4.2. SR 08-30-1993
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ITEM 4.2.
TO:
FROM:
MAYOR & CITY COUNCIL \
LORI JOHNSON, FINANCE DIRECTOR~,~0
DATE: AUGUST 25, 1993
SUBJECT: RESOLUTION AWARDING THE SALE OF
THE CITY'S $109,500 G.O. EQUIPMENT
CERTIFICATE OF 1993
Each year as part of
approves capital outlay
equipment certificates.
authorized capital outlay
resolution for detail on
resolution included a tax
Equipment Certificate.
the budget process, the City Council
expenditures to be financed by
The 1993 budget included $108,700 of
expenditures (see Page 1 of the
the expenditures). The 1993 levy
levy of $30,000 for the 1993
The Bank of Elk River has offered to purchase the Certificate
at an interest rate of five percent. By negotiating the sale
with a local bank versus putting this on the public market, the
City saves a substantial amount in issuance cost. The 1993
Equipment Certificate includes $800 of issuance cost.
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The Council is asked to approve the attached resolution
awarding the sale of the City's $109,500 General Obligation
Equipment Certificate of 1993 to the Bank of Elk River for the
term of five years at an interest rate of five percent.
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P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION 93-
RESOLUTION AWARDING THE SALE OF THE CITY'S $109,500
GENERAL OBLIGATION EQUIPMENT CERTIFICATE OF 1993;
FIXING ITS FORM AND SPECIFICATIONS;
DIRECTING ITS EXECUTION AND DELIVERY;
AND PROVIDING FOR ITS PAYMENT.
BE IT RESOLVED by the City Council (The "council") of the City
of Elk River, Minnesota (the "City"), as follows:
1. It is hereby determined:
(a) It is necessary and expedient to issue the City's
$109,500 General Obligation Equipment Certificate
of 1993 (the "certificate") pursuant to Minnesota
Statutes, Section 412.301, to finance the costs of
the acquisition of the following items of capital
equipment for the City (hereinafter referred to as
the "Equipment"):
~ Equipment:
Police Vehicles, Setup and
Equipment
Emergency Preparedness
Siren
Street Department Trucks,
Hot Pour Kettle, and
Skid Loader
Costs of Issuance
$ 53,700
10,000
TOTAL
45,000
800
$109,500
(b) The Equipment has an expected useful life at least
as long as the final maturity of the Certificate,
and for such purposes the City has treated the
above-mentioned police equipment as having a useful
life of 3 years (with corresponding allocation
thereto of the earlier maturities of the
Certificate), with the remaining Equipment having a
useful life of 5 years or more; and the $109,500
amount of the Certificate does not exceed 0.25% of
the market value of the taxable property in the
City.
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(c) The City is authorized pursuant to Minnesota
statutes, Section 475.60, Subdivision 2(2), to
negotiate the sale of the certificate without
public notice and sale because the $109,500
principal amount of the Certificate, when combined
with any amounts of other obligations which the
City has negotiated and sold without public sale
pursuant to said Subdivision wi thin the last 12
months, aoes not exceed $1,200,000.
2. The offer of Bank of Elk River, in Elk River, Minnesota
(the "Purchaser"), to purchase the certificate is hereby accepted,
such offer being to purchase the certificate at a price of $109,500
par, the certificate to be subject to the terms and conditions
herein provided.
3. The City shall forthwith issue and sell its $109,500
General Obligation Equipment certificate of 1993. The certificate
shall be dated as of the date of delivery thereof to the Purchaser,
which shall be September 1, 1993, or as soon thereafter as
settlement can be arranged with the Purchaser, shall be a single,
fully registered obligation without interest coupons, shall bear
interest payable on February 1, 1994, and semiannually thereafter
on each August 1 and February 1, and shall mature and bear interest
as provided in the form of the certificate set out in paragraph 5
of this Resolution.
