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Home My WebLink About4.a. 2015 Refunding-Port-Set Sale SUM EXECUTIVE SUMMARY Port Authority Meeting Date: September 15, 2015 AGENDA ITEM: 2015A G.O. TIF Refunding Bonds - AGENDA SECTION: Authorizing Issuance and Setting Bond Sale New Business PREPARED BY: AGENDA NO. Jeff May, Finance Director4.a. ATTACHMENTS: APPROVED BY: Resolution and Recommendations ddj RECOMMENDED ACTION: Motion to adopt a Resolution Providing for the Competitive Negotiated Sale of $3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A. ISSUE The authorization to issue bonds for the crossover refunding of one current Port Authority bond issue. BACKGROUND This item is on the agenda for your consideration in authorizing the issuance and setting the sale of General Obligation Tax Increment (TIF) Refunding bonds for the current bonds (G.O. Tax Increment Bonds, Series 2008B). The main reason for doing this refunding is because of the market today and the lower interest rates that should be available to us. These lower interest rates will result in present value savings and actual interest savings on the payments that we will make over the life of the bonds. The refunding will keep the remaining life of the current bonds in place we will not be extending any of our debt to do these refundings. The net present value benefit for this Port Authority issue is estimated to be $224,931.28 and the estimated actual interest savings that will be realized over the life of the issue is $370,742.25 (approximately $17,000 - $22,000 per year over the remaining 15 years after the crossover refunding takes place in 2017). This is also the approximate extra amount that we will have available for future TIF district projects over and above previous calculations. 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 Port Authority at 6:00 P.M., Central Time, of the same day. SUMMARY Recommend the above motion. ROSEMOUNT PORT AUTHORITY DAKOTA COUNTY, MINNESOTA RESOLUTION 2015-01 RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $3,460,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2015A WHEREAS, the Board of Commissioners of the Rosemount Port Authority, Minnesota (the Authority), has heretofore determined that it is necessary and expedient to issue its $3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A (the Bonds) to refund the Increment Bonds, Series 2008B, dated April 10, 2008; WHEREAS, the Authority 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 Board of Commissioners of the Rosemount Port Authority, Minnesota, as follows: 1.Authorization; Findings. The Board of Commissioners hereby authorizes Springsted to solicit bids for the competitive negotiated sale of the Bonds. 2.Meeting; Bid Opening. This Board of Commissioners 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 Authority 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 Authority upon its completion. (The remainder of this page is intentionally left blank) 467701v1 JSB RS125-16 RESOLUTION 2015-01 ADOPTED this 15th day of September, 2015. ______________________________________ Chair ATTEST: Executive Director Motion by: Seconded by: Voted in favor: Voted Against: Members Absent: 2 467701v1 JSB RS125-16 RESOLUTION 2015-01 CERTIFICATE STATE OF MINNESOTA ) COUNTY OF DAKOTA ) ss ROSEMOUNT PORT AUTHORITY ) I am the duly appointed, acting and qualified Executive Director of the Rosemount Port Authority do hereby certify that I have examined the Rosemount Port Authority records and the Minute Book th of said Authority for the meeting of the 15 of September, 2015 and that the attached copy of the Resolution 2015-___ RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $3,460,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2015A was approved and is a true and correct copy of the Authority Proceedings relating to said Resolution. IN WITNESS WHEREOF, I have hereunto set my hand and seal of said Authority this ____ day of September, 2015. Executive Director Rosemount Port Authority Dakota County, Minnesota 467701v1 JSB RS125-16 RESOLUTION 2015-01 EXHIBIT A THE AUTHORITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $3,460,000* ROSEMOUNT PORT AUTHORITY, MINNESOTA GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2015A (BOOK ENTRY ONLY) AUTHORITY Proposals for the 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 Authority Bonds will be by the Board of Commissioners at6:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS shallSpringsted 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 Authority to purchase the Authority Bonds regardless of the manner in which the proposal is submitted. Sealed Bidding. (a) 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 Electronic Bidding. (b) 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 Authority, its agents nor PARITY shall have any duty or obligation to undertake registration to bid for any prospective bidder or to A-1 467701v1 JSB RS125-16 RESOLUTION 2015-01 provide or ensure electronic access to any qualified prospective bidder, and neither the ® Authority, its agents nor PARITY shall be responsible for a bidde for any failure in the proper operation of, or have any liability for any delays or interruptions of ® or any damages caused by the services of PARITY. The Authority is using the services of ® PARITY solely as a communication mechanism to conduct the electronic bidding for the ® Authority Bonds, and PARITY is not an agent of the Authority. ® 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: ®nd PARITY, 1359 Broadway, 2 Floor, New York, New York 10018 Customer Support: (212) 849-5000 DETAILS OF THE AUTHORITY BONDS The Authority Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2016. