5.5. ERMUSR 05-10-2016 Elk River .M
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski, Finance and Office Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
May 10, 2016 5.5
SUBJECT:
Bond Sale Resolution
BACKGROUND: As mentioned in my April staff update,we are moving forward with our buy-in to
MMPA with an early payment amount by bonding this year for$10 million. We have been working with
our financial consultants, Springsted,to bring the sale information forward this commission meeting.
Upon their review,we are also proposing to refund debt issue 2007A bonds for early payoff in 2018 when
we move to MMPA as our power provider.
DISCUSSION:
Springsted has provided information on the 2016A bonding for$10 million,and an analysis on the 2007A
bond refunding of$1.46 million.Additionally, Springsted has provided information for the justification
of the refunding with the adjusted timeline and projected savings of$56,000. The report is attached,
providing this information.Terri Heaton from Springsted will be at our Commission meeting to help
explain the refunding and answer any questions you may have.
Given the City of Elk River is the qualified entity to issue bonds,the resolution must be approved by the
City Council to be effective. We have the necessary resolutions for the Utility Commission and City
Council to act upon in order to authorize the sale and refund of these bond issues. Successful action from
the Utility at the May 10`h meeting would bring it before the City Council on May 16`h for action. The
resolutions are attached for your review.
The award of the bonds by the Utility Commission would come back and be on the June 14`h agenda.
ACTION REQUESTED:
Staff recommends that the Elk River Municipal Utilities authorize and request the City Council to sell the
2016A Electric Bonds and refund the 2007A Electric Bonds in June 2015,per the attached resolution.
ATTACHMENTS:
Recommendations related to Bonds 2016A Issuance,and 2016B Refunding
Resolutions for Utility 2016A and 2016B
Resolutions for City 2016A and 2106B
...
P—OWERED 11
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City of Elk River, Minnesota
Recommendations for Issuance of Bonds
$10,000,000 Electric Revenue Bonds, Series 2016A
$1,460,000 Electric Revenue Refunding Bonds, Series 2016B
The City Council and Utilities Commission have under consideration the issuance of bonds to (i)finance the Utility's
buy-in to become a member of the Minnesota Municipal Power Agency(the"Series 2016A Bonds")and(ii)refund an
outstanding series of electric revenue bonds (the "Series 2016B Bonds"). This document provides information
relative to the proposed issuance.
KEY EVENTS: The following summary schedule includes the timing of some of the key events that will
occur relative to the bond issuance.
May 10,2016 Utilities Commission sets sale date and terms
May 16,2016 City Council sets sale date and terms and authorizes
.--A,1„ Utilities Commission to award Bonds
Week of May 30,2016 Rating conference is conducted
On or about June 10,2016 Rating received
June 14,2016, 10:00 AM Competitive bids are received
June 14,2016,3:30 PM Utilities Commission considers award of Bonds
{
July 14,2016(est.) Proceeds are received
4 RATING: An application will be made to Moody's Investors Service for a rating on the Bonds. The
,, City's electric revenue supported debt is currently rated'Aa3'by Moody's.
THE MARKET: Performance of the tax-exempt market is often measured by the Bond Buyer's Index("BBI")
which measures the yield of high grade municipal bonds in the 20th year for general
obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the BBI 25
Bond Index). The following chart illustrates these two indices over the past five years.
BBI 25-bond(Revenue)and 20-bond(G.O.)Rates for 5 Years Ending
4/28/2016
6.5% ----BBI 25 Bond
-BBI20 Bond
4/25/2015
6.0% 25 bond:371%
20 bond:3.32%
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166
POST ISSUANCE The issuance of these bonds will result in post-issuance compliance responsibilities. The
COMPLIANCE: responsibilities are in two primary areas: i)compliance with federal arbitrage requirements
and ii)compliance with secondary disclosure requirements.
Federal arbitrage requirements include a wide range of implications that have been taken into
account as your issue has been structured. Post-issuance compliance responsibilities for
your tax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In
general terms the arbitrage requirements control the earnings on unexpended bond
proceeds, including investment earnings, moneys held for debt service payments (which are
considered to be proceeds under the IRS regulations), and/or reserves.
The City expects to meet the 6-month spending exception for the Series 2016A Bonds.
Because the Series 2016B Bond refunding transaction is being conducted as a current
refunding in which proceeds will be spent within 90 days, the City expects to meet the 6-
month spending exception and gross proceeds that meet the test will qualify for an exception
to rebate.
Yield restriction provisions will apply to the debt service fund and the debt service reserve
account and the funds should be monitored throughout the life of the Bonds.
Secondary disclosure requirements result from an SEC requirement that underwriters provide
ongoing disclosure information to investors. To meet this requirement, any prospective
underwriter will require the City to commit to providing the information needed to comply
under a continuing disclosure agreement.
Springsted will provide arbitrage and continuing disclosure compliance services to the City
under separate contracts.Contracts for these services will be provided to City staff.
AUTHORITY: Statutory Authority: The Bonds are being issued pursuant to Minnesota Statutes,
Chapters 453 and 475.
Parity Debt: In addition to the Bonds, the Utility has two other outstanding issues payable
from net revenues of the Electric Utility system—the Electric Revenue Bonds, Series 2007A
(the "Series 2007A Bonds"), today outstanding in the aggregate principal amount
of$1,535,000 with a final maturity of February 1,2022 and the Electric Revenue Refunding
Bonds, Series 2014A (the "Series 2014A Bonds"), today outstanding in the aggregate
principal amount of$1,235,000 with a final maturity of August 1,2018. The Series 2007A
Bonds are being refunded and redeemed in their entirety on September 1, 2016 with the
proceeds of the Series 2016B Bonds.
Rate Covenant: The Utility has pledged to establish user rates and charges for the Electric
System so that annual net revenues shall not be less than 110%of the average annual debt
service on the Bonds,the Series 2014A Bonds and any additional parity bonds.
Additional Bonds Test:Additional obligations may be issued on a parity of lien with the Bonds
and the Series 2014A Bonds so long as the net revenues of the Electric System for the
audited fiscal year immediately preceding the issuance of such additional bonds are not less
than 125%of the average annual principal and interest due on all outstanding bonds and the
additional bonds to be issued, during the remaining term of the outstanding bonds. The
average annual principal and interest payment on the Series 2014A Bonds and the Bonds
will be approximately$796,837.
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The resolution authorizing such additional bonds provides for payment to the Reserve
Account upon delivery of such additional bonds, from the proceeds thereof or any other
source, of an amount necessary to cause the aggregate balance in the Reserve Account to
equal the Reserve Requirement.
Debt Service Reserve Account: The Utility will maintain a Debt Service Reserve Account in
the amount of the Reserve Requirement. "Reserve Requirement" means, as of the date of
issuance of a series of bonds, an amount equal to the least of(i) 10%of the original principal
amount of the outstanding bonds and Additional Bonds, or (ii)the maximum amount of
principal and interest payable during the then current Fiscal Year or any future Fiscal Year on
all outstanding bonds and Additional Bonds as of the date of issuance of a series of bonds,or
(iii) 125%of the average annual principal and interest payable on all outstanding bonds and
Additional Bonds as of the date of issuance of a series of bonds.
With the issuance of the Bonds, the Reserve Requirement will be equal to 125%of average
annual debt service on the Bonds and the Series 2014A Bonds. The amount on deposit for
the Series 2007A Bonds is$287,500, of which $141,500 will be applied to the redemption of
the Series 2007A Bonds. It is anticipated that the total amount of the Debt Service Reserve
Account necessary on the Bonds and the Series 2014A Bonds will be $996,461. Funds are
on deposit for the Series 2014A Bonds in the amount of$203,000. Funds are on deposit for
the Series 2007A Bonds in the amount of$287,500 of which $146,000 will be retained with
regard to the Series 2016B Bonds. The $647,461 remainder of the $996,461 Reserve
Requirement of will be funded from the proceeds of the Series 2016A Bonds.
SECURITY AND The Bonds will be not be general obligations of the City but will be special limited obligations
SOURCE OF payable solely from net revenues of the City's Electric System.
PAYMENT:
The Bonds will be issued as Additional Bonds,on parity with the Series 2014A Bonds.
The table below demonstrates that the issuance of the Bonds satisfies the Additional Bonds
test described above.
Elk River Utilities Electric Revenue Fund
Net Revenues Available For Debt Service
Fiscal Years Ended December 31,2013 and 2014
December 31,2013 December 31,2014 December 31,2015
Operating Revenue $ 30,846,379 $ 31,366,685 $ 32,551,722
Operating Expense (28,127,892) (29,392,123) (29,896,154)
Net Operating Income(Loss) $ 2,718,487 $ 1,974,562 $ 2,655,568
Add Back Depreciation 2,029,496 1,914,062 1,922,359
Add Other Income 264,209 166,481 375,020
Available for Debt Service $ 5,012,192 $ 4,055,105 $ 4,952,947
Average Annual Debt Service* $ 796,837
Coverage 6.21x
*Includes average annual debt service for the Bonds and the Series 2014A Bonds.
Source:City of Elk River Comprehensive Annual Financial Reports,for the Years Ended December 31,2013
through 2015.
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SALE TERMS AND Variability of Issue Size: A specific provision in the sale terms permits modifications to the
MARKETING: issue size and/or maturity structure to customize the issue once the price and interest rates
are set on the day of sale.
Prepayment Provisions:
• Series 2016A Bonds maturing on or after February 1, 2026 will be subject to
optional redemption on February 1, 2025 and any date thereafter, at a price of par
plus accrued interest.