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The certificate shall be sUbject to redemption in whole or in
part at the option of the City at any time, in inverse order of the
principal maturities thereof, upon prior written notice to the
Registered Owner thereof, at par plus accrued interest to date of
redemption. Interest on the certificate shall be calculated on the
basis of a 360-day year consisting of 12 months of 30 days each.
4. Both principal of and interest on the certificate shall
be payable by the City Finance Director, who shall also act as
registrar and transfer agent (the "certificate Registrar") for the
certificate.
5.
form:
The certificate shall be substantially the following
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[Form of Certificate]
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No. R-1
$109,500
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
GENERAL OBLIGATION
EQUIPMENT CERTIFICATE OF 1993
KNOW ALL BY THESE PRESENTS that the ci ty of Elk Ri ver ,
Sherburne County, Minnesota, acknowledges itself to be indebted
and, for value received, hereby promises to pay to Bank of Elk
River, or its registered assigns (the "Registered Owner"), the
Principal Sum of ONE HUNDRED NINE THOUSAND FIVE HUNDRED DOLLARS
($109,500) on February 1 in the years and principal amounts,
respectively, as follows:
~
PrinciDal Amount
1994
1995
1996
1997
1998
$27,000
27,000
18,500
18,500
18,500
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or on any earlier date on which the principal amounts of this
certificate may be and shall have been duly called for prepayment,
and to pay interest to the Registered Owner from the date hereof on
the principal amounts hereof until the same are paid at the rate of
five percent (5.00%) per annum, interest to maturity payable on
February 1, 1994, and on each August 1 and February 1 thereafter
(the "Interest Payment Dates"). Interest shall be calculated on
the basis of a 360-day year consisting of 12 months of 30 days
each. The City Finance Director will pay the interest due on this
certificate on each Interest Payment Date by mailing or delivering
a check or draft made payable to the person that was the Registered
Owner at the end of the day preceding such Interest Payment Date.
Both principal of and interest on this certificate are payable in
any coin or currency of the united States of America which on the
date of payment is legal tender for public and private debts. At
the-time of final payment of all principal of and interest on this
Certificate, the Registered Owner shall surrender this certificate
to the City Finance Director.
This certificate is subject to prepayment at the option of the
City at any time, in inverse order of the principal maturities
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hereof, in whole or in part, at par plus accrued interest to the
date of prepayment, upon prior written notice to the Registered
Owner.
This certificate is issued by the City pursuant to and in full
conformity with the Constitution and laws of the state of Minnesota
for the purpose of providing funds to finance costs of acquiring
certain capital equipment of the City. This certificate
constitutes a general obligation of the city, and to provide moneys
for the prompt and full payment of the principal hereof and the
interest thereon, as the same become due, the full faith and credit
and taxing powers of the City have been and are hereby irrevocably
pledged.
This certificate may be assigned but upon such assignment the
assignor shall promptly give written notice thereof to the City at
the office of the City Finance Director, and the assignee shall
surrender this certificate to the City Finance Director either in
exchange for a new fully registered Certificate or for transfer of
this certificate on the registration records. Each such assignee
shall take this certificate subject to this condition. The City
shall treat the Registered Owner as the absolute owner of this
certificate for purposes of paying the principal of and interest on
this certificate and for all other purposes whatsoever.
This certificate has been designated by the City as a
"qualified tax-exempt obligation" for purposes of section 265(b) (3)
of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions,
and things required by the Constitution and laws of the state of
Minnesota to be done, to have happened, and to be performed
precedent to and in the issuance of this certificate have been
done, have happened, and have been performed in regular and due
form, time, and manner as required by law; and that this
Certificate, together with all other indebtedness of the City
outstanding on the date hereof, does not cause the indebtedness of
the City to exceed any constitutional or statutory limitation
thereon.
