HomeMy WebLinkAbout9.b. 2015A G.O. Water Utility Revenue Bonds - Authorizing Issuance and Setting Bond Sale
EXECUTIVE SUMMARY
City Council Meeting Date: September 15, 2015
AGENDA ITEM: 2015A G.O. Water Utility Revenue Bonds
- Authorizing Issuance and Setting Bond
Sale
AGENDA SECTION:
New Business
PREPARED BY: Jeff May, Finance Director AGENDA NO. 9.b.
ATTACHMENTS: Resolution and Recommendations APPROVED BY: ddj
RECOMMENDED ACTION: Motion to adopt a Resolution Providing for the Competitive
Negotiated Sale of $1,525,000 General Obligation Utility Revenue Bonds, Series 2015A.
ISSUE
The authorization to issue bonds for the construction of Well #16 and well house.
BACKGROUND
This item is on the agenda for your consideration in authorizing the issuance and setting the sale of
General Obligation Utility Revenue bonds for Well #16 and well house. The repayment of these bonds
will be made from the Water Core Fund.
Bids will be open until Tuesday, October 20, 2015, at 10:00 A.M. at the offices of Springsted Incorporated.
The bids will be tabulated there and then consideration for award of the Bonds will be by the City Council
at 7:00 P.M., Central Time, of the same day.
SUMMARY
Recommend the above motion.
466345v1 JSB RS125-15
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2015-__
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $1,525,000 GENERAL OBLIGATION UTILITY REVENUE
BONDS, SERIES 2015A
WHEREAS, the City Council of the City of Rosemount, Minnesota (the “City”), has heretofore
determined that it is necessary and expedient to issue its $1,525,000 General Obligation Utility
Revenue Bonds, Series 2015A (the “Bonds”) to finance improvements to the City’s water utility
system;
WHEREAS, the City has retained Springsted Incorporated, in Saint Paul, Minnesota (“Springsted”),
as its independent financial advisor and is therefore authorized to sell these obligations by a
competitive negotiated sale in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9);
and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rosemount,
Minnesota, as follows:
1. Authorization; Findings. The City Council hereby authorizes Springsted to solicit bids for
the competitive negotiated sale of the Bonds.
2. Meeting; Bid Opening. This City Council shall meet at the time and place specified in the
Terms of Proposal attached hereto as Exhibit A for the purpose of considering sealed bids for, and
awarding the sale of, the Bonds. The Administrator, or designee, shall open bids at the time and
place specified in such Terms of Proposal.
3. Terms of Proposal. The terms and conditions of the Bonds and the negotiation thereof are
fully set forth in the “Terms of Proposal” attached hereto as Exhibit A and hereby approved and
made a part hereof.
4. Official Statement. In connection with said competitive negotiated sale, the Administrator,
Finance Director and other officers or employees of the City are hereby authorized to cooperate
with Springsted and participate in the preparation of an official statement for the Bonds, and to
execute and deliver it on behalf of the City upon its completion.
(The remainder of this page is intentionally left blank)
RESOLUTION 2015-___
2
466345v1 JSB RS125-15
ADOPTED this 15th day of September, 2015.
______________________________________
William H. Droste, Mayor
ATTEST:
Clarissa Hadler, City Clerk
CERTIFICATION
I hereby certify that the foregoing is a true and correct copy of a resolution presented to and
adopted by the City Council of Rosemount at a duly authorized meeting thereof, held on the 15th
day of September, 2015, as disclosed by the records of said City in my possession.
(SEAL)
Rosemount City Clerk
RESOLUTION 2015-___
A-1
466345v1 JSB RS125-15
EXHIBIT A
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE
THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE
FOLLOWING BASIS:
TERMS OF PROPOSAL
$1,525,000* CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2015A
(BOOK ENTRY ONLY)
Proposals for the Series 2015A City Bonds will be received on Tuesday, October 20, 2015, until
10:00 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300,
Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for
award of the Series 2015A City Bonds will be by the City Council at 7:00 P.M., Central Time, of the
same day.
SUBMISSION OF PROPOSALS
Proposals
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time
of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a
contract between the bidder and the City to purchase the Series 2015A City Bonds regardless of the
manner in which the proposal is submitted.
(a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to
Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior
to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal
price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the
submitted proposal.
OR
(b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via
PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY®
shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder
shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its
electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither
the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid
for any prospective bidder or to provide or ensure electronic access to any qualified prospective
bidder, and neither the City, its agents nor PARITY® shall be responsible for a bidder’s failure to
register to bid or for any failure in the proper operation of, or have any liability for any delays or
RESOLUTION 2015-___
A-2
466345v1 JSB RS125-15
interruptions of or any damages caused by the services of PARITY®. The City is using the services
of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Series
2015A City Bonds, and PARITY® is not an agent of the City.
If any provisions of this Terms of proposal conflict with information provided by PARITY®, this
Terms of proposal shall control. Further information about PARITY®, including any fee charged,
may be obtained from:
PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE SERIES 2015A CITY BONDS
The Series 2015A City Bonds will be dated as of the date of delivery and will bear interest payable
on February 1 and August 1 of each year, commencingAugust 1, 2016. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
The Series 2015A City Bonds will mature February 1 in the years and amounts*as follows:
2017 $140,000
2018 $145,000
2019 $145,000
2020 $150,000
2021 $150,000
2022 $155,000
2023 $155,000
2024 $160,000
2025 $160,000
2026 $165,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2015A City Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2015A City Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public.