• Based on the short duration of the Series 2016B Bonds, and to avoid possible
negative pricing impacts, the Series 2016B Bonds will not be subject to redemption
prior to their stated maturities.
Bank Qualification:
• The City does not expect to issue more than $10 million in tax-exempt obligations
that count against the $10 million limit for this calendar year; therefore, the Series
2016A Bonds are designated as bank qualified.
• The Series 2016B Bonds will refund an issue that is not bank qualified and therefore
the Series 2016B Bonds will not be designated as bank qualfied.
RISKS/SPECIAL The outcome of this financing will rely on the market conditions at the time of the sale. Any
CONSIDERATION: projections included herein are estimates based on current market conditions.
SUPPLEMENTAL Supplementary information will be available to staff including detailed terms and conditions of
INFORMATION sale, comprehensive structuring schedules and information to assist in meeting post-
AND issuance compliance responsibilities.
BOND RECORD:
Upon completion of the financing, a bond record will be provided that contains pertinent
documents and final debt service calculations for the transaction.
$10,000,000 Electric Revenue Bonds, Series 2016A
Description of Issue
PURPOSE: Proceeds of the Series 2016A Bonds will be used to finance the Utility's buy-in to become a
member of the Minnesota Municipal Power Agency (the "MMPA"). The City and the MMPA
will execute a Power Sales Agreement under which the City will purchase electric power and
energy from the MMPA from and after October 1 2018. The City agrees to a buy in equal to
120% of its proportionate share of the net position (equity) and related rate accruals of
MMPA through an agreed upon formula. The amount of the buy in will be at least
$10,000,000 and will be determined in 2018. At that time, any additional amounts owed may
result in additional bonds.
We have attached the buy-in analysis for the Utility's membership prepared by the MMPA.
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STRUCTURING At the direction of the Utility, the Series 2016A Bonds have been structured to provide for
SUMMARY: approximately level annual debt service over a term of 20 years.
SCHEDULES Schedules attached include: MMPA buy-in analysis, sources and uses of funds and net debt
ATTACHED: service requirements,given the current interest rate environment.
$1,460,000 Electric Revenue Refunding Bonds, Series 2016B
Description of Issue
PURPOSE: Proceeds of the Series 2016B Bonds, together with $287,500 available in the Reserve
Account and $30,700 held in the debt service fund, will be used to (i)refund the February
1,2017 through 2022 maturities of the City's Electric Revenue Bonds, Series 2007A (the
"Prior Bonds"),dated March 28,2007; (ii)fund a deposit to the Reserve Account;and (iii)pay
costs of issuance.The issuance of the Series 2016B Bonds is being conducted as a"current"
refunding, in which the proceeds of the Series 2016B Bonds are used within ninety days of
bond settlement to redeem the outstanding principal of the Prior Bonds. The maturities to be
refunded are currently outstanding in the aggregate principal amount of$1,535,000. The
purpose of the refunding is to achieve interest cost savings.
The Prior Bonds were originally issued to finance improvements and extensions to the City's
Electric Utility system and to fund a deposit to the Reserve Account.
STRUCTURING At the direction of the Utility, the Series 2016A Bonds have been structured to provide for
SUMMARY: approximately level annual savings over a term of matching the remaining term of the Prior
Bonds.
On August 1, 2016 the Utility will use the $30,700 held in the debt service fund to pay the
interest due on the Prior Bonds. On Septermber 1,2016, the Utility will use the proceeds of
the Series 2016B Bonds and the $287,500 transfer from the Debt Service Reserve Account
to redeem the remaining $1,535,000 outstanding principal on the Prior Bonds and to pay
interest accrued thereon from August 1,2016. Beginning with the February 1,2017 principal
and interest payment, the Utility will begin to make debt service payments on the Series
2016B Bonds,realizing the interest cost savings.
Based on current interest rates, this refunding is projected to result in total future value
savings of approximately $56,284, with a net present value of$58,277. These savings are
after payment of all expenses related to the transaction.
SCHEDULES Schedules attached include: a preliminary feasibility summary, estimated net debt service
ATTACHED: requirements and interest cost savings, given the current interest rate environment,
aggregate Electric System debt service after issuance of the Bonds, and proof of the debt
service reserve requirement.
RISKS/SPECIAL The outcome of this financing will rely on the market conditions at the time of the sale. Any
CONSIDERATION: projections included herein are estimates based on current market conditions.
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Minnesota Municipal Power Agency
Elk River Buy-In Analysis
Elk River Wholesale Purchases-2015 294,442
MMPA Wholesale Sales-2015 1,498,338
Equals: Elk River Proportion Ratio 0.20
Actual Projected
As of 12/31/2015 As of 12/31/2018
MMPA Net Position 58,109,379 82,672,259
Rate Stabilization Fund Balance 30,450,000 36,470,000
Accrued Major Maintenance 4,052,163 4,052,163
EAC Accrual 3,119,978 2,000,000
Deferred Costs (37,242,644) (50,285,760)
Total Net Position & Rate-Related Accruals 58,488,876 74,908,662
Times: Elk River Proportion Ratio 0.20 0.20
Equals: Elk River Proportionate Share 11,493,790 14,720,481
Times:1.2 per New Member Agreement 1.2 1.2
Equals: Projected Elk River Buy-In 13,792,547 17,664,577
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$10,000,000
City of Elk River, Minnesota
Electric Revenue Bonds, Series 2016A
Sources&Uses
Dated 07/14/2016 I Delivered 07/14/2016
Sources Of Funds
Par Amount of Bonds $10,000,000.00
Total Sources $10,000,000.00
Uses Of Funds
Available for Project Costs 9,068,057.50
Deposit to Debt Service Reserve Fund(DSRF) 711,467.50
Total Underwriter's Discount (1.300%) 130,000.00
Costs of Issuance 90,475.00
Total Uses $10,000,000.00
Series 2016 Electric Rev I SINGLE PURPOSE 4/29/2016 12:23 PM
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$10,000,000
City of Elk River, Minnesota
Electric Revenue Bonds, Series 2016A
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I DSR Existing Net Net New D/S
D/S
02/01/2017 - - 133,479.81 133,479.81 (3,892.55) 670,334.56 799,921.82
02/01/2018 - - 243,922.50 243,922.50 (7,114.68) 673,385.00 910,192.82
02/01/2019 465,000.00 1.350% 243,922.50 708,922.50 (7,114.68) 474,988.75 1,176,796.57
02/01/2020 470,000.00 1.500% 237,645.00 707,645.00 (7,114.68) 256,162.50 956,692.82
02/01/2021 480,000.00 1.650% 230,595.00 710,595.00 (7,114.68) 257,732.50 961,212.82
02/01/2022 485,000.00 1.800% 222,675.00 707,675.00 (7,114.68) 112,732.50 813,292.82
02/01/2023 495,000.00 1.900% 213,945.00 708,945.00 (7,114.68) - 701,830.32
02/01/2024 505,000.00 2.050% 204,540.00 709,540.00 (7,114.68) - 702,425.32
02/01/2025 515,000.00 2.100% 194,187.50 709,187.50 (7,114.68) - 702,072.82
02/01/2026 525,000.00 2.250% 183,372.50 708,372.50 (7,114.68) - 701,257.82
02/01/2027 535,000.00 2.400% 171,560.00 706,560.00 (7,114.68) - 699,445.32
02/01/2028 550,000.00 2.500% 158,720.00 708,720.00 (7,114.68) - 701,605.32
02/01/2029 565,000.00 2.600% 144,970.00 709,970.00 (7,114.68) - 702,855.32
02/01/2030 580,000.00 2.650% 130,280.00 710,280.00 (7,114.68) - 703,165.32
02/01/2031 595,000.00 2.750% 114,910.00 709,910.00 (7,114.68) - 702,795.32
02/01/2032 610,000.00 2.800% 98,547.50 708,547.50 (7,114.68) - 701,432.82
02/01/2033 630,000.00 2.950% 81,467.50 711,467.50 (7,114.68) - 704,352.82
02/01/2034 645,000.00 3.050% 62,882.50 707,882.50 (7,114.68) - 700,767.82
02/01/2035 665,000.00 3.150% 43,210.00 708,210.00 (7,114.68) - 701,095.32
02/01/2036 685,000.00 3.250% 22,262.50 707,262.50 (718,582.18) - (11,319.68)
Total $10,000,000.00 - $3,137,094.81 $13,137,094.81 (850,538.97) $2,445,335.81 $14,731,891.65
SIGNIFICANT DATES
Dated Date 7/14/2016
Delivery Date 7/14/2016
First Coupon Date 2/01/2017
Yield Statistics
Bond Year Dollars $116,737.22
Average Life 11.674 Years
Average Coupon 2.6873132%
Net Interest Cost(NIC) 2.7986744%