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IN WITNESS WHEREOF, the city of Elk River, Sherburne County,
Minnesota, by its City Council, has caused this certificate to be
executed by the manual signatures of its Mayor and City
Administrator; has caused the official seal of the City to be
impressed upon this certificate; and has caused this Certificate to
be dated september , 1993.
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City Administrator
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Mayor
CERTIFICATE OF REGISTRATION
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It is hereby certified that the foregoing certificate was on
the date specified below registered in the name of Bank of Elk
River and that, at the request of the Registered Owner of this
Certificate, the undersigned has this day registered the
Certificate as to principal and interest in the name of such
Registered Owner, as indicated in the registration blank below, on
the books kept by the undersigned for such purposes.
NAME OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF CITY
FINANCE DIRECTOR
Bank of Elk River,
Elk River, Minnesota
, 1993
(End of Form of Certificate)
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6. The City Finance Director shall obtain a copy of the
proposed approving legal op~n~on of bond counsel for the
Certificate, Briggs and Morgan, st. Paul, Minnesota, and shall
cause such opinion to be filed in the offices of the City.
7. The certificate shall be executed on behalf of the City by
the manual signatures of the Mayor and the City Administrator and
shall be duly registered by the manual signature of the City
Finance Director as certificate Registrar. The official seal of
the City shall be impressed upon the certificate. The Certificate,
when fully executed and sealed, shall be delivered by the City
Finance Director to the Purchaser upon receipt of the purchase
price thereof, and the Purchaser shall not be obligated to see to
the proper application thereof.
8. The proceeds of the certificate shall be deposited in and
expended from a separate capital account or subaccount of the City
to provide financing for the Equipment. The City Finance Director
shall establish and maintain a separate debt service account or
subaccount (the "Debt Service Account") for the payment of the
certificate. The Debt Service Account shall be maintained to pay
the debt service on the certificate and any additional obligations
of the City which may hereafter be made payable therefrom.
9. The Debt Service Account shall be held in trust by the
City for the benefit of the Registered Owner from time to time of
the Certificate, as hereinafter provided. until the principal of
and interest on the certificate are paid, or until the certificate
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is otherwise discharged as hereinafter provided, there shall be
credited to and maintained in the Debt Service Account (1) first,
the proceeds of the general ad valorem taxes hereinafter or
hereafter levied by the City for the purpose of paying the
principal of and interest on the Certificate; (2) second, the
proceeds of the $30,000 ad valorem taxes levied for the certificate
pursuant to Resolution No. 92-121, adopted by the Council on
December 14, 1992; and (3) third, any other funds which are
properly available and are appropriated by the Council to the Debt
Service Account. The aforesaid funds, when deposited in the Debt
Service Account, shall be used only and exclusively for, and are
hereby pledged to, the payment of the principal of and interest on
the Certificate, when due, and such other obligations of the City
as may be made payable therefrom. If any payment of principal or
interest shall become due when there are not sufficient funds in
the Debt Service Account to pay the same, the City Finance Director
shall pay such principal or interest from the general fund or other
available fund of the City, and such fund shall be reimbursed for
such advances from the proceeds of the ad valorem taxes levied for
such purpose, when collected.
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10. The full faith and credit and taxing powers of the City
are hereby pledged to the payment of the principal of and interest
on the certificate, and in the event of any current or anticipated
deficiency of funds in the Debt Service Account of amounts needed
to make any such payment, when due, the City Council shall levy ad
valorem taxes on all taxable property in the City in the amount of
such deficiency.
11. To provide moneys for payment of the principal of and
interest on the certificate there is hereby levied upon all of the
taxable property in the City a direct annual ad valorem tax which
shall be spread upon the tax rolls and collected with and as part
of other general property taxes in the City for the years and in
the amounts as follows:
Year of Tax Year of Tax
Levv Collection Amount
1993 1994 $34,884
1994 1995 21,853
1995 1996 20,882
1996 1997 19,911
The foregoing tax levies shall be irrepealable so long
as the certificate is outstanding and unpaid, provided that the
City reserves the right and power to reduce the levies in the
manner and to the extent permitted by Minnesota Statutes, section
475.61, Subdivision 3.
