HomeMy WebLinkAbout10B - Bond Financing Resolutions
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
CITY COUNCIL AGENDA REPORT
APRIL 16, 2007
10 ~
Ralph Teschner, Finance Director
CONSIDER APPROVAL OF THE FOLLOWING BOND FINANCING
RESOLUTIONS:
A) A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$1,400,000 GENERAL OBLIGATION STREET RECONSTRUCTION
BONDS OF 2007
B) A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$8,500,000 WATER TREATMENT PLANT WATER REVENUE BONDS
OF 2007
Introduction
The City's bond and fiscal consultant Steve Mattson from Northland Securities
will be present during the Council meeting to request Council approval for the
following negotiated bond sales:
1) Issuance of street reconstruction bonds in the amount of $1,400,000 to
finance improvements associated with the reconstruction of CSAH 21
between Franklin Trail and Adelmann Street. (Project 05-03)
2) Issuance of water revenue bonds in the amount of $8,500,000 to
finance the construction of a water treatment plant (Project 06-02)
Historv
The City Council approved Resolution 07-049 on March 19,2007 which
authorized execution of a cooperative agreement between the City of Prior
Lake and Scott County to construct the CSAH 21 improvements and to
finance $1.4 million dollars of the improvements with street reconstruction
bonds. Also, on December 4, 2006 the Council approved Resolution 06-205
which authorized the preparation of plans and specifications for a 7.5 ml gallon
water treatment plant.
Current Circumstances
In previous sales the Council has authorized negotiated bond sales directly
from Northland Securities. Based upon current market conditions Northland
Securities is scheduling the actual sale for Monday morning April 30, 2007.
This strategy has served the city well in the past due to the following two
reasons:
1) Because there is a 5th Monday in April when typically there are no other
Council, School or County board meetings to consider pending bond
sales which increases competition in the bond buyers market that
subsequently drives down interest rates.
2) By selling bonds before the construction season, when demand is at its
highest, the City avoids higher interest rates due to an increase in the
supply of bonds.
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
FINANCIAL
IMPACT:
ALTERNATIVES:
A 3rd factor is the economic market climate. Interest rates have been trending
lower since the last Federal Reserve meeting and as a result we anticipate the
market to be very favorable for the issuance of low cost bonds. Ultimately the
final purchase price will be subject to Council approval.
The structure of the reconstruction bond issue itself will be based upon the
following components in rounded amounts:
! Total project costs.
l..m~(P~EB~QI=9.4..~)m
$2.712,000 !
..'~!!.~~,999ml
...........................................
.J!!:r!~iPC!!.~~~~~A!q~t?mm . mmmmm~?9,OOO.00>
... Utm~yE.~!:r~~t?!:r~r.Jp.yJ!.t?!:r.m_m_ .__.__1.m:99?:
L.~~~m~~~. TrJ!!:rJsB.~~~rY~E.~!:rq~t?IJJ'-!.k~t.!.t?!:rmml <$893,000.00>
............................ .........................
Net Bond Issue Total...
The financing for the water treatment plant will be staged over two years. The
initial water revenue bond issuance will be in the amount of $8,500,000 with
the remaining balance of $1 ,500,000 scheduled for next year. The reason for
dividing the financing into two parts is because the City is limited to issuing no
more than $10 million dollars in bank qualified bonds in anyone year. We
would lose our preferred tax exempt status for all bonds in 2006, not just the
amount over and above the ten million dollar threshold if we were to exceed
this threshold. By allocating the $1.4 ml of street reconstruction bonds and
$8.5 ml for water revenue bonds we will remain below the ceiling by $100,000.
The debt service on the street reconstruction bonds shall be paid 100% upon
the property taxes while the debt repayment on the water revenue bonds shall
be pledged from utility water rates. If bid today, a net effective interest rate of
3.95% & 4.27% with an average bond coupon rate of 3.73% & 4.17% would
probably be a close estimate for the street reconstruction bonds and water
revenue bonds respectively. The bond issues will be dated 5/15/07, with
maturities each year of December 15. The street reconstruction bonds will be
structured 10 years in length and the water revenue bonds will have a term of
25 years.
Attached are two worksheets from Northland Securities that provides
additional detail with respect to debt service principal/interest payments
necessary to amortize each bond issue. Plus they identify the application of
funds, financing costs and other miscellaneous information associated with the
respective bond issues.