True Interest Cost(TIC) 2.7947711%
Bond Yield for Arbitrage Purposes 2.6610456%
All Inclusive Cost(AIC) 2.8892451%
IRS Form 8038
Net Interest Cost 2.6873132%
Weighted Average Maturity 11.674 Years
Series 2016 Electric Rev SINGLE PURPOSE 4/29/20/6,223 PM
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Preliminary
$1,460,000
City of Elk River, Minnesota
Electric Revenue Refunding Bonds, Series 2016B
Current Refunding of Series 2007A
Preliminary Feasibility Summary
Dated 07/14/2016 I Delivered 07/14/2016
Sources Of Funds
Par Amount of Bonds $1,460,000.00
Transfers from Rior Issue DSR Funds 287,500.00
Transfers from Rior Issue Debt Service Funds 30,700.00
Total Sources $1,778,200.00
Uses Of Funds
Deposit to Current Refunding Fund 1,570,816.67
Deposit to Debt Service Reserve Fund(DSRF) 146,000.00
Costs of Issuance 49,000.00
Total Underwriter's Discount (0.700%) 10,220.00
Rounding Amount 2,163.33
Total Uses $1,778,200.00
ISSUES REFUNDED AND CALL INFORMATION
Rior Issue Call Rice 100.000%
Rior Issue Call Date 9/01/2016
SAVINGS INFORMATION
Net Future Value Benefit $56,283.77
Net Resent Value Benefit $58,277.45
Net FM Benefit/$1,681,569.08 R/Refunded Debt Service 3.466%
BOND STATISTICS
Average Life 3.099 Years
Average Coupon 1.4877280%
Net Interest Cost(NIC) 1.7136371%
True Interest Cost(TIC) 1.7194062%
Series 2016B Ref2007A Re I SINGLE PURPOSE 1 4/29/20/6 1 1153 AM
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Preliminary
$1,460,000
City of Elk River, Minnesota
Electric Revenue Refunding Bonds, Series 2016B
Current Refunding of Series 2007A
Debt Service Schedule
Date Principal Coupon Interest Total P+I
02/01/2017 235,000.00 0.950% 10,591.49 245,591.49
02/01/2018 235,000.00 1.000% 17,122.50 252,122.50
02/01/2019 240,000.00 1.200% 14,772.50 254,772.50
02/01/2020 245,000.00 1.400% 11,892.50 256,892.50
02/01/2021 250,000.00 1.600% 8,462.50 258,462.50
02/01/2022 255,000.00 1.750% 4,462.50 259,462.50
Total $1,460,000.00 - $67,303.99 $1,527,303.99
Yield Statistics
Bond Year Dollars $4,523.94
Average Life 3.099 Years
Average Coupon 1.4877280%
Net Interest Cost(NIC) 1.7136371%
True Interest Cost(TIC) 1.7194062%
Bond Yield for Arbitrage Purposes 1.4850295%
All Inclusive Cost(AC) 2.8782285%
IRS Form 8038
Net Interest Cost 1.4877280%
Weighted Average Maturity 3.099 Years
Series 2016B Ref 2007A Re I SINGLE PURPOSE 14/29/2016 1 11.53 AM
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Preliminary
$1,460,000
City of Elk River, Minnesota
Electric Revenue Refunding Bonds, Series 2016B
Current Refunding of Series 2007A
Debt Seryice Comparison
Date Total P+I DSR Net New D/S Old Net D/S Savings
02/01/2017 245,591.49 (399.43) 245,192.06 284,962.50 39,770.44
02/01/2018 252,122.50 (730.00) 251,392.50 290,962.50 39,570.00
02/01/2019 254,772.50 (730.00) 254,042.50 291,362.50 37,320.00
02/01/2020 256,892.50 (730.00) 256,162.50 291,362.50 35,200.00
02/01/2021 258,462.50 (730.00) 257,732.50 295,962.50 38,230.00
02/01/2022 259,462.50 (146,730.00) 112,732.50 7,462.50 (105,270.00)
Total $1,527,303.99 (150,049.43) $1,377,254.56 $1,462,075.00 $84,820.44
PV Analysis Summary(Net to Net)
Net FV Cashflow Savings 84,820.44
Gross PV Debt Service Savings 221,569.08
Effects of changes in DSR investments (134,754.96)
Net PV Cashflow Savings @ 1.485%(Bond Yield) 86,814.12
Transfers from Prior Issue Debt Service Fund (30,700.00)
Contingency or Rounding Amount 2,163.33
Net Future Value Benefit $56,283.77
Net Present Value Benefit $58,277.45
Net PV Benefit/$216,704.78 IN Refunded Interest 26.893%
Net PV Benefit/$1,681,569.08 W Refunded Debt Service 3.466%
Net PV Benefit/ $1,535,000 Refunded Rincipal 3.797%
Net W Benefit/ $1,460,000 Refunding Principal 3.992%
Refunding Bond Information
Refunding Dated Date 7/14/2016
Refunding Delivery Date 7/14/2016
Series 2016B Ref 2007A Re SINGLEPORPOSE 4/29/2016 11.53 AM
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City of Elk River, Minnesota
Electric Revenue Bonds
Aggregate Debt Service
Series 2014 Series 2016A Series 2016B
02/01/2017 425,650.00 133,479.81 245,591.49 804,721.30
02/01/2018 422,500.00 243,922.50 252,122.50 918,545.00
02/01/2019 424,200.00 708,922.50 254,772.50 1,387,895.00
02/01/2020 - 707,645.00 256,892.50 964,537.50
02/01/2021 - 710,595.00 258,462.50 969,057.50
02/01/2022 - 707,675.00 259,462.50 967,137.50
02/01/2023 - 708,945.00 - 708,945.00
02/01/2024 - 709,540.00 - 709,540.00
02/01/2025 - 709,187.50 - 709,187.50
02/01/2026 - 708,372.50 - 708,372.50
02/01/2027 - 706,560.00 - 706,560.00
02/01/2028 - 708,720.00 - 708,720.00
02/01/2029 - 709,970.00 - 709,970.00
02/01/2030 - 710,280.00 - 710,280.00
02/01/2031 - 709,910.00 - 709,910.00
02/01/2032 - 708,547.50 - 708,547.50
02/01/2033 - 711,467.50 - 711,467.50
02/01/2034 - 707,882.50 - 707,882.50
02/01/2035 - 708,210.00 - 708,210.00
02/01/2036 - 707,262.50 - 707,262.50
Total $1,272,350.00 $13,137,094.81 $1,527,303.99 $15,936,748.80
Average= 796,837.44
Par Amounts Of Selected Issues
Series 2014 Ref 2006A-PS 1,235,000.00
Series 2016 Bectric Rev 10,000,000.00
Series 2016B Ref 2007A Rev 1,460,000.00
TOTAL 12,695,000.00
Aggregate 1 4/29/2016 1 225PM
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City of Elk River, Minnesota
Electric Revenue Bonds
Proof of Reserve Fund Requirement-Series 2016A 2016B and 2014A Bonds
Date Principal Interest Series 2014A TOTAL P+I
and Series
02/01/2017 - 133,479.81 670,334.56 803,814.37
02/01/2018 - 243,922.50 673,385.00 917,307.50
02/01/2019 465,000.00 243,922.50 474,988.75 1,183,911.25
02/01/2020 470,000.00 237,645.00 256,162.50 963,807.50
02/01/2021 480,000.00 230,595.00 257,732.50 968,327.50
02/01/2022 485,000.00 222,675.00 112,732.50 820,407.50
02/01/2023 495,000.00 213,945.00 - 708,945.00
02/01/2024 505,000.00 204,540.00 - 709,540.00
02/01/2025 515,000.00 194,187.50 - 709,187.50
02/01/2026 525,000.00 183,372.50 - 708,372.50
02/01/2027 535,000.00 171,560.00 - 706,560.00
02/01/2028 550,000.00 158,720.00 - 708,720.00
02/01/2029 565,000.00 144,970.00 - 709,970.00
02/01/2030 580,000.00 130,280.00 - 710,280.00
02/01/2031 595,000.00 114,910.00 - 709,910.00
02/01/2032 610,000.00 98,547.50 - 708,547.50
02/01/2033 630,000.00 81,467.50 - 711,467.50
02/01/2034 645,000.00 62,882.50 - 707,882.50
02/01/2035 665,000.00 43,210.00 - 708,210.00
02/01/2036 685,000.00 22,262.50 - 707,262.50
Total $10,000,000.00 $3,137,094.81 $2,445,335.81 $15,582,430.62
PROOF OF RESERVE FUND
MAXIMUM PERIODIC DI33T SERVICE
Omit First Period? Yes
100%of the Maximum Periodic Debt Service 1,183,911.25
AVERAGE PERIODIC DEBT SERVICE
Total PFI 15,582,430.62
Bond Years(Delivery Date) 19.55
125%of the Average Periodic Debt Service 996,460.68
PERCENT OF PAR
Total Par(Existing+New) 12,695,000.00
10%of Par 1,269,500.00
RESERVE REQUREM ENT
Corrputed Requirement 647,460.68
Proof's Requirement 996,460.68
Portion of reserve requirement funded externally 349,000.00
Lowest Requirement less external funding 647,460.68
Series 2016 Electric Rev I SINGLE PURPOSE 1 5/2/2016 1 4:09 PM
Spf ingsted Page 13
178
EXTRACT OF MINUTES OF MEETING OF THE
ELK RIVER MUNICIPAL UTILITIES COMMISSION
HELD: May 10, 2016
Pursuant to due call and notice thereof, a regular meeting of the Elk River Municipal
Utilities Commission, was duly held in the Utilities Conference Room, 13069 Orono Parkway in
said City on the 10th day of May, 2016, at 3:30 P.M. for the purpose in part of authorizing the
competitive negotiated sale of the $10,000,000 Electric Revenue Bonds, Series 2016A.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $10,000,000
ELECTRIC REVENUE BONDS, SERIES 2016A
A. WHEREAS, the Elk River Municipal Utilities Commission (the
"Commission"), has heretofore determined that it is necessary and expedient that the City of
Elk River, Minnesota (the "City") issue its $10,000,000 Electric Revenue Bonds, Series 2016A
(the "Bonds") to finance a portion of the cost of the acquisition of its membership in the
Minnesota Municipal Power Association by the electric system of the Elk River Municipal
Utilities; and
B. WHEREAS, the Commission has retained Springsted Incorporated, in Saint
Paul, Minnesota("Springsted"), as its independent municipal 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 Elk River Municipal Utilities
Commission, as follows:
1. Authorization; Findings. The Commission hereby authorizes Springsted to solicit
bids for the competitive negotiated sale of the Bonds.
