HomeMy WebLinkAbout8.a. 1995 Bond Issue - Authorize Issuance and setting Bond Sale (1995A) CITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACT10N
CITY COUNCIL MEETING DATE: July 5, 1995
AGENDA ITEM: 1995 Bond Issue - Authorizing Issuance AGENDA SECTION:'
and Setting Bond Sale 11995A) New Business
PREPARED BY: Jeff May, Finance Director AGENDA NO.
���� ►�
ATTACHMENTS: None APPROVED BY:
This item is on the agenda for your consideration in authorizing the issuance and setting the sale
of General Obligation Improvement Bonds for one project, Project #249 - Biscayne Avenue
Improvements. At this point in time, this is the only public improvement project that the City is
undertaking or planning on undertaking for 1995.
Bids will be opened Tuesday, August 1 , 1995, at the offices of Springsted Incorporated. The
bids will be tabulated there, and then consideration for award of the Bonds will by the City
Council at 7:30 P.M., Central Time, of the same day.
Normally, included with this summary would be a copy ofi the enabling resolution and the
recommendations from Springsted. Because of the timing of preparing for this issue, those
items will not be availabte until the evening of the Council meeting. I did receive the wording for
the resolution that will need to be approved by the Council and that is included in the
Recommended Action below.
RECOMMENDED ACTION:
Motion to adopt A RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF
$1 ,900,000 GENfRAL OBLIGATION IMPROVEMENT BONDS, SERIES 1995A.
COUNCIL ACTIDN:
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 1995 -
A RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $1,900,000 GENERAL OBLIGATION IMPROVEMENT
BONDS, SERIfS 1995A
WHEREAS, the City Council of the City of Rosemount, Minnesota, (the "City") has
heretofore determined that it is necessary and expedient to issue its $1,900,000
General Obligation Improvement Bonds, Series 1995A (the "Bonds") to finance the
construction of various improvements in the City; 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 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; Findinas. The City Council hereby authorizes Springsted to
solicit bids for the competitive negotiated sale of the Bonds.
2. Meeting; Bid Openinp. 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 his 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 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.
ADOPTED this 5th day of July, 1995.
E.B. McMenomy, Mayor
ATTEST:
Susan M. Walsh, City Clerk
Motion by: Seconded by:
Voted in favor:
Voted Against:
07/05/95 09:4� F�� 612 223 �OOZ SPRINGSTED INC. �002/005
EXHI�IT A
THE CITY HAS AUTHi�R1ZED SPRINGSTED INCORPORATED TO NEGaTiATE THiS
' I�SUE ON ITS BEHALF. PRCaPQSALS WILL BE RECEIVED C3N THE FOLL.�JVYING BASI�:
TERMS OF PROPOSAL
S'1,9G�,OGO
ClTI(OF ROSEMOUNT, MtNNESOTA
GENERAL OBLIGATION tMPR�VEMENT BONDS,'SERIES 1995A
(BOQK ENTRY ONLI�
Proposal$ for the Bonds will b� received on Tuesday, August 1, 1995, until 11:3C1 A.IVI., Centr�l
Tme, at the offices of Springsted fncarporated, 85 East Seventh Place, Suite 'f OQ, Saint Pau(,
Minnesata, after which time they will be open�d and tabulat�d. Consideration for award of#he
Bonds will be by the City Council at 7:30 P.M., Central Time, of the 5ame day.
SIJBMIS51�7N OF PRC�I�OSAL�
Proposais m�y be submitted in a sealed envelope ar by f�x {612} 223-3t7�2 ta Springsted.
Signed Propnsals, without final price or c4upons, may be submitted to Springsted prior to #he
time of sale. �'he bidder shal) be responsible for submitting to Springsted the final Proposa]
price and coupans, by telephone (61�) �23-3000 ar fax (612) 223-3002 for inclusion in the
submitted Proposal. Springsted will �ssume no liability for the inability of th� bidder ta reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via l'ARITY, in accord�nc� with PARITY Rules of Partieip�tion and the Terms of Prapasal,
within a one�hour period prior ta the time af sale established above, but no Proposals will be
received after that time. If provisions in the Terms of Propasal canflict with the PARITY Rul�s
af P�rkicipation, the Terms of Propasai shall control. The norm�l fee fa1' use of PARITY may be
abtained fram PARITY and such fee shall be the respansibility of the bidd�r. Far further
infot�rnation about PARITY, patential bidders may contact PARITY at 100 116th Avenue SE,
�uite 10Q, Bellevue, Washington 98044, telephone (2fl6) 635-35�45. Neither the City nar
Springst�d Incorporated �ssumes any liability if there is a maifunction of PARITY_ All bidders
� are advised that each Proposal shall be deemed to constitute a cnntract between the bidder
and the City to purchase the Bonds r�gardless af th� mann�r af the ProposaC submitted.
