5.5. SR 10-13-2003Item
~5.5.
M :MORANDUM
TO:
Mayor and City Council
FROM:
Lori Johnson, Finance Director
DATE:
October 13, 2003
SUBJECT:
Consider Resolution Providing for the Sale of $1,795,000 G.O.
Improvement Bond Series 2003A and Resolution Providing for the
Sale of $2,020,000 G.O. Water Revenue and Refunding Bond Series
2003B
Attached are two resolutions calling for the sale of bonds on November 10, 2003. The general
obligation bond is being issued to £mance recent and upcoming infrastructure improvements
including the following projects: Boston and Concord, 2003 Street Rehabilitation, 2002 Zane Street,
and Cascade Industrial Park. The water revenue issue is to fund construction of well #8 as well as to
refund the 1994D and 1993B water bonds. The refunding is being proposed to save on interest
costs and to restructure the debt to better fit with the projected cash flow of the Water fund. More
detail on both of these issues is included in the attached Pre-Sale Reports.
Also attached is the levy schedule for the G.O. Improvement Bonds. A levy is required to pay for
the 2003 Street Rehabilitation project share of the issue for taxes payable 2004 through 2006. The
tax levy approved in September included $100,000 for this bond issue. Bond levies for this project
total $239,156. Only the special assessment portion of the other projects is being financed;
therefore, no levy is required for those projects. The Cascade Industrial Park improvements have
been petitioned for by the developer and will be considered by the Council later in October. The
developers have been made aware of the time line for financing and understand that the City is
proceeding as requested.
The Elk River Municipal Utilities Commission will be taking action on the 2003B Water Revenue
Bond at its October 15 meeting. However, since Utility Commissions do not have authority to issue
debt, the action taken by the ERMU is advisory only. The official action is taken by the City
Council. Bryan Adams and Pat Hemza worked with Mark Ruff, Ehlers and Associates, to determine
which water issues to refund and to develop the debt structure of the new financing and the
refunding.
Action Requested
The Council is asked to approve the Resolution Providing for the Sale of $1,795,000 G.O.
Improvement Bond Series 2003A and the Resolution Providing for the Sale of $2,020,000 G.O.
Water Revenue and Refunding Bond Series 2003B.
S:~Councii~Lori~2OO3~bondsales.doc
RESOLUTION NO.
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION PROVIDING FOR THE SALE OF
$1,79S,000 G.O. IMPROVEMENT BONDS SERIES 2003A
WHEREAS,
the City Council of the City of Elk River, Minnesota, has heretofore determined
that it is necessary and expedient to issue the City's $1,795,000 General
Obligation Improvement Bonds, Series 2003A (the "Bonds"), to finance public
improvements in the City; and
WHEREAS,
the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"),
as its independent financial advisor for the Bonds and is therefore authorized to
solicit proposals in accordance with Minnesota Statutes, Section 475.60,
Subdivision 2(9);
NOW THEREFORE, BE IT RESOLVED by the City Council of Elk River, Minnesota, as follows:
I. Authorization; Findings-The City Council hereby authorizes Ehlers to solicit proposals for the
sale of the Bonds.
2. Meeting; Proposal Opening-The City Council shall meet at 6:30 p.m. on November 10, 2003, for
the purpose of considering sealed proposals for and awarding the sale of the Bonds.
Official Statement.-In connection with said sale, the officers or employees of the City are hereby
authorized to cooperate with Ehlers 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.
The foregoing resolution was introduced by Councilmember and duly seconded by
Councilmember . The following voted in favor of the Resolution:
and the following voted against the resolution:
Passed and adopted this
day of 2003.
ATTEST:
Stephanie Klinzing, Mayor
Joan Schmidt, City Clerk
S: ~AD MIN \Resolutions \2003 Resolutions ~Unapproved\BondsGo.doc
RESOLUTION NO.
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION PROVIDING FOR THE SALE OF
$2,020,000 G.O. WATER REVENUE BONDS SERIES 2003B
WHEREAS,
WHEREAS,
the City Council of the City of Elk River, Minnesota, has heretofore determined that it
is necessary and expedient to issue the City's $2,020,000 General Obligation Water
Revenue Bonds, Series 2003B (the "Bonds"), to finance public improvements in the City
and refund the $475,000 of the water portion of the G.O. PIR Bonds, Series 1993B, and
$510,000 of the G.O. Water Revenue Bonds, Series 1994D; and
the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its
independent financial advisor for the Bonds and is therefore authorized to solicit
proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9);
NOW, THEREFORE, BE IT RESOLVED by the City Council of Elk River, Minnesota, as follows:
I. Authorization; Findings-The City Council hereby authorizes Ehlers to solicit proposals for
the sale of the Bonds.
Meeting; Proposal Opening-The City Council shall meet at 6:30 p.m. on November I 0,
2003, for the purpose of considering sealed proposals for and awarding the sale of the
Bonds.