Proposals for the Series 2015A City Bonds may contain a maturity schedule providing for a
combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking
fund redemption at a price of par plus accrued interest to the date of redemption scheduled to
conform to the maturity schedule set forth above. In order to designate term bonds, the proposal
must specify “Years of Term Maturities” in the spaces provided on the proposal form.
BOOK ENTRY SYSTEM
The Series 2015A City Bonds will be issued by means of a book entry system with no physical
distribution of Series 2015A City Bonds made to the public. The Series 2015A City Bonds will be
issued in fully registered form and one Series 2015A City Bond, representing the aggregate principal
amount of the Series 2015A City Bonds maturing in each year, will be registered in the name of
Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which
will act as securities depository of the Series 2015A City Bonds. Individual purchases of the Series
2015A City Bonds may be made in the principal amount of $5,000 or any multiple thereof of a
single maturity through book entries made on the books and records of DTC and its participants.
Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the
Series 2015A City Bonds. Transfer of principal and interest payments to participants of DTC will be
the responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants will be the responsibility of such participants and other nominees of beneficial owners.
RESOLUTION 2015-___
A-2
466345v1 JSB RS125-15
The purchaser, as a condition of delivery of the Series 2015A City Bonds, will be required to deposit
the Series 2015A City Bonds with DTC.
REGISTRAR
The City will name the registrar which shall be subject to applicable SEC regulations. The City will
pay for the services of the registrar.
OPTIONAL REDEMPTION
The City may elect on February 1, 2024, and on any day thereafter, to prepay Series 2015A City
Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the
option of the City and in such manner as the City shall determine. If less than all Series 2015A City
Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of
such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in
such maturity to be redeemed and each participant will then select by lot the beneficial ownership
interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued
interest.
SECURITY AND PURPOSE
The Series 2015A City Bonds will be general obligations of the City for which the City will pledge its
full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will
pledge net revenues of the City’s water utility system. The proceeds will be used to finance the
drilling of a water well.
BIDDING PARAMETERS
Proposals shall be for not less than $1,508,225 plus accrued interest, if any, on the total principal
amount of the Series 2015A City Bonds. No proposal can be withdrawn or amended after the time
set for receiving proposals unless the meeting of the City scheduled for award of the Series 2015A
City Bonds is adjourned, recessed, or continued to another date without award of the Series 2015A
City Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The
initial price to the public for each maturity must be 98.0% or greater. Series 2015A City Bonds of the
same maturity shall bear a single rate from the date of the Series 2015A City Bonds to the date of
maturity. No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
To have its proposal considered for award, the lowest bidder is required to submit a good faith
deposit to the City in the amount of $15,250 (the “Deposit”) no later than 1:00 P.M., Central Time
on the day of sale. The Deposit may be delivered as described herein in the form of either (i) a
certified or cashier’s check payable to the City; or (ii) a wire transfer. The lowest bidder shall be
solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither
the City nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If
the Deposit is not received by the specified time, the City may, at its sole discretion, reject the
proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter
award the sale to such bidder.
RESOLUTION 2015-___
A-3
466345v1 JSB RS125-15
Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely
delivered to the City if it is made payable to the City and delivered to Springsted Incorporated,
380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time.
Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon
submission of a federal wire reference number by the specified time. Wire transfer instructions will
be available from Springsted Incorporated following the receipt and tabulation of proposals. The
successful bidder must send an e-mail including the following information: (i) the federal reference
number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies.
Once an award has been made, the Deposit received from the lowest bidder (the “purchaser”) will
be retained by the City and no interest will accrue to the purchaser. The amount of the Deposit will
be deducted at settlement from the purchase price. In the event the purchaser fails to comply with
the accepted proposal, said amount will be retained by the City.
AWARD
The Series 2015A City Bonds will be awarded on the basis of the lowest interest rate to be
determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment
made by the City. The City's computation of the interest rate of each proposal, in accordance with
customary practice, will be controlling.
The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of
matters relating to the receipt of proposals and award of the Series 2015A City Bonds, (ii) reject all
proposals without cause, and (iii) reject any proposal that the City determines to have failed to
comply with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
The City has not applied for or pre-approved a commitment for any policy of municipal bond
insurance with respect to the Series 2015A City Bonds. If the Series 2015A City Bonds qualify for
municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities
to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The
City specifically reserves the right to reject any bid specifying municipal bond insurance, even
though such bid may result in the lowest TIC to the City. All costs associated with the issuance and
administration of such policy and associated ratings and expenses (other than any independent rating
requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer
to issue the policy after the award of the Series 2015A City Bonds shall not constitute cause for
failure or refusal by the successful bidder to accept delivery of the Series 2015A City Bonds.
CUSIP NUMBERS
If the Series 2015A City Bonds qualify for assignment of CUSIP numbers such numbers will be
printed on the Series 2015A City Bonds, but neither the failure to print such numbers on any
Series 2015A City Bond nor any error with respect thereto will constitute cause for failure or refusal
by the purchaser to accept delivery of the Series 2015A City Bonds. The CUSIP Service Bureau
charge for the assignment of CUSIP identification numbers shall be paid by the purchaser.