DETAILS �F THE BONDS
The Bonds will be dated August 1, 1995, as the date of ariginai is5ue, and will bear interest
payable on �ebruary 1 and August 1 af each year, commencing August 1, 1996. Interest wil!
be computed on the basis of a 360-day year c�f tweive 3a-day months.
The Bonds wilt m2�ture February 1 in the years and amounts as foilows:
1997 $165,000 2009 $155,0�0 2005 $150,OQ0
1998 $370,000 2002 $155,004 2d06 $150,40d
9999 $16b,OQ0 2003 $155,0�4 2007 $135,OOQ
20Q0 $155,000 20Q4 $150,Q00
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07/05/95 09:44 F.�Y 612 22� 3002 SPRINGSTED INC. �1003/005
BC3C7K ENTRY SYSTEM
The Bands wili be issued by means of a book en#ry �ystem with na physicai distribution of
Bonds made ta the public. The Bonds wip be issued in fully registered form and one Band,
• representing the aggregate principal �maunt t�f the Bonds maturing ir� each year, wi1) b�
registered in the name of Kray & Ca. as naminee of Midwes# Securities Trust Company
("MSTC"�, Chicago, (Ilinois, which wi{I act as securities depository of the Bonds. Individual
purchases of the Bonds may be made in the principal amaur�t of$S,OOO or any multiple thereaf
of a single maturity through book entries made on the books �nd records c�f MSTC and its
participants. Principal and interest �re pay�ble by the registrar to MSTC or its nominee as
registered owner of #he Bands_ Transfer of principal and interest payments to participants of
MSTC will be the respon�ibility af MSTC; transfer of principal and interest payments t�
benefioial owners by participants wi{I be the respansibility of such particip�nts and other
nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be
required to depasit the Bartds with MSTC.
� REGISTRAR
The City wiA name the registrar which shall be subject to applicable SEC regulations. T�re City
will pay for the servi��s of the registrar.
OPTIONA� REpEMf'TION
The City may elect an February 1, 2004, attd on any day thereafter, ta prepay Bonds due on or
a#ker February 1, 2QQ5. Redemption may be in whole or in part and if in p�rt at the op#ion of th�
City and in such manner as the City shall determine. If less than all Bonds of a maturity are
called for redemption, the City will notify MSTC of the particular amaunt of such maturity to be
prepaid. MSTC will determine by lot the amount of each participant's interest in such maturity
to be redeemed and each p�rticipant will then select by lot the beneficial ownership interests in
such maturity to �� tedeemed. All prepayments shall he at a price of par plus a�crued interest.
SECURIIY AA1D PURI'OS� .
The B�nds will be general obligations of the City for which thE City will pledge its ful) faith and
credit and power to levy direct gen�ral ad valaren't tax��. In addition th� Glty wi11 pletlge special
assessments against benefi#ed property. The proceeds will be used to finance a street
• improvement prajec#within the City.
TYPE OF PROPOSALS
Praposals shall be far not less than $1,877,200 and accrued interest on the total principa!
amvunt of the Bonds. Proposa{s sha(I be accompanied by a Goad Faith Deposit {"Deposit") in
the farm of a certified ar cashier's check or a Financial Surety Bpnd in the amount of $19,000,
payable ta the order af the City. If a check Is used, it must accompany each proposal. If a
Financial Surety Band is used, it mus# be from an insurance �ompany lic�ns�d to issue such a
band in the State af hllinnesota, and preappr�ved by the City. Such bond must be submitt�d to
Springsted tncorparated prior to the opening af the pr�posals. The �inanci�l Surety Bond must
identify each undenuriter whose Deposit is guaranteed by such Financial Sur�ty Bond. If th�
Bonds are awarded to an unden+vriter using a Finan�aal Surety Bond, then that purchas�r is
required to submit �ts Deposit to Springsted Incorporated in the form of a cerki�ed ar cashier's
check ar wire transfer as instructed by Springsted Incorporated nat later than 3:30 P.M., Centr2l
Time, on the next business day following the award. Ifi such Depa$it is not received by that
time, the Fin�nci�l Surety Bond may be drawn by the City to satisfy the Deposit requirement.
The Gity will deposit the check of the purchaser, the amount of which will be deducted at
settlement and no interest will accrue to the purchaser. In the event the purchaser fails to
comply with the accepted proposal, said amaunt will be retained by t�e City. No proposal can
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07/05/95 09:45 FAX 612 22� �002 SPRINGSTED INC. �I00�/005
be withdrawn or amended after the time s�t far receiving propo�als unless th� meeting of fhe
' Gity schedu{ed for award af the Bands is adjaurned, recessed, or confiinued ta another date
without award afi the Bantls having been made. Rates shaA be in integral muitiples of 5/10Q or
1/$ of 1°k. Rates must be in ascending arder. Bonds ofi the same maturity shall bear a single
" rate from the date of the Bonds to the date of maturity. No conditianal propcsal$ wii) be
accepted.
