4.1. SR 08-16-1993
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ITEM 4. 1.
FROM:
MAYOR & CITY COUNCIL ~
LORI JOHNSON, FINANCE DIRECTOR~
TO:
DATE: AUGUST 12, 1993
SUBJECT: AUTHORIZING ISSUANCE AND SETTING
SALE DATE FOR 1993 IMPROVEMENT
BONDS
There are numerous public improvement projects being completed
by the City in 1993. As is past practice, the City will be
issuing General Obligation Improvement bonds to finance the
cost of the improvement projects. In addition, the water
utility is proceeding with the construction of a water tower
and the related well and treatment facilities. Water revenue
bonds will be issued to finance those improvements. The total
issue will be in the amount of $3,525,000, $2,400,000 for
special assessment improvement projects and $1,125,000 for
water revenue projects.
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Special assessments are pledged to the repayment of the
improvement project debt; however, some of the assessments are
deferred and some are the City's responsibility. For that
reason, there are tax levies which may be due on this bond.
The bond has been structured so that the levies will not start
until taxes payable in 1998. Delaying the need for levies
until that time increases the interest costs on the bond by
approximately $120,000. Some assessments are being deferred
until other public utilities are available. It is hoped that
these will be available and that the assessments can be levied
prior to the need for a tax levy. If the property does not
develop within that timeframe, tax levies will be required.
The levies are quite substantial in the years 1998 through
2002, between $184,000 and $191,000.
It is important that the deferral of assessments be monitored
closely. As the City continues to expand public services, it
is sometimes necessary to defer certain assessments. The
Council needs to be aware that the debt service for financing
the project still needs to be paid in a timely fashion; this
may mean that taxes on all City property owners will need to be
levied in order to make the debt payments. This may also be
true when improvement projects have large portions of
assessments that are Green Acres deferred. If, prior to
issuance of debt, the amount and length of the deferred
assessments are known, the bond can be structured, to a limited
degree, to accommodate the expected revenue stream and,
hopefully, reduce or delay the levy requirement.
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The water revenue portion of this bond will be financed by
future water connection and water access fees as well as water
rate revenue. Bill Birrenkott has provided estimated revenues
P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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from each of those sources. Based upon those assumptions,
there is adequate revenue to service this debt. The term of
the bond is 15 years as requested by Bill. The City will be
required to monitor water rates and revenues to ensure that
adequate funds are available to meet the water utility debt
service obligations.
This memo does not contain detail on each of the improvement
projects and the special assessments pledged to those
projects. I have previously provided that information to our
fiscal consultants and they have included that information in
their Recommendations which are attached. The Recommendations
also state estimated paYment schedules and other information
regarding the terms of the offering. Once the bonds have been
sold, two separate paYment schedules will be prepared; one for
the City's portion of the debt, and one for Elk River Municipal
Utilities portion of the debt.
The Council is asked to approve the attached resolution, a
Resolution Initiating the Process for the Sale of the City's
$3,525,000 General Obligation Permanent Improvement Revolving
Fund Bonds, Series 1993. This resolution will authorize the
issuance of debt and set the sale date for September 7, 1993.
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EXTRACT OF MINUTES OF A M~ETING OF THE
CITY COUNCIL OF THE CITY OF
ELK RIVER, MINNESOTA
Pursuant to due call and notice thereof, a regular or
special meeting of the city Council of the Ci ty of Elk River I
Minnesota, waf) duly called and held at the Elk River City Hall on
August 16, 1993, commencing at P.M., C.T.
The following Councilmembers Were present:
and the following were absent:
Councilmember
following resolution and moved its adoption:
introduced the
RESOLUTION NO.