The estimated special tax levy calculation associated with this bond issue is
$179,000.00 and will be added to the City's proposed general fund operating
budget levy, revolving equipment fund levy and other special debt levies for
payable 2008 property taxes in December of this year. The estimated initial
year debt payment of $447,585.00 on the water revenue bonds will be
budgeted as a line item transfer in the 2008 Water Department to the
designated debt service account with no tax impact as the utility billing water
rate already in effect will fund the bond payments.
The following alternatives are available to the City Council:
RECOMMENDED
MOTION:
1. Adopt the following resolutions:
a) A Resolution Authorizing the Negotiated Sale of $1,400,000
General Obligation Street Reconstruction Bonds of 2007.
b) A Resolution Authorizing the Negotiated Sale of $8,500,000
General Obligation Water Revenue Bonds of 2007.
2. Table this item for a specific reason.
Alternative 1.
1. A Resolution Authorizing the Negotiated Sale of $1 ,400,000 General Obligation
Street Reconstruction Bonds of 2007.
2. A Resolution Authorizing the Negotiated Sale of $8,500,000 General Obligation
Water Revenue Bonds of 2007
ATTACHM
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY
OF PRIOR LAKE, MINNESOTA
HELD: APRIL 16,2007
Pursuant to due call and notice thereof, a regular meeting of the City Council (the "Council") of
the City of Prior Lake (the "City"), Scott County, Minnesota, was duly called and held at the Fire Station
in said City on April 16, 2007, at _ P.M.
The following members were present:
and the following were absent:
introduced the following resolution and moved its adoption:
Member
RESOLUTION NO.
RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$8,500,000 GENERAL OBLIGATION WATER TREATMENT PLANT WATER REVENUE
BONDS OF 2007
WHEREAS, the City has an upcoming issuance of approximately $8,500,000 General Obligation
Water Treatment Plant Water Revenue Bonds of2007, dated May 15,2007, (the Bonds) and
WHEREAS, Northland Securities, Inc. (NSI) has indicated a willingness to purchase the Bonds
upon receipt from the City, County, and School District of various required information, and
WHEREAS, the City desires to effectuate the transaction with NSI whenever market conditions
are appropriate and NSI has received the required information.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
1. That Mayor Jack Haugen and Manager Frank Boyles are hereby jointly authorized to
approve the sale of certain Bonds to NSI in the amount illustrated to this Council on this
date at such time as NSI advises that it is appropriate to market said Bonds.
2. The City Council will meet to adopt the necessary approval resolution drafted by bond
counsel at a special meeting date of Monday, April 30, 2007.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon voted being taken thereon, the following voted in favor thereof:
and the following voted against the same:
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
Whereupon said resolution was declared duly passed and adopted on April 19, 2004.
Mayor
Attest:
Manager
CERTIFICATION
STATE OF MINNESOTA
)SS
COUNTY OF Scott
I, the undersigned, being the duly qualified and acting Manager of the City of Prior Lake, Scott
County, Minnesota, DO HEREBY CERTIFY, that I have carefully compared the preceding extract of
minutes of a meeting of the City Council of said City held on the date therein indicated with the original
minutes thereof on file in my office and that the same is a full, true and correct transcript thereof insofar
as said minutes relate to the topic described in the title of the resolution set forth in the extract.
WITNESS my hand officially and the official seal of the City on April 16, 2007.
City Manager
(SEAL)
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY
OF PRIOR LAKE, MINNESOTA
HELD: APRIL 16,2007
Pursuant to due call and notice thereof, a regular meeting of the City Council (the "Council") of
the City of Prior Lake (the "City"), Scott County, Minnesota, was duly called and held at the Fire Station
in said City on April 16, 2007, at _ P.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION NO.
RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$1,400,000 GENERAL OBLIGATION STREET RECONSTRUCTION BONDS OF 2007
WHEREAS, the City has an upcoming issuance of approximately $1,400,000 General Obligation
Street Reconstruction Bonds of2007, dated May 15,2007, (the Bonds) and
WHEREAS, Northland Securities, Inc. (NSI) has indicated a willingness to purchase the Bonds
upon receipt from the City, County, and School District of various required information, and
WHEREAS, the City desires to effectuate the transaction with NSI whenever market conditions
are appropriate and NSI has received the required information.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
1. That Mayor Jack Haugen and Manager Frank Boyles are hereby jointly authorized to
approve the sale of certain Bonds to NSI in the amount illustrated to this Council on this
date at such time as NSI advises that it is appropriate to market said Bonds.
