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HomeMy WebLinkAbout9A - Three Bond Redemption Resolutions ',., Il,INNESO~~ MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: ST AFF AGENDA REPORT APRIL 19, 1999 9A RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF THREE BOND REDEMPTION RESOLUTIONS: 1. RESOLUTION 99-XX CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBLIGATION PARK BONDS OF 1973 2. RESOLUTION 99-XX CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBLIGATION REFUNDING PARK BONDS OF 1977 3. RESOLUTION 99-XX CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBLIGATION IMPROVEMENT BONDS OF 1988 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 payoff the remaining debt associated with the following three bond issues: 1.) $280,000 General Obligation Park Bonds of 1973 2.) $280,000 General Obligation Refunding Park Bonds of 1977 3.) $390,000 General Obligation Bonds of 1988 History The City Council initially reviewed two of these three refunding proposals as part of an overall action plan for property tax relief at a workshop conducted on 4/5/99. Upon discussion of the various tax reduction options available, the Council directed Staff to pursue the call redemption procedures for both the 1973 and 1977 park bond Issues. Current Circumstances The City has two remaining general obligation park bonds that require annual property tax levies to pay for the principal and interest on these bonds. These bonds originally financed the acquisition of Lakefront Park along with state grant funding. The first issue is the $280,000 General Obligation Park Bonds of 1973. This issue has a final maturity scheduled for the year 2003. We presently have $75,000 of outstanding bonds left in this issue. Over the next five years our principal and interest payments and paying agent fees average $18,237.50 each year. The second issue is the $280,000 General Obligation Park Bonds of 1977 which is scheduled to be paid off in the year 2000. There is $30,000 of outstanding bonds remaining. The average annual payment is $16,237.50. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 A;-.l EQUAL OPPORTUNITY EMPLOYER H:\BONDSIA99CALLDOC ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: If the City were to use existing funds on hand to payoff these bonds early through what is known as a redemption call, we could accomplish two objectives. The current bond coupon rates range from 5.50% to 5.75%. Since we cannot earn these interest rates in today's investment market, we would be money ahead by paying off these bonds now. Secondly, we would be able to reduce our annual debt service property tax levies associated with these bonds. The final bond issue that would be advantageous for the City to defease is the $390,000 General Obligation Improvement Bonds of 1988. The City Council did not discuss this bond issue on April 5th. There is $75,000 of outstanding special assessment bonds and three years remaining on this bond issue. The current bond coupon rates average 7.60%. A sufficient debt service fund balance is on hand to retire these bonds which would save the city interest cost of $7,442.50 Our financial consultant Juran and Moody concurs with this proposed course of action for these three specific bond redemptions and has prepared the required documents. They would also be responsible for the proper notification to the existing bondholders and publication requirements. Financial Impact Paying off the two general obligation park bonds will decrease our annual property tax levy by an amount of $36,615 .00 because we are eliminating the future bond levy requirements for the years 2000 thru 2003. Also, by redeeming the 1988 outstanding bonds the city will save itself interest dollars of $7,442.50 over the final three years of this bond issue as well. Not only will the property tax levy be reduced by the amount stated above, but the Council's action will achieve a total interest savings of $19,048.75 for the city by paying off these three bond issues. . The following alternatives are available to the City Council; 1. Approve the following resolutions: a) Resolution 99-XX Calling for the Redemption of the Outstanding General Obligation Park Bonds of 1973. b) Resolution 99-XX Calling for the Redemption of the Outstanding General Obligation Refunding Park Bonds of 1977. c) Resolution 99-XX Calling for the Redemption of the Outstanding General Obligation Improvement Bonds of 1988. 