Official Statement-In connection with said sale, the officers or employees of the City are
hereby authorized to cooperate with Ehlers 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.
The foregoing resolution was introduced by Councilmember and duly seconded by
Councilmember . The following voted in favor of the Resolution:
and the following voted against the resolution:
Passed and adopted this
day of 2003
ATTEST:
Stephanie Klinzing, Mayor
Joan Schmidt, City Clerk
S: ~ADMIN\Resolutions \ 2003 Resolutions \Unapproved\Bondswater.doc
Proposed Issue:
Purpose:
Term:
Call Feature:
Rating:
Funding Sources:
Bauk Qualification:
Discussion Issues:
Schedule:
City of Elk River, Minnesota
Pre-Sale Report
October 13, 2003
$1,795,000 General Obligation Improvement Bonds, Series 2003A
To fund four infrastructure projects in the City including the Boston & Concord project,
the 2003 Street Rehab project, the 2002 Zane Street Improvements, and Cascade
Industrial Park. Attached is an exhibit which demonstrates the expected amount and term
of the assessments associated with each project.
The total term of the Bonds will be 10 years of payments with the first interest payment
on August 1, 2004, and the final principal payment on February 1, 2014.
The Bonds maturing in 2012 and later can be called on February 1,2011.
The Bonds are expected to be rated by Moody's Investors Service at an "A2" level.
Approximately $1,556,000 of the project costs financed by the bond issue is expected to
be assessed to benefiting properties. The remaining amount of the Bonds will be paid
with a tax levy beginning with taxes payable in 2004 of approximately $95,000.
Additional levies of $72,000 per year in payable 2005 and 2006 will also be expected.
Future reconstruction projects are expected to require debt levies for later years. The
levy will be a debt levy outside of levy limits, under current law.
The City does not expect to issue more than $10,000,000 in the calendar year 2003 and
has not issued any conduit financing which would exceed the limit. Therefore the Bonds
are expected to be bank qualified.
The City expects to approve a resolution on November 10, 2003 to pre-pay two
additional bond issues which have sufficient cash on hand to retire the debt. The issues
are the G.O. Sewer Bonds, Series 1994B with an outstanding principal amount of
$565,000 and the G.O. Tax Increment Bonds, Series 1994D, with an outstanding
principal amount of $80,000.
If prepayments of special assessments are received earlier than the call date, the City may
need to levy additional funds to cover the differential between the assessments interest
rate and the City's investment rate.
Pre-Sale Review:
Distribute Official Statement:
Conference with Rating Agency:
Bond Sale:
Estimated Closing Date:
October 13, 2003
Week of October 27, 2003
Week of November 3, 2003
November 10, 2003
Week of December 1, 2003
Attachmeuts:
Sources and Uses of Funds
Proposed Debt Service Schedule
Resolution authorizing Ehlers to proceed with bond sale
Proposed Issue:
Purpose:
Term:
Call Feature:
Rating:
Funding Sources:
Bank Qualification:
Discussion Issues:
Schedule:
City of Elk River, Minnesota
Pre-Sale Report
October 13, 2003
$2,020,000 General Obligation Water Revenue and Refunding Bonds, Series 2003B
To fund $975,000 in new project costs for various water main construction projects and
to currently refund on February 1, 2004, $475,000 of the water portion of the G.O. PIR
Bonds, Series 1993B, and $510,000 of the G.O. Water Revenue Bonds, Series 1994D.
Attached is an exhibit which demonstrates the breakdown of the sources and uses of
funds for the proceeds.
The total term of the Bonds will be 10 years of payments with the first interest payment
on August 1, 2004, and the final principal payment on February 1, 2014. The new money
portion of the bond issue will not commence principal payments until February 1, 2010 to
allow for adequate debt service coverage in the next few years.
The Bonds maturing in 2012 and later can be called on February 1,2011.
The Bonds are expected to be rated by Moody's Investors Service at an "A2" level.
Water revenues are expected to cover 100% of the debt service.
The City does not expect to issue more than $10,000,000 in the calendar year 2003 and
has not issued any conduit financing which would exceed the limit. Therefore the Bonds
are expected to be bank qualified.
The current rates on the two issues being refunded are up to 5.2% in 2009 for the 1993B
Bonds and 6.5% in 2010 for the 1994D Bonds. The new bonds are expected to have
coupons in 2009 of 3.75% and 4.15% in 2010. The present value savings after all fees
expected on the refundings is $35,000 to $40,000 plus the benefit of reducing the costs of
issuance for the new money portion and reducing paying agent fees from three issues to
one combined issue.
