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HomeMy WebLinkAbout7.d. Authorize Bond SaleCITY OF ROSEMOUNT MEMORANDUM TO: Mayor Knutson Councilmembers: Napper Tucker Walsh Willard FROM: Stephan Jilk, Administrator/Clerk DATE: June 12, 1987 RE: 1987 Bond Issue Gentlemen: Attached is a copy of the report and recommendation of Springsted regarding the issuance of the 1987 bond issue. Jerry Shannon, the project coordinator, will be present at the Council meeting to answer questions and/or assist in the procedure. I believe the report is well written and quite well presented. Jerry and I, along with other staff members, will be present at the meeting to answer any questions you may have. Please contact me prior to the meeting if you have any questions I can help with. smj Attachment • CITY OF ROSEMOUNT RESOLUTION 1987- A RESOLUTION PROVIDING FOR PUBLIC SALE OF $4,975,000 GENERAL OBLIGATION TEMPORARY IMPROVEMENT BONDS, SERIES 1987 WHEREAS, improvements have been ordered in for street, storm sewer, sanitary sewer and water utilities at estimated costs, including construction, legal & administrative cost of $4,975,000. by the City Council of the City of Rosemount, and WHEREAS, temporary financing of these improvements is necessary, NOW THEREFORE IT BE RESOLVED, by the City Council of the City of Rosemount, Minnesota, as follows: 1. It is hereby found, determined and declared that this City should issue $4,975,000 General Obligation Temporary Improvement Bonds, Series 1987 to defray the expense of these various improvements in the City. 2. This Council shall meet at the time and place specified in the form of notice hereinafter contained for the purpose of considering sealed bids for, and awarding the sale of $4,975,000 General Obligation Temporary Improvement Bonds, Series 1987 of said City. -+ 3. The City Administrator is hereby authorized and directed to cause notice of the time, place and purpose of said meeting to be published in the official newspaper of the City and in Commercial West not less than ten days in advance of date of sale, as provided by law, which notice shall be in substantially the form set forth in Exhibit A attached hereto. 4. The terms and conditions of said bonds and the sale thereof are fully set forth in the "Official Terms of Offering" attached hereto as Exhibit B and incorporated herein by reference. ADOPTED this 16th day of June, 1987. Leland S. Knutson, Mayor~' -' ATTEST: Stephan Jilk, aclminisirator%Clerk CITY OF ROSEMOUNT, MINNESOTA $4,995,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1987A Study No. 3278 June 11, 1987 SPRINGSTED incorporated SPRINGS TED WOHAO 111h,J, I it i: ii), - Ad 1110 612 'It'lj 0100 June 11, 1987 Mayor Leland Knutson Members, City Council Mr. Stephan Jilk, Administrator Rosemount City Hall 2875 145th Street West Rosemount, Minnesota 55068 RE: Recommendations for the Issuance of $4,995,000 General Obligation Improvement Bonds, Series 1987A We respectfully request your consideration of our recommendations for the issuance of these bonds. The proceeds ofthese bonds will be used to fund the costs of nine improvement projects currently underway within the City. We have detailed the composition of the bond issue relating to each of these nine projects in Exhibit I of these recommendations. Not included in, this bond issue is any money for the O'Leary's Hills Third Addition improvements. The primary reason for not including this project into the bond issue is that the City will not expend all of the bond proceeds in 1987, and if the City wishes to avoid rebate of any arbitrage earnings, it must keep the bond issue below $5,000,000. Since the construction costs are not all firmed up, there is included in the bond issue $334,000 of contingencies. We have also included $374,000 of costs for right-of-ways for the County Roads 38 and 42, and the Shannon Parkway project. Of the total cost, approximately $2,759,000 will be assessed against benefited. property, and the balance will be paid out of future MSA moneys. The assessments will be filed in 1987 and in 1988. Of the total assessments, approximately $750,000 of the costs will be assessed over three years and an additional $400,000 over five years. We have discussed with City staff the potential problems that may occur if the developers do not make the assessment payments when due. The annual installments on these short-term assessments are significant enough that the City may not be in a position to pay the debt service with available money on hand, or if it could, it would strain the City's cash position. We have recommended to staff, and staff has concurred, that for projecting assessment income in structuring the bond issue, we assume ten-year assessments for these projects also. If the City does in fact receive the scheduled payments of those special assessments, the