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Authority Bonds will mature February 1 in the years and amounts* as follows: 2018 $20,000 2021 $25,000 2024 $ 60,000 2027 $390,000 2030 $425,000 2019 $20,000 2022 $25,000 2025 $375,000 2028 $400,000 2031 $435,000 2020 $20,000 2023 $25,000 2026 $380,000 2029 $410,000 2032 $450,000 * The Authority reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Authority 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 Authority Bonds as that of the original proposal. Gross spread is the differential between the price paid to the Authority for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Authority 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 proposal form. BOOK ENTRY SYSTEM The Authority Bonds will be issued by means of a book entry system with no physical distribution of Authority Bonds made to the public. The Authority Bonds will be issued in fully registered form and one Authority Bond, representing the aggregate principal amount of the Authority Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee depository of the Authority Bonds. Individual purchases of the Authority Bonds may be made in A-2 467701v1 JSB RS125-16 RESOLUTION 2015-01 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 Authority 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. The purchaser, as a condition of delivery of the Authority Bonds, will be required to deposit the Authority Bonds with DTC. REGISTRAR The Authority will name the registrar which shall be subject to applicable SEC regulations. The Authority will pay for the services of the registrar. OPTIONAL REDEMPTION The Authority may elect on February 1, 2024, and on any day thereafter, to prepay Authority 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 Authority and in such manner as the Authority shall determine. If less than all Authority Bonds of a maturity are called for redemption, the Authority 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 Authority Bonds are full faith and credit obligations of the City of Rosemount, Minnesota on all property in the City for their payment. In addition, the Authority will pledge tax increment revenue from the Downtown/Brockway Tax Increment District. The proceeds of the Authority Bonds will be used to refund the February 1, 2024 through February 1, 2032 maturities of the . BIDDING PARAMETERS Proposals shall be for not less than $3,420,210 plus accrued interest, if any, on the total principal amount of the Authority Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the Authority scheduled for award of the Authority Bonds is adjourned, recessed, or continued to another date without award of the Authority 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. Authority Bonds of the same maturity shall bear a single rate from the date of the Authority Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT A-2 467701v1 JSB RS125-16 RESOLUTION 2015-01 To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the Authority in the amount of $34,600 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the Authority 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 Authority 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. timely delivered to the Authority if it is made payable to the Authority 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 Authority 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 will be retained by the Authority 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 Authority. AWARD The Authority 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 Authority. The Authority's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Authority 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 Authority Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the Authority determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION not The Authority has applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Authority Bonds. If the Authority Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturi proposal. The Authority specifically reserves the right to reject any bid specifying municipal A-3 467701v1 JSB RS125-16 RESOLUTION 2015-01 bond insurance, even though such bid may result in the lowest TIC to the Authority. