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Home My WebLink About6.e. 2008A G.O. Equipment Certificates of Indebtedness - Providing for the Limited Competitive Sale4 ROSEMOUNT SUMMARY Recommend the above motion. CITY COUNCIL City Council Meeting Date: September 16, 2008 EXECUTIVE SUMMARY AGENDA ITEM: 2008A G.O. Equipment Certificates of Indebtedness Providing for the Limited Competitive Sale PREPARED BY: Jeff May, Finance Director ATTACHMENTS: Resolution AGENDA SECTION: Consent AGENDA NO. Ia. APPROVED BY: lid RECOMMENDED ACTION: Motion to adopt a Resolution Providing for the Limited Competitive Sale of $385,000 General Obligation Equipment Certificates of Indebtedness, Series 2008A. ISSUE The authorization to issue certificates for the purchase of equipment for the Public Works Department. BACKGROUND This item is on the agenda for your consideration in authorizing the limited competitive sale of General Obligation Equipment Certificates of Indebtedness for equipment for the Public Works Department (a skid steer loader, emergency generator, mower, backhoe and dump truck). Proposals will be received until Tuesday, October 7, 2008, at 12:00 P.M. at the offices of Springsted Incorporated. The proposals will be tabulated there and then consideration for award of the Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. 2230138v1 CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2008 RESOLUTION PROVIDING FOR THE LIMITED COMPETITIVE SALE OF $385,000 GENERAL OBLIGATION EQUIPMENT CERTIFICATES OF INDEBTEDNESS, SERIES 2008A WHEREAS, the City Council of the City of Rosemount, Minnesota, has heretofore determined that it is necessary and expedient to issue its $385,000 General Obligation Equipment Certificates of Indebtedness, Series 2008A (the "Certificates to finance the acquisition of various items of capital equipment; and 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 limited competitive 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 proposals for the limited competitive sale of the Certificates. 2. Meeting: Proposals. This City Council shall meet at the time and place specified in the Summary of Terms attached hereto as Exhibit A for the purpose of considering proposals for, and awarding the sale of, the Certificates. The Administrator, or his designee, shall open proposals at the time and place specified in such Summary of Terms. 3. Summary of Terms. The terms and conditions of the Certificates and the negotiation thereof are fully set forth in the "Summary of Terms" attached hereto as Exhibit A and hereby approved and made a part hereof. ADOPTED this 16th day of September, 2008. ATI EST: Amy Domeier, City Clerk 2230138v1 William H. Droste, Mayor RESOLUTION 2008- Motion by: Seconded by: Voted in favor: Voted Against: Members Absent 2 STATE OF MINNESOTA COUNTY OF DAKOTA ss CITY OF ROSEMOUNT CERTIFICATE I, Amy Domeier, duly appointed, acting and qualified City Clerk of the City of Rosemount do hereby certify that I have examined the City of Rosemount records and the Minute Book of said City for the meeting of the 16th of September, 2008 and that the attached copy of the Resolution 2008 RESOLUTION PROVIDING FOR THE LIMITED COMPETITIVE SALE OF $385,000 GENERAL OBLIGATION EQUIPMENT CERTIFICATES OF INDEBTEDNESS, SERIES 2008A was approved and is a true and correct copy of the City Proceedings relating to said Resolution. IN WITNESS WHEREOF, I have hereunto set my hand and seal of said City this day of September, 2008. 2230138v1 Amy Domeier, City Clerk City of Rosemount Dakota County, Minnesota Issuer. Issue: Form of Offering: Sale Date anal Time: Award of the Certificates: Expected Deljvery/Dated Date: Principal Due: Term Bonds: Interest Due: Prior Redeml{tion: Offering Docilmenf: EXHIBIT A SUMMARY OF TERMS $385,000 City of Rosemount, Minnesota General Obligation Certificates of Indebtedness, Series 2008A City of Rosemount, Minnesota (the 'City' or the Issuer) $385,000 General Obligation Certificates of Indebtedness, Series 2008A (the 'Certificates') The City intends to offer the Certificates as a limited competitive scie. Proposals for the Certificates will be received on Tuesday, October 7, 2008, until 12:00 Noon, Central Time. The Certificates are expected to be approved by the City Council by resolution adopted on Tuesday, October 7, 2008. October 30, 2008. The Bonds wdi mature annually on February 1, 2010 through 2014 in the following amounts: 2010 2011 2012 2013 2014 65,000 75,000 80,000 80,000 85,000 Proposals for the Certificates 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 and must conform to the maturity schedule set forth above at a price of par plus accrued Interest to the date of redemption. Each February 1 and August 1, commencing August 1, 2009. Due to their short term the Certificates will not be subject to redemption prior to their stated maturity dates. An offering document for the Certificates will not be prepared. The City will provide the Bank with three years of audited financial statements. 