RESOLUTION 2015-___
A-4
466345v1 JSB RS125-15
SETTLEMENT
On or about November 19, 2015, the Series 2015A City Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of
settlement, payment for the Series 2015A City Bonds shall be made in federal, or equivalent, funds
that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Unless compliance with the terms of payment for the Series 2015A City Bonds has been
made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any
loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Series 2015A City Bonds, to provide annual reports and notices of certain
events. A description of this undertaking is set forth in the Official Statement. The purchaser's
obligation to purchase the Series 2015A City Bonds will be conditioned upon receiving evidence of
this undertaking at or prior to delivery of the Series 2015A City Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of a Preliminary Official Statement containing pertinent
information relative to the Series 2015A City Bonds, and said Preliminary Official Statement will
serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and
Exchange Commission. For copies of the Preliminary Official Statement or for any additional
information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City,
Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone
(651) 223-3000.
A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the
maturity dates, principal amounts and interest rates of the Series 2015A City Bonds, together with
any other information required by law. By awarding the Series 2015A City Bonds to an underwriter
or underwriting syndicate, the City agrees that, no more than seven business days after the date of
such award, it shall provide without cost to the sole underwriter or to the senior managing
underwriter of the syndicate (the “Underwriter” for purposes of this paragraph) to which the Series
2015A City Bonds are awarded up to 25 copies of the Final Official Statement. The City designates
the Underwriter of the syndicate to which the Series 2015A City Bonds are awarded as its agent for
purposes of distributing copies of the Final Official Statement to each Participating Underwriter.
Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall accept designation and
(ii) it shall enter into a contractual relationship with all Participating Underwriters of the Series
2015A City Bonds for purposes of assuring the receipt by each such Participating Underwriter of the
Final Official Statement.
Dated September 15, 2015 BY ORDER OF THE CITY COUNCIL
/s/ Clarissa Hadler
RESOLUTION 2015-___
A-5
466345v1 JSB RS125-15
City Clerk
Recommendations for Issuance of Bonds
City of Rosemount, Minnesota
$1,525,000 General Obligation Utility Revenue Bonds, Series 2015A
$1,445,000 General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B
City of Rosemount Port Authority, Minnesota
$3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A
The City Council has under consideration the issuance of bonds to (i) finance the drilling of a new well and
constructing a well house for the Water Utility (the “Utility Bonds”) and (ii) refund an outstanding issue of general
obligation capital improvement plan bonds to achieve interest cost savings (the “CIP Bonds”). The Port Authority
Board has under consideration the issuance of bonds to refund an outstanding issue of general obligation tax
increment bonds, secured by a general obligation pledge of the City, to achieve interest cost savings (the “Port
Authority Bonds”) (collectively, the “Bonds”). This document provides information relative to the proposed issuance.
KEY EVENTS: The following summary schedule includes the timing of some of the key events that will
occur relative to the bond issuance.
September 15, 2015 City Council and Port Authority Board set sale date
and terms; City Council approves its general
obligation pledge for the Port Authority issue
Week of October 5, 2015 Rating conference is conducted
Est. October 16, 2015 Receipt of rating
October 20, 2015, 10:00 AM Competitive proposals are received
October 20, 2015, 7:00 PM City Council and Port Authority Board consider
award of bonds
On or about November 19, 2015 Proceeds are received
RATING: An application will be made to Moody’s Investors Service for a rating on the Bonds. The
City’s general obligation debt is currently rated 'Aa2' by Moody’s.
THE MARKET: Performance of the tax-exempt market is often measured by the Bond Buyer’s Index (“BBI”)
which measures the yield of high grade municipal bonds in the 20th year for general
obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the BBI 25
Bond Index). The following chart illustrates these two indices over the past five years.
St
u
d
y
N
o
.
:
0
0
7
0
4
.
1
3
1
Da
t
e
S
e
p
t
e
m
b
e
r
8
,
2
0
1
5
Page 2
POST ISSUANCE
COMPLIANCE:
The issuance of these bonds will result in post-issuance compliance responsibilities. The
responsibilities are in two primary areas: i) compliance with federal arbitrage requirements
and ii) compliance with secondary disclosure requirements.
Federal arbitrage requirements include a wide range of implications that have been taken into
account as this issue has been structured. Post-issuance compliance responsibilities for tax-
exempt issues include both rebate and yield restriction provisions of the IRS Code. In general
terms the arbitrage requirements control the earnings on unexpended bond proceeds,
including investment earnings, moneys held for debt service payments (which are considered
to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any
“excess earnings” will need to be paid to the IRS to maintain the tax-exempt status of the
Bonds. Any interest earnings on gross bond proceeds or debt service funds should not be
spent until it has been determined based on actual facts that they are not “excess earnings” as
defined by the IRS Code.
The arbitrage rules provide spend-down exceptions for proceeds that are spent within either a
6-month, 18-month or 24-month period in accordance with certain spending criteria. Proceeds
that qualify for an exception will be exempt from rebate. These exceptions are based on
actual expenditures and not based on reasonable expectations, and expenditures, including
any investment proceeds will have to meet the spending criteria to qualify for the exclusion.
The three series of bonds will have the following rebate thing:
Utility Bonds – The City expects to meet the 18-month spend-down exception.