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the Authority) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Authority Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Authority Bonds. CUSIP NUMBERS If the Authority Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Authority Bonds, but neither the failure to print such numbers on any Authority Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Authority Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about November 19, 2015, the Authority 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 Authority Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Authority or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Authority Bonds has been made impossible by action of the Authority, or its agents, the purchaser shall be liable to the Authority for any loss suffered by the Authority 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 Authority will undertake, pursuant to the resolution awarding sale of the Authority 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 Authority Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Authority Bonds OFFICIAL STATEMENT The Authority has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Authority 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 Authority, Springsted Incorporated, 380Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. A-4 467701v1 JSB RS125-16 RESOLUTION 2015-01 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 Authority Bonds, together with any other information required by law. By awarding the Authority Bonds to an underwriter or underwriting syndicate, the Authority 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 to which the Authority Bonds are awarded up to 25 copies of the Final Official Statement. The Authority designates the Underwriter of the syndicate to which the Authority 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 Authority, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Authority 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 BOARD OF COMMISSIONERS /s/ Jean Harrington Port Authority Secretary A-5 467701v1 JSB RS125-16 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. The following summary schedule includes the timing of some of the key events that will KEY EVENTS: 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 An application will be made to Moody’s Investors Service for a rating on the Bonds. The RATING: City’s general obligation debt is currently rated 'Aa2' by Moody’s. Performance of the tax-exempt market is often measured by the Bond Buyer’s Index (“BBI”) THE MARKET: which measures the yield of high grade municipal bonds in the 20 year for general th obligation bonds (the BBI 20 Bond Index) and the 30 year for revenue bonds (the BBI 25 th Bond Index). The following chart illustrates these two indices over the past five years. Date September 8, 2015 Study No.: 00704.131 The issuance of these bonds will result in post-issuance compliance responsibilities. The POST ISSUANCE responsibilities are in two primary areas: i) compliance with federal arbitrage requirements COMPLIANCE: 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. The outcome of this financing will rely on the market conditions at the time of the sale. Any RISKS/SPECIAL projections included herein are estimates based on current market conditions. CONSIDERATIONS: Page 2 Supplementary information will be available to staff including detailed terms and conditions of SUPPLEMENTAL sale, comprehensive structuring schedules and information to assist in meeting post-issuance INFORMATION AND compliance responsibilities. BOND RECORD: Upon completion of the financing, a bond record will be provided that contains pertinent documents and final debt service calculations for the transaction. Variability of Issue Size: A specific provision in the sale terms permits modifications to the SALE TERMS AND issue size and/or maturity structure to customize the issue once the price and interest rates MARKETING: are set on the day of sale. Prepayment Provisions: Utility Bonds maturing on or after February 1, 2025 may be prepaid at a price of Utility Bonds: par plus accrued interest on or after February 1, 2024. CIP Bonds maturing on or after February 1, 2024 may be prepaid at a price of par CIP Bonds: plus accrued interest on or after February 1, 2023. Port Authority Bonds maturing on or after February 1, 2025 may be Port Authority Bonds: 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 Proceeds of the Utility Bonds will be used to finance the cost of drilling Well #16 and PURPOSE: constructing a well house for the City’s Water Utility. Statutory Authority: The Utility Bonds are being issued pursuant to Minnesota Statutes, AUTHORITY: 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 3 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. The Bonds will be general obligations of the City, secured by its full faith and credit and taxing SECURITY AND power. The Bonds will be paid entirely from net revenues of the Water Utility fund. SOURCE OF PAYMENT: At the direction of the City, the Utility Bonds have been structured over a term of ten years with STRUCTURING level annual debt service. SUMMARY: Schedules