proceeds can be used to call in outstanding bonds prior to their final maturity. The remaining assessments are all spread over ten years, therefore the total issue would be compatible with the longer-term assessments. Exhibit 11 is our projection of assessment income, assuming the amortization of those short - it it 1 hiit>i t 10 1 City of Rosemount, Minnesota June 11, 1987 Page 2 term assessments over the longer ten-year term. All assessments will carry interest at 9% on the unpaid balance, which, in accordance with City policy is 2% over the rate on the bonds. Exhibit III is our projected debt service repayment schedule for these bonds. The assessment income generated in Exhibit II is shown in column 10 of Exhibit 111. Since the City is assessing only 55% of the total bond issue costs, the remaining portion must be shown as a tax levy, but can be paid from other available funds. It is our understanding a portion of those available funds will be future MSA dollars to be received by the City. The annual.debt service amount is approximately $315,000 per year for that unassessed portion. The City's 1987 construction allotment in the MSA fund was only about $222,000; therefore, additional revenue sources will be required in order to repay the bonds. To the extent some of these projects include utilities, contributions from the utilities' funds could also be used. At the time the bonds are sold, a tax levy for the full amount of debt service, less the assessment income, will be filed with the County. Each fall the City will have to allocate its other resources to the debt service fund to cancel that levy. The bonds are dated August 1, 1987 and will mature on February 1, 1989-99. The first interest payment on the bonds is due on February 1, 1988, in the estimated amount of $161,000. That payment can be made from capitalized - interest in the bond issue of $133,000, accrued interest received at settlement of approximately $13,000 and any prepayments on assessments, if received. If no prepayments are received, the City would have to use approximately $15,000 of other available funds on hand until the May 1988 tax settlement is received. The August 1, 1988 interest payment of the same amount of $161,000 will be paid from proceeds of the first-half tax settlement from the County. The February I, 1989 principal and interest payment will be paid from the second -half tax settlement and surpluses from the first-half settlement. This same sequence will continue throughout the term of the i ssue. As we have stated previously, we have designed this bond issue to conform with the new Tax Reform Acta In so doing, we have eliminated one project from the current funding. If surplus moneys accrue in the construction fund, because construction bids come in lower or all of the contingency is not used, then the surplus money can be used for other eligible improvement projects, including the O'Leary's Hills project. If construction bids on some of these projects come in higher than the amounts provided for in the bond issue, the City can recover those additional costs with a future bond issue in 1988. The Tax Reform Act of 1986 established certain arbitrage reporting and rebate requirements for issuers of tax-exempt obligations. In essence, an issuer must report on and rebate the amount of reinvestment income which exceeds the income which would have been earned if the some amount had been invested at the rate on the bonds. There are several exemptions to the reporting and rebate requirements involving small issuers who issue less than $5,000,000 of government purpose bonds in any calendar year, issues of which all proceeds are expended within six months of issuance and for debt service funds on which actual earnings are less than $100,000 per year. City of Rosemount, Minnesota June 1 I , 19$7 Page 3 We are of the opinion this issue will be exempt from the requirements and you will not have to maintain investment records and rebate any arbitrage profit to the U.S. Treasury. Our opinion is based on our review of your reasonable expectations at this time and is subject to change in the event subsequent actions by you cause the loss of exemption from the requirements. We will also request a rating on the City's behalf from Moody's Investors Service. The City has maintained a good relationship with the rating agencies, and that was enhanced this spring when Moody's visited the City while reviewing the School District's bonding program. We do not anticipate an increase in the rating at this time, but we do think the City will continue to receive favorable consideration from Moody's. We are recommending the bonds be offered for sale at the Council's regular meeting to be held on Tuesday, July 21. Proceeds of the bond issue will be available in mid-August. A representative of our firm will attend the sale to