AWARD
The Bands will be awarded on the basis cf the lawest interest rate t� be determined on a true
interest cost (TIC) basis. The Ci#y's comput�tion of the int.erest rate af each propasal, in
accordance with customary practice, wiA b� con#roAing.
The City will reserve the right to: (i) waive r�on�-substantive informalities of any proposal or af
matters relating to th� re�eipt of propc�sals �nd �ward of the Bends, {ii) reject all proposals
witl�out cause, and, (iii) reject any prop�sal which the City d�termines to have failed to comply
with trie terms herain.
B�ND INSURANCE AT PURCHASER'S ClPTI�N
ff the Bonds qualify for issu�nce af �ny poficy of municipaf bond insurance or commitment
theref�r at the optian of the underwriter, the purchase of any such insurance policy or th�
issuance of any such cammitment shalf be �t the snle option and exp�nse of the purchaser of
the Bonds. Any increased casts af issuanee of the Bdnds resulting fram such purchase of
insurance shall be paid by the purct�aser, exeept that, if the Ci#y has requested and received a
rating on the Bands fram a rating agency, the City will pay that rating fee. Any other rating
agency f�es shall be the responsibility af the purchaser.
Failure of the municipal bond insursr tv issue the policy afte� Bands have been awarded to the
purchaser shall nat constitute caus� f�r failure ar refusal by the purchaser to accept deliv�ry on
the Bonds.
CUSIP NUMBERS
If the Bonds qualify for assignment af CUSIP numbers such numbers wifl be printed an the
Bonds, but neither the failure to print such numbers on any Bond nor any errar with respect
� thereto will canstitute cause for failure or refusal by the purchaser to accept delivery af the
Bonds. The CUSIP �ervice Bur�au charge for the assignment of CUSIP idenfification numb�rs
shall be paid by the purchaser.
SETTLEMENl'
Within 44 days follawing the date �f their award, the Bonds will be deliv�c�ed without cost to the
purchaser �t a place mutually satisf�ct4ry t� the City and the purCh��er. Delivery will be
subjec# to receipt by the purchaser af an approuing legal opinion of Briggs and Morgan,
Professional Association, ai Saint Paul and Minneapalis, Minnesota, and of customary closing
papers, including a no-litigation certificate and are a continuing disclQsure certificate. On the
date of settlement p�yment fiar the Bands shall be made in federal, or equivalent, funds which
shall be recei�ed at the offices of the �ity or its designee not later than 12:QQ Noon, Central
Time. �xcept as complianee with the terms of payment far the Bonds shall have b��n made
irnpossible by action of the City, or i#s agents, the purchaser shal( be li�ble to the City far any
lass suffe�ed by the City by reason of the purch�ser's nan-aampliance with said terms for
payment.
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07/05/95 09:45 F�X 612 223 �002 SPRINGSTED INC. �005/005
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GC7NTINUING DISGLQSU�E
Th� Issuer will covenant in the resa(utian awarding the sale of the Bonds and in a Continuing
Dis�l�sure Cert�cate to provide, or cause to be provided, a�nnua)financial information, including
' audited financial statements of the Issuer, and n�tices of certain rnaterial events, as required by
SEC Rule 15(c)2-12.
OFFICIAL STATEM�NT
The City has authorized the preparation vf an Officia! �tatement containing pertinent
infot'mation relative to the Bands, �nd said C��Ci�t Statem�nt will �erve �s a rlearly-final Official
Statement within the meaning of (�ule 1�c2-12 of the Securities and Ex�hange Commissian.
Far copies af the Official Statement or for any additianal infvrmation prior to sale, any
prospective purahaser is refeRed to the Financia! Advisor to the City, Springsted Incorporated,
85 East Sever�th Place, Suite 100, Saint P�ul, Minnesota 551Q1, telephone (612}�23-3Q�4.
The Official Stetement, when further supplerr��nted by an addendum or addenda specifying the
ma#urity dates, principal amounts and interest ra#es of the Bonds, tagether with any ather
information required by law, shall constitute � "�in21 (�fficial Statement" of#he City with respect
to the Bvnds, as that term is defined in Rule 95c2-12. By awarding the Bonds to any
underwriter or underwriting syndicate sul�mitting a proposat ther�for, the City agrees that, no
more than seven business days after the date of such award, it shali provide without cast t� the
senior managing underwriter of#he syndicate to which the Bonds are awarded 80 copies of#he
dfficial Statement and the addendum ar addenda described above. The City d�signates the
seniar managing undervuriter of the syndicate to which the Bonds are aw�rded �s its agent far
purpos�s of distributing copies of the Final Official StatemEnt to each Participating Underwriter.