2. Meeting; Bid Opening. This Commission 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 Finance and Office Manager or
designee, shall open bids at the time and place specified in such Terms of Proposal.
479050v1 JSB EL185-41
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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
Finance and Office Manager and other officers or employees of the Commission 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 Commission upon its completion.
5. Request to City Council. The Commission hereby requests that the City Council
of the City adopt a resolution on May 16, 2016, approving the issuance of the Bonds and
authorizing the Commission to take actions necessary and sufficient to provide for the issuance
of the Bonds.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
479050v1 JSB EL185-41 2
180
STATE OF MINNESOTA )
COUNTY OF SHERBURNE )
ELK RIVER MUNICIPAL )
UTILTIES COMMISSION )
I, the undersigned, being the duly qualified and acting Secretary of the Elk River
Municipal Utilities Commission, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the same is a
full, true and complete transcript of the minutes of a meeting of the Commission, duly called and
held on the date therein indicated, insofar as such minutes relate to the $10,000,000 Electric
Revenue Bonds, Series 2016A.
WITNESS my hand this day of , 2016.
Secretary
479050v1 JSB EL185-41 3
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EXHIBIT A
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING
BASIS:
TERMS OF PROPOSAL
$10,000,000*
CITY OF ELK RIVER, MINNESOTA
ELECTRIC REVENUE BONDS, SERIES 2016A
(BOOK ENTRY ONLY)
Proposals for the Series 2016A Bonds will be received on Tuesday, June 14, 2016, until 10:00
A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300,
Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration
for award of the Series 2016A Bonds will be by the Elk River Municipal Utilities Commission
(the"Commission")at 3:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Series 2016A Bonds
regardless of the manner in which the proposal is submitted.
(a) Sealed Bidding, Proposals may be submitted in a sealed envelope or by fax (651) 223-3046
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 (651) 223-3000 or fax (651)223-3046 for inclusion in
the submitted proposal.
OR
(b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via
PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY®
shall constitute the official time with respect to all proposals submitted to PARITY®. Each
bidder shall be solely responsible for making necessary arrangements to access PARITY® for
purposes of submitting its electronic proposal in a timely manner and in compliance with the
requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any
duty or Series 2016A Bond to undertake registration to bid for any prospective bidder or to
provide or ensure electronic access to any qualified prospective bidder, and neither the City, its
agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any
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failure in the proper operation of, or have any liability for any delays or interruptions of or any
damages caused by the services of PARITY®. The City is using the services of PARITY® solely
as a communication mechanism to conduct the electronic bidding for the Series 2016A Bonds,
and PARITY®is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this
Terms of Proposal shall control. Further information about PARITY®, including any fee
charged, may be obtained from:
PARITY®, 1359 Broadway,2nd Floor,New York,New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE SERIES 2016A BONDS
The Series 2016A Bonds will be dated as of the date of delivery and will bear interest payable on
February 1 and August 1 of each year, commencing February 1, 2017. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Series 2016A Bonds will mature February 1 in the years and amounts*as follows:
2019 $465,000 2023 $495,000 2027 $535,000 2031 $595,000 2034 $645,000
2020 $470,000 2024 $505,000 2028 $550,000 2032 $610,000 2035 $665,000
2021 $480,000 2025 $515,000 2029 $565,000 2033 $630,000 2036 $685,000
2022 $485,000 2026 $525,000 2030 $580,000
* The City reserves the right, after proposals are opened and prior to award, to increase or
reduce the principal amount of the Series 2016A Bonds or the amount of any maturity in
multiples of$5,000. In the event the amount of any maturity is modified, the aggregate
purchase price will be adjusted to result in the same gross spread per$1,000 of Series 2016A
Bonds as that of the original proposal. Gross spread is the differential between the price
paid to the City for the new issue and the prices at which the securities are initially offered to
the investing public.
Proposals for the Series 2016A Bonds may contain a maturity schedule providing for a
combination of serial bonds and term bonds. All term bonds shall be subject to mandatory
sinking fund redemption at a price of par plus accrued interest to the date of redemption
scheduled to conform to the maturity schedule set forth above. In order to designate term bonds,
the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal
form.
BOOK ENTRY SYSTEM
The Series 2016A Bonds will be issued by means of a book entry system with no physical
distribution of Series 2016A Bonds made to the public. The Series 2016A Bonds will be issued
in fully registered form and one Series 2016A Bond, representing the aggregate principal amount
of the Series 2016A Bonds maturing in each year, will be registered in the name of Cede & Co.
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479050v1 JSB EL185-41
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as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act
as securities depository of the Series 2016A Bonds. Individual purchases of the Series 2016A
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 Series 2016A 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 Series 2016A Bonds, will be required to
deposit the Series 2016A Bonds with DTC.
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 Februaryl, 2025, and on any day thereafter, to prepay Series 2016A
Bonds due on or after February 1, 2026. Redemption may be in whole or in part and if in part at
the option of the City and in such manner as the City shall determine. If less than all Series
2016A Bonds of a maturity are called for redemption, the City 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 Series 2016A Bonds will be special obligations of the City payable solely from net revenues
of the electric system of the Commission and shall not constitute a debt for which the full faith
and credit or taxing powers of the City will be pledged. The proceeds will be used to finance
acquisition of membership in the Minnesota Municipal Power Association by the electric system
of the Elk River Municipal Utilities.
BIDDING PARAMETERS
Proposals shall be for not less than $9,870,000 plus accrued interest, if any, on the total principal
amount of the Series 2016A Bonds. No proposal can be withdrawn or amended after the time set
for receiving proposals unless the meeting of the City scheduled for award of the Series 2016A
Bonds is adjourned, recessed, or continued to another date without award of the Series 2016A
Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial
price to the public for each maturity must be 98.0% or greater. Series 2016A Bonds of the same
maturity shall bear a single rate from the date of the Series 2016A Bonds to the date of maturity.
No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
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479050v1 JSB EL185-41
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To have its proposal considered for award, the lowest bidder is required to submit a good faith
deposit to the City in the amount of$100,000 (the "Deposit") no later than 1:00 P.M., Central
Time on the day of sale. The Deposit may be delivered as described herein in the form of either
(i) a certified or cashier's check payable to the City; or (ii) a wire transfer. The lowest bidder
shall be solely responsible for the timely delivery of their Deposit whether by check or wire
transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt
of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole
discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a
Deposit, and thereafter award the sale to such bidder.
Certified or Cashier's Check. A Deposit made by certified or cashier's check will be considered
timely delivered to the City if it is made payable to the City and delivered to Springsted
Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time.
Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon
submission of a federal wire reference number by the specified time. Wire transfer instructions
will be available from Springsted Incorporated following the receipt and tabulation of proposals.
The successful bidder must send an e-mail including the following information: (i) the federal
reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to
which it applies.
Once an award has been made, the Deposit received from the lowest bidder (the "purchaser")
will be retained by the City and no interest will accrue to the purchaser. The amount of the
Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails
to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Series 2016A Bonds will be awarded on the basis of the lowest interest rate to be determined
on a true interest cost (TIC)basis calculated on the proposal prior to any adjustment made by the
City. 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 Series 2016A Bonds, (ii) reject all
proposals without cause, and (iii)reject any proposal that the City determines to have failed to
comply with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
The City has not applied for or pre-approved a commitment for any policy of municipal bond
insurance with respect to the Series 2016A Bonds. If the Series 2016A Bonds qualify for
municipal bond insurance and a bidder desires to purchase a policy, such indication, the
maturities to be insured, and the name of the desired insurer must be set forth on the bidder's
proposal. The City specifically reserves the right to reject any bid specifying municipal bond
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479050v1 JSB EL185-41
185
insurance, even though such bid may result in the lowest TIC to the City. All costs associated
with the issuance and administration of such policy and associated ratings and expenses (other
than any independent rating requested by the City) shall be paid by the successful bidder.
Failure of the municipal bond insurer to issue the policy after the award of the
Series 2016A Bonds shall not constitute cause for failure or refusal by the successful bidder to
accept delivery of the Series 2016A Bonds.
CUSIP NUMBERS
If the Series 2016A Bonds qualify for assignment of CUSIP numbers such numbers will be
printed on the Series 2016A Bonds, but neither the failure to print such numbers on any Series
2016A Bond nor any error with respect thereto will constitute cause for failure or refusal by the
purchaser to accept delivery of the Series 2016A Bonds. The CUSIP Service Bureau charge for
the assignment of CUSIP identification numbers shall be paid by the purchaser.
SETTLEMENT
On or about July 14, 2016, the Series 2016A Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of
settlement, payment for the Series 2016A Bonds shall be made in federal, or equivalent, funds
that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Unless compliance with the terms of payment for the Series 2016A Bonds has 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.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Series 2016A Bonds, to provide annual reports and notices of certain events.
A description of this undertaking is set forth in the Official Statement. The purchaser's obligation
to purchase the Series 2016A Bonds will be conditioned upon receiving evidence of this
undertaking at or prior to delivery of the Series 2016A Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of a Preliminary Official Statement containing pertinent
information relative to the Series 2016A Bonds, and said Preliminary 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 Preliminary Official Statement or for any
additional information prior to sale, any prospective purchaser is referred to the Municipal
Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul,
Minnesota 55101, telephone (651) 223-3000.
