EDSR MEMORANDUM 10-20-1997 ELK RIVER ECONOMIC DEVELOPMEN eAVTHORITY
MEMORANDUM
TO: Economic Development Authority
FROM: Lori Johnson, Asst. City Administrator/
Finance Director
DATE: October 20, 1997
SUBJECT: Consideration of a Resolution
Providing for the Competitive
Negotiated Sale of the EDA's City Hall
and Law Enforcement Facility Revenue
Refunding Bond, Series 1997
In 1991 the EDA issued $2,740,000 in City Hall and Law Enforcement
revenue bonds to finance the construction of City Hall. As is the case with all
of the city's debt, we have been monitoring this issue for an opportunity to
• refund the issue at a lower interest rate. Under the current market
conditions, it is projected that refunding this issue now will result an
estimated total net savings of in excess of$142,000. This equates to a
present value savings of approximately $108,250. Because the market can
fluctuate substantially in relatively short periods of time, a special meeting
to approve the refunding was requested.
Attached are Recommendations for the refunding as well as a copy of the
resolution which, when approved, will set the sale date for November 10,
1997. At that time the EDA will be asked to approve a resolution awarding
the sale. Subsequently, the City Council must also take action on the award
and will be asked to approve similar action at its November 17 meeting.
Since this is a lease revenue bond, no taxing authority is pledged either by
the EDA or the city. A lease is in place between the city and the EDA which
requires that the city annually appropriate funds for debt repayment.
Action Requested
The EDA is asked to approve the attached resolution Providing for the
Competitive Negotiated Sale of the EDA's City Hall and Law Enforcement
ipFacility Revenue Refunding Bond, Series 1997.
13065 Orono Parkway • P. 0. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EXTRACT OF MINUTES OF A MEETING OF THE
411 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
Pursuant to due call and notice thereof, a regular or
special meeting of the Board of Commissioners (the "Board" ) of
the Elk River Economic Development Authority (the "EDA" ) was duly
held at the Elk River City Hall on October 20, 1997, beginning at
P.M. for the purpose in part of authorizing the competitive
negotiated sale of the EDA' s City Hall and Law Enforcement
Facility Revenue Refunding Bonds, Series 1997 .
The following Boardmembers were present :
and the following were absent :
• Boardmember introduced the following
resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF THE EDA' S
• CITY HALL AND LAW ENFORCEMENT FACILITY
REVENUE REFUNDING BONDS, SERIES 1997
A. WHEREAS, the Board believes it expedient to issue
the EDA' s City Hall and Law Enforcement Facility Revenue
Refunding Bonds, Series 1997 (the "Bonds" ) , to refund the EDA' s
$2, 740, 000 City Hall and Law Enforcement Facility Revenue Bonds,
Series 1997 (City of Elk River Lease Purchase Obligation) , dated
November 1, 1991;
B. WHEREAS, the Board has retained Springsted
Incorporated, in Saint Paul, Minnesota ("Springsted") , as its
independent financial advisor for this financing and is therefore
authorized to sell these obligations by a competitive negotiated
sale in accordance. with Minnesota Statutes, Section 475 . 60,
Subdivision 2 (9) :
• 366825.1
NOW, THEREFORE, BE IT RESOLVED by the Board, as
• follows :
1 . Authorization; Findings . The Board hereby
authorizes Springsted to solicit bids for the competitive
negotiated sale of the Bonds .
2 . Meeting; Bid Opening. The Board shall meet at the
time and place specified in the Terms of Proposal attached hereto
for the purpose of considering sealed bids for, and awarding the
sale of, the Bonds . The Secretary of the Board, or 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 set forth in the Terms
of Proposal attached hereto and hereby approved and made a part
hereof .
4 . Official Statement . In connection with said sale,
the Secretary and other officers or employees of the Board 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 Board upon its
completion.
• Adopted by Board of Commissioners of the Elk River Economic
Development Authority on October 20, 1997 .
The motion for the adoption of the foregoing resolution
was duly seconded by Boardmember and, after full
discussion thereof and upon a vote being taken thereon, the
following Boardmembers voted in favor thereof :
and the following voted against the same :
111 366825.1 2
THE AUTHORITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE
THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING
BASIS:
TERMS OF PROPOSAL
$2,290,000•
THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, MINNESOTA,
CITY HALL AND LAW ENFORCEMENT FACILITY REVENUE REFUNDING BONDS,
SERIES 1997
(CITY OF ELK RIVER LEASE PURCHASE OBLIGATION)
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Monday, November 10, 1997, until 10:00 A.M.,
Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
of the Bonds will be by the Board of Commissioners at 6:00 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 Proposal
price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion 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 500 Main Street,
Suite 1010, Fort Worth, TX 76102, telephone (817) 885-8900. Neither the Authority 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 Authority to purchase the Bonds regardless of the manner of the Proposal submitted.