RESOLUTION INITIATING THE PROCESS FOR THE SALE
OF THE CITY'S $3,525,000 GENERALOBLIGA1'ION
PERMANENT IMPROVEMENT REVOLVING FUND BONDS ,SERIES 1993B
BE IT RESOLVED by the City Council (the "CouncilU) of the
City of Elk River (the "city"), Minnesota, as follows:
1. It is hereby determined:
(a) . The City has duly ordered the making of, and
has undertaken or will undertake, the assessable and
vater system pUblic improvements, respectively, listed in
the attached Exhibit A (the "Improvements") within the
City, pursuant to and in full conformity with Minnesota
statutes, Chapter 429 and/or Section 444.075.
(b) It would be advantageous for the City to issue
its $3,525,000 General Obliqation Permanent Improvement
Revolvinq. Fund Bonds, Series 19938 (the "Bonds"),
pursuant to Minnesota Statutes, Chapters 429 and 475, to
provide financing for the Improvements.
Ce) The city has retained Springsted Incorporated,
in Saint Paul, Minnesota C"Springsted"}, a.s it.s
independent financial aavisor for the Bonas and is
therefore authorized to sell the Bonas by a competitive
negotiated sale in accordance with Minnesota Statutes,
Section 475.60, Subdivision 2(9).
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Eroiects
Mississippi Oaks, A
Heritage Landing
Cherryhill Bluffs
MeadowvaJe Heights
Orono Lake 3rd
MissLssJppl Oaks, B
Trunk
Holt Avenue/4th Street
North Water Tower
North Well atJd Treatment
SubtotaJ
Costs of Issuance
AJlowance for DIscount Bidding
Total
Exhibit A
$ 269,094
649,602
320,395
577,389
227.413
196,656
94,203
1 8,392
$2,343,144
25,395
31.460
$2.400.000
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Total
$ 500,000
600.000
$1/100,000
10,505
14,0195
$1.125.000
S 269,094
649,602
320,395
577.389
227.413
196.656
84.203
18,392
500.000
600.000
$3,443.144
35.901
45.955
$3,525.000
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Exhibit B
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THE CITY HAS AUTHORIZED SPRfNGSTED fNCORPOAATED TO NEGOTlATf THIS JSSUE
ON ITS BEHAJ..F. PROPOSALS WILL BE RECElVEO ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$3.525,000
CITY OF ELK RIVER, MINNESOTA
GENERAL OBUGAnON PERMANENT IMPROVEMENT REVOLVING FUND
BONDS, SERIES 19938
Proposals for the Bonds. wllJ be received on Tuesday, September 7, 1993. until 12:00 Noon,
Central Time, at the offlces of Sprlngsted Inoorparated, a5 East Seventh Place. Suite 100, Saint
Paul. Minnesota, atter whIch time they will be opened and tabulated. Consideration for award
of the Bonds wilf be by the City Council at 7;00 P.M., Central Time. of the same day.
DETAILS OF THE BONDS
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The Bonds will be dated October 1, 1993, as the date of original Jssue, and wjjJ bear interest
payable on February 1 and August 1 of eaoh year, commencing August 1, 1994. Interest will
be computed on the basis of a 36o-day year of twelve 3o-day months. The Bonds will be
Issued In the denomInation of $5,000 each, or In integral multiples thereof, as requested by the
purchaser, and fUlly regisfBred as to principal and interest. Prinoipal wlU be payable at 1he main
corporate office of the registrar and Interest on each Bond will be payable by check or draft of
the registrar maIled to the registered holder 1hereof at the holder's address as it appears on the
books of the registrar as of the close of business on the 15th day of the immedJately preceding
month.
The Bonds wJrl mature February 1 In the years and amounts as follows:
1995 $515,000
1996 $535,000
1997 $535,000
1998 $105,000
1999 $110,000
2000 $230,000
2001 $240,000
2002 S250,ooO
2003 $255,000
2004 $275,000
2005 S 85,000
2006 $ 90,000
2007 $ 95,000
2008 $100,000
2009$105,000
OPTIONAL REDEMPTION
The City may elect on Febru21lj' " 2003. and on any day thereafter, 10 prepay Bond's due on or
after February 1, 2004. Redemption may be In whole or in part and if in part, at the oplionof
the City and in such order as the City shall determine and within a maturity by Jot as selected
by the tegisfrar. All prepayments sha(l be at a pr1ce of par plus accrued interest
SECURITY AND PURPOSE
'The Bonds win be general obligations of the City for which the City will pledge It<; full faith and
credit and power to levy direct general ad valorem taxes. In addition the City will pledge
special assessments against beneflted property and net re....enues of the City Water Utility. The
proceeds will be used to finance various public improvements in 1he City.
