HomeMy WebLinkAbout4 - Sale of General Obligation Improvement Bonds
DATE:
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RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF RESOLUTION 93-28
AUTHORIZING PUBLIC SALE OF $3,000,000 GENERAL
OBLIGATION IMPROVEMENT BONDS OF 1993
MAY 17, 1993
AGENDA:
REQUESTED BY :
SUBJECT MATTER:
INTRODUCTION:
The City has a number of ~rojects scheduled
for construction this upcom1ng summer. Several
avenues of financing are available to complete
these improvements. A combination of bonding,
state aids, water & sewer reserves, and trunk
funds are recommended to be utilized. The
following is a list of projects, proposed
funding source and anticipated cost:
proiect Source Amount
1- Business Office Park G.O. Bonds $791,000
Trunk Fund 213,000
Enterprise 142,000
2 . Lime & Center Roads G.O. Bonds 132,000
3. Forest Oaks G.O. Bonds 85,000
Trunk Fund 25,000
4. CSAH 21 Improvements G.O. Bonds 405,000
5. Indust. Park st. Sew. G.O. Bonds 100,000
6. CSAH 42 Improvements G.O. Bonds 735,000
7. Fish Point Rd Ext. G.O. Bonds 35,000
MSAS Funds 165,000
8. Carriage Hill Road G.O. Funds 60,000
MSAS Funds 540,000
9. Lemley Cir. st. Sewer G.O. Bonds 125,000
10. Traffic Signal G.O. Bonds 100,000
11. Seal Coating G.O. Bonds 150,000
12. Pond Parking Lot G.O. Bonds 165,000
13. civil Defense Sirens G.O. Bonds 60,000
Contingency G.O. Bonds 32,000
----------
----------
Project Total . . . $4,060,000
Financing Source Summary:
Enterprise Funds
Trunk Reserve Funds -
MSAS Funds
G.O. Bonds
$142,000
$213,000
$705,000
- $3,000,000
It is important that financing be secured on a
timely basis so that funds are available for
payment of the first construction contract
voucher requests which are estimated for July
15, 1993. To accomplish this it is necessary
for the City Council to approve a public bond
sale.
4629 Dakota St. S.E., Prior Lake, Minnesota 55372 / Ph, (612) 447,4230 I Fax (612) 447-4245
AJ~ EQUAL OPPORTUNITY EMPLDYER
BACKGROUND:
The Council directed the Citr's engineering
department to prepare a feasib1lity report on
November 2, 1992 pursuant to Resolution 92-36.
On February 16, 1993 the Council adopted
Resolution 93-05 accepting the feasibility
report and called for public hearings to be
conducted on 3/15/93 and 4/5/93 (continued to
5/17/93) .
Upon the conclusion of these hearings all the
above referenced projects were approved as the
Council adopted Resolutions 93-13, 93-16 and
93-29 ordering these improvements.
DISCUSSION:
Bids will be undertaken over the course of the
next several weeks as plans and specifications
are finalized. Assuming the bids received are
within the projection of the engineer'S
estimates and the Council awards bids,
authorization for a bond sale in an
anticipated amount of $3,000,000 would be
necessary to finance the construction and
other related costs.
To facilitate the availability of drawdown
funds with planned construction activities,
the financing process will involve
establishing the bond sale for Monday, June
21, 1993 with publication in the Northwestern
Financial Review on June 5th and in the Prior
Lake American during the week of June 7th.
This will allow for the bond proceeds to be
delivered the first week of July.
On a number of occasion~ in the past the city
has insured its bond 1ssuance through MBIA
(Municipal Bond Investors Assurance Corp.) in
an effort to obtain a AAA bond rating. This
strategy works well in a market whereby
interest rates range above the 8% level.
Under such conditions, there is enough play in
the market whereby a significant interest
savings can be achieved.
However, in today's climate of depressed
interest rates, the cost of the premium pass
through by the underwriter does not justify
the expense. The rate difference would
probably be less than 20 basis points.
Therefore, the city will NOT be purchasing the
insurance because Staff feels that our present
"A" bond rating will result in a very
comparable and favorable interest rate.
The structure of the bond issue itself is
based upon the following components:
Est. gross construction costs
(less City contribution)
Engineering (18%)
Capitalized interest (5 mos.)
Discount (2%)
Fiscal fee
Bond ratin9
Legal opinlon
Bond re~istration
Bond prlnting & publishing
Contingency/rounding
BOND TOTAL
$ 2,750,000
<380,000>
470,000
65,625
60,000
17,500
4,500
4,000
3,500
1,000
3,875
$ 3,000,000
Approximately 34% of the bonds will be
recovered thru paYment of special assessments.