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479050v1 JSB EL185-41
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A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying
the maturity dates, principal amounts and interest rates of the Series 2016A Bonds, together with
any other information required by law. By awarding the Series 2016A Bonds to an underwriter
or underwriting syndicate, the City agrees that, no more than seven business days after the date
of such award, it shall provide without cost to the sole underwriter or to the senior managing
underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the
Series 2016A Bonds are awarded up to 25 copies of the Final Official Statement. The City
designates the Underwriter of the syndicate to which the Series 2016A Bonds are awarded as its
agent for purposes of distributing copies of the Final Official Statement to each Participating
Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall
accept designation and (ii) it shall enter into a contractual relationship with all Participating
Underwriters of the Series 2016A Bonds for purposes of assuring the receipt by each such
Participating Underwriter of the Final Official Statement.
Dated May 10, 2016 BY ORDER OF THE ELK RIVER MUNICIPAL
UTILITIES COMISSION
/s/Theresa Slominski
Finance and Office Manager
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479050v1 JSB EL185-41
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EXTRACT OF MINUTES OF MEETING OF THE
ELK RIVER MUNICIPAL UTILITIES COMMISSION
HELD: May 10, 2016
Pursuant to due call and notice thereof, a regular meeting of the Elk River Municipal
Utilities Commission, was duly held in the Utilities Conference Room, 13069 Orono Parkway in
said City on the 10th day of May, 2016, at 3:30 P.M. for the purpose in part of authorizing the
competitive negotiated sale of the $1,460,000 Electric Revenue Refunding Bonds, Series 2016B.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $1,460,000
ELECTRIC REVENUE REFUNDING BONDS, SERIES 2016B
A. WHEREAS, the Elk River Municipal Utilities Commission (the
"Commission"), has heretofore determined that it is necessary and expedient that the City of
Elk River, Minnesota (the "City") issue its $1,460,000 Electric Revenue Refunding Bonds,
Series 2016B (the"Bonds")to refund the February 1, 2017 through February 1, 2022 maturities
of the City's Electric Revenue Bonds, Series 2007A; and
B. WHEREAS, the Commission 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 Elk River Municipal Utilities
Commission, as follows:
1. Authorization; Findings. The Commission hereby authorizes Springsted to solicit
bids for the competitive negotiated sale of the Bonds.
2. Meeting; Bid Opening. This Commission 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 Finance and Office Manager 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 fully set forth in the "Terms of Proposal" attached hereto as Exhibit A and hereby
approved and made a part hereof.
478975v1 JSB EL185-42
188
4. Official Statement. In connection with said competitive negotiated sale, the
Finance and Office Manager and other officers or employees of the Commission 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 Commission upon its completion.
5. Request to City Council. The Commission hereby requests that the City Council
of the City adopt a resolution on May 16, 2016, approving the issuance of the Bonds and
authorizing the Commission to take actions necessary and sufficient to provide for the issuance
of the Bonds.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
478975v1 JSB EL185-42 2
189
STATE OF MINNESOTA )
COUNTY OF SHERBURNE )
ELK RIVER MUNICIPAL )
UTILTIES COMMISSION )
I, the undersigned, being the duly qualified and acting Secretary of the Elk River
Municipal Utilities Commission, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the same is a
full, true and complete transcript of the minutes of a meeting of the Commission, duly called and
held on the date therein indicated, insofar as such minutes relate to the $1,460,000 Electric
Revenue Refunding Bonds, Series 2016B.
WITNESS my hand this day of , 2016.
Secretary
478975v1 JSB EL185-42 3
190
EXHIBIT A
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING
BASIS:
TERMS OF PROPOSAL
$1,460,000*
CITY OF ELK RIVER, MINNESOTA
ELECTRIC REVENUE REFUNDING BONDS, SERIES 2016B
(BOOK ENTRY ONLY)
Proposals for the Series 2016B Bonds will be received on Tuesday, June 14, 2016, until 10:00
A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300,
Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration
for award of the Series 2016B Bonds will be by the Elk River Municipal Utilities Commission
(the"Commission")at 3:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Series 2016B Bonds
regardless of the manner in which the proposal is submitted.
(a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046
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 (651) 223-3000 or fax (651) 223-3046 for inclusion in
the submitted proposal.
OR
(b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via
PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY®
shall constitute the official time with respect to all proposals submitted to PARITY®. Each
bidder shall be solely responsible for making necessary arrangements to access PARITY® for
purposes of submitting its electronic proposal in a timely manner and in compliance with the
requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any
duty or Series 2016B Bond to undertake registration to bid for any prospective bidder or to
provide or ensure electronic access to any qualified prospective bidder, and neither the City, its
agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any
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191
failure in the proper operation of, or have any liability for any delays or interruptions of or any
damages caused by the services of PARITY®. The City is using the services of PARITY® solely
as a communication mechanism to conduct the electronic bidding for the Series 2016B Bonds,
and PARITY®is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this
Terms of Proposal shall control. Further information about PARITY®, including any fee
charged, may be obtained from:
PARITY®, 1359 Broadway, 2nd Floor,New York,New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE SERIES 2016B BONDS
The Series 2016B Bonds will be dated as of the date of delivery and will bear interest payable on
February 1 and August 1 of each year, commencing February 1, 2017. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Series 2016B Bonds will mature February 1 in the years and amounts* as follows:
2017 $235,000 2019 $240,000 2021 $250,000
2018 $235,000 2020 $245,000 2022 $255,000
* The City reserves the right, after proposals are opened and prior to award, to increase or
reduce the principal amount of the Series 2016E Bonds or the amount of any maturity in
multiples of$5,000. In the event the amount of any maturity is modified, the aggregate
purchase price will be adjusted to result in the same gross spread per $1,000 of Series
2016B Bonds as that of the original proposal. Gross spread is the differential between
the price paid to the City for the new issue and the prices at which the securities are
initially offered to the investing public.
Proposals for the Series 2016B Bonds may contain a maturity schedule providing for a
combination of serial bonds and term bonds. All term bonds shall be subject to mandatory
sinking fund redemption at a price of par plus accrued interest to the date of redemption
scheduled to conform to the maturity schedule set forth above. In order to designate term bonds,
the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal
form.
BOOK ENTRY SYSTEM
The Series 2016B Bonds will be issued by means of a book entry system with no physical
distribution of Series 2016B Bonds made to the public. The Series 2016B Bonds will be issued
in fully registered form and one Series 2016B Bond, representing the aggregate principal amount
of the Series 2016B 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 Series 2016B Bonds. Individual purchases of the Series 2016B
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478975v1 JSB EL185-42
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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 Series 2016B 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 Series 2016B Bonds, will be required to
deposit the Series 2016B Bonds with DTC.
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 Series 2016B Bonds will not be subject to payment in advance of their respective stated
maturity dates.
SECURITY AND PURPOSE
The Series 2016B Bonds will be special obligations of the City payable solely from net revenues
of the electric system of the Commission and shall not constitute a debt for which the full faith
and credit or taxing powers of the City will be pledged. The proceeds will be used to refund the
February 1, 2017 through February 1, 2022 maturities of the City's Electric Revenue Bonds,
Series 2007A, dated March 28, 2007.
BIDDING PARAMETERS
Proposals shall be for not less than $1,449,780 plus accrued interest, if any, on the total principal
amount of the Series 2016B Bonds. No proposal can be withdrawn or amended after the time set
for receiving proposals unless the meeting of the City scheduled for award of the Series 2016B
Bonds is adjourned, recessed, or continued to another date without award of the Series 2016B
Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%.The initial
price to the public for each maturity must be 98.0% or greater. Series 2016B Bonds of the same
maturity shall bear a single rate from the date of the Series 2016B Bonds to the date of maturity.
No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
To have its proposal considered for award, the lowest bidder is required to submit a good faith
deposit to the City in the amount of $14,600 (the "Deposit") no later than 1:00 P.M., Central
Time on the day of sale. The Deposit may be delivered as described herein in the form of either
(i) a certified or cashier's check payable to the City; or (ii) a wire transfer. The lowest bidder
shall be solely responsible for the timely delivery of their Deposit whether by check or wire
transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt
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of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole
discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a
Deposit, and thereafter award the sale to such bidder.
Certified or Cashier's Check. A Deposit made by certified or cashier's check will be considered
timely delivered to the City if it is made payable to the City and delivered to Springsted
Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time.
Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon
submission of a federal wire reference number by the specified time. Wire transfer instructions
will be available from Springsted Incorporated following the receipt and tabulation of proposals.
The successful bidder must send an e-mail including the following information: (i) the federal
reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to
which it applies.
Once an award has been made, the Deposit received from the lowest bidder (the "purchaser")
will be retained by the City and no interest will accrue to the purchaser. The amount of the
Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails
to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Series 2016B Bonds will be awarded on the basis of the lowest interest rate to be determined
on a true interest cost(TIC)basis calculated on the proposal prior to any adjustment made by the
City. 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 Series 2016B Bonds, (ii)reject all
proposals without cause, and (iii)reject any proposal that the City determines to have failed to
comply with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
The City has not applied for or pre-approved a commitment for any policy of municipal bond
insurance with respect to the Series 2016B Bonds. If the Series 2016B Bonds qualify for
municipal bond insurance and a bidder desires to purchase a policy, such indication, the
maturities to be insured, and the name of the desired insurer must be set forth on the bidder's
proposal. The City specifically reserves the right to reject any bid specifying municipal bond
insurance, even though such bid may result in the lowest TIC to the City. All costs associated
with the issuance and administration of such policy and associated ratings and expenses (other
than any independent rating requested by the City) shall be paid by the successful bidder.