CIP Bonds – Because this is a current refunding that will close within 90 days of the
call date of the refunded issue, the CIP Bonds will meet the 6-month spend-down
exception.
Port Authority Bonds – This will not meet a spend-down exception but as an advance
refunding the proceeds will be invested at a yield no greater than the yield on the Port
Authority Bonds. Therefore there will be no rebate requirement.
Regardless of whether the issue qualifies for an exemption from the rebate provisions, yield
restriction provisions will apply to the debt service fund under certain conditions and any
unspent bond proceeds remaining after three years. These funds should be monitored
throughout the life of the Bonds.
Secondary disclosure requirements result from an SEC requirement that underwriters provide
ongoing disclosure information to investors. To meet this requirement, any prospective
underwriter will require the City to commit to providing the information needed to comply under
a continuing disclosure agreement.
Springsted and the City will enter into an Agreement for Municipal Advisor Services, under
which Springsted will provide arbitrage and continuing disclosure compliance services for the
City and the Port Authority.
RISKS/SPECIAL
CONSIDERATIONS:
The outcome of this financing will rely on the market conditions at the time of the sale. Any
projections included herein are estimates based on current market conditions.
Page 3
SUPPLEMENTAL
INFORMATION AND
BOND RECORD:
Supplementary information will be available to staff including detailed terms and conditions of
sale, comprehensive structuring schedules and information to assist in meeting post-issuance
compliance responsibilities.
Upon completion of the financing, a bond record will be provided that contains pertinent
documents and final debt service calculations for the transaction.
SALE TERMS AND
MARKETING:
Variability of Issue Size: A specific provision in the sale terms permits modifications to the
issue size and/or maturity structure to customize the issue once the price and interest rates
are set on the day of sale.
Prepayment Provisions:
Utility Bonds: Utility Bonds maturing on or after February 1, 2025 may be prepaid at a price of
par plus accrued interest on or after February 1, 2024.
CIP Bonds: CIP Bonds maturing on or after February 1, 2024 may be prepaid at a price of par
plus accrued interest on or after February 1, 2023.
Port Authority Bonds: Port Authority Bonds maturing on or after February 1, 2025 may be
prepaid at a price of par plus accrued interest on or after February 1, 2024.
Bank Qualification: The City and the Port Authority do not expect to issue more than $10
million in tax-exempt obligations that count against the $10 million limit for this calendar year;
therefore, the Bonds are designated as bank qualified.
Good Faith Deposit: The lowest bidder will be required to provide a good faith deposit within a
specified time after receipt of proposals. The good faith deposit will be deducted from the
purchase price otherwise due at the time of closing. In the event the lowest bidder fails to
comply with the accepted bid proposal, the Issuer will retain the good faith deposit.
$1,525,000 General Obligation Utility Revenue Bonds, Series 2015A
Description of Issue
PURPOSE: Proceeds of the Utility Bonds will be used to finance the cost of drilling Well #16 and
constructing a well house for the City’s Water Utility.
AUTHORITY: Statutory Authority: The Utility Bonds are being issued pursuant to Minnesota Statutes,
Chapters 444 and 475.
Statutory Requirements: Pursuant to Minnesota Statutes, Chapter 444 and the resolution
awarding the Utility Bonds, the City will covenant to maintain rates in an amount sufficient to
generate revenues to support the operation of the City’s Water Utility fund and to pay debt
service. The City has five other outstanding issues payable entirely or in part from the Water
Utility fund.
Page 4
The table below shows the net revenue calculation and remaining capacity to issue debt
based on projected debt service on the Utility Bonds:
City of Rosemount Water Utility
Net Revenues Available For Debt Service
Fiscal Year Ended December 31, 2014
Operating Revenue $ 1,616,927
Operating Expense (1,925,438)
Net Operating Income (Loss) (308,511)
Add Back Depreciation and amortization 782,249
Add Connection Fees 467,164
Add Other income 105,515
Available for Debt Service 1,046,417
Maximum Annual Debt Service 809,047
Surplus (Shortfall) $ 237,370
Coverage with connection fees 1.29 times
Coverage without connection fees 0.72 times
Source: City of Rosemount Comprehensive Annual Financial Reports, for the Year Ended
December 31, 2014.
SECURITY AND
SOURCE OF
PAYMENT:
The Bonds will be general obligations of the City, secured by its full faith and credit and taxing
power. The Bonds will be paid entirely from net revenues of the Water Utility fund.
STRUCTURING
SUMMARY:
At the direction of the City, the Utility Bonds have been structured over a term of ten years with
level annual debt service.
SCHEDULES
ATTACHED:
Schedules attached include a sources and uses of funds and estimated net debt service
requirements, including existing water utility debt service, given the current interest
environment.
$1,445,000 General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B
Description of Issue
PURPOSE: Proceeds of the CIP Bonds, together with $100,000 of funds being contributed by the City, will
be used to refund the February 1, 2017 through 2025 maturities of the City’s General
Obligation Capital Improvement Plan Bonds, Series 2005A, dated June 15, 2005 (the “Series
2005A Bonds”). The maturities to be refunded are outstanding in the aggregate principal
amount of $1,490,000. The February 1, 2016 maturity is not callable and will not be refunded.
The Series 2005A Bonds were originally issued to finance the construction and equipping of a
new fire station.