Any underwriter delivering a propasa) with respect ta the Bands agrees thereby that if its
proposa! is accepted by the City (i) it shaU accept such designation and (ii} it shall enter into a
contractual re(ationship with all Participating Undenrvriters af the Bonds for purposes of�ssuring
the receipt by each such Participating Underwriter af the Final O�cial Statement.
Dated July 5, 1995 BY ORDER OF THE GITY COUNCIL
/s/5usan M_ Wa�lsh
Clerk
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f
i
Recommendations i'
For
City of Rosemount, Minnesota
$1,900,000
General Obligation Improvement Bonds, Series 1995A
Study No. R0704Z3
SPRINGSTED Incorporated
July 5, 1995
�
�
Recommendations for
City of Rosemount, Minnesota �,
$1,900,000 '
Generai Obligation Improvement Bonds, Series 1995A '
EXECUTIVE SUMMARY
This summary is intended to highlight data contained in these recommendations. It is intended
to be an adjunct to the recommendations and not to be used solely as the basis of
determination of actions required. Your actions should be based on the information more fully
set forth in the recommendations.
1, Action Requested To establish the date and time of receiving
bids and establish the terms and conditions
ofthe Offering.
2. Type and Purpose of Offering Proceeds of the issue will be used to finance
the Biscayne Avenue Improvement Project
(Project#249).
3. Principal Amount of Offering $1,900,000
4. Repayment Term February 1, 1997 through 2007.
5. Source of Debt Service Revenues A combination of special assessments
against benefited property, storm core funds,
MSA funds and general ad valorem tax
levies.
6. Optiona!Redemption The February 1, 2005 through 2007
maturities will be callable on February 1,
2004 and any day thereafter at a price of par
plus accrued inte�est.
7. Credit Rating Comments Moody's rating recommended. The City is
currently rated "A".
8. Sa/e Date and Time Tuesday, August 1, 1995 at 11:30 A.M., '
Central Time.
9. Award Date and Time Tuesday, August 1, 1995 at 7:30 P.M.,
Central Time.
.
85 E.3EVENTH PLACE,SUITE 100
SAINT PAUL,MN 55t0t-2143
' 612-223-3000 FAX:612-223-3002
er .
SPRINGSTED
Public Finance Advisors
July 5, 1995
Mayor Edward B. McMenomy
Members, City Council
Mr. Thomas Burt, Administrator
Mr. Jeff May, Finance Director
City of Rosemount
2875 145th Street West
Rosemount, MN 55068
Re: Recommendations for the Issuance of $1,900,000 General Obligation Improvement
Bonds, Series 1995A
We respectfully request your consideration of our recommendations for the issuance of these
bonds according to the terms and conditions set forth in the attached proposed "Terms of
Proposaf."
The bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475, with
proceeds to be used to finance the Biscayne Avenue Improvement Project. The City is
contributing a total of$223,000 in cash from its water core, sewer core and storm core funds to
reduce the total amount of borrowing.
The composition of the issue is as follows
Project Costs $2,080,000
Less: Water Core Funds (150,000)
Sewer Core Funds (7,OQ0)
Storm Core Funds (66.000)
Net Project Costs $1,857,000
Costs of Issuance 22,850
Allowance for Discount Bidding 22,800
Less: Investment Earnings (2,650)
Total Bond Issue $1.900,000
These bonds will be general obligations of the City for which it pledges its full faith and credit
and power to levy direct general ad valorem taxes. In addition, the City will pledge special
assessments against benefited property. Appendix t is the projection of assessment income.
Special assessments totaling an estimated $1,191,650 of principal are expected to be filed on
or before October 1, 1996, for first collection in 1997. The assessments will be spread over ten
SAINT PAUt,MN • MINNEAPOLIS,MN • BROOKFIELD,W! • OVERLAND PARK,KS ^ WASHINGTON,DC ' IOWA CITY,[A
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City of Rosemount, Minnesota
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July 5, 1995
years, requiring equal annual payments of principal with interest charged on the unpaid balance
at a rate of approximately 2.0% over the expected net interest rate on the bonds. We have
assumed a rate of 7.05% for the projection of assessment income. We have not made any
projections of prepayments or delinquencies and are assuming for all structuring purposes that
assessments will be collected as scheduled.
Appendix II is the recommended cash flow for the bond issue. The bonds have been structured
around the projected assessment income, as well as the City's contribution of storm core and
MSA funds (Columns 8 through 10). The bonds will be dated August 1, 1995, and will mature
each February 1 from 1997 through 2007. Columns 1 through 6 of Appendix II show the years
and amounts of principal and estimated interest due and payable on the bonds. Column 7
shows the 105% levy requirement as set forth by State statute. The 5% overlevy is a protection
to the bondholder and to the City in the event 100% of the expected revenues are not received.