Failure of the municipal bond insurer to issue the policy after the award of the
Series 2016B Bonds shall not constitute cause for failure or refusal by the successful bidder to
accept delivery of the Series 2016B Bonds.
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CUSIP NUMBERS
If the Series 2016B Bonds qualify for assignment of CUSIP numbers such numbers will be
printed on the Series 2016B Bonds, but neither the failure to print such numbers on any Series
2016B Bond nor any error with respect thereto will constitute cause for failure or refusal by the
purchaser to accept delivery of the Series 2016B Bonds. The CUSIP Service Bureau charge for
the assignment of CUSIP identification numbers shall be paid by the purchaser.
SETTLEMENT
On or about July 14, 2016, the Series 2016B Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of
settlement, payment for the Series 2016B Bonds shall be made in federal, or equivalent, funds
that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Unless compliance with the terms of payment for the Series 2016B Bonds has 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.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Series 2016B Bonds, to provide annual reports and notices of certain events.
A description of this undertaking is set forth in the Official Statement. The purchaser's
obligation to purchase the Series 2016B Bonds will be conditioned upon receiving evidence of
this undertaking at or prior to delivery of the Series 2016B Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of a Preliminary Official Statement containing pertinent
information relative to the Series 2016B Bonds, and said Preliminary 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 Preliminary Official Statement or for any
additional information prior to sale, any prospective purchaser is referred to the Municipal
Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul,
Minnesota 55101,telephone(651) 223-3000.
A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying
the maturity dates, principal amounts and interest rates of the Series 2016B Bonds, together with
any other information required by law. By awarding the Series 2016B Bonds to an underwriter
or underwriting syndicate, the City agrees that, no more than seven business days after the date
of such award, it shall provide without cost to the sole underwriter or to the senior managing
underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the
Series 2016B Bonds are awarded up to 25 copies of the Final Official Statement. The City
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designates the Underwriter of the syndicate to which the Series 2016B Bonds are awarded as its
agent for purposes of distributing copies of the Final Official Statement to each Participating
Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall
accept designation and (ii) it shall enter into a contractual relationship with all Participating
Underwriters of the Series 2016B Bonds for purposes of assuring the receipt by each such
Participating Underwriter of the Final Official Statement.
Dated May 10, 2016 BY ORDER OF THE ELK RIVER MUNICIPAL
UTILITIES COMMISSION
/s/Theresa Slominski
Finance and Office Manager
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EXTRACT OF MINUTES OF MEETING OF THE
CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: May 16, 2016
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Elk River, Minnesota, was duly called and held at the City Hall in the City on the 16th day of
May, 2016, at 6:00 P.M.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION APPROVING THE ISSUANCE OF ELECTRIC REVENUE BONDS, AND
AUTHORIZING CERTAIN OTHER ACTIONS TO BE TAKEN BY THE ELK RIVER
MUNICIPAL UTILITIES COMMISSION WITH RESPECT TO THE ISSUANCE OF
ELECTRIC REVENUE BONDS, SERIES 2016A
BE IT RESOLVED by the City Council of the City of Elk River (the "City"),
Minnesota, as follows:
1. Authority. The City is authorized by Minnesota Statutes, Chapter 453, as
amended (the "Electric Utility Act"), to issue bonds to finance the acquisition or construction of
any plant, works, system, facilities, and real and personal property of any nature, together with
all parts thereof and appurtenances thereto, used or useful in the generation, production,
transmission, purchase, sale, exchange, or interchange of electric energy or any interest therein
or capacity thereof. Rents, rates, and charges may be established, levied, and collected in
connection with the electric utility system of the Elk River Municipal Utilities Commission (the
"Commission") and may be pledged to the payment of the principal of and interest on bonds
issued by the City for the benefit of the Commission, including bonds issued to finance the
electric utility system of the Commission.
2. Terms of Proposal. The City proposes to issue and the Commission proposes to
offer and sell Electric Revenue Bonds, Series 2016A (the "Bonds"), in an aggregate principal
amount not to exceed $10,000,000, to finance a portion of the cost of the acquisition of its
membership in the Minnesota Municipal Power Association by the electric system of the Elk
River Municipal Utilities and pay the costs of issuing the Bonds. 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. The Bonds shall be special
obligations of the City payable solely from the net revenues of the electric utility system of the
479010v1 JSB EL185-41
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Commission and shall not constitute a debt for which the full faith and credit or taxing powers of
the City will be pledged.
3. Terms of Sale. The City hereby approves the issuance of the Bonds and Terms of
Proposal and delegates to the Commission the authority to award the sale of the Bonds in an
aggregate principal amount not to exceed $10,000,000. The resolution of the Commission
awarding the sale of the Bonds, fixing the form and details of the Bonds, establishing the terms
of the Bonds and the security therefor, and providing for the execution and delivery of the Bonds
shall have the same force and effect as if such resolution had been adopted by this Council.
4. Qualified Tax Exempt Obligations. In order to qualify the Bonds as "qualified
tax-exempt obligations"within the meaning of Section 265(b)(3) of the Code, the City makes the
following factual statements and representations:
(a) the Bonds are not"private activity bonds" as defined in Section 141 of the
Code;
(b) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the City
(and all subordinate entities of the City) during calendar year 2016 will not exceed $10,000,000;
and
(c) not more than $10,000,000 of obligations issued by the City during
calendar year 2016 have been designated for purposes of Section 265(b)(3) of the Code;
(d) the aggregate face amount of the issue of the Bonds is not greater than
$10,000,000; and
(e) the City, hereby designates the Bonds, to the extent the principal amount
exceeds the outstanding principal amount of the Prior Bonds, as "qualified tax-exempt
obligations" for purposes of Section 265(b)(3) of the Code.
5. Consultants. This Council hereby approves the selection of Springsted
Incorporated, in Saint Paul, Minnesota ("Springsted"), as municipal advisor to the City and the
Commission, to assist in the offer and sale of the Bonds, and hereby approves the selection of
Kennedy & Graven, Chartered, as bond counsel to the City and the Commission, to render an
approving legal opinion with respect to the Bonds.
6. Continuing Disclosure. The City and the Commission will enter into a
Continuing Disclosure Certificate (the "Certificate"), dated the date of closing, a form of which
is on file with the City. The Mayor and City Clerk of the City are hereby authorized to sign the
Certificate.
7. Official Statement. In connection with said competitive negotiated sale, the
Finance and Office Manager and other officers or employees of the Commission and the 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 Commission and the City upon its completion.
479010v1 JSB EL185-41 2
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The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
479010v1 JSB EL185-41 3
199
STATE OF MINNESOTA )
COUNTY OF SHERBURNE )
CITY OF ELK RIVER )
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and
complete transcript of the minutes of a meeting of the City Council, duly called and held on the
date therein indicated, insofar as such minutes relate to the Electric Revenue Bonds, Series
2016A.
WITNESS my hand this day of , 2016.
Clerk
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EXHIBIT A
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING
BASIS:
TERMS OF PROPOSAL
$10,000,000*
CITY OF ELK RIVER, MINNESOTA
ELECTRIC REVENUE BONDS, SERIES 2016A
(BOOK ENTRY ONLY)
Proposals for the Series 2016A Bonds will be received on Tuesday, June 14, 2016, until 10:00.
A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300,
Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration
for award of the Series 2016A Bonds will be by the Elk River Municipal Utilities Commission
(the "Commission")at 3:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Series 2016A Bonds
regardless of the manner in which the proposal is submitted.
(a) Sealed Bidding, Proposals may be submitted in a sealed envelope or by fax (651) 223-3046
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 (651) 223-3000 or fax (651) 223-3046 for inclusion in
the submitted proposal.
OR
(b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via
PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY®
shall constitute the official time with respect to all proposals submitted to PARITY®. Each
bidder shall be solely responsible for making necessary arrangements to access PARITY® for
purposes of submitting its electronic proposal in a timely manner and in compliance with the
requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any
duty or Series 2016A Bond to undertake registration to bid for any prospective bidder or to
provide or ensure electronic access to any qualified prospective bidder, and neither the City, its
agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any
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failure in the proper operation of, or have any liability for any delays or interruptions of or any
damages caused by the services of PARITY®. The City is using the services of PARITY® solely
as a communication mechanism to conduct the electronic bidding for the Series 2016A Bonds,
and PARITY®is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this
Terms of Proposal shall control. Further information about PARITY®, including any fee
charged, may be obtained from:
PARITY®, 1359 Broadway,2nd Floor,New York,New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE SERIES 2016A BONDS
The Series 2016A Bonds will be dated as of the date of delivery and will bear interest payable on
February 1 and August 1 of each year, commencing February 1, 2017. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Series 2016A Bonds will mature February 1 in the years and amounts*as follows:
2019 $465,000 2023 $495,000 2027 $535,000 2031 $595,000 2034 $645,000
2020 $470,000 2024 $505,000 2028 $550,000 2032 $610,000 2035 $665,000
2021 $480,000 2025 $515,000 2029 $565,000 2033 $630,000 2036 $685,000
2022 $485,000 2026 $525,000 2030 $580,000
* The City reserves the right, after proposals are opened and prior to award, to increase or
reduce the principal amount of the Series 2016A Bonds or the amount of any maturity in
multiples of$5,000. In the event the amount of any maturity is modified, the aggregate
purchase price will be adjusted to result in the same gross spread per$1,000 of Series 2016A
Bonds as that of the original proposal. Gross spread is the differential between the price
paid to the City for the new issue and the prices at which the securities are initially offered to
the investing public.