2. Continue payment of the existing bonds. Adopt an individual motion and a second to approve each of the three resolutions calling fo the redemption of the outstanding park bonds of 1973 an 1977 a the improvement bonds of 1988. / I , EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA Held: 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 to order on the _ day of 1999, at o'clock P.M. The following members were present: and the following members were absent: Member introduced the following resolution and moved its adoption: RESOLUTION CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBLIGATION PARK BONDS OF 1973 WHEREAS: A. The City Council of the City of Prior Lake, Minnesota issued $280,000 General Obligation Park Bonds of 1973, dated December I, 1973, of which, $75,000 of the bonds maturing on December 1, 1999, and thereafter remain outstanding; and B. All of said bonds maturing on June 1, 1989, and thereafter, are subject to redemption, in whole or in part, and prepayment at the option of the City of Prior Lake, on December L 1988, and on any payment date thereafter at 100.5% plus accmed interest all as provided in the resolution of the City authorizing the issuance of said bonds: and C. The City deems it desirable and in the best interest of the City to call $75,000 of the outstanding of said bonds maturing in the years 1999 through 2003. inclusive, for redemption on June I, 1999, in accordance with said resolution authorizing the issuance of said bonds, and NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota as follows: 1. $75,000 of the General Obligation Park Bonds 1973, dated December 1, 1973, of the City of Prior Lake, MilUlesota, maturing in the years 1999 through 2003. shall be redeemed and prepaid on June I, 1999 at 100.5% of their principal amount plus accrued interest for each such bond called. 2. The City Finance Director is hereby authorized and directed to give mailed notice of call to the bank where said bonds are payable and newspaper publication as required by law. Said notice shall be in substantially the following f0n11: NOTICE OF CALL FOR REDEMPTION CITY OF PRIOR LAKE, MINNESOTA DATED: December 1,1973 GENERAL OBLIGATION PARK BONDS OF 1973 NOTICE IS HEREBY GIVEN that by order of the City Council of the City of Prior Lake, Scott County, Minnesota, there have been called for redemption and prepayment on June 1, 1999 those outstanding bonds of the City designated as General Obligation Park Bonds of 1973, dated December I, 1973, having the stated maturity dates of December I, 1999 through 2003, bearing serial numbers 42 through 56, inclusive, and totaling $75,000 in principal amount. The bonds are being called for redemption at a price of 100.5% of their principal amount plus accrued interest to June 1, 1999, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment to U. S. Bank Trust National Association (formerly know as First Trust N.A.), 180 East Fifth Street, 4th Floor-Bond Drop Window, or ifby mail, to P.O. Box 6411 1, in St. Paul, Minnesota 55164-0111, on or before June 1, 1999. Dated: BY ORDER OF THE CITY COUNCIL Isl Frank Bovles City Manager Important Notice: Under the Interest and Dividend Compliance Act of 1983,31 % will be witWleld if tax identification is not properly certified. Additional Infonnation may be obtained from: JURAN & MOODY 1100 World Trade Center 30 East Seventh Street St. Paul, Minnesota 55101-2091 Telephone No. (612) 224-1500 Attn: Lori A. Giampaolo Public Finance Department ~U_ w... 3. The City Finance Director is hereby authorized and directed to deposit with the bank where said bonds are payable prior to said call date sufficient funds to pay all principal and interest due on the bonds as of the call date. The motion for the adoption of the foregoing resolution was duly seconded by council member and upon a vote taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. STATE OF MINNESOTA COUNTY OF SCOTI CITY OF PRIOR LAKE I, the undersigned, being the duly qualified and acting City Manager of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of the City Council meeting held on the date therein indicated, with the original thereof on file in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to calling for redemption the outstanding General Obligation Park Bonds of 1973, dated December 1, 1973. WITNESS my hand as such City Manager of the City of Prior Lake, Minnesota, this _ day of 1999. City Manager EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA