total $1,130,000.00 -$385,364.38 $1,515,364.38 - Date Principal Coupon Interest Total P+I Fiscal Total 08/20/2024 ----- 06/15/2025 --47,882.19 47,882.19 - 12/15/2025 300,000.00 3.550%29,216.25 329,216.25 377,098.44 06/15/2026 --23,891.25 23,891.25 - 12/15/2026 330,000.00 3.450%23,891.25 353,891.25 377,782.50 06/15/2027 --18,198.75 18,198.75 - 12/15/2027 340,000.00 3.450%18,198.75 358,198.75 376,397.50 06/15/2028 --12,333.75 12,333.75 - 12/15/2028 350,000.00 3.450%12,333.75 362,333.75 374,667.50 06/15/2029 --6,296.25 6,296.25 - 12/15/2029 365,000.00 3.450%6,296.25 371,296.25 377,592.50 Total $1,685,000.00 -$198,538.44 $1,883,538.44 - Northland Securities, Inc. Page 9 Attachment 2 – Estimated Levy Schedule CIP Portion PIR Portion Date Total P+I 105% Levy Levy Year Collection Year 12/15/2024 -- 12/15/2025 99,684.38 104,668.60 2024 2025 12/15/2026 99,847.50 104,839.88 2025 2026 12/15/2027 102,777.50 107,916.38 2026 2027 12/15/2028 100,535.00 105,561.75 2027 2028 12/15/2029 103,292.50 108,457.13 2028 2029 12/15/2030 100,877.50 105,921.38 2029 2030 12/15/2031 98,462.50 103,385.63 2030 2031 12/15/2032 101,047.50 106,099.88 2031 2032 12/15/2033 103,422.50 108,593.63 2032 2033 12/15/2034 100,582.50 105,611.63 2033 2034 12/15/2035 102,662.50 107,795.63 2034 2035 12/15/2036 99,475.00 104,448.75 2035 2036 12/15/2037 101,202.50 106,262.63 2036 2037 12/15/2038 102,647.50 107,779.88 2037 2038 12/15/2039 98,847.50 103,789.88 2038 2039 Total $1,515,364.38 $1,591,132.60 Date Total P+I 105% Levy Less: Special Assessment Revenue* Use / (Deposit) PIR Fund Net Levy Levy Year Collection Year 12/15/2024 ----- 12/15/2025 377,098.44 395,953.36 417,070.22 (21,116.86)-2024 2025 12/15/2026 377,782.50 396,671.63 396,224.00 447.63 -2025 2026 12/15/2027 376,397.50 395,217.38 379,168.00 16,049.38 -2026 2027 12/15/2028 374,667.50 393,400.88 362,112.00 31,288.88 -2027 2028 12/15/2029 377,592.50 396,472.13 345,056.00 51,416.13 -2028 2029 Total $1,883,538.44 $1,977,715.36 $1,899,630.22 $78,085.14 - *Special assessment revenue is based on assessments totaling $1,640,000 assessed at a rate of 5.20%, as provided by the City, with equal annual principal payments. 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. A rebate exemption the City expects to qualify for is the “small issuer” exemption because the City expects to issue less than $5,000,000 of tax-exempt bonds, including any 501(c)3 conduit financings, in calendar year 2024. 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 PFA loans, leases, or bank placements) must be reported within ten business 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 Northland Securities, Inc. Page 11 reflects the bidder’s view on future market conditions, tax considerations for investors and other factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid, regardless of premium. A premium bid produces additional funds that can be used in several ways: • The premium means that the City needs less bond proceeds and can reduce the size of the issue by the amount of the premium. • The premium can be deposited in the Construction Fund and used to pay additional project costs, rather than used to reduce the size of the issue. • The premium can be deposited in the Debt Service Fund and used to pay principal and interest. Northland will work with City staff prior to the sale day to determine use of premium (if any). Rating A rating will be requested from Standard and Poor’s (S&P). The City’s general obligation debt is currently rated "AAA" 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 May 2 City to provide preliminary project costs City Staff May 16 General Information Certificate Sent to City Northland May 30 City Returns Completed General Information Certificate City Staff June 14 Rating Request sent to S&P. Preliminary Official Statement Sent to City for Sign Off Northland, City June 18 Set Sale Resolution and Finance Plan Sent to City Northland, Bond Counsel June 25 Set Sale Resolution Adopted and Review of Finance Plan Northland, Bond Counsel, City Council Action End of June, First part of July Rating Call Northland, City, Rating Agency July 10 City confirms project costs to be financed and source of payment and plans for use of any premium that may be bid City Staff July 15 Rating Received Northland, City, Rating Agency July 16 Awarding Resolutions sent to City Northland, Bond Counsel May 2024 June 2024 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 July 2024 August 2024 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 31 Holiday Northland Securities, Inc. Page 13 Date Action Responsible Party July 23 Bond Sale at 10:00 a.m. Bond Proposal Signed and Awarding Resolution adopted – 7:00 p.m. Northland, City Council Action August 20 Closing on the Series 2023A Bonds Northland, City Staff, Bd Counsel Northland Securities, Inc. Page 14 Attachment 5 - Risk Factors System Revenues: The City pledges the net revenues of the storm water system to the payment of principal and interest on the Storm Water Portion of the Bonds. The failure to adjust rates and charges as needed and the loss of significant customers will affect available net revenues. If the net revenues are insufficient, the City is required to levy property taxes or use other revenues to cover the deficiency. Property taxes can only be used on a temporary basis and may not be an ongoing source of revenue to pay debt service. 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, have 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.