Column 8 shows the projection of assessment income from Appendix I and Columns 9 and 10
show the anticipated City storm core and MSA funds. Column 11 shows the combined income
from Columns 8 through 10. Column 12 shows the net levy requiremen# which represents the
City's share of costs of the Biscayne Avenue Improvement Project.
Storm core and MSA funds are expected to be sufficient to cover 100% of the bond payments
due through February 1, 1997. Therefore, it is not necessary to add capitalized interest to the
issue to make bond payments due prior to the first receipt of special assessments in 1997.
Thereafter, each August 1 interest payment and the following February 1 principal and interest
payment is expected to be payable from assessment and other income, including general ad
valorem taxes. The average annual levy requirement for the bonds is projected to be $19,150.
Included in the principal amount of the issue is a provision for discount bidding in the amount of
$22,800, representing 1.2% of the principal amount of the bonds. The discount provides the
underwriters with all or part of their profit and/or working capital for purchasing the issue. It
permits the underwriters to reoffer the bonds at a close to a par reoffering scale, and, in our
experience, results in lower interest rates on the bonds.
We recommend the bonds maturing on or after February 1, 2005 be callable on February 1,
2004, and any day thereafter, at a price of par and accrued interest. This call feature,
representing $435,000, or approximately 23% of the bond issue, wilt permit a prepayment of
those bonds should substantial prepayments of assessments be received or if future market
conditions warrant a refinancing of this issue. �th the inclusion of the provision for discount
bidding, this call feature should not impair the marketability of the bonds.
Continuing Market bisclosure
The Securities and Exchange Commission has finalized amendments to its Rule 15c2-12 which
prohibits broker-dealers from underwriting municipal securities of $1,000,000 or more unless
the issuer has agreed in writing to provide annual disclosure of financial and operating
information and to disclose material events when they occur. This Rule is effective for issues
underwritten on and after July 3, 1995. Since these bonds are to be issued after that date, the
City will be required to comply with the Rule in order for underwriters to bid on the issue.
The agreement with the underwriter and bondholders, or the "undertaking," as it is called in the"
Rule, must be incorporated in the band resolution or a separate disclosure agreement and in
the final Official Statement. The unde�taking will obligate the City to prepare and file with all
nationally recognized municipal securities information repositories (°NRMSIRs") annual up-
dated financial and operating information and the City's annual audited financial statements. As
of now, there are five recognized NRMSIRs.
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City of i�osemount, Minnesota
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July 5, 1995
The Rule uses the information in the final Official Statement as the benchmark for data to
include in the secondary market disclosure repo�t so that certain information provided in the
Official Statement must be revised annually. Between now and the date of the sale, August 1,
Springsted Incorporated will be working with City staff and your bond counsel to craft an
acceptable undertaking which will either be incorporated in the resolution for the bonds, or
drafted as a separate document, the "Continuing Disclosure Certificate,° and which wiA also be
included in the O�cial Statement for the issue.
Book Entry
We recommend the bonds be issued as "book entry only" bonds through the Midwest Securities
Trust Company of Chicago. Under the book entry system, the holders of the bonds will not
receive printed bonds but will have only a record from the broker/dealer stating they are held by
the depository. The use of the book entry system eliminates all costs to the City for printing
physical bonds. Although the bonds are issued in book entry form, which also eliminates the
need for a registrar, we recommend the City retain a registrar for a nominal fee to send the City
reminder notices indicating the date and amount of the payments coming due and to act as an
intermediary with the depository, should the need arise.
Rating
The City is currently rated "A" by Moody's Investors Service. This issue wiU require a rating
review in order to maintain the ratings on the City's outstanding bonds and to insure the high '
level of marketability for this issue. The rating agency fee has been included in the bond I
issuance costs and will be billed directly to the City by Moody's.
Federal Rebate -Arbitrage
The bonds are subject to federal arbitrage regulations. One of the requirements includes
rebating arbitrage profits to the U.S. Treasury. Generally speaking, all arbitrage profits (the
yield difference between the eamings on the investments and the yield on the obligations) must
be rebated to the U.S. Treasury. There are some exemptions to this rebate requirement which
include:
(i) A small issuer exemption if the bonds are for governmental purposes and the issuer
reasonably expects to issue not more than $5,000,000 of tax-exempt obligations during
the calendar year.
(ii) A six-month exemption if all of the proceeds are expended within six months of bond
issuance.
(iii) An 18-month expenditure test if at least 15% of proceeds are expended within six
months, 60%within 12 months and 100%within 18 months.