Pre-Sale Review by City Council:
Review by Elk River Municipal Utilities:
Distribute Official Statement:
Conference with Rating Agency:
Bond Sale:
Estimated Closing Date:
October 13, 2003
October 15, 2003
Week of October 27, 2003
Week of November 3, 2003
November 10, 2003
Week of December 1, 2003
Attachments:
Sources and Uses of Funds
Proposed Debt Service Schedule
Resolution authorizing Ehlers to proceed with bond sale
Ehlers Contacts:
Financial Advisor: Mark Ruff (651) 697-8505
Bond Analysts: Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Bond Sale Coordinator: Connie Kuck (651) 697-8527
The Official Statement for this financing will be mailed to the Council Members at their home address for review
prior to the sale date.
City of Elk River, MN
2003 Projects
Issue Summery
Proposed G.O. Bonds, Series 2003
Par Amount of Bonds 1,795,000
City Contribution 487,391
Prepaid Spcl Assmt 184,000
ERMU Cash 285,220
TOTAL SOURCES 2,751,611
Total Underwdter's Discount (1.200%)21,540
Costs of Issuance 28,000
Deposit to Project Construction Fund
Rounding Amount
TOTAL USES
Assessment Revenue
Boston & Concord
Assessment Amt 362,112
Rate 5.50%
Start Year (Collection) 2004
Term 10
Calculation Method Equal Pdn
Assessment Revenue Assessment Revenue
2003 Street Rehab 2002 Zaue Street
Assessment Amt 441,300 Assessment Amt 227,736
Rate 5.50% Rate 5.50%
Start Year (Collection) 2004 Start Year (Collection 2004
Term 10 Term 9
Calculation Method Equal Pdn Calculation Method Equal Pdn
2,699,698 Construction Fund Amt.
2,373
2,751,611
452,614 Construction Fund Amt.
1,475,886 Construction Fund Amt.
Assessment Revenue
Industrial Park
Assessment Amt 525,000
Rate 6.00%
Sta~ Year (Collection) 2004
Term 7
Calculation Method Equal Pdn
277,736 Construction Fund Amt.512,000
Principal
CollectPayment
Year Date
12./1/2003
2/1/2004
2004 2/1/2005
2005 2/1/2006
2006 2/1/2007
2007 2/1/2008
2008 2/1/2009
2009 2/1/2010
2010 2/1/2011
2011 2/1/2012
2012 2/1/2013
2013 2/1/2014
Net P & I
Prtnclpal Rate Interest P & I +9.00%
Total Total Total Total
Principal Interest A~_~_ _~_-mt Principal Interest A_-_-'-_-_:mt Principal Interest A==cc=mt PN,~¢;~al Interest
Total
Revenue Levy
27510002.05% 711~ ~1~ 363,895
260,0002.50% 551705 3151705 331,490
255,0003.00% 49,205 304,205 319,415
185,0003.40% 41,555 226,555 237,883
185,0003.75% 35,265 220,265 231,278
175,0004.15% 28,328 203,328 213,494
175,0004.40% 21,065 196,065 205,868
105,0004.60% 13,365 118,365 124,283
105,0004.70% 8,535 113,535 119,212
75,000 4.80% 3,600 78,600 82,530
1,795,000
(36,211) (19,916) (56,127) (44,130) (24,272) (68,402) (25,304) (12,525) (37,829) (75,000) (31,500) (106,500)
(36,211) (17,925) (54,136) (44,130) (21,844) (65,974) (25,304) (11,134) (36,438) (75,000) (27.000) (102,000)
(36,211) (15,933) (52,144) (44,130) (19,417) (63,547) (25,304) (9,742) (35,046) (75,000) (22,500) (97,500)
(36,211) (13,941) (50,153) (44,130) (16,990) (61,120) (25,304) (8,350) (33,654) (75,000) (18,000) (93,000)
(36,211) (11,950) (48,161) (44,130) (14,563) (58,693) (25,304) (6,959) (32,263) (75,000) (13,500) (88,500)
(36,211) (9,958) (46,169) (44,130) (12,136) (56126~) (25,304) (5,567) (30,871) (75,000) (9,000) (84,000)
(36,211) (7,966) (44,178) (44,130) (9,709) (53,839) (25,304) (4,175) (29,479) (75,000) (4,500) (79,500)
(36,211) (5,975) (42,186) (44,130) (7,281) (51,411) (25,304) (2,783) (28,087)
(36,211) (3,983) (40,194) (44,130) (4,854) (48,984) (25,304) (1,392) (26,696)
(36,211) (1,992) (38,203) (44,130) (2,427) (46,557)
328,189 2,123,189 21229,348
(362,112) (109,539) (471,651) (441,300) (133,493) (574,793) (227,736)
(62,627) (290,363) (525,000) (126,000) (651,000)
(268,858) 95,036
(258,548) 72,942
(248,237) 71,178
(237,927) (44)
(227,616) 3,662
517,306) (3,812)
(206,995) (1,127)
(121,685) 2,598
(115,874) 3,337
(84,760) (2,230)
(1,987,808)241,54I
Prepared by Ehlers & Associates, Inc. 10/7/2003