attached include a sources and uses of funds and estimated net debt service SCHEDULES requirements, including existing water utility debt service, given the current interest ATTACHED: environment. $1,445,000 General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B Description of Issue Proceeds of the CIP Bonds, together with $100,000 of funds being contributed by the City, will PURPOSE: 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 4 Statutory Authority: The CIP Bonds are being issued pursuant to Minnesota Statutes, Chapter AUTHORITY: 475. The CIP Bonds will be general obligations of the City, secured by its full faith and credit and SECURITY AND taxing power and will be paid from ad valorem property taxes. SOURCE OF PAYMENT: 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. At the direction of the City, the CIP Bonds have been structured over a term matching that of STRUCTURING the Series 2005A Bonds to provide for even annual savings. SUMMARY: 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 include: a preliminary feasibility summary, estimated debt service SCHEDULES requirements and interest cost savings, given the current interest rate environment. ATTACHED: $3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A Description of Issue Proceeds of the Port Authority Bonds will be used to refund the February 1, 2024 through PURPOSE: 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. The Port Authority Bonds are being issued pursuant to Minnesota Statutes, Chapters 469 and AUTHORITY: 475. The Port Authority Bonds will be general obligations of the City, secured by its full faith and SECURITY AND credit and taxing power and will be paid from tax increment revenue generated from the SOURCE OF Downtown/Brockway Tax Increment District. PAYMENT: The issuance of the Port Authority Bonds is being conducted as a crossover advance Page 5 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. In consultation with the City and the Port Authority, the Port Authority Bonds have been STRUCTURING structured over a term of 17 years to provide for approximately even annual savings. SUMMARY: 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 include: a preliminary feasibility summary, estimated debt service SCHEDULES requirements and interest cost savings, given the current interest rate environment. ATTACHED: The Port Authority Bonds are an advance refunding under federal tax law and may not FEDERAL themselves be advance refunded using tax exempt bonds. If market conditions permit, a CONSIDERATIONS current refunding, where closing occurs within 90 days of the prepayment of the refunded AND/OR bonds, could be done at or after the call date. Tax exempt advance refunding transactions REQUIREMENTS: 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 6 $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 1,450,000.00 Deposit to Project Construction Fund................................................................................................................... . 54,150.00 Costs of Issuance................................................................................................................................................ . 16,775.00 Total Underwriter's Discount (1.100%)............................................................................................................... . 4,075.00 Rounding Amount................................................................................................................................................. . Total Uses..........................................................................................................................................................$1,525,000.00 . Series 2015A GO Utility R | SINGLE PURPOSE | 8/28/2015 | 12:58 PM Page 7 $1,525,000 City of Rosemount, Minnesota General Obligation Utility Revenue Bonds, Series 2015A NET DEBT SERVICE SCHEDULE DatePrincipalCouponInterestTotal P+IExisting D/SNet New D/S105% Overlevy 02/01/2016----496,060.00496,060.00520,863.00 02/01/2017140,000.000.950%32,655.00172,655.00396,730.00569,385.00597,854.25 02/01/2018145,000.001.100%25,882.50170,882.50321,802.50492,685.00517,319.25 02/01/2019145,000.001.300%24,287.50169,287.5062,805.00232,092.50243,697.13 02/01/2020150,000.001.500%22,402.50172,402.5067,200.00239,602.50251,582.63 02/01/2021150,000.001.750%20,152.50170,152.5066,420.00236,572.50248,401.13 02/01/2022155,000.001.900%17,527.50172,527.5065,280.00237,807.50249,697.88 02/01/2023155,000.002.050%14,582.50169,582.5064,140.00233,722.50245,408.63 02/01/2024160,000.002.200%11,405.00171,405.0063,000.00234,405.00246,125.25 02/01/2025160,000.002.350%7,885.00167,885.0066,560.00234,445.00246,167.25 02/01/2026165,000.002.500%4,125.00169,125.00-169,125.00177,581.25 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 ield Statistics Y 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 8 $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 . $1,545,000.00 Total Sources....................................................................................................................................................... . Uses Of Funds Deposit to Current Refunding Fund.........................................................................................................................1,490,000.00 . 