assist you in its conduct. - Respectfully submitted, SPRINGSTED Incorporated dah CITY OF ROSEMOUNT, MINNESOTA $4.995+000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1987A Legal/ Admin./ Right Interest Capitalized t Total Costs Amount Assessed Filed Notes Project Construction Contingencies Engineering of-WayLoss Interest $ 300,000 $ 30,300 $ 69,700 $ -0- $ -0- $ 35,000 $ "435,000 $ 435,000 10/1/88 West Ridge 2nd Add'n Streets, Utilities, Storm 4 315 -0- 443,465 443,465 10/1/87 Country Hills 1st Add'n 337,808 33,780 67,562 -0- - + Streets, Utilities, Storm 8,151 -0- 454,491 331,745 1011/87 Ballance from County Road #38 312,569 31,257 62,514 40,000 SA Road Improvements 70,000 2,540 9,500 520,682 107,348 I0/1 /87 Balance from County Road #42 (West) 337,417 33,742 67,483 Road Improvements _0- 70,000 -0- 22,000 272,000 272,000 10/1 /88 County Rood #42 (East) 180,000 -0- Road Improvements 313,406 194,000 -0- 59,000 2, 290,.140 728, 342. 10/1/'88 Balancefrom Shannon Parkway 1,567,031 156,703 Street, Utilities, Storm 56 -0- 32,856 32,856 10/I /87 Shannon Park Townhouses 25,231 2,523 5,046 -0- Utilities -0- -0- -d- 511,400 317,068 10/1/87 Balance from Conemorro Trail 393,385 39,338 78,677 SA . Street and Utilities -0- 7,500 91,600 91,600 10/1/88 Bruck Industrial Pork 64,692 6,470 12,938 -0- Street $334,113 $677,326 $374,000 $15,062 $133,000 $5,051,634 $2,759,424 $ 3 518 133 Subtotals: ► + Add: Costs of Bond Issuance 75,000 Bond Discount $5,156,634 Subtotal: (161, 634) Less: Investment Earnings $4,995,000 Rt Net Bond Issue: X Prepared by: SPRINGSTED Incorporated _ Date: June 11, 1987 N City of Rosemount, Minnesota $4,995,000 G.O. Improvement Bonds Prepared June 10, 1987 By SPRINGSTED Incorporated 1987 Projects PROJECTED ASSESSMENT INCOME 1987 Assessments 1988 Assessments - - - - T 0 T A L - - - - - Filing Date: 10/ 1/1987 Filing Date: 10/ 1/1988 Filing Year Collect Principal Interest @-9_000% Total Principal Interest @-9_000% Total Principal Interest Total 1987 -_Year- 1988 123,248 138,882a 262,130 123,248 138,882 262,1 1988 1989 123,248 99,831 223,079 152,698 172,068b 324,766 275,946 271,899 547,84 1989 1990 123,248 88,739 211,987 152,698 123,686 276,384- 275,946 212,425 488,371 1990 1991 123,248 77,646 200,894 152,698 109,943 262,641 275,946 187,589 463,535 1991 1992 123,248 66,554 189,802 152,698 96,200 248,898 275,946 162,754 438,700 1992 1993 123,248 55,462 178,710 152,698 82,457 235,155 275,946 137,919 413,865 1993 1994 123,248 44,369 167,617 152,698 68,714 221,412 275,946 1139083 389,029 1994 1995 123,248 33,217 156,525 152,698 54,971 207,669 275,946 88,248 364,194 1995 1996 123,248 22,185 145,433 152,698 41,229 193,927 275,946 63,414 339,360 1996 1997 123,250 11,093 134,343 152,698 152,700 27,486 13,743 180,184 166,443 275,948 152,700 38,579 13,743 314,527 166,443 1997 1998 TOTALS 1,232,482 638,038 1,870,520 1,526,982 790,497 2,3179479 2,759,464 1,428,535 4,187,999 a) Includes interest from filing b) Includes interest from filing date to 12/31/1988. date to 12/31/1989. x cA City of Rosemount, Minnesota Prepared June 10, 1987 $4,995,000 G.O. Improvement Bonds By SPRINGSTED Incorporat 1987 Projects Dated: 8- 1-1987 SCHEDULE A Mature: 2- 1= Total Capital- Total Year of Year of Principal ized Net 105% Assessment Net Levy Mat. Principal Rates Interest & Interest Interest Levy of Total Income Requirement (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) 1987 1989 70,000 5.25% 484,256 554,256 133,000 421,256 442,319 262,130 180,189 1988 1990 500,000 5.50% 319,163 819,163 0 819,163 860,121 547,845 312,276 1989 1991 475,000 5.75% 291,663 766,663 0 766,663 804,996 488,371 316,625 1990 1992 475,000 6.00% 264,350 739,350 0 739,350 776,318 463,535 312,783 1991 1993 475,000 6.20% 235,850 710,850 0 710,850 746,393 438,700 307,693 1992 1994 500,000 6.409'0 206,400 706,400 0 706,400 741,720 413,865 327,855 1993 1995 500,000 6.60% 174,400 674,400 0 674,400 708,120 389,029 319,091 1994 1996 500,000 6.80% 141,400 641,400 0 641,400 673,470 364,194 309,276 1995 1997 525,000 7.007. 107,400 632,400 0 632,400 664,020 339,360 324,660 1996 1998 525,000 1.20% 70,650 595,650 0 595,650 625,433 314,527 310,906 1997 1999 450,000 1.30% 32,850 482,850 0 482,850 506,993 166,443 340,550 TOTALS: 4,995,000 2,328,382. 7,323,382 133,000 7,190,382 7,549,903 4,187,999 3,361,904 Bond Years: 34,692.50 Annual Interest:. 