If bid today, a net effective interest rate of
5.25% would probably be a close estimate.
Past practice of rounding to the nearest 1/2%
above the initial 1% float would result in a
project assessment rate of 6.50% for the Lime,
Center and Forest Oaks improvements. The
Business Office Park land would be assessed at
a rate of 5.50% or 1 percent less because
there is no prepayment or delinquency risk as
the City has guaranteed these assessments.
The bond issue will be structured 15 years in
length with greater weighted average during
the first ten years for all projects supported
by an ad valorem tax levy plus a five year
tail to account for the last five years of
assessment distribution on the Business Office
Park.
The following is a schedule of tax levies and
assessment terms and their corresponding
amounts required to amortize the bonded debt:
1. 10 year ad valorem levy
2. 10 year assessment term
3. 15 year assessment term
Cash Flow Total
$1,992,000.00
217,000.00
791,000.00
$3,000,000.00
Enclosed is a copy of the resolution which
establishes the amount and date of bond sale
plus a financial services contract with Juran
& Moody, Inc. is also incorporated within the
document. steve Mattson will be present at the
meeting to discuss the resolution and answer
any questions the Council may have with
respect to the bond issuance process.
The special levies associated with the 1993
construction improvements are expected to
generate the following approximate average
annual property tax increases:
TAX IMPACT
MARKET VALUE HOMESTEAD
$85,000 $100,000 $125,000 $150,000
AVERAGE ANNUAL TAX INCREASE
$37.00 $48.50 $67.50 $86.50
ALTERNATIVES:
RECOMMENDATION:
ACTION REQUIRED:
The alternatives are as follows:
1. Approve Resolution 93-28 establishing bond
amount and date of public sale as submitted.
2. Amend resolution to a different amount
and/or date as agreed upon by the Council.
time
3. Delay financing to a future
determined by the city Council.
4. Table action for further consideration.
as
staff would recommend that Resolution 93-28 be
approved for the full amount as indicated with
final project funding contingent upon the
successful awarding of project bids.
Motion to approve Resolution 93-28 Authorizing
Public Sale of $3,000,000 General Obligation
Improvement Bonds of 1993.
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
PRIOR LAKE, MINNESOTA
HELD: May 17, 1993
Pursuant to due call and notice thereof, a regular meeting
of the City Council of the City of Prior Lake, Scott County,
Minnesota, was duly called and held at the City Hall in said City
on Monday, the 17th day of May, 1993, at o'clock .M.
The following members were present:
and the following were absent:
Member
resolution and moved its adoption:
introduced the following
Resolution Number 93-28
RESOLUTION PROVIDING FOR PUBLIC SALE
OF $3,000,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1993
BE IT RESOLVED by the City Council of the City of Prior
Lake, Minnesota, as follows:
1. Findinq; Amount and Purpose. It is hereby found,
determined and declared that this City should issue $3,000,000
General Obligation Improvement Bonds of 1993 (the "Bonds") for
the purpose of providing money to finance the construction of
various improvements in the city.
2. Appointment of Financial Advisor. The City Council does
hereby appoint Juran & Moody, Inc., in st. Paul, Minnesota, to
act as its financial advisor to the City for the sale of the
Bonds.
3.
time and
attached
for, and
Meeting; Bid Openinq. This Council shall meet at the
place specified in the form of Notice of Bond Sale
hereto as Exhibit A for the purpose of considering bids
awarding the sale of, the Bonds. The City Manager, or
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designee, shall open bids at the time and place specified in such
Notice of Bond Sale.
4. Notice of Bond Sale. The City Manager is hereby
authorized and directed to cause notice of the time, place and
purpose of said meeting to be published in the official newspaper
of the City and in Northwestern Financial Review not less than
ten (10) days in advance of the date of sale, as provided by law,
which notice shall be in substantially the form set forth in
Exhibit A attached hereto and made a part hereof.
5. Official Terms of Bond Sale. The terms and conditions
of the Bonds and the sale thereof are fully set forth in the
"Official Terms of Bond Sale" attached hereto as Exhibit Band
hereby made a part hereof.
6. Official Statement. The City Manager, Finance Director
and other officers or employees of the city are hereby authorized
to participate in the preparation of an official statement for
the Bonds with Juran & Moody, Inc.
The motion for the adoption of the foregoing resolution was
duly seconded by member and, after full
discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and
adopted.