Held: 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 to order on the _ day of 1999, at o'clock P.M. The following mcmbers were present: and the following members were absent: Member introduced the following resolution and moved its adoption: RESOLUTION CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBLIGATION REFUNDING PARK BONDS OF 1977 WHEREAS: A. The City Council of the City of Prior Lakc, Minnesota issued $280,000 General Obligation Refunding Park Bonds of 1977, dated October I, 1977, of which, $30,000 of the bonds maturing on July I, 1999, and thereafter remain outstanding; and B. All of said bonds maturing on July L 1987, and thereafter, are subject to redemption, in whole or in part, and prepayment at the option of the City of Prior Lake, on July 1, 1986, and on any payment date thereafter at 100% plus accmed interest all as provided in the resolution of the City authorizing the issuance of said bonds: and C. The City decms it desirable and in the best intcrcst of the City to call $15,000 of the outstanding of said bonds maturing in the ycar 2000. inclusive. for redcmption on July I, 1999, in accordance with said resolution authorizing thc issuancc of said bonds. and NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake, Milmesota as follows: 1. $15,000 of the General Obligation Refunding Park Bonds 1977, dated October 1,1977, of the City of Prior Lakc. Minnesota. maturing in the ycar 2000, shall be redeemed and prepaid on July I, 1999 at 100% of their principal amount plus accmed interest for each such bond called. 2. The City Fin:mcc Dircctor is hcrcby authorized and dircctcd to givc mailed notice of call to the bank where said bonds arc payable and ncwspaper publication as required by law. Said notice shall be in substantially the following fonn: NOTICE OF CALL FOR REDEMPTION GENERAL OBUGA TION REFUNDING P ARK BONDS OF 1977 DATED: October 1, 1977 CITY OF PRIOR LAKE, MINNESOTA NOTICE IS HEREBY GIVEN that by order of the City Council of the City of Prior Lake, Mirmesota, there have been called for redemption and prepayment on July I, 1999 those outstanding bonds of the City designated as General Obligation Refunding Park Bonds of 1977, dated October I, 1977, having the statt:d maturity date in the year of 2000, bearing serial numbers 54 through 56, inclusive, having the stated coupon rate of 5.50% and totaling $15,000 in principal amount. The bonds are being called for redemption at a price of 100% of their principal amount plus accrued interest to July I, 1999,on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds with subsequent coupons attached for payment at Norwest Bank Minnesota, National Association (fornlerly Northwestern National Bank of Minneapolis), if by mail to: Corporate Trust Operations, Sixth and Marquette Avenue, Mirmeapolis, Minnesota 55479- 0113; or ifin person to: Corporate Trust Bond Window, Northstar East 12th Floor, 608 Second Avenue South, in Minneapolis, Minnesota, on or before July 1, 1999. Dated: BY ORDER OF THE CITY COUNCIL Isl Frank Bo'des City Manager Important Notice: Under the Interest and Dividend Compliance Act of 1983,31 % will be withheld if tax identification is not properly certified. Additional Infornlation may be obtained from: JURAN & MOODY 1100 Minnesota World Trade Center 30 East St:venth Street St. Paul, Minnesota 55 101-2091 Telephone No. (612) 224-1500 Attn: Lori A. Giampaolo Public Finance Department ~ 3. The City Finance Director is hereby authorized and directed to deposit with the bank where said bonds are payable prior to said call date sufficient funds to pay all principal and interest due on the bonds as of the call date. The motion for the adoption of the foregoing resolution was duly seconded by council member and upon a vote taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. STATE OF MINNESOTA COUNTY OF SCOTT CITY OF PRIOR LAKE I, the undersigned. being the duly qualified and acting City Manager of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY that 1 have carcfully compared the attached and foregoing extract of minutes of the City Council meeting held on the date therein indicated, with the original thereof on file in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to calling for redemption the outstanding Gcneral Obligation Refunding Park Bonds of 1977. dated October I, 1977. WITN ESS my hand as stich City Manager of the City of Prior Lake, Minnesota, this _ day of 1999. City