(iv) A two-year expenditure test if at least 75% of the proceeds af the issue are used for
construction and if 10% is expended within six months, 45% within 12 months, 75%
within 18 months and 100%within two years.
The Ciry expects to qualify as a small issuer under (i) above and therefore wiN be exempt from
the reporting and rebate requirements.
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City of Rosemount, Minnesota
, July 5, 1995 I
Debt service funds created to pay debt seroice on new issues are subject to yield restriction ��,
unless they fall under the definition of "bona fide" debt service funds described as follows. A i
bona fide debt service fund is defined as a fund for which there is an equal matching of revenue ,
to debt service expense with a carry over permitted equal to the greater of the investment '
earnings in the fund during that year or 1/12 of the debt service of that year. A debt service
fund can lose its bona fide status when investment earnings or prepayments of assessments
are accumulated, which are in excess of semiannual debt service payments. It is important to
monitor the debt service fund for the bonds to assure compliance with the regulations. Any
portion in excess of a bona fide debt service fund must be restricted in yield to the yield on the
bonds.
Federal Reimbursement Regulations
The U.S. Treasury has enacted reimbursement regulations to regulate issuers who wish to
issue tax-exempt bonds to recover costs of prior expenditures. The reimbursement regulations
require that if the issuer proposes to reimburse itself for expenses they paid prior to receipt of
bond proceeds, it must have made a declaration of that intent within 60 days of the actual
payment of the expense. There are exemptions for architectural and engineering fees and
miscellaneous start-up costs. The City has complied with the federal reimbursement
regulations in regards to the bonds.
Economic Life of Financed Projects
The 1993 final arbitrage regulatians brought all tax-exempt issues into the calculation of
"economic life." Previously this requirement was only for private activity bonds. The intent of
this requirement is that the U.S. Treasury does not want bonds outstanding longer than is
necessary, thus creating more tax-exempt bonds in the marketplace than are needed. The
general safe harbor for assuring that bonds comply with the regulations is if the average
maturity of the bonds does not exceed 120% of the economic life of the financed projects.
Since the bonds are being issued for street improvements which, under the U.S. Treasury
guidelines have an economic life of 20 years, this issue is in compliance wi#h this regulation.
Bank-Qualified Obligations
The Tax Reform Act also restricts the ability of banks to deduct tax-exempt interest as a
carrying expense under certain circumstances in calculating their tax liability. Since the City
does not expect to issue more than $10,000,000 of tax-exempt obligations in 1995, these bonds
will be designated as "qualified obligations." This qualification wifl,help the marketability of the
bonds.
Sale Procedure
Springsted Incorporated, together with Capital Guaranty Insurance Company, a municipal bond
insurer, will again offer a surety bond service, "Sure-Bid," to underwriters in lieu of putting up a
good faith check in order to bid on the Bonds. In addition to allowing underwriters to submit
their bids by mail or telephone, we will also allow them to submit bids through PARITY, an
electronic bid filing process. Springsted has access to the bids via modem and will verify and
tabulate the bids received to determine the winning bid. We have allowed for the use Qf Sure-
Bid and PARITY in the Terms of Proposal, attached to these recommendations. We believe
that the use of these bidding options may attract more bids for the bond sale, since it reduces
Page 4
.
City of Rosemount, Minnesota
y July 5, 1995
administrative barriers for an undennrriter to bid. The�e is no cost to the City for these services
and Springsted does not have a financial interest in the use of Sure-Bid or PARITY.
We recommend these bonds be offered for sale on Tuesday, August 1, 1995, with proposals
received at the offices of Springsted Incorporated at 11:30 A.M. The proposals will then be
verified for accuracy, and a compilation of such proposals will be presented to the City Council
at its regular meeting at 7:30 P.M. that evening for consideration of award. A representative of
Springsted will attend the meeting to provide recommendations as to the acceptability of
proposals received and to comment on the procedures required for award. Bond proceeds will
be available the end of August.
Respectfully submitted,
�����- �_
SPRINGSTED Incorporated
cb
Page 5
�
APPENDIX I
,
City of Rosea�ount, Minnesota Prepared June 27, 1995
G.O. Improvement Bonds, Series 1995A By SPRINGSTED Incorporated
PROJECTED ASSESSMENT INC�ME
Project 249 - Biscayne Ave
Filing Date: 10i 1/1996
Filing Collect Interest
Year Year Principal � 7.050� Total
----- ------- --------- -------- -----
1996 1997 119,165 105,187a 224,352
1997 1998 119,165 75,610 194,775
1998 1999 119,165 67,209 186,374
1999 2000 119,165 58,808 177,973
2000 2001 119,165 50,407 169,572
2001 2002 119,165 42,006 161 ,171
2002 2003 119,165 33,605 152,770
2003 2004 119,165 25,203 144,368
2004 2005 119,165 16,802 135,967
2005 2006 119,165 8,401 127,566
TOTALS 1 ,191 ,650 483,238 1 ,674,888
a) Includes interest from filing
date to 12/31/1997.