2. The City Council will meet to adopt the necessary approval resolution drafted by bond
counsel at a special meeting date of Monday, April 30, 2007.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota as follows:
The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon voted being taken thereon, the following voted in favor thereof:
and the following voted against the same:
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
Whereupon said resolution was declared duly passed and adopted on April 16, 2007.
Mayor
Attest:
City Manager
CERTIFICATION
STATE OF MINNESOTA
)SS
COUNTY OF Scott
I, the undersigned, being the duly qualified and acting Manager of the City of Prior Lake, Scott
County, Minnesota, DO HEREBY CERTIFY, that I have carefully compared the preceding extract of
minutes of a meeting of the City Council of said City held on the date therein indicated with the original
minutes thereof on file in my office and that the same is a full, true and correct transcript thereof insofar
as said minutes relate to the topic described in the title of the resolution set forth in the extract.
WITNESS my hand officially and the official seal of the City on April 16, 2007.
City Manager
(SEAL)
IFILE: PRIOR LAKE STREET RECON. (4-3.1)1)
DATE OF ANALYSIS:
DATED DATE OF ISSUE:
I
APRIL 3, 2007
MAY 15,2007
(A)
YEAR
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
(B)
(C)
(D)
(E)
TOTAL
DEBT
SERVICE
30,137.92
166,665.00
167,525.00
168,205.00
168,705.00
169,025.00
169,097.50
173,987.50
173,437.50
172,625.00
176,545.00
CITY OF PRIOR lAKE, MINNESOTA
GENERAL OBLIGATION STREET RECONSTRUCTION BONDS OF 2007
PAR AMOUNT: $1,400,000
(F)
STATUTORY
5.00%
30,137.92
174,998.25
175,901.25
176,615.25
177,140.25
177,476.25
177,552.38
182,686.88
182,109.38
181,256.25
185,372.25
(G)
CAPITALIZED
INTEREST
$30,137.92
(FROM CITY)
(H)
TAX
LEVY
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
179,000.00
(I)
(J)
(12-15)
PRINCIPAL
EST.
INTEREST
RATES
INTEREST
30,137.92
51,665.00
47,525.00
43,205.00
38,705.00
34,025.00
29,097.50
23,987.50
18,437.50
12,625.00
6,545.00
ANNUAL
SURPLUS CUMUlATIVE
/DEFICIT BALANCE
0.00 0.00
4,001.75 4,001.75
3,098.75 7,100.50
2,384.75 9,485.25
1,859.75 11,345.00
1,523.75 12,868.75
1,447.63 14,316.38
(3,686.88) 10,629.50
(3,109.38) 7,520.13
(2,256.25) 5,263.88
(6,372.25) (1,108.38)
$115,000.00
120,000.00
125,000.00
130,000.00
135,000.00
140,000.00
150,000.00
155,000.00
160,000.00
170,000.00
3.60%
3.60%
3.60%
3.60%
3.65%
3.65%
3.70%
3.75%
3.80%
3.85%
1,400,000.00
335,955.42 1,735,955.42 1,821,246.29
30,137.92
BONDS DATED:
BONDS MATURE:
INTEREST:
OPTION:
$1,790,000.00
DISCOUNT FACTOR (1.40% OF PAR) 19,600.00
CAPITALIZED INTEREST (0 MONTHS) 0.00
EST. REGISTRATION 0.00
EST. BOND DlSBURSTMENT FEE 0.00 PURCHASE PRICE:
ESTIMATED RATING FEE (DISCOUNTED) 3,500.00 PAYING AGENT &
ESTIMATED OFFICIAL STATEMENT PRINTING 400.00 REGISTRAR:
ESTIMATED LEGAL SERVICES 4,750.00 EST. AVERAGE COUPON RATE:
SUBTOTAL $1,415,750.00 EST. NET EFFECrIVE RATE:
LESS: INVESTMENT INCOME ON CONSTR. ACCOUNT ($15,869.25) (A)
GRANDTOTAL $1,399,880.75 EST. BOND SALE DATE:
ROUNDED FOR ISSUANCE $1,400,000.00 EST. CLOSING DATE:
(A) ASSUMES NET CONSTRUCTION AND INTEREST FUNDS INVESTED
FOR AVERAGE OF 90 DAYS @4.50%
NdRt.HLAN-D.OSE CQ.RITIES
APPLICATION OF FUNDS
ESTIMATED CONSTRUCTION NEEDS
TOTAL HARD COSTS
ADD SOFf COSTS OF ISSUANCE
I $1,387,500.00 I
1,387,500.00
($1,108.38)
MAY 15, 2007
DECEMBER 15,2008 THROUGH 2017
DECEMBER 15,2007 AND SEMIANNUALLY THEREAFTER
ON EACH JUNE 15 AND DECEMBER 15.