Proposals for the Series 2016A Bonds may contain a maturity schedule providing for a
combination of serial bonds and term bonds. All term bonds shall be subject to mandatory
sinking fund redemption at a price of par plus accrued interest to the date of redemption
scheduled to conform to the maturity schedule set forth above. In order to designate term bonds,
the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal
form.
BOOK ENTRY SYSTEM
The Series 2016A Bonds will be issued by means of a book entry system with no physical
distribution of Series 2016A Bonds made to the public. The Series 2016A Bonds will be issued
in fully registered form and one Series 2016A Bond, representing the aggregate principal amount
of the Series 2016A Bonds maturing in each year, will be registered in the name of Cede & Co.
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as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act
as securities depository of the Series 2016A Bonds. Individual purchases of the Series 2016A
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 Series 2016A 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 Series 2016A Bonds, will be required to
deposit the Series 2016A Bonds with DTC.
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, 2025, and on any day thereafter, to prepay Series 2016A
Bonds due on or after February 1, 2026. Redemption may be in whole or in part and if in part at
the option of the City and in such manner as the City shall determine. If less than all Series
2016A Bonds of a maturity are called for redemption, the City 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 Series 2016A Bonds will be special obligations of the City payable solely from net revenues
of the electric system of the Commission and shall not constitute a debt for which the full faith
and credit or taxing powers of the City will be pledged. The proceeds will be used to finance
acquisition of membership in the Minnesota Municipal Power Association by the electric system
of the Elk River Municipal Utilities.
BIDDING PARAMETERS
Proposals shall be for not less than $9,870,000 plus accrued interest, if any, on the total principal
amount of the Series 2016A Bonds. No proposal can be withdrawn or amended after the time set
for receiving proposals unless the meeting of the City scheduled for award of the Series 2016A
Bonds is adjourned, recessed, or continued to another date without award of the Series 2016A
Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial
price to the public for each maturity must be 98.0% or greater. Series 2016A Bonds of the same
maturity shall bear a single rate from the date of the Series 2016A Bonds to the date of maturity.
No conditional proposals will be accepted.
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GOOD FAITH DEPOSIT
To have its proposal considered for award, the lowest bidder is required to submit a good faith
deposit to the City in the amount of$100,000 (the "Deposit") no later than 1:00 P.M., Central
Time on the day of sale. The Deposit may be delivered as described herein in the form of either
(i) a certified or cashier's check payable to the City; or (ii) a wire transfer. The lowest bidder
shall be solely responsible for the timely delivery of their Deposit whether by check or wire
transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt
of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole
discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a
Deposit, and thereafter award the sale to such bidder.
Certified or Cashier's Check. A Deposit made by certified or cashier's check will be considered
timely delivered to the City if it is made payable to the City and delivered to Springsted
Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time.
Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon
submission of a federal wire reference number by the specified time. Wire transfer instructions
will be available from Springsted Incorporated following the receipt and tabulation of proposals.
The successful bidder must send an e-mail including the following information: (i) the federal
reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to
which it applies.
Once an award has been made, the Deposit received from the lowest bidder (the "purchaser")
will be retained by the City and no interest will accrue to the purchaser. The amount of the
Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails
to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Series 2016A Bonds will be awarded on the basis of the lowest interest rate to be determined
on a true interest cost (TIC)basis calculated on the proposal prior to any adjustment made by the
City. 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 Series 2016A Bonds, (ii) reject all
proposals without cause, and (iii)reject any proposal that the City determines to have failed to
comply with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
The City has not applied for or pre-approved a commitment for any policy of municipal bond
insurance with respect to the Series 2016A Bonds. If the Series 2016A Bonds qualify for
municipal bond insurance and a bidder desires to purchase a policy, such indication, the
maturities to be insured, and the name of the desired insurer must be set forth on the bidder's
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proposal. The City specifically reserves the right to reject any bid specifying municipal bond
insurance, even though such bid may result in the lowest TIC to the City. All costs associated
with the issuance and administration of such policy and associated ratings and expenses (other
than any independent rating requested by the City) shall be paid by the successful bidder.
Failure of the municipal bond insurer to issue the policy after the award of the
Series 2016A Bonds shall not constitute cause for failure or refusal by the successful bidder to
accept delivery of the Series 2016A Bonds.
CUSIP NUMBERS
If the Series 2016A Bonds qualify for assignment of CUSIP numbers such numbers will be
printed on the Series 2016A Bonds, but neither the failure to print such numbers on any Series
2016A Bond nor any error with respect thereto will constitute cause for failure or refusal by the
purchaser to accept delivery of the Series 2016A Bonds. The CUSIP Service Bureau charge for
the assignment of CUSIP identification numbers shall be paid by the purchaser.
SETTLEMENT
On or about July 14, 2016, the Series 2016A Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of
settlement, payment for the Series 2016A Bonds shall be made in federal, or equivalent, funds
that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Unless compliance with the terms of payment for the Series 2016A Bonds has 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.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Series 2016A Bonds,to provide annual reports and notices of certain events.
A description of this undertaking is set forth in the Official Statement. The purchaser's obligation
to purchase the Series 2016A Bonds will be conditioned upon receiving evidence of this
undertaking at or prior to delivery of the Series 2016A Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of a Preliminary Official Statement containing pertinent
information relative to the Series 2016A Bonds, and said Preliminary 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 Preliminary Official Statement or for any
additional information prior to sale, any prospective purchaser is referred to the Municipal
Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul,
Minnesota 55101, telephone (651) 223-3000.
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A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying
the maturity dates, principal amounts and interest rates of the Series 2016A Bonds, together with
any other information required by law. By awarding the Series 2016A Bonds to an underwriter
or underwriting syndicate, the City agrees that, no more than seven business days after the date
of such award, it shall provide without cost to the sole underwriter or to the senior managing
underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the
Series 2016A Bonds are awarded up to 25 copies of the Final Official Statement. The City
designates the Underwriter of the syndicate to which the Series 2016A Bonds are awarded as its
agent for purposes of distributing copies of the Final Official Statement to each Participating
Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall
accept designation and (ii) it shall enter into a contractual relationship with all Participating
Underwriters of the Series 2016A Bonds for purposes of assuring the receipt by each such
Participating Underwriter of the Final Official Statement.
Dated May 10, 2016 BY ORDER OF THE ELK RIVER MUNICIPAL
UTILITIES COMISSION
/s/Theresa Slominski
Finance and Office Manager
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EXTRACT OF MINUTES OF MEETING OF THE
CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: May 16, 2016
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Elk River, Minnesota, was duly called and held at the City Hall in the City on the 16th day of
May, 2016, at 6:00 P.M.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION APPROVING THE ISSUANCE OF ELECTRIC REVENUE REFUNDING
BONDS,AND AUTHORIZING CERTAIN OTHER ACTIONS TO BE TAKEN BY THE ELK
RIVER MUNICIPAL UTILITIES COMMISSION WITH RESPECT TO THE ISSUANCE OF
ELECTRIC REVENUE REFUNDING BONDS, SERIES 2016B
BE IT RESOLVED by the City Council of the City of Elk River (the "City"),
Minnesota, as follows:
1. Authority. The City is authorized by Minnesota Statutes, Chapter 453, as
amended (the "Electric Utility Act"), to issue bonds to finance the acquisition or construction of
any plant, works, system, facilities, and real and personal property of any nature, together with
all parts thereof and appurtenances thereto, used or useful in the generation, production,
transmission, purchase, sale, exchange, or interchange of electric energy or any interest therein
or capacity thereof. Rents, rates, and charges may be established, levied, and collected in
connection with the electric utility system of the Elk River Municipal Utilities Commission (the
"Commission") and may be pledged to the payment of the principal of and interest on bonds
issued by the City for the benefit of the Commission, including bonds issued to finance or
refinance the electric utility system of the Commission.
2. Terms of Proposal. The City proposes to issue and the Commission proposes to
offer and sell Electric Revenue Refunding Bonds, Series 2016B (the "Bonds"), in an aggregate
principal amount not to exceed $1,460,000, to refund the February 1, 2017 through
February 1, 2022 maturities of the City's Electric Revenue Bonds, Series 2007A, dated
March 28, 2007 (the "Prior Bonds") and pay the costs of issuing the Bonds. 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. The Bonds shall be
special obligations of the City payable solely from the net revenues of the electric utility system
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of the Commission and shall not constitute a debt for which the full faith and credit or taxing
powers of the City will be pledged.
3. Terms of Sale. The City hereby approves the issuance of the Bonds and Terms of
Proposal and delegates to the Commission the authority to award the sale of the Bonds in an
aggregate principal amount not to exceed $1,460,000. The resolution of the Commission
awarding the sale of the Bonds, fixing the form and details of the Bonds, establishing the terms
of the Bonds and the security therefor, and providing for the execution and delivery of the Bonds
shall have the same force and effect as if such resolution had been adopted by this Council.
4. Consultants. This Council hereby approves the selection of Springsted
Incorporated, in Saint Paul, Minnesota ("Springsted"), as municipal advisor to the City and the
Commission, to assist in the offer and sale of the Bonds, and hereby approves the selection of
Kennedy & Graven, Chartered, as bond counsel to the City and the Commission, to render an
approving legal opinion with respect to the Bonds.