Page 6
CITY OF ROSEMOUNT, MINNE30TA Prepared June 27, 1995
0,0. I�prove�ent Bonds, Series 1995A 8y SPRINOSTED Incorporated
Biscayne Avenue Iniprovements
Dated: 8- t-1995
Mature: 2- 1
Firat Interest: 8- 1-1996
Total Projected Stor� Total
Year of Year of Principal 105� Aasesseent Core NSA Total Net Annual
levy Mat. Principal Rates Interest � Interest of Total Inco�e Funds Funds Inco�e Require�ent Surplus
(1) (2) (3) (4) �5) �s) ��I (8) �91 �10) (11) (12) (13)
1895 1897 165,000 4.10� 133,005 288,005 312,805 0 20,000 ,300,000 320,000 0 7,095
1996 1998 370,000 4.30�k 81,905 451,905 474,500 224,352 20,000 �211,000 455,352 18,148 0
1897 1999 160,000 4.40is 65,985 225,995 237,295 184,775 20,000 0 214,775 22,520 0
1988 2000 155,000 4.55is 58,855 213,955 224,653 186,374 20,000 0 206,374 18,279 0
1898 2001 155,000 4.65� 51,802 206,902 217,247 177,973 20,000 0 197,973 19,274 0
2000 2002 155,000 4.75is 44,694 199,694 208,679 169,572 20,000 0 188,572 20,107 0
2001 2003 155,000 4.85� 37,331 182,33/ 201,848 161,171 20,000 0 181,171 20,777 0
2002 2004 150,000 4.959s 28,813 179,813 188,804 152,770 20,000 0 172,770 16,034 0
2003 2005 150,000 5.05� 22,388 172,388 181,007 144,368 20,000 0 164,368 16,B39 0
2004 2008 150,000 5.15� 14,813 164,813 173,054 135,867 20,000 0 155,967 17,087 0
2005 2007 135,000 5.25� 7,086 142,088 148,182 127,568 0 0 127,568 21,626 0
TOTALS: 1,800,000 547,B89 2,447,888 2,5T0,284 1,674,888 200,000 511,000 2,385,888 191,491
Bond Yaars: 11,280.00 Annual Interest: 547,889
Avp. Maturlty: 5.94 Plus Discount: 22,800
Avp. Annual Rate: 4.8579s Net Interest: 570,689
T.I.C. Rat�: 5.0699s N.I.C. Rate: 5.059qs
Interest rates are estimates; changes may cause aigniticant alterations of this achedule. D
The actu�l underwriter's discount bid �nay also vary. �
'�
m
m �
m x
y =
' THE CITY HAS AUTHORIZED SPRINGSTED INC�Ft�OFtAT°ED TO NEGOTIATE 7HfS
ISSUE ON ITS-BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSA�
$1,900,000
CITY OF ROSEMOUNT, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1995A
(BOOK ENTRY ONLY)
Proposais for the Bonds will be received on Tuesday, August 1, 1995, until 11:30 A.M., Central �
Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, �
Minnesota, afte�which time they will be opened and tabulated. Consideration for award of the
Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 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 Proposa{
price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inelusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal,
within a one-hour period prior to the time of sale established above, but no Proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, Bellevue, Washington 98004, telephone (206) 635-3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner of the Proposal submitted.
DETAILS OF THE BONDS
The Bonds will be dated August 1, 1995, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 1996. Interest will
be computed on the basis of a 360-day year of finrelve 30-day months.
The Bonds will mature February 1 in the years and amounts as follows
1997 $165,000 2001 $155,000 2005 $150,000
1998 $370,000 2002 $155,000 2006 $150,000
1999 $160,000 2003 $155,000 2007 $135,000
2000 $155,000 2004 $150,000
Page 8
�
r BOOK ENTRY SYSTEM
The Bonds will be issued by means of a book entry system with no physical distribution of
Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Kray & Co. as nominee of Midwest Securities Trust Company
("MSTC"), Chicago, Illinois, which will act as securities depository of the Bonds. Individual
purchases of the Bonds may be made in the principal amount of$5,000 or any multiple thereof
of a single maturity through book entries rnade on the books and records of MSTC and its
participants. Principal and interest are payable by the registrar to MSTC or its nominee as
registered owner of the Bonds. Transfer of principal and interest payments to participants of
MSTC will be the responsibility of MSTC; 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 Bonds, will be
required to deposit the Bonds with MSTC. ',
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, 2004, and on any day thereafter; to prepay Bonds due on or
after February 1, 2005. Redemption may be in whole or in part and if in pa�t at the option of the
City and in such manner as the City shatl determine. If less than all Bonds of a maturity are
called for redemption, the City will notify MSTC of the particular amount of such maturity to be
prepaid. MSTC 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 pfus accrued interest.