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lYPE OF PROPOSALS
Proposals shall be for not Jess than $3,479,045 and accrued interest on the total principal
amount of the Bonds. Proposals shaff be accompanied by a Good Faith Deposit (~Oeposit") in
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the form of a certified or cashier's check or a FinancIal Surety Bond In lhe amount 01 $35,250.
payable to the order of the CIty, tf a check Is used, it rnusl accompany each proposal. If a
FinancIal Surety Bond is used, It mus1 be trom an insurance company licensed 10 issue such a
bond )n the State of Minnesota, and praapproved by the City. 'Such bond must be submItted 10
Sprlngsted Incorporated prIor to the opening of the proposals. The FJnancial Surety Bond
must identity each underwrIter whose Dep<>sit is guaranteed by such FinanciaJ Surety Bond. If
the Bonds are awarded to an undalWrlter using a Financial Surety Sond,then that purchaser is
required to submit its Deposit to Splingsted Incorporated in the form of a certified or cashier's
check or wIre transfer as Instructed by Springsted Incorporated not later than 3:30 P.M..
Centra! Tlme. on the next business day following the award. If such Deposit is not received by
1hat time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit
fequirement The City will deposit the check 01 ihe purchaser. the amount of which will be
deducted at settlement and no Interest will accrue to the purchaser. In the event the purchaser
falls to comply with the accepted propqsal, said amount will be retained by the City. No
proposal can be withdrawn or amended after the time ~et for receiving proposals unless the
meeting of the City scheduled for award at the Bonds is aajourned, recessed, or conlinued to
another date without award of the Bonds having been made. Rates shalJ be in integral
murtiples of 5/100 or 1/8 of 1 %. Rates must be In ascending order. Bonds of the same
ma1urfty shall bear a single rate from the date of [he Bonds to the d~te or maturity. No
condltJonal proposals wiJI be accepted.
AWARD
The Bonds wJJJ be awarded on the basis of the lowest interest rate to be determined On a true
Interest cost (TIC) basis. The City's computation of the Interest rate of each proposal, in
acrordance with customary practice. will be controlling.
The City .....m reserve the right to: (Q waive non-substantive informalities; of any proposal or of
matters relating to the receipt of proposals and award of the Bonds. (ii) reject an proposals
without cause, and, (m) reject any proposal which the City delermines to have failed to comply
with the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
If the Bonds qualify for issuance of any policy 01 municipal bond insurance or commitment
therefor at the option of the underwriter, the purchase or any such insurance poucy or the
issuance of any such commJ1ment shall be at the sole option and expense of the purchaser of
Ihe Bonds. Any inaeased costs of issuance 01 the Bonds rasutting from such purchase of
insurance shall be paid by lhe purchaser, except that, i1 the City has requested and received a
rating on the Bonds from a rating agency, the City will pay thaI rating fee. Any other rating
agency fees shaJl be the responslblli;ty of the purchaser,
Fanure of the municipal bond Insurer to issue the policy after Bonds have been awarded to the
purchaser shall nol constJtlJte cause for failure or refusal by the purchaser to accept delivery on
the Bonds.
REGISTRAR
The City will name the registrar which shall be subject to applicable SEC regulations. The City
will pay for 1he sstvlces of the registrar.
CUSIP NUMBERS
If the Bonds qualtfy lor assignment of CUSJP numbers such numbers will be printed on the
Bonds, but neither the 1ailure to print such numbers on any Bond nor any erlor with respect
thereto will constitute cause for failure or refusal by the purchaser (0 accept delivery of the
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Bonds. The CUSIP Service Bureau cha.rgo for the assignment of CUS!? identltication numbers
shaH be paid by the purchaser.