ALL BONDS MATURING IN THE YEARS 2012 THROUGH
2017 ARE CALLABLE AT THE OPTION OF THE CITY ON
DECEBMER 15, 2011 OR ANY DATE THEREAFfER @
PAR PLUS ACCRUED INTEREST.
$1,380,400.00
CITY OF PRIOR lAKE
3.7280%
39455%
APRIL 30,2007
MAY 22,2007
NORTHLAND SECURITIES, INC.
STEVEN J. MATTSON. mCUTIVE VlCB PRESIDENT
612-8&1-5900
80G-8&1-292D
II FILE: PRIOR LAKE 444 oW (4-11-07) II
CITY OF PRIOR LAKE, MINNESOTA WATER TREATMENT FACILITIES PROJECf
CASH FLOW ANALYSIS
"BQ" SCALES GENERAL OBLIGATION WATER REVENUE BONDS OF 2007
DATE OF ANALYSIS: APRIL 11, 2007 125 YEAR SCHEDULE
EST. DATED DATE: MAY 15, 2007
(A) (B) (C) (D) (E) APPLICATION OF FUNDS
EST. NET FUNDS TO CONSTRUCTION FUND 8,345,000.00
EST.
(12-15) INTEREST TOTAL TOTAL HARD COSTS $8,345,000.00
YEAR PRINCIPAL RATES INTEREST REQUIREMENT ADD:
ESTIMATED LEGAL OPINION 8,750.00
CAPITALIZED INTEREST ( 0 MONTHS) 0.00
2007 202,758 202,758 EST. OFFICIAL STATEMENT PRINTING 700.00
2008 100,000 3.60% 347,585 447,585 ESTIMATED FAIRNESS OPINION 1,500.00
2009 110,000 3.60% 343,985 453,985 EST. REGISTRATION (BE) (1ST YR.) 0.00
2010 120,000 3.60% 340,025 460,025 EST. DISCOUNT FACTOR (1.65% OF PAR) 140,250.00
2011 135,000 3.60% 335,705 470,705 EST. RATING FEE (MOODYS) 4,000.00
2012 150,000 3.65% 330,845 480,845 GRAND TOTAL 8,500,200.00
2013 175,000 3.65% 325,370 500,370 ROUNDED FOR ISSUANCE $8,500,000.00
2014 200,000 3.70% 318,983 518,983
2015 220,000 3.75% 311,583 531,583 BONDS DATED: MAY 15, 2007
2016 240,000 3.80% 303,333 543,333 BONDS MATURE: DECEMBER 15, 2008 THROUGH 2032
2017 260,000 3.85% 294,213 554,213 INTEREST: DECEMBER 15, 2007 & SEMlANNUALL Y THEREAFTER
2018 280,000 3.90% 284,203 564,203 OPTION: DECEMBER 15, 2015 @ 100
2019 300,000 3.95% 273,283 573,283 PURCHASE PRICE: $8,359,750.00
2020 325,000 4.00% 261,433 586,433 AVERAGE COUPON: 4.17381%\
2021 350,000 4.05% 248,433 598,433 NEIR: 4.27033%
2022 375,000 4.10% 234,258 609,258 PAYING AGENT &
2023 400,000 4.10% 218,883 618,883 REGISTRAR: CITY OF PRIOR LAKE
2024 425,000 4.15% 202,483 627,483 CLOSING DATE: MAY 22, 2007
2025 450,000 4.15% 184,845 634,845
2026 475,000 4.20% 166,170 641,170 ...
2027 500,000 4.20% 146,220 646,220 NORTHLAND~SECURITIES
2028 525,000 4.25% 125,220 650,220
2029 550,000 4.25% 102,908 652,908
2030 580,000 4.30% 79,533 659,533
2031 610,000 4.35% 54,593 664,593 NORTHLAND SECURITIES, INC.
2032 645,000 4.35% 28,058 673,058 STEVEN J. MATTSON, EXECUTIVE VICE PRESIDENT
2033 0 0.00% 0 0 612-851-5900
2034 0 0.00% 0 0 800-851-2920
2035 0 0.00% 0 0
$8,500,000 $6,064,900 $14,564,900 I NOTE: 1/10 OF 1.00% IS EQUAL TO -----> 145,308.3~J