Manager L~------~- - .. ~ EXTRACT OF MINUTES OF A MEETING OF THE CITI' COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA Held: 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 to ordcr on the _ day of 1999, at o'clock P.M. The following members were present: and the following members were absent: introduced the following resolution and moved its adoption: Member RESOLUTION CALLING FOR THE REDEMPTION OF THE OUTSTANDING GENERAL OBUGA TION IMPROVEMENT BONDS OF 1988 WHEREAS: A. The City Council of the City of Prior Lake, Minnesota issued $390,000 General Obligation Improvement Bonds of 1988, dated June I, 1988. of which, $75,000 of the bonds maturing on December 1, 1999, and thereafter remain ou tstanding: and B. All of said bonds maturing on December L 1997, and thereafter, are subject to redemption, in whole or in part, and prepayment at the option of the City of Prior Lake, on December 1, 1996 and on any payment date thereafter at 100.5% plus accnled intercst, all as provided in the resolution of the City authorizing the issuance of said bonds: and C. The City deems it dcsirable and in the best intcrest of the City to call $75,000 of the outstanding of said bonds maturing in the years 1999 through 2001, inclusive, for redemption on June L 1999, in accordancc with said resolution authorizing the issuance of said bonds, and NOW THEREFORE. BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota as follows: 1. $75,000 of the General Obligation Improvement Bonds of 1988, dated June 1,1988, of the City of Prior Lake, Minnesota. maturing in the years 1999 through 2001. shall be redeemed and prepaid on June L 1999 at 100.5% of their principal amount plus accrued interest for each such bond called. 2. The City Financc Director is hereby authorized and dirccted to give mailed noticc of call to the bank whcre said bonds arc payable and to all holders of thc bonds. Said notice shall be in substantially thc following fonn: NOTICE OF CALL FOR REDEMPTION GENERAL OBLIGATION IMPROVEMENT BONDS OF 1988 DATED: June I, 1999 CITY OF PRIOR LAKE, MINNESOTA NOTICE IS HEREBY GIVEN that by order of the City Council of the City of Prior Lake, Mimlesota, there have been called for redemption and prepayment on June 1, 1999, those outstanding bonds of the City designated as General Obligation Improvement Bonds of 1988, dated June 1, 1988, totaling $75,000 in principal amount, and having the following stated maturity dates and amounts: Maturitv Date 12-1-1999 12-1-2000 12-1-2001 Amount $ 35,000 $ 20,000 $ 20,000 Cusip The bonds are being called for redemption at a price of 100.5% of their principal amount plus accrued interest to June 1, 1999, on which date all interest on said bonds \'Vill cease to accrue. Holders of the bonds hereby called for redemption are requested to present their certificates for payment to Firstar Trust Company, (as successor for American National Bank & Trust Company), 1555 RiverCellter Drive, Suite 3001, Milwaukee, Wisconsin 53212 on or before June 1, 1999. Dated: , 1999 BY ORDER OF THE CITY COUNCIL Isl Frank Bovles City Manager Important Notice: Under the Interest and Dividend Compliance Act of 1983, 31 % will be withheld if tax identification is not properly certified. Additional Infomlation may be obtained from: JURAN & MOODY 1100 World Trade Center 30 East Seventh Street St. Paul, Minnesota 55101-4901 Telephone No. (612) 224-1500 Attn: Lori A. Giampaolo Public Finance Department 3. The City Finance Director is hereby authorized and directed to deposit with the bank where said bonds are payable prior to said call date sufficient funds to pay all principal and interest due on the bonds as of the call date. The motion for the adoption of the foregoing resolution was duly seconded by council member and upon a vote taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. .. STATE OF MINNESOTA COUNTY OF SCOTT CITY OF PRIOR LAKE I, the undersigned, being the duly qualified and acting City Manager of the City of Prior Lake, Milmesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of the City Council meeting held on the date therein indicated, with the original thereof on file in my office, and the same is a full, tme and complete transcript therefrom insofar as the same relates to calling for redemption the outstanding General Obligation Improvement Bonds of 1988, dated June I, 1988. WITNESS my hand as such City Manager of the City of Prior Lake, Minnesota, this _ day of 1999. City Manager