SffiLEMENT
Within 40 days following the dete 01 their award, the Sonds will be delivered without cost to the
purchaser at a place mutually satisfactory to the City and the purchaser. DeUvel}' will be
subject to receipt by the purchaser 01 an approving legal opinion of Briggs and Morgan,
ProfessJonaJ AssocIation, of SaInt Paul and Minneapolis, Minnesota, which opinIon will be
printed on the Bonds, 8J1d of customary closIng papers. Including a no-Jitlga1ion certificate. On
the date of settlement payment 10r the Bonds shall be made in federal, or equlvaJent, funds
which shall be received at the offices of the City or its desjgnee not later than 12:00 Noon,
Cerrtral1ime. Except as compliance with the terms of payment for the Bonds shan have been
made impossfble by action of the City, or its agents, the pwchaser shall be liable to the City fOI
any loss suffered by the City by reason of the purchaser's non~compliance with said terms for
payment
OFFICIAL STATEMENT
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The CIty has authorized the preparation of an Official Statement containing pertinent
information relative to the Bonds, and said Official Stetemenl will serve as a nearly-final OfficiaJ
Statement wjthin the meaning 01 Rule 15c2-12 01 the Securities and Exchange Commission.
For copIes of the OftJdaJ statement or for any additional information prior 10 sale, any
prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated,
85 E:as1 Seventh Place, Suite 100. Saint Paul, Minnesota 55101. telephone (612) 223-3000.
The OfficjaJ Statement, when further supplemented by an addendum or addenda specifying the
matu(rty dates, principal amounts and interegt rates of the Bonds, together with any other
Infonnation requited by law, shall cons1ttute a AFlnal Official Statement" of the City with respect
to the Bonds, as that term is defined in Rule 15c2~12. By awarding 1he Bonds to any
underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no
more than seven business days after the date of such award, it shall provide without cost to the
senior managing underwrIter of the syndioate to WhIch the BondS are awarded 150 copies ot
the Official Statement and the addendum or addenda described above. The CJty designates
the senior managing underwriter of the syndicate to which the Bonds are awarded as Us agent
for purposes of dIstributing copies of the Final Official Sta1ement to each Participating
Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees ~(eby
that if its proposal is accepted by the City {i} it shall accept such designation and {iQ it shalJ
enter Into a contractual relatlonship with all Parlicipa11ng Underwriters of the Bonds for
purposes of assuring the receipt by eaoh such Participating Unde/Wri1er of the Final Official
Statement.
Dated August 16, 1993
BY ORDER O~ THE CITY CQUNCH.
/s/ Patrick Klaers
AdmInistrator
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2. The terms and conditions of the Bonds and the sale thereof
are tully set forth in. the "Terms of Proposal II attached hereto as
Exhibit B, and the COUhcil shall meet at the tilIle and place
specified therein for the purposes of considering the bids for the
purchase of the Bonds and considering the awa:rd of the sale of the
Bonds.
Adopted on August 16, 1993, by the Elk River City Council.
The motion for the adoption of the foregoing resolution vas
duly seconded by Councilmember and upon a vote being
taken thereon, the following voted in favor thereof:
and the fallowing voted against the same:
Whereupon said resolution was declared duly passed and
adopted.
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city Clerk's Certificate
I, the undersigned, being the duly qualified and acting
city Clerk of the City of Elk River, Minnesota, DO HEREBY CERTIFY
that I have carefully 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 excerpt of the official
minutes Of a meeting of the City Council of said city, duly called
and held on the date therein indicated, insofar as such minutes
relate to authorizing the sale of the City's General Obliqation
Permanent Improvement Revolving Fund Bonds, Series 1993B.
WITNESS my hand as such city Clerk and the ofticial seal
of the City this ____ day of , 1993.
City Clerk
( SEAL)
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