DETAILS OF THE BONDS
The Bonds will be dated December 1, 1997, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 1998. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Bonds will mature February 1 in the years and amounts as follows:
2001 $165,000 2005 $205,000 2009 $260,000
2002 $175,000 2006 $220,000 2010 $280,000
2003 $185,000 2007 $230,000 2011 $130,000
2004 $195,000 2008 $245,000
' The Authority reserves the right, after proposals are opened and prior to award, to increase or reduce
the principal amount of the Bonds offered for sale. Any such increase or reduction will be in a total
• amount not to exceed$75,000 and will be made in multiples of$5,000 in any of the maturities. In the
event the principal amount of the Bonds is increased or reduced, any premium offered or any discount
taken by the successful bidder will be increased or reduced by a percentage equal to the percentage
by which the principal amount of the Bonds is increased or reduced.
i
• Proposals for the Bonds may contain a maturity schedule providing for a combination of serial
bonds and term bonds, provided that no serial bond may mature on or after the first mandatory
sinking fund redemption date of any term bond. All term bonds shall be subject to mandatory
sinking fund redemption and must conform to the maturity schedule set forth above at a price of
par plus accrued interest to the date of redemption. In order to designate term bonds, the
proposal must specify "Last Year of Serial Maturities" and "Years of Term Maturities" in the
spaces provided on the Proposal Form.
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 Bonds,
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
New York, New York, 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 made on the books and records of DTC and its participants.
Principal and interest are payable by the registrar to DTC or its nominee as registered owner of
the Bonds. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; 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 DTC.
REGISTRAR
The Authority will name the registrar which shall be subject to applicable SEC regulations.
The Authority will pay for the services of the registrar.
OPTIONAL REDEMPTION
The Authority may elect on February 1, 2006, and on any day thereafter, to prepay Bonds due
on or after February 1, 2007. Redemption may be in whole or in part and if in part at the option
of the Authority and in such manner as the Authority shall determine. If less than all Bonds of a
maturity are called for redemption, the Authority will notify DTC of the particular amount of such
maturity to be prepaid. DTC 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
plus accrued interest.
SECURITY AND PURPOSE
The Bonds will be special obligations of the Authority payable solely from lease rental payments
received from the City of Elk River pursuant to a Lease Purchase Agreement and shall not
constitute a debt for which the faith and credit or taxing powers of the Authority will be pledged.
The proceeds will be used to refund the 2001 through 2011 maturities of the Authority's City
Hall and Law Enforcement Facility Revenue Bonds,Series 1991.
•
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• TYPE OF PROPOSALS
Proposals shall be for not less than $2,267,100 and accrued interest on the total principal
amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in
the form of a certified or cashier's check or a Financial Surety Bond in the amount of $22,900,
payable to the order of the Authority. If 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 Authority. Such bond must be
submitted to Springsted Incorporated prior to the opening of the proposals. The Financial
Surety Bond must 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
that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a
certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later
than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is
not received by that time, the Financial Surety Bond may be drawn by the Authority to satisfy
the Deposit requirement. The Authority 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 amount will be retained by the
Authority. No proposal can be withdrawn or amended after the time set for receiving proposals
unless the meeting of the Authority scheduled for award of the Bonds is adjourned, recessed, or
continued to another date without award of the Bonds having been made. Rates shall be in
integral multiples of 5/100 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 Authority's computation of the interest rate of each proposal, in
accordance with customary practice, will be controlling.
The Authority 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 Authority 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 underwriter, 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 of the Bonds resulting from such purchase of
insurance shall be paid by the purchaser, except that, if the Authority has requested and
received a rating on the Bonds from a rating agency, the Authority 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 refusal by the purchaser to accept delivery on
the Bonds.
410
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• 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 Bonds 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 Authority 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, 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 Authority or its designee not later than 12:00 Noon, Central Time. Except as
compliance with the terms of payment for the Bonds shall have been made impossible by action
of the Authority, or its agents, the purchaser shall be liable to the Authority for any loss suffered
by the Authority by reason of the purchaser's non-compliance with said terms for payment.
CONTINUING DISCLOSURE
On the date of the actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking whereunder the City will covenant to provide, or cause to be
provided, annual financial information, including audited financial statements of the City, and
notices of certain material events, as specified in and required by SEC Rule 15c2-12(b)(5),
• OFFICIAL STATEMENT
The Authority 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 Authority, Springsted
Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, 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, together with any other
information required by law, shall constitute a "Final Official Statement" of the Authority 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 proposal therefor, the Authority 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 90 copies of
the Official Statement and the addendum or addenda described above. The Authority
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 Authority (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 October 20, 1997 BY ORDER OF THE BOARD OF COMMISSIONERS
IllbPatrick Dwyer, President
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