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Home My WebLink About9A - Sale of $1,025,000 General Obligation Improvement Bonds of 1999 STAFF AGENDA REPORT MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: SEPTEMBER 20, 1999 ~PH TESCHNER, FINANCE DIRECTOR ~ ~ CONSIDER APPROVAL OF RESOLUTION 99~ AUTHORIZING NEGOTIATED SALE OF $1,025,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 1999 DISCUSSION: Introduction The City's bond and fiscal consultant Steve Mattson from Juran & Moody will be present during the Council meeting to request Council approval to negotiate the sale of general obligation bonds in the amount of $1,025,000 to finance improvements associated with the Candy CovelLakeside Manor street reconstruction (Project 99- 11), sewer and water installation in North Shore Oaks 1st Addition (Project 99-13) and for our estimated share of the cooperative agreement between Scott County and the City for the four lane upgrade of CSAH 42 between McKenna Road and CSAH 83. History The City Council approved Resolution 98-116 on October 5, 1998 which accepted the feasibility report for a number of projects identified for construction during 1999 which were to be financed by a combination of general obligation bonds and various fund appropriations. A summary of those improvements and their costs in round numbers are listed below: Project Description Project Financing 1. Candy Cove Park and Lakeside Manor street reconstruction North Shore Oaks 1st Addition sewer & water installation CSAH 42 upgrade cooperative share per feasibility report G.O. Bonds ... Trunk Reserve ... $1,025,000.00 $109,000.00 2. Project Totals... $1,134,000.00 3. Subsequently, the public hearing for these 1999 improvement projects was conducted on November 2, 1998 and Resolution 98-131 ordering the respective improvements was approved. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H:\BONDS\A99BONDS.DOC Current Circumstances As was the case earlier in the year when the City Council refinanced the initial fire hall bonds by negotiating the sale of the refunding bonds directly from Juran & Moody, Staff would propose a similar process. The advantage of the negotiated sale method versus public sale is the flexibility it affords the City because our fiscal consultant, Steve Mattson would attempt to time the sale of bonds with the market in an effort. to obtain the lowest interest rate possible. Also, the City saves itself the fiscal fee of $13,500.00. The City has utilized the negotiated sale method successfully in the past when funds are not immediately needed. The structure of the bond issue itself would be based upon the following components in rounded amounts: Construction Bid (City Proj 99-11 &13) Engineering (18% of $646,988 bid which exe!. trunk expenditure portion) Administration (5% of $646,988 bid whieh exel. trunk expenditure portion) Financing (4Y4 of $646,988 bid which exe!. trunk expenditure portion) CSAH 42 Upgrade - Scott County Cooperative Agreement Share Project Total... Less... Trunk Reserve Fund Contribution Plus ... Rounding/Contingency Net Bond Issue Total... $756,205.00 $116,500.00 $32,350.00 $27,625.00 $200.000.00 $1,132,680.00 <$109,215.00> $1.535.00 $1,025,000.00 The above financing expenses represent approximately 4Y4% of the actual construction bid amounts of the city projects and are detailed below: Discount (1.60%) Bond Rating Bond Counsel Paying Agent Fees Subtotal... $16,400.00 $5,500.00 $3,500.00 $2.225.00 $27,625.00 Approximately 37% of the bonds will be recovered through special assessments. The remainder of the bonds will be levied against the overall property taxes within the City. If bid today, a net effective interest rate of 5.23% with an average bond coupon rate of 4.96% would probably be a close estimate. The bond issue will probably be dated 11/1/99, with maturities each year of 12/1, depending upon the sale date, and will be structured 10 years in length. The following is a schedule of tax levies/assessment H:\BONDS\A99BONDS.DOC ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: terms and their corresponding amounts necessary to amortize the bond debt: 10 year assessment stream 10 year property tax levy Total... $383,000.00 $642.000.00 $1,025,000.00 Attached is a worksheet from Juran & Moody which provides additional detail with respect to debt service principal/interest payments, projected assessment stream and annual special tax levies necessary to amortize this bond issue. The second page lists the estimated coupon and net effective interest rates for this bond issue plus it identifies the financing costs and other miscellaneous information. Financial Imvact - The estimated special tax levy calculation associated with this bond issue has already been factored in along with the City's proposed general fund operating budget levy, revolving equipment fund levy and other special debt levies for payable 2000 property taxes. These levies are projected to slightly lower property taxes in 2000. The following alternatives are available to the City Council: 1. Approve Resolution 99-XX Authorizing Negotiated Sale of $1,025,000 General Obligation Improvement Bonds of 1999. 