2,328,382 Ave. Maturity: 6.95 Plus. Discount: 75,000 Ave. Annual Rate: 6.711% Net Interest: 2,403,382 N.I.C. Rate: 6.928% Interest rates are estimates; changes may cause significant alterations of this schedule The actual Underwriter's discount bid may also vary M x 2 01 OFFICIAL TERMS OF OFFERING $4,995,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1987A Sealed bids for the Bonds will be opened by the City Administrator on Tuesday, July 21, 1987, at 11:00 A.M., Central Time, at the offices of SPRINGSTED Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota. Consideration for award of the Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. DETAILS OF THE BONDS The Bonds will be dated August 1, 1987, as the date of original issue, and will bear interest payable on February I and August 1 of each year, commencing February I, 1988. Interest will be computed upon the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the MSRB. The Bonds will be issued in the denomination of $5,000 each, or in integral multiples thereof as requested by the Purchaser, and fully registered as to principal and interest. Principal will be payable at the main corporate office of the Registrar and interest on each- Bond will be payable by check or draft of the Registrar mailed to the registered holder thereof at his address as it appears on the books of the Registrar as of the 15th day of the calendar month next preceding the interest payment. The Bonds will mature February I in the amounts and years as follows: 000 1989 475,000 1991-1993 525,000 1997- 500,000 1990 500,000 1994-1996 �450,000 1999 1998 OPTIONAL REDEMPTION The City may elect on February I, 1996, and on any interest payment date thereafter, to prepay Bonds due on or after February I, 1997. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, those Bonds remaining unpaid which have the latest maturity date will be prepaid first. If only part of the Bonds having a common maturity date are called for prepayment the specific Bonds to be prepaid will be chosen by lot by the Registrar. All prepayments shall be at a price of par and accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge special assessments against benefited property. The proceeds will be used to finance the costs of various improvement projects within the City. TYPE OF BID A sealed bid for not less than $4,920,000 and accrued interest on the total principal amount of the Bonds shall be filed with the undersigned prior to the time set for the openin of bids. Also prior to the time set for bid opening, a certified or cashier's check in the amount of 49,950, payable to the order of the City, shall have been filed with the undersigned or SPRINGSTED Incorporated, the City's Financial Advisor. No bid will be considered for which said check has not been filed. The check of the Purchaser will be retained by the City as liquidated damages in the event the Purchaser fails to comply with the accepted bid. The City will deposit the check of the Purchaser, the amount of which will be deducted at settlement. No bid shall be withdrawn after the time set for opening bids unless the meeting of the City scheduled for consideration of the bids is adjourned, recessed, or continued to 0 • another date without award of the Bonds having been made. Rates offered by Bidders shall be in integral multiples of 5/100 or 1/8 of 1%. No rate for any maturity shall be more than 1% lower than any prior rate. Bonds of the some maturity shall bear a single rate from the date of the Bonds to the date of maturity. AWARD The Bonds will be awarded to the Bidder offering the lowest dollar interest cost to be determined by the deduction of the premium, if any, from, or the addition of any amount less than par, to the total dollar interest on the Bonds from their date to their final scheduled maturity. The City's computation of the total net dollar interest cost of each bid, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non -substantive informalities of any bid or of matters relating to the receipt of bids and award of the Bonds, (ii) reject all bids without cause, and, (iii) reject any bid which the City determines to have failed to comply with the terms herein. 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. 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 will 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 Association of Saint Paul and Minneapolis, Minnesota, which opinion will be printed on the Bonds, and of customary closing papers, including a no=litigation 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 1:00 P.M., Central Time. Except as compliance with the 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 Purchaser's non-compliance with said terms for payment. At settlement the Purchaser will be furnished with a certificate, signed by appropriate officers of the City, to the effect that the Official Statement did not as of the date of the Official Statement, and does not as of the date of settlement, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. OFFICIAL STATEMENT Underwriters may obtain a copy of the Official Statement by request to the City's Financial Advisor prior to the bid opening. The Purchaser will be provided with 50 copies of the Official Statement, Dated June 16, 1987 BY ORDER OF THE CITY COUNCIL /s/ Stephan Jilk Administrator/Clerk