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STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting
Manager of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY
that I have carefully compared the attached and foregoing extract
of minutes with the original minutes of a meeting of the City
council of said city duly called and held on the date therein
indicated, which are on file and of record in my office, and the
same is a full, true and complete transcript therefrom insofar as
the same relates to said city's $3,000,000 General Obligation
Improvement Bonds of 1993.
WITNESS my hand as such Manager and the official seal of the
City this 17th day of May, 1993.
City Manager
(SEAL)
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EXHIBIT A
NOTICE OF BOND SALE
$3,000,000
CITY OF PRIOR LAKE
SCOTT COUNTY
MINNESOTA
GENERAL OBLIGATION IMPROVEMENT
BONDS OF 1993
These bonds will be offered June 21, 1993. Sealed bids will be
opened by the city Manager, or designee, at 11:00 A.M., Central
Time, at the offices of Juran & Moody, Inc., 400 North Robert
street, suite 800, in Saint Paul, Minnesota 55101-2091.
Consideration of the bids and award of the sale of the bonds will
be by the City Council at the city Hall in Prior Lake, Minnesota,
at 7:30 P.M. following the opening of the bids. The bonds will
be dated July 1, 1993, as the date of original issue. Interest
will be payable December 1, 1993 and semiannually thereafter.
The bonds will mature on December 1 in the years and amounts as
follows:
Year Amount Year Amount
1994 $210,000 2000 $295,000
1995 220,000 2001 310,000
1996 230,000 2002 335,000
1997 245,000 2003 370,000
1998 260,000 2004-2008 50,000
1999 275,000
All dates are inclusive.
Bidders must specify a price of not less than $2,941,200 plus
accrued interest. An approving legal opinion will be furnished
by Briggs and Morgan, Professional Association, of st. Paul and
Minneapolis, Minnesota.
Bidders should be aware that the Official Terms of Bond Sale to
be published in the Official Statement for the sale may contain
additional bidding terms and information relative to the Issue.
In the event of a variance between statements in this Notice of
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Bond Sale and said Official Terms of Bond Sale the provisions of
the latter shall be those to be complied with.
Dated: May 17, 1993.
BY ORDER OF THE CITY COUNCIL
Isl Frank Boyles
City Manager
Additional information
may be obtained from:
JURAN & MOODY, INC.
Minnesota Mutual Life Building
400 North Robert street
suite 800
st. Paul, Minnesota 55101-2091
Telephone No.: (612) 224-1500
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EXHIBIT B
OFFICIAL TERMS OF
BOND SALE
$3,000,000
GENERAL OBLIGATION IMPROVEMENT
BONDS OF 1993
CITY OF PRIOR LAKE
SCOTT COUNTY
MINNESOTA
NOTICE IS HEREBY GIVEN that these bonds will be offered for sale
according to the following terms:
TIME AND PLACE:
Sealed bids will be opened by the City
Manager, or designee, on Monday,
June 21, 1993, at 11:00 A.M., Central
Time, at the offices of Juran & Moody,
Inc., 400 North Robert Street, suite
800, in Saint Paul, Minnesota 55101-
2091. Consideration of the bids for
award of the sale will be by the city
Council at its meeting in the Prior Lake
City Hall beginning at 7:30 P.M., on the
same day.
TYPE OF BONDS:
Fully registered general obligation
bonds, $5,000 or larger denominations at
the option of the bidder.
DATE OF ORIGINAL
ISSUE OF BONDS:
July 1, 1993.
PURPOSE:
For the purpose of providing money to
finance the construction of various
improvements in the city.
INTEREST PAYMENTS:
December 1, 1993, and semiannually
thereafter on June 1 and December 1.
MATURITIES:
December 1 in each of the years and
amounts as follows:
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Year Amount
1994 $210,000
1995 220,000
1996 230,000
1997 245,000
1998 260,000
1999 275,000
2000 295,000
2001 310,000
2002 335,000
2003 370,000
2004 50,000
2005 50,000
2006 50,000
2007 50,000
2008 50,000
All dates are inclusive.
REDEMPTION:
At the option of the Issuer, bonds
maturing on or after December 1, 1999
shall be subject to prior payment, on
December 1, 1998 and any interest
payment date thereafter, at a price of
par and accrued interest. Redemption
may be in whole or in part of the bonds
subject to prepayment. If redemption is
in part, the bonds remaining unpaid
which have the latest maturity date
shall be prepaid first and if only part
of the bonds having a common maturity
date are called for prepayment the
specific bonds to be prepaid shall be
chosen by lot by the Registrar.