Page 5
AUTHORITY: Statutory Authority: The CIP Bonds are being issued pursuant to Minnesota Statutes, Chapter
475.
SECURITY AND
SOURCE OF
PAYMENT:
The CIP Bonds will be general obligations of the City, secured by its full faith and credit and
taxing power and will be paid from ad valorem property taxes.
The City will make its first levy for the CIP Bonds in 2015 for collection in 2016. Each year,
first-half collection of taxes will pay the interest due August 1. Second-half collections of taxes,
together with surplus first-half collections, will pay the principal and interest due the following
February 1.
STRUCTURING
SUMMARY:
At the direction of the City, the CIP Bonds have been structured over a term matching that of
the Series 2005A Bonds to provide for even annual savings.
On February 1, 2016, the City will use (i) previously collected tax levies to pay the scheduled
principal and interest due on the Series 2005A Bonds and (ii) the proceeds of the Bonds to
redeem the remaining $1,490,000 outstanding principal on the Series 2005A Bonds.
Beginning
with the August 1, 2016 interest payment, the City will begin to make debt service payments
on the CIP Bonds, realizing the interest cost savings.
Based on current interest rates, this refunding is projected to result in average annual savings
of approximately $26,960 resulting in total future value savings of approximately $142,714,
with a net present value of $123,073. These savings are net, after payment of all expenses
related to the transaction.
SCHEDULES
ATTACHED:
Schedules attached include: a preliminary feasibility summary, estimated debt service
requirements and interest cost savings, given the current interest rate environment.
$3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A
Description of Issue
PURPOSE: Proceeds of the Port Authority Bonds will be used to refund the February 1, 2024 through
2032 maturities of the Authority’s General Obligation Tax Increment Bonds, Series 2008B,
dated April 10, 2008 (the “Series 2008B Bonds”). The maturities to be refunded are
outstanding in the aggregate principal amount of $3,275,000. This transaction is being
conducted as an advance crossover refunding to achieve interest cost savings and to
accelerate the repayment of principal.
The Series 2008B Bonds were originally issued to finance land acquisition for the Stonebridge
Project in Core Block East and refinance the CPDC Notes in the Brockway/Harmony
development in the City.
AUTHORITY: The Port Authority Bonds are being issued pursuant to Minnesota Statutes, Chapters 469 and
475.
SECURITY AND
SOURCE OF
PAYMENT:
The Port Authority Bonds will be general obligations of the City, secured by its full faith and
credit and taxing power and will be paid from tax increment revenue generated from the
Downtown/Brockway Tax Increment District.
The issuance of the Port Authority Bonds is being conducted as a crossover advance
Page 6
refunding in which the proceeds of the Port Authority Bonds are placed in an escrow account
with a major bank and invested in government securities. These investments and their
earnings are structured to pay interest on the Port Authority Bonds to and including February
1, 2017 (the call date of the Series 2008B Bonds), at which time the escrow account will
prepay the outstanding principal of the Series 2008B Bonds. The City will continue to pay the
originally scheduled debt service payments on the Series 2008B Bonds through the February
1, 2017 call date. After the call date, the City will cross over and begin making debt service
payments on the Port Authority Bonds, taking advantage of the lower interest rates.
STRUCTURING
SUMMARY:
In consultation with the City and the Port Authority, the Port Authority Bonds have been
structured over a term of 17 years to provide for approximately even annual savings.
The Series 2008B Bonds did not begin amortizing principal until February 1, 2024, because it
was structured around a companion issue, the General Obligation Taxable Tax Increment
Bonds, Series 2008A which had a final maturity of February 1, 2024. Because of the
anticipated favorable level of interest cost savings in this current transaction, the Port Authority
is able to begin amortizing principal six years sooner, beginning in 2018, and still achieve cash
flow savings.
Based on current interest rates, this refunding is projected to result in average annual savings
of $18,837, resulting in total future value savings of approximately $283,258, with a net
present value of $224,931. These saving are after payment of all expenses related to the
transaction.
SCHEDULES
ATTACHED:
Schedules attached include: a preliminary feasibility summary, estimated debt service
requirements and interest cost savings, given the current interest rate environment.
FEDERAL
CONSIDERATIONS
AND/OR
REQUIREMENTS:
The Port Authority Bonds are an advance refunding under federal tax law and may not
themselves be advance refunded using tax exempt bonds. If market conditions permit, a
current refunding, where closing occurs within 90 days of the prepayment of the refunded
bonds, could be done at or after the call date. Tax exempt advance refunding transactions
have more restrictive federal arbitrage limitations than current refunding issues as they pertain
to the escrow account. Coincident with the sale of the Port Authority Bonds, a verification
agent will be retained by the Port Authority to confirm that the refunding escrow is in
compliance with federal yield restrictions and will also verify the adequacy of the escrow to
satisfy its cash flow requirements.