SECURITY AND PURPOSE
The Bonds will be general obligations of the City for which the City will pledge its fuli faith and
credit and power to levy direct general ad valorem taxes. In addition the City will pledge special
assessments against benefited property. The proceeds will be used to finance a street
improvement project within the City.
TYPE OF PROPOSALS
Proposals shall be for not less than $1,877,200 and accrued interest on the total principal
amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in
� 0
in the amount of 19 00
r hier s check or a Financial Suret Bond $ , ,
t h e f o r m o f a c e rt i f i e d o c a s
Y
payable to the order af the City. 1f a check is used, it must accompany each proposaL If a
Financial Surety Bond is used, it must be from an insurance company licensed to issue such a
bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to
Springsted Incorpora#ed prior to the opening of the proposals. The Financial Surety Bond rnust
identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the
Bonds are awarded to an underwriter using a Financial Surety Bond, then #hat purchaser is
required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's
check or wire t�ansfer as instructed by Springsted Incorporated not iater than 3:30 P.M., Central
Time, on the next business day following the award. If such Depasit is not received by that
time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement.
The City will deposit the check of the purchaser, the amount of which wifl be deducted at
settlement and no interest will accrue to the purchaser. In the event the purchaser fails to
comply with the accepted proposal, said amount will be retained by the City. No proposal can
Page 9
i
a
be withdrawn or amended after the time set for receiving proposals unless the meeting of the
City scheduled for award of the Bonds is adjoumed, recessed, or continued to another date
without award of the Bonds having been made. Rates shall be in integ�al multiples of 5J100 or
1/8 of 1%. Rates must be in ascending order. Bonds of the same maturity shall bear a single
rate from the date of the Bonds to the date of maturity. No conditional proposals will be
accepted.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true
interest cost (TIC) basis. 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 Bonds, (ii) reject all proposals
without cause, and, {iii) reject any proposal which the City determines to have failed to comply
with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment
therefor at the option of the undennrriter, the purchase of any such insurance policy or the
issuance of any such commitment shall be at the sole option and expense of the purchaser of
the Bonds. Any increased costs of issuance o# the Bonds resulting from such purchase of
insurance shall be paid by the purchaser, except that, if the City has requested and received a
rating on the Bonds from a rating agency, the Ciry will pay that rating fee. Any other rating
agency fees shall be the responsibility of the purchaser. �
Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the
purchaser shall not constitute cause for failure or �efusal by the purchaser to accept delivery on
the Bonds.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the
Bonds, but neither the failure to print such numbers on any Bond nor any error with respect
thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the
Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers
shall be paid by the purchaser.
SETTLEMENT
Within 40 days following the date of their award, the Bonds wiN be delivered without cost to the
purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be
subject to receipt by the purchaser of an approving legal opinion of Briggs and Morgan,
Professional Associatian; of Saint Paul and Minneapolis, Minnesota, and of customary closing
papers, including a no-litigation certificate and are a continuing disclosure certificate. On the
date of settlement payment for the Bonds shall be made in federal, or equivalent, funds which
shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Except as compliance with tfie terms of payment for the Bonds shall have 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 purchase�'s non-compliance with said terms for
payment.
Page 10
i
y CONTINUING DISCLOSURE
The Issuer will covenant in the resolution awarding the sale of the Bonds and in a Continuing
Disclosure Certificate to provide, or cause to be provided, annual financial information, including
audited financial statements of the Issuer, and notices of certain material events, as required by
SEC Rule 15(c)2-12.
OFFICIAL STATEMENT
The City has authorized the preparation of an Official Statement containing pertinent
information relative to the Bonds, and said 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 Official Statement or for any additional information prior to sale, any
prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated,
85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55401, telephone (612) 223-3000.
The Official Statement, when further supplemented by an addendum or addenda specifying the
maturity dates, principal amounts and interest rates of the Bonds, tagether with any other
information required by law, shafl constitute a "Final O�cial Statement" of the City with respect
to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any
underwriter or underwriting syndicate submitting a proposat therefor, the City agrees that, no
more than seven business days after the date of such award, it shall provide without cost to the
senior managing underwriter of the syndicate to which the Bonds are awarded 80 copies of the
Official Statement and the addendum or addenda described above. The City designates the
senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for
purposes of distributing copies of the Final Official Statement to each Participating Underwriter.
Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its
proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a
contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring
the receipt by each such Participating Underwriter of the Final Official Statement.
Dated July 5, 1995 BY ORDER OF THE CITY COUNCIL
/s/Susan M. Walsh
Clerk
Page 11