BOND REGISTRAR:
Principal will be payable at the main
corporate office of Firstar Trust
Company, in Milwaukee, Wisconsin (the
"Registrar"). Interest will be payable
by check or draft of the Registrar
mailed to the registered holder of the
bond at his address as it appears on the
books of the Registrar. The Issuer will
pay reasonable and customary charges for
the services of the Registrar.
CUSIP NUMBERS:
If the bonds qualify for assignment of
CDSIP numbers such numbers will be
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printed on the bonds, but neither the
failure to print such numbers on any
bond nor any error with respect thereto
shall constitute cause for a failure or
refusal by the Purchaser thereof to
accept delivery of and pay for the bonds
in accordance with terms of the purchase
contract. The CUSIP Service Bureau
charge for the assignment of CUSIP
identification numbers shall be paid by
the Purchaser.
DELIVERY:
Forty days after award subject to
approving legal opinion of Briggs and
Morgan, Professional Association, of st.
Paul and Minneapolis, Minnesota. Bond
printing and legal opinion will be paid
by the Issuer and delivery will be
anywhere in the continental united
states without cost to the Purchaser.
Legal opinion will be printed on the
bonds at the request of the successful
bidder.
TYPE OF BID:
Sealed bids of not less than $2,941,200
and accrued interest on the principal
sum of $3,000,000 from date of original
issue of the bonds to date of delivery
must be filed with the undersigned prior
to the time of sale. Bids must be
unconditional except as to legality. A
certified or cashier's check (the
"Deposit") in the amount of $60,000
payable to the order of the Finance
Director of the Issuer, or a Financial
Surety Bond complying with the
provisions below, must accompany each
bid, to be forfeited as liquidated
damages if bidder fails to comply with
accepted bid. Bids for the bonds should
be delivered to Juran & Moody, Inc., and
addressed to:
Ralph Teschner
Finance Director
Prior Lake City Hall
4629 Dakota street Southeast
Prior Lake, Minnesota 55372-1714
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If a Financial Surety Bond is used, it
must be from an insurance company
licensed to issue such a bond in the
state of Minnesota, and preapproved by
the Issuer. Such bond must be submitted
to Juran & Moody, Inc. prior to the
opening of the bids. The Financial
Surety Bond must identify each bidder
whose Deposit is guaranteed by such
Financial Surety Bond. If the bonds are
awarded to a bidder using a Financial
Surety Bond, then that purchaser is
required to submit its Deposit to Juran
& Moody, Inc. in the form of a certified
or cashier's check or wire transfer as
instructed by Juran & Moody, Inc. not
later than 3:30 P.M., Central Time, on
the next business day following the
award. If such Deposit is not received
by that time, the Financial Surety Bond
may be drawn by the Issuer to satisfy
the Deposit requirement. The Issuer
will deposit the check of the purchaser,
the amount of which will be deducted at
settlement and no interest will accrue
to the purchaser. In the event the
purchaser fails to comply with the
accepted bid, said amount will be
retained by the Issuer. No bid can be
withdrawn after the time set for
receiving bids unless the meeting of the
Issuer scheduled for award of the bonds
is adjourned, recessed, or continued to
another date without award of the bonds
having been made.
RATES:
All rates must be in integral multiples
of 1/20th or 1/8th of 1%. No limitation
is placed upon the number of rates which
may be used. All bonds of the same
maturity must bear a single uniform rate
from date of issue to maturity and no
rate of any maturity may be lower than
the highest rate applicable to bonds of
any preceding maturities.
INFORMATION FROM
PURCHASER:
The successful purchaser will be
required to provide, in a timely manner,
certain information relating to the
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initial offering price of the bonds
necessary to compute the yield on the
bonds pursuant to the provisions of the
Internal Revenue Code of 1986, as
amended.
AWARD:
The Issuer will designate the
bonds as qualified tax exempt
obligations for purposes of section
265(b) (3) of the Internal Revenue Code
of 1986, as amended.
Award will be made solely on the basis
of lowest dollar interest cost,
determined by addition of any discount
to and deduction of any premium from the
total interest on all bonds from their
date to their stated maturity.
QUALIFIED TAX
EXEMPT OBLIGATIONS:
The Issuer reserves the right to reject any and all bids, to
waive informalities and to adjourn the sale.
Dated: May 17, 1993.
BY ORDER OF THE CITY COUNCIL
Isl Frank Boyles
City Manager
Additional information
may be obtained from:
JURAN & MOODY, INC.
Minnesota Mutual Life Building
400 North Robert Street
suite 800
st. Paul, Minnesota 55101-2091
Telephone No.: (612) 224-1500
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