Page 7
$1,525,000
City of Rosemount, Minnesota
General Obligation Utility Revenue Bonds, Series 2015A
Sources & Uses
Dated 11/19/2015 | Delivered 11/19/2015
Sources Of Funds
Par Amount of Bonds............................................................................................................................................$1,525,000.00
Total Sources.....................................................................................................................................................$1,525,000.00
Uses Of Funds
Deposit to Project Construction Fund....................................................................................................................1,450,000.00
Costs of Issuance.................................................................................................................................................54,150.00
Total Underwriter's Discount (1.100%)................................................................................................................16,775.00
Rounding Amount..................................................................................................................................................4,075.00
Total Uses...........................................................................................................................................................$1,525,000.00
Series 2015A GO Utility R | SINGLE PURPOSE | 8/28/2015 | 12:58 PM
Page 8
$1,525,000
City of Rosemount, Minnesota
General Obligation Utility Revenue Bonds, Series 2015A
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I Existing D/S Net New D/S 105% Overlevy
02/01/2016 - - - - 496,060.00 496,060.00 520,863.00
02/01/2017 140,000.00 0.950% 32,655.00 172,655.00 396,730.00 569,385.00 597,854.25
02/01/2018 145,000.00 1.100% 25,882.50 170,882.50 321,802.50 492,685.00 517,319.25
02/01/2019 145,000.00 1.300% 24,287.50 169,287.50 62,805.00 232,092.50 243,697.13
02/01/2020 150,000.00 1.500% 22,402.50 172,402.50 67,200.00 239,602.50 251,582.63
02/01/2021 150,000.00 1.750% 20,152.50 170,152.50 66,420.00 236,572.50 248,401.13
02/01/2022 155,000.00 1.900% 17,527.50 172,527.50 65,280.00 237,807.50 249,697.88
02/01/2023 155,000.00 2.050% 14,582.50 169,582.50 64,140.00 233,722.50 245,408.63
02/01/2024 160,000.00 2.200% 11,405.00 171,405.00 63,000.00 234,405.00 246,125.25
02/01/2025 160,000.00 2.350% 7,885.00 167,885.00 66,560.00 234,445.00 246,167.25
02/01/2026 165,000.00 2.500% 4,125.00 169,125.00 - 169,125.00 177,581.25
Total $1,525,000.00 - $180,905.00 $1,705,905.00 $1,669,997.50 $3,375,902.50 $3,544,697.63
SIGNIFICANT DATES
Dated Date...................................................................................................................................................................... 11/19/2015
Delivery Date...................................................................................................................................................................11/19/2015
First Coupon Date........................................................................................................................................................... 8/01/2016
Yield Statistics
Bond Year Dollars...........................................................................................................................................................$8,905.00
Average Life...................................................................................................................................................................5.839 Years
Average Coupon.............................................................................................................................................................2.0314992%
Net Interest Cost (NIC).................................................................................................................................................... 2.2198765%
True Interest Cost (TIC)...................................................................................................................................................2.2248626%
Bond Yield for Arbitrage Purposes.................................................................................................................................2.0209833%
All Inclusive Cost (AIC)................................................................................................................................................... 2.9047818%
IRS Form 8038
Net Interest Cost............................................................................................................................................................. 2.0314992%
Weighted Average Maturity............................................................................................................................................ 5.839 Years
Series 2015A GO Utility R | SINGLE PURPOSE | 9/ 8/2015 | 1:19 PM
Page 9
$1,445,000
City of Rosemount, Minnesota
General Obligation CIP Refunding Bonds, Series 2015B
Current Refunding of Series 2005A
Preliminary Feasibility Summary
Dated 11/19/2015 | Delivered 11/19/2015
Sources Of Funds
Par Amount of Bonds...............................................................................................................................................$1,445,000.00
Transfers from Prior Issue Debt Service Funds......................................................................................................100,000.00
Total Sources........................................................................................................................................................$1,545,000.00
Uses Of Funds
Deposit to Current Refunding Fund..........................................................................................................................1,490,000.00
Costs of Iss uance....................................................................................................................................................43,000.00
Total Underwriter's Discount (0.825%).................................................................................................................. 11,921.25
Rounding Amount.....................................................................................................................................................78.75
Total Uses..............................................................................................................................................................$1,545,000.00
ISSUES REFUNDED AND CALL INFORMATION
Prior Issue Call Price................................................................................................................................................100.000%
Prior Issue Call Date.................................................................................................................................................2/01/2016
SAVINGS INFORMATION
Net Future Value Benefit..........................................................................................................................................$142,713.75
Net Present Value Benefit........................................................................................................................................$123,073.13
Net PV Benefit / $1,667,994.38 PV Refunded Debt Service....................................................................................7.379%
BOND STATISTICS
Average Life............................................................................................................................................................5.318 Years