2230138v1 City of Rosem September 9, Page 2 Rating: Bank QuauflcEitlon: Security and Source of Payment Payment Cycle: Legal: Statutory Authority and Purpose: Tax Status: Dunt, Minnesota 2008, 2008 Continuing Disclosure: The Certificates will not be rated. Under Federal Tax Law, financial institutions cannot deduct from income for federal income tax purposes, expense that is allocable to carrying and acquiring tax exempt bonds. There is an exemption to this for 'bank qualified" bonds, which can be so designated if the issuer does not issue more than $10 million of tax exempt bonds in a calendar year. Issues that are bank qualified generally receive slightly lower interest rates than issues that are not bank qualified. Since the City does not expect to issue more than $10 million of tax exempt obligations in 2008, the Certificates are designated as bank qualified. The Certificates will be general obligations of the City, secured by its full faith and credit and taxing power. The Bonds will be repaid with ad valorem property taxes. Pursuant to Minnesota Statutes, Section 412.301 specifies that the City may issue certificates of indebtedness without being subject to a petition requirement calling for a referendum if the total amount of the issue does not exceed 'A of 1% of the market value of the taxable property in the City. Based on the City's 2007/2008 taxable market value of $2,365,760,300, this represents a maximum issue size of $5,914,400. The amount of the Certificates is $385,000; therefore the Certificates are within the statutory requirements and not subject to taxpayer petition for a referendum. The City will make its first levy for the Certificates in 2008 for collection In 2009. Each year's first -half collection of taxes will be used to pay the interest payment due August 1 in the year of collection. Second -half cdlections of taxes plus surplus first half collections will be used to pay the February 1 principal and interest payment due in the following year. Briggs and Morgan, PA will serve as bond counsel on matters relating to the Certificates. The Certificates are being issued pursuant to Minnesota Statutes, Chapter 475 and Section 412.301. Certificate proceeds will be used to finance the acquisition of equipment for City purposes including a skid steer loader, emergency generator, mower, backhoe and a dump truck. The Bonds will be tax- exempt obligations. The Certificates shall be issued as fully registered Certificates, one printed certificate per maturity, in the form set forth in the awarding resolution. The Certificates are subject to continuing disclosure requirements set forth by the Securities and Exchange Commission. The SEC rules require the underwriter of the Certificates to provide an annual update of certain City information and report any material events to bond holders. On the date of A -2 City of Rose September 9, Page 3 2230138v1 Attachments unt, Minnesota 008, 2008 Arbitrage Compliance: (a) Rebate (b) Yield Restriction Tres tee/Regi* t ar/Pa ying Agent issuance and delivery of the Certificates, the City will execute and deliver a Continuing Disclosure Certificate pursuant to which the City will covenant and agree to comply with the SEC rules and to comply with and carry out the provisions of the Continuing Disclosure Certificate. All of the officers of the City will be authorized and directed to take any and all actions that may be necessary to comply with the SEC rules and the Continuing Disclosure Certificate. All tax exempt issues are subject to the federal arbitrage and rebate requirements, which require all excess earnings created by the finandng to be rebated to the U.S. Treasury. The requirements generally cover two categories: bond proceeds and debt service funds. There are exemptions from rebate that may apply in both of these categodes. There is a 'small issuer" exemption from rebate for a municipality that issues $5 million or less in a calendar year. Since the City does not expect to issue more than $5 million in tax exempt obligations in 2008, this issue will be exempt from rebate; however, the yield restriction provision will apply (see next section). The City must maintain a bona fide debt service fund for the Certificates or be subject to yleid restriction. Yield restriction requires restricting the investment return in the debt service fund to the yield on the Certificates. A bona fide debt service fund is a fund for which there is an equal matching of revenue to debt service expense, with the fund spent down each year to a carry over permitted equal to the greater of the investment earnings in the fund during the prior year or 1/12 the debt service of the prior year. Additionally, all original proceeds of bonds and interest earnings on those proceeds must be expended within three years, or the remaining proceeds will be subject to yield restriction. The City should monitor both the project fund and the debt service fund to make sure yield restriction provisions of the federal arbitrage rules are met. To be negotiated based on the needs of the purchaser. Sources and Uses of Funds Debt Service Schedule A -3 Dated 10/30/2008 I Delivered 10/30/2008 2008 lga{pmanl Carts SING1tPLAMSE 9/ 9/20018 9I2AM Springsted $385,000 City of Rosemount, Minnesota General Obligation Equipment Certificates of Indebtedness, Series 2008A Sources Uses Sources Of Fu ds Par Amount of s 8385,000.00 Total Sourees...4 8385,000.00 Uses Of Fun Deposit to Proj Construction Fund 372,000.00 Costs of Issuance 11,500.00 Rounding 1,500.00 Total Uses. $385,000.00 2230138v1 Yield Stet Istice $385,000 City of Rosemount, Minnesota 43eneral Obligation Equipment Certificates of Indebtedness, Series 2008A 200811MateeniCerts j StAVIIPURPOSI 9/ 0/Z008 9:12AM Spriingsted DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total 141 10514 Levy 02/01/2009 02/01/2010 65,000.00 4.250% 20,498.58 85,496.58 89,773.51 02/01/2011 75,000.00 4.250% 13,600.00 88603.00 93,030.00 02/01/2012 80,000.00 4.250% 10,412.50 90,412.50 94,933.13 02/01/2013 80,000.00 4.250% 7,012.50 87,012.50 91,363.13 02101/2314 85,000.00 4.25096 3,612.50 88,612.50 93,043.13 Total $385,000.00 $55,138.08 5440,136.08 $462,142.88 1 SIGNIFICANT ATES Dated 10/30/20013 Delivery Date 10/30120313 Rrst Coupon Date 8/01/2009 Bond Year Dollars 51,297.32 Average Life 3.370 Years Average Coupon 4.2500003% Net Interest Costi(NIC) 4.2500303% True Interest Cot (HC) 4.2446094% Bond Yield for Arbitrage Purposes 42446094% All Inclusive Cost! (AIC) 5.2353231% IRS Form 8038 Net Interest Cost 4.2500303% Weighted Average Maturity 3.370 Years Interest rates are estimates. Changes in rates may cause signMcant alterations to this schedule. The actual underwrfter's discount bid may also vary. A-5