2. Delay financing to a future time as determined by the City Council. Motion and second to approve Resolution 99-XX Authorizing Negotiated Sale of $1,025,000 General Obligation Improvement Bonds of 1999. Steve Mattson will be present at the meeting to discuss the resolution and a wer any questions the Council may have with respect the bo issuance process. ~ 1. Resoluti -XX Certifying Proposed 2000 City of Prior Lake Tax Levy To Scott County Department of Taxation 2. Juran & Moody Bond Analysis ~ RESOLUTION 99- ~ ~ RESOLUTION AUTHORIZING NEGOTIATED SALE 'lVNESo F $1,025,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 1999 MOTION BY: WHEREAS, WHEREAS, WHEREAS, WHEREAS, WHEREAS, 11'- ~f> SECOND BY: The City of Prior Lake has conducted the appropriate public hearings to consider comments regarding those public improvement projects deemed necessary for construction in 1999; and The City Council has determined that such construction projects scheduled for 1999 are consistent with the City's Capital Improvement Plan (CIP); and The City of Prior Lake has complied with all requirements of Chapter 429 of Minnesota State Statutes with respect to special assessment improvement projects; and The City of Prior Lake has awarded the construction bids for Project 99-11 Candy CovelLakeside Manor for street reconstruction and for Project 99-13 North Shore Oaks 1st Addition for the installation of sewer and water; and It is necessary to issue general obligation bonds for the purpose of financing these construction improvements and the city's cooperative share for the 4 lane divided highway upgrade improvements for CSAH 42 between McKenna Road and CSAH 83. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that it has determined it is in the best interest of the City of Prior Lake to enter into a negotiated sale with Juran & Moody, in an effort to obtain the lowest interest rate possible, for the issuance of $1,025,000 of general obligation improvement bonds. Passed and adopted this 20th day of September, 1999. YES NO Mader Kedrowski Petersen Schenck Wuellner Mader Kedrowski Petersen Schenck Wuellner {Seal} City Manager City of Prior Lake 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 H:\BONDSIRESNS99.DOC AN EQUAL OPPORTUNITY EMPLOYER CITY OF PRIOR LAKE, MINNESOTA GENERAL OBUGATION IMPROVEMENT BONDS OF 1999 PAR AMOUNT: $1,025,000 APPUCATION OF FUNDS (ESTIMATED COSTS) 1999 CONSTRUcrrON PROJECTS 956,205.00 YEAR AMOUNT ADD: ESTIMATED ENGINEERING (15%) 116.500.00 1999 ESTIMATED ADMINISTRATION (4.25%) 32,350.00 2000 $75.000 ESTIMATED FINANCING (3.25%) 29,160.00 2001 100,000 LESS: MUNICIPAL STATE AID 0.00 2002 100,000 TRUNK RESERVE FUND CONfR (l09,215.00) 2003 100,000 GRAND TOTAL HARD COSTS 1,025.000.00 2004 100,000 2005 100,000 2006 100.000 ADD: (SOFf COSTS, INCLUDED IN ABOVE) 2007 100,000 ESTIMATED LEGAL OPINION 3,500.00 2008 125,000 ESTIMATED BOND PRINI1NG I PUBUCATIONS 0.00 2009 125,000 ESTIMATED REGISTRATION (1 TIME - BOOK ENI'RY) 2,225.00 2010 0 CAPlT AL INfEREST (0 MONfHS) 0.00 2011 0 ESTIMATED FISCAL FEE 0.00 2012 0 ESTIMATED BOND RATING FEE 5,500.00 2013 0 EST. DISCOUNf FACfOR (1.60% OF PAR) 16,400.00 2014 0 ROUNDING FACfOR 1,535.00 2015 0 29,160.00 2016 0 TarAL SOFf COSTS OF ISSUANCE 2017 0 2018 0 SUBTarAL 1,025,000.00 2019 0 TOTAU $1,025,000 BONDS DATED: BONDS MATURE: lNI'EREST: 0PI10N: MINIMUM BID: EST. AVERAGE COUPON RATE: EST. NET EFFECTIVE RATE: PAYING AGENf & REGISTRAR: BOND SALE DATE: BOND SALE PLACE: EST. BOND CLOSING DATE: PRELIM. ANALYSIS OCTOBER 1, 1999 DECEMBER I, 2000 THROUGH 2009 JUNE 1,2000 AND SEMIANNUAU.Y TIlEREAFI'ER ON EACH JUNE 1 AND DECEMBER 1. AU. BONDS MATURING INTIffi YEARS 2006 THROUGH 2009, ARE CALLABLE AT TIffi 0PI10N OF THE crrY ON DECEMBER I, 2005 ORANY PAYMENTDATETIffiREAFrERATPAR. $1,008,600.00 4.9604% 5.2284% US BANK TRUST OCTOBER ~ 1999 FIRE HALL OCTOBER ~ 1999