5. Continuing Disclosure. The City and the Commission will enter into a
Continuing Disclosure Certificate (the "Certificate"), dated the date of closing, a form of which
is on file with the City. The Mayor and City Clerk of the City are hereby authorized to sign the
Certificate.
6. Official Statement. In connection with said competitive negotiated sale, the
Finance and Office Manager and other officers or employees of the Commission and the 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 Commission and the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
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STATE OF MINNESOTA )
COUNTY OF SHERBURNE )
CITY OF ELK RIVER )
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and
complete transcript of the minutes of a meeting of the City Council, duly called and held on the
date therein indicated, insofar as such minutes relate to the Electric Revenue Refunding Bonds,
Series 2016B.
WITNESS my hand this day of , 2016.
Clerk
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EXHIBIT A
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING
BASIS:
TERMS OF PROPOSAL
$1,460,000*
CITY OF ELK RIVER, MINNESOTA
ELECTRIC REVENUE REFUNDING BONDS, SERIES 2016B
(BOOK ENTRY ONLY)
Proposals for the Series 2016B Bonds will be received on Tuesday, June 14, 2016, until 10:00
A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300,
Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration
for award of the Series 2016B Bonds will be by the Elk River Municipal Utilities Commission
(the"Commission") at 3:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Series 2016B Bonds
regardless of the manner in which the proposal is submitted.
(a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046
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 (651) 223-3000 or fax (651)223-3046 for inclusion in
the submitted proposal.
OR
(b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via
PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY®
shall constitute the official time with respect to all proposals submitted to PARITY®. Each
bidder shall be solely responsible for making necessary arrangements to access PARITY® for
purposes of submitting its electronic proposal in a timely manner and in compliance with the
requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any
duty or Series 2016B Bond to undertake registration to bid for any prospective bidder or to
provide or ensure electronic access to any qualified prospective bidder, and neither the City, its
agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any
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failure in the proper operation of, or have any liability for any delays or interruptions of or any
damages caused by the services of PARITY®. The City is using the services of PARITY® solely
as a communication mechanism to conduct the electronic bidding for the Series 2016B Bonds,
and PARITY®is not an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this
Terms of Proposal shall control. Further information about PARITY®, including any fee
charged, may be obtained from:
PARITY°, 1359 Broadway, 2°a Floor,New York,New York 10018
Customer Support: (212) 849-5000
DETAILS OF THE SERIES 2016B BONDS
The Series 2016B Bonds will be dated as of the date of delivery and will bear interest payable on
February 1 and August 1 of each year, commencing February 1, 2017. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Series 2016B Bonds will mature February 1 in the years and amounts* as follows:
2017 $235,000 2019 $240,000 2021 $250,000
2018 $235,000 2020 $245,000 2022 $255,000
* The City reserves the right, after proposals are opened and prior to award, to increase or
reduce the principal amount of the Series 2016E Bonds or the amount of any maturity in
multiples of$5,000. In the event the amount of any maturity is modified, the aggregate
purchase price will be adjusted to result in the same gross spread per $1,000 of Series
2016B Bonds as that of the original proposal. Gross spread is the differential between
the price paid to the City for the new issue and the prices at which the securities are
initially offered to the investing public.
Proposals for the Series 2016B Bonds may contain a maturity schedule providing for a
combination of serial bonds and term bonds. All term bonds shall be subject to mandatory
sinking fund redemption at a price of par plus accrued interest to the date of redemption
scheduled to conform to the maturity schedule set forth above. In order to designate term bonds,
the proposal must specify "Years of Term Maturities" in the spaces provided on the proposal
form.
BOOK ENTRY SYSTEM
The Series 2016B Bonds will be issued by means of a book entry system with no physical
distribution of Series 2016B Bonds made to the public. The Series 2016B Bonds will be issued
in fully registered form and one Series 2016B Bond, representing the aggregate principal amount
of the Series 2016B 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 Series 2016B Bonds. Individual purchases of the Series 2016B
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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 Series 2016B 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 Series 2016B Bonds, will be required to
deposit the Series 2016B Bonds with DTC.
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 Series 2016B Bonds will not be subject to payment in advance of their respective stated
maturity dates.
SECURITY AND PURPOSE
The Series 2016B Bonds will be special obligations of the City payable solely from net revenues
of the electric system of the Commission and shall not constitute a debt for which the full faith
and credit or taxing powers of the City will be pledged. The proceeds will be used to refund the
February 1, 2017 through February 1, 2022 maturities of the City's Electric Revenue Bonds,
Series 2007A, dated March 28, 2007.
BIDDING PARAMETERS
Proposals shall be for not less than$1,449,780 plus accrued interest, if any, on the total principal
amount of the Series 2016B Bonds. No proposal can be withdrawn or amended after the time set
for receiving proposals unless the meeting of the City scheduled for award of the Series 2016B
Bonds is adjourned, recessed, or continued to another date without award of the Series 2016B
Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%.The initial
price to the public for each maturity must be 98.0% or greater. Series 2016B Bonds of the same
maturity shall bear a single rate from the date of the Series 2016B Bonds to the date of maturity.
No conditional proposals will be accepted.
GOOD FAITH DEPOSIT
To have its proposal considered for award, the lowest bidder is required to submit a good faith
deposit to the City in the amount of $14,600 (the "Deposit") no later than 1:00 P.M., Central
Time on the day of sale. The Deposit may be delivered as described herein in the form of either
(i) a certified or cashier's check payable to the City; or (ii) a wire transfer. The lowest bidder
shall be solely responsible for the timely delivery of their Deposit whether by check or wire
transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt
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of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole
discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a
Deposit, and thereafter award the sale to such bidder.
Certified or Cashier's Check. A Deposit made by certified or cashier's check will be considered
timely delivered to the City if it is made payable to the City and delivered to Springsted
Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time.
Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon
submission of a federal wire reference number by the specified time. Wire transfer instructions
will be available from Springsted Incorporated following the receipt and tabulation of proposals.
The successful bidder must send an e-mail including the following information: (i) the federal
reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to
which it applies.
Once an award has been made, the Deposit received from the lowest bidder (the "purchaser")
will be retained by the City and no interest will accrue to the purchaser. The amount of the
Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails
to comply with the accepted proposal, said amount will be retained by the City.
AWARD
The Series 2016B Bonds will be awarded on the basis of the lowest interest rate to be determined
on a true interest cost(TIC)basis calculated on the proposal prior to any adjustment made by the
City. 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 Series 2016B Bonds, (ii) reject all
proposals without cause, and (iii)reject any proposal that the City determines to have failed to
comply with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
The City has not applied for or pre-approved a commitment for any policy of municipal bond
insurance with respect to the Series 2016B Bonds. If the Series 2016B Bonds qualify for
municipal bond insurance and a bidder desires to purchase a policy, such indication, the
maturities to be insured, and the name of the desired insurer must be set forth on the bidder's
proposal. The City specifically reserves the right to reject any bid specifying municipal bond
insurance, even though such bid may result in the lowest TIC to the City. All costs associated
with the issuance and administration of such policy and associated ratings and expenses (other
than any independent rating requested by the City) shall be paid by the successful bidder.
Failure of the municipal bond insurer to issue the policy after the award of the
Series 2016B Bonds shall not constitute cause for failure or refusal by the successful bidder to
accept delivery of the Series 2016B Bonds.
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CUSIP NUMBERS
If the Series 2016B Bonds qualify for assignment of CUSIP numbers such numbers will be
printed on the Series 2016B Bonds, but neither the failure to print such numbers on any Series
2016B Bond nor any error with respect thereto will constitute cause for failure or refusal by the
purchaser to accept delivery of the Series 2016B Bonds. The CUSIP Service Bureau charge for
the assignment of CUSIP identification numbers shall be paid by the purchaser.
SETTLEMENT
On or about July 14, 2016, the Series 2016B Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of
settlement, payment for the Series 2016B Bonds shall be made in federal, or equivalent, funds
that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central
Time. Unless compliance with the terms of payment for the Series 2016B Bonds has 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.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Series 2016B Bonds, to provide annual reports and notices of certain events.
A description of this undertaking is set forth in the Official Statement. The purchaser's
obligation to purchase the Series 2016B Bonds will be conditioned upon receiving evidence of
this undertaking at or prior to delivery of the Series 2016B Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of a Preliminary Official Statement containing pertinent
information relative to the Series 2016B Bonds, and said Preliminary 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 Preliminary Official Statement or for any
additional information prior to sale, any prospective purchaser is referred to the Municipal
Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul,
Minnesota 55101, telephone(651) 223-3000.
A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying
the maturity dates, principal amounts and interest rates of the Series 2016B Bonds, together with
any other information required by law. By awarding the Series 2016B Bonds to an underwriter
or underwriting syndicate, the City agrees that, no more than seven business days after the date
of such award, it shall provide without cost to the sole underwriter or to the senior managing
underwriter of the syndicate (the "Underwriter" for purposes of this paragraph) to which the
Series 2016B Bonds are awarded up to 25 copies of the Final Official Statement. The City
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designates the Underwriter of the syndicate to which the Series 2016B Bonds are awarded as its
agent for purposes of distributing copies of the Final Official Statement to each Participating
Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall
accept designation and (ii) it shall enter into a contractual relationship with all Participating
Underwriters of the Series 2016B Bonds for purposes of assuring the receipt by each such
Participating Underwriter of the Final Official Statement.
Dated May 10, 2016 BY ORDER OF THE ELK RIVER MUNICIPAL
UTILITIES COMMISSION
/s/Theresa Slominski
Finance and Office Manager
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