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