Average Coupon......................................................................................................................................................1.7023686%
Net Interest Cost (NIC).............................................................................................................................................1.8575124%
True Interest Cost (TIC)............................................................................................................................................1.8595848%
Series 2015A Ref 2005A | Series 2008 Ref 2000A | 8/31/2015 | 8:59 AM
Page 10
$1,445,000
City of Rosemount, Minnesota
General Obligation CIP Refunding Bonds, Series 2015B
Current Refunding of Series 2005A
Debt Service Schedule
Date Principal Coupon Interest Total P+I
02/01/2016 - - - -
02/01/2017 150,000.00 0.650% 25,605.00 175,605.00
02/01/2018 155,000.00 1.000% 20,362.50 175,362.50
02/01/2019 155,000.00 1.100% 18,812.50 173,812.50
02/01/2020 155,000.00 1.300% 17,107.50 172,107.50
02/01/2021 160,000.00 1.450% 15,092.50 175,092.50
02/01/2022 160,000.00 1.650% 12,772.50 172,772.50
02/01/2023 165,000.00 1.800% 10,132.50 175,132.50
02/01/2024 170,000.00 2.000% 7,162.50 177,162.50
02/01/2025 175,000.00 2.150% 3,762.50 178,762.50
Total $1,445,000.00 -$130,810.00 $1,575,810.00
Yield Statistics
Bond Year Dollars......................................................................................................................................................$7,684.00
Average Life..............................................................................................................................................................5.318 Years
Average Coupon........................................................................................................................................................1.7023686%
Net Interest Cost (NIC)............................................................................................................................................... 1.8575124%
True Interest Cost (TIC)..............................................................................................................................................1.8595848%
Bond Yield for Arbitrage Purposes............................................................................................................................1.6948072%
All Inclusive Cost (AIC).............................................................................................................................................. 2.4698321%
IRS Form 8038
Net Interest Cost........................................................................................................................................................ 1.7023686%
Weighted Average Maturity....................................................................................................................................... 5.318 Years
Series 2015A Ref 2005A | Series 2008 Ref 2000A | 8/31/2015 | 8:59 AM
Page 11
$1,445,000
City of Rosemount, Minnesota
General Obligation CIP Refunding Bonds, Series 2015B
Current Refunding of Series 2005A
Debt Service Comparison
Date Total P+I Existing D/S Net New D/S Old Net D/S Savings
02/01/2016 - 168,357.50 168,357.50 168,357.50 -
02/01/2017 175,605.00 - 175,605.00 201,315.00 25,710.00
02/01/2018 175,362.50 - 175,362.50 200,715.00 25,352.50
02/01/2019 173,812.50 - 173,812.50 199,915.00 26,102.50
02/01/2020 172,107.50 - 172,107.50 198,915.00 26,807.50
02/01/2021 175,092.50 - 175,092.50 202,715.00 27,622.50
02/01/2022 172,772.50 - 172,772.50 200,950.00 28,177.50
02/01/2023 175,132.50 - 175,132.50 203,980.00 28,847.50
02/01/2024 177,162.50 - 177,162.50 206,555.00 29,392.50
02/01/2025 178,762.50 - 178,762.50 203,385.00 24,622.50
Total $1,575,810.00 $168,357.50 $1,744,167.50 $1,986,802.50 $242,635.00
PV Analysis Summary (Net to Net)
Net FV Cashflow Savings.............................................................................................................................. 242,635.00
Gross PV Debt Service Savings.....................................................................................................................222,994.38
Net PV Cashflow Savings @ 1.695%(Bond Yield)....................................................................................... 222,994.38
Transfers from Prior Issue Debt Service Fund...............................................................................................(100,000.00)
Contingency or Rounding Amount.................................................................................................................. 78.75
Net Future Value Benefit.................................................................................................................................$142,713.75
Net Present Value Benefit...............................................................................................................................$123,073.13
Net PV Benefit / $308,524.81 PV Refunded Interest...................................................................................... 39.891%
Net PV Benefit / $1,667,994.38 PV Refunded Debt Service...........................................................................7.379%
Net PV Benefit / $1,490,000 Refunded Principal............................................................................................8.260%
Net PV Benefit / $1,445,000 Refunding Principal...........................................................................................8.517%
Refunding Bond Information
Refunding Dated Date.....................................................................................................................................11/19/2015
Refunding Delivery Date................................................................................................................................. 11/19/2015
Series 2015A Ref 2005A | Series 2008 Ref 2000A | 8/31/2015 | 8:59 AM
Page 12
$3,460,000
City of Rosemount Port Authority, Minnesota
General Obligation TIF Refunding Bonds, Series 2015A
Crossover Refunding of Series 2008B
Preliminary Feasibility Summary
Dated 11/19/2015 | Delivered 11/19/2015
Sources Of Funds
Par Amount of Bonds...............................................................................................................................................$3,460,000.00
Total Sources........................................................................................................................................................$3,460,000.00
Uses Of Funds
Deposit to Crossover Escrow Fund........................................................................................................................ 3,368,514.01
Costs of Issuance....................................................................................................................................................51,000.00
Total Underwriter's Discount (1.150%).................................................................................................................. 39,790.00
Rounding Amount.....................................................................................................................................................695.99
Total Uses..............................................................................................................................................................$3,460,000.00
ISSUES REFUNDED AND CALL INFORMATION
Prior Issue Call Price................................................................................................................................................ 100.000%