43,000.00 Costs of Issuance................................................................................................................................................... . 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 9 $1,445,000 City of Rosemount, Minnesota General Obligation CIP Refunding Bonds, Series 2015B Current Refunding of Series 2005A Debt Service Schedule DatePrincipalCouponInterestTotal P+I 02/01/2016---- 02/01/2017150,000.000.650%25,605.00175,605.00 02/01/2018155,000.001.000%20,362.50175,362.50 02/01/2019155,000.001.100%18,812.50173,812.50 02/01/2020155,000.001.300%17,107.50172,107.50 02/01/2021160,000.001.450%15,092.50175,092.50 02/01/2022160,000.001.650%12,772.50172,772.50 02/01/2023165,000.001.800%10,132.50175,132.50 02/01/2024170,000.002.000%7,162.50177,162.50 02/01/2025175,000.002.150%3,762.50178,762.50 Total$1,445,000.00-$130,810.00$1,575,810.00 ield Statistics Y 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 10 $1,445,000 City of Rosemount, Minnesota General Obligation CIP Refunding Bonds, Series 2015B Current Refunding of Series 2005A Debt Service Comparison DateTotal P+IExisting D/SNet New D/SOld Net D/SSavings 02/01/2016-168,357.50168,357.50168,357.50- 02/01/2017175,605.00-175,605.00201,315.0025,710.00 02/01/2018175,362.50-175,362.50200,715.0025,352.50 02/01/2019173,812.50-173,812.50199,915.0026,102.50 02/01/2020172,107.50-172,107.50198,915.0026,807.50 02/01/2021175,092.50-175,092.50202,715.0027,622.50 02/01/2022172,772.50-172,772.50200,950.0028,177.50 02/01/2023175,132.50-175,132.50203,980.0028,847.50 02/01/2024177,162.50-177,162.50206,555.0029,392.50 02/01/2025178,762.50-178,762.50203,385.0024,622.50 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% . 8.517% Net PV Benefit / $1,445,000 Refunding Principal.......................................................................................... . 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 11 $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 . $3,460,000.00 Total Sources....................................................................................................................................................... . 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 12.449 Years Average Life........................................................................................................................................................... . 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 12 $3,460,000 City of Rosemount Port Authority, Minnesota General Obligation TIF Refunding Bonds, Series 2015A Crossover Refunding of Series 2008B Debt Service Schedule DatePrincipalCouponInterestTotal P+I 02/01/2016---- 02/01/2017--109,929.00109,929.00 02/01/201820,000.001.000%91,607.50111,607.50 02/01/201920,000.001.100%91,407.50111,407.50 02/01/202020,000.001.300%91,187.50111,187.50 02/01/202125,000.001.450%90,927.50115,927.50 02/01/202225,000.001.650%90,565.00115,565.00 02/01/202325,000.001.850%90,152.50115,152.50 02/01/202460,000.002.000%89,690.00149,690.00 02/01/2025375,000.002.100%88,490.00463,490.00 02/01/2026380,000.002.300%80,615.00460,615.00 02/01/2027390,000.002.400%71,875.00461,875.00 02/01/2028400,000.002.600%62,515.00462,515.00 02/01/2029410,000.002.800%52,115.00462,115.00 02/01/2030425,000.003.000%40,635.00465,635.00 02/01/2031435,000.003.100%27,885.00462,885.00 02/01/2032450,000.003.200%14,400.00464,400.00 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% . 2.7356485% Bond Yield for Arbitrage Purposes.......................................................................................................................... . 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 13 $3,460,000 City of Rosemount Port Authority, Minnesota General Obligation TIF Refunding Bonds, Series 2015A Crossover Refunding of Series 2008B Debt Service Comparison DateTotal P+IEscrowExisting D/SNet New D/SOld Net D/SSavings 02/01/2016--66,036.2566,036.2566,036.25- 02/01/2017109,929.00(3,384,929.00)3,407,072.50132,072.50132,072.50- 02/01/2018111,607.50--111,607.50132,072.5020,465.00 02/01/2019111,407.50--111,407.50132,072.5020,665.00 02/01/2020111,187.50--111,187.50132,072.5020,885.00 02/01/2021115,927.50--115,927.50132,072.5016,145.00 02/01/2022115,565.00--115,565.00132,072.5016,507.50 02/01/2023115,152.50--115,152.50132,072.5016,920.00 02/01/2024149,690.00--149,690.00167,072.5017,382.50 02/01/2025463,490.00--463,490.00480,672.5017,182.50 02/01/2026460,615.00--460,615.00481,672.5021,057.50 02/01/2027461,875.00--461,875.00482,072.5020,197.50 02/01/2028462,515.00--462,515.00481,872.5019,357.50 02/01/2029462,115.00--462,115.00480,875.0018,760.00 02/01/2030465,635.00--465,635.00484,270.0018,635.00 02/01/2031462,885.00--462,885.00481,855.0018,970.00 02/01/2032464,400.00--464,400.00483,832.5019,432.50 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 Page 14