Prior Issue Call Date.................................................................................................................................................2/01/2017
SAVINGS INFORMATION
Net Future Value Benefit..........................................................................................................................................$283,258.49
Net Present Value Benefit........................................................................................................................................$224,931.28
Net PV Benefit / $3,576,983.77 PV Refunded Debt Service....................................................................................6.288%
BOND STATISTICS
Average Life............................................................................................................................................................12.449 Years
Average Coupon......................................................................................................................................................2.7488775%
Net Interest Cost (NIC)............................................................................................................................................. 2.8412577%
True Interest Cost (TIC)............................................................................................................................................2.8463359%
Series 2015B Ref 2008B Po | Series 2008 Ref 2000A | 8/31/2015 | 9:00 AM
Page 13
$3,460,000
City of Rosemount Port Authority, Minnesota
General Obligation TIF Refunding Bonds, Series 2015A
Crossover Refunding of Series 2008B
Debt Service Schedule
Date Principal Coupon Interest Total P+I
02/01/2016 - - - -
02/01/2017 - - 109,929.00 109,929.00
02/01/2018 20,000.00 1.000% 91,607.50 111,607.50
02/01/2019 20,000.00 1.100% 91,407.50 111,407.50
02/01/2020 20,000.00 1.300% 91,187.50 111,187.50
02/01/2021 25,000.00 1.450% 90,927.50 115,927.50
02/01/2022 25,000.00 1.650% 90,565.00 115,565.00
02/01/2023 25,000.00 1.850% 90,152.50 115,152.50
02/01/2024 60,000.00 2.000% 89,690.00 149,690.00
02/01/2025 375,000.00 2.100% 88,490.00 463,490.00
02/01/2026 380,000.00 2.300% 80,615.00 460,615.00
02/01/2027 390,000.00 2.400% 71,875.00 461,875.00
02/01/2028 400,000.00 2.600% 62,515.00 462,515.00
02/01/2029 410,000.00 2.800% 52,115.00 462,115.00
02/01/2030 425,000.00 3.000% 40,635.00 465,635.00
02/01/2031 435,000.00 3.100% 27,885.00 462,885.00
02/01/2032 450,000.00 3.200% 14,400.00 464,400.00
Total $3,460,000.00 - $1,183,996.50 $4,643,996.50
Yield Statistics
Bond Year Dollars.....................................................................................................................................................$43,072.00
Average Life............................................................................................................................................................. 12.449 Years
Average Coupon.......................................................................................................................................................2.7488775%
Net Interest Cost (NIC).............................................................................................................................................. 2.8412577%
True Interest Cost (TIC).............................................................................................................................................2.8463359%
Bond Yield for Arbitrage Purposes...........................................................................................................................2.7356485%
All Inclusive Cost (AIC)............................................................................................................................................. 2.9904895%
IRS Form 8038
Net Interest Cost....................................................................................................................................................... 2.7488775%
Weighted Average Maturity...................................................................................................................................... 12.449 Years
Series 2015B Ref 2008B Po | Series 2008 Ref 2000A | 8/31/2015 | 9:00 AM
Page 14
$3,460,000
City of Rosemount Port Authority, Minnesota
General Obligation TIF Refunding Bonds, Series 2015A
Crossover Refunding of Series 2008B
Debt Service Comparison
Date Total P+I Escrow Existing D/S Net New D/S Old Net D/S Savings
02/01/2016 - - 66,036.25 66,036.25 66,036.25 -
02/01/2017 109,929.00 (3,384,929.00) 3,407,072.50 132,072.50 132,072.50 -
02/01/2018 111,607.50 - - 111,607.50 132,072.50 20,465.00
02/01/2019 111,407.50 - - 111,407.50 132,072.50 20,665.00
02/01/2020 111,187.50 - - 111,187.50 132,072.50 20,885.00
02/01/2021 115,927.50 - - 115,927.50 132,072.50 16,145.00
02/01/2022 115,565.00 - - 115,565.00 132,072.50 16,507.50
02/01/2023 115,152.50 - - 115,152.50 132,072.50 16,920.00
02/01/2024 149,690.00 - - 149,690.00 167,072.50 17,382.50
02/01/2025 463,490.00 - - 463,490.00 480,672.50 17,182.50
02/01/2026 460,615.00 - - 460,615.00 481,672.50 21,057.50
02/01/2027 461,875.00 - - 461,875.00 482,072.50 20,197.50
02/01/2028 462,515.00 - - 462,515.00 481,872.50 19,357.50
02/01/2029 462,115.00 - - 462,115.00 480,875.00 18,760.00
02/01/2030 465,635.00 - - 465,635.00 484,270.00 18,635.00
02/01/2031 462,885.00 - - 462,885.00 481,855.00 18,970.00
02/01/2032 464,400.00 - - 464,400.00 483,832.50 19,432.50
Total $4,643,996.50 (3,384,929.00) $3,473,108.75 $4,732,176.25 $5,014,738.75 $282,562.50
PV Analysis Summary (Net to Net)
Net FV Cashflow Savings.......................................................................................................................................282,562.50
Gross PV Debt Service Savings............................................................................................................................. 224,235.29
Net PV Cashflow Savings @ 2.736%(Bond Yield)................................................................................................224,235.29
Contingency or Rounding Amount...........................................................................................................................695.99
Net Future Value Benefit......................................................................................................................................... $283,258.49
Net Present Value Benefit....................................................................................................................................... $224,931.28
Net PV Benefit / $1,263,237.95 PV Refunded Interest............................................................................................17.806%
Net PV Benefit / $3,576,983.77 PV Refunded Debt Service................................................................................... 6.288%
Net PV Benefit / $3,275,000 Refunded Principal.................................................................................................... 6.868%
Net PV Benefit / $3,460,000 Refunding Principal....................................................................................................6.501%
Refunding Bond Information
Refunding Dated Date..............................................................................................................................................11/19/2015
Refunding Delivery Date..........................................................................................................................................11/19/2015
Series 2015B Ref 2008B Po | Series 2008 Ref 2000A | 8/31/2015 | 9:00 AM