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12. It is hereby determined that the funds available to the
Debt Service Account pursuant to this Resolution (including from
the foregoing ad valorem tax levies) will be in amounts not less
than 5% in excess of the amount needed to meet, when due, the
principal of and interest on the Certificate. The City Finance
Director is directed to file a certified copy of this Resolution
with the county Auditor of Sherburne County and to obtain the
certificate of the County Auditor required by Minnesota Statutes,
section 475.63.
13. The officers of the City are hereby authorized and
directed to prepare and furnish upon request to the Purchaser and
to the attorneys approving the Certificate, certified copies of
proceedings and records of the City relating to the Certificate
and to the financial condition and affairs of the City, and to
furnish such other certificates, affidavits, and transcripts as
may be required to show facts within their knowledge or as shown
by the books and records in their custody and under their control
relating to the validity and marketability of the certificate,
and such instruments, including any heretofore furnished, shall
be deemed representations of the City as to the facts stated
therein.
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14. The City covenants and agrees with the Registered Owner
from time to time of the certificate that the City will not take
or permit to be taken by any of its officers, employees, or
agents any action which would cause the interest on the
Certificate to become generally SUbject to taxation under the
Internal Revenue Code of 1986, as amended (the "Code"), and
regulations issued thereunder, as now existing or as hereafter
amended or proposed and in effect at the time of such action, and
that the City will take, or it will cause to be taken, all
affirmative actions within its power which may be necessary to
insure that such interest will not become subject to income
taxation under the Code.
15. The City shall comply with requirements necessary under
the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the
Certificate, including without limitation (1) requirements
relating to temporary periods for investments, (2) limitations on
amounts invested at a yield greater than the yield on the
Certificate, and (3) the rebate of excess investment earnings to
the" United States if the Certificate (together with other
obligations reasonably expected to be issued and outstanding at
one time in this calendar year) exceed the small issuer exception
amount of $5,000,000. For purposes of qualifying for the small
issuer exception to the federal arbitrage rebate requirements,
the City hereby finds, determines and declares that (1) the
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certificate is issued by a governmental unit with general taxing
powers, (2) the certificate is not a private activity bond, (3)
ninety-five percent (95%) or more of the net proceeds of the
Certificate are to be used for local governmental activities of
the City (or of a governmental unit the jurisdiction of which is
entirely within the jurisdiction of the City), and (4) the
aggregate face amount of all tax-exempt obligations (other than
private activity bonds) issued by the City (and all entities
subordinate to, or treated as one issuer with, the City) during
the 1993 calendar year is not reasonably expected to exceed
$5,000,000, all within the meaning of section 148(f) (4) (D) of the
Code.
16. In order to qualify the certificate as a "qualified
tax-exempt obligation" within the meaning of section 265(b) (3) of
the Code, the City hereby makes the following factual statements
and representations:
(a) the certificate is issued after August 7, 1986;
(b) the certificate is not a "private activity bond" as
defined in section 141 of the Code;
(c) the City hereby designates the certificate as a
"qualified tax-exempt obligation" for purposes of section
265(b) (3) of the Code;
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(d) the reasonably anticipated amount of tax-exempt
obligations (other than private activity bonds, treating
qualified 501(c) (3) bonds as not being private activity bonds)
which will be issued by the City (and all entities subordinate
to, or treated as one issuer with, the City) during calendar year
1993 will not exceed $10,000,000; and
(e) not more than $10,000,000 of obligations issued or to
be issued by the City during calendar year 1993 have been
designated for purposes of section 265(b) (3) of the Code.
The City shall use its best efforts to comply with any federal
procedural requirements which may apply in order to effectuate
the designation made by this paragraph.
17. When any obligation of the certificate has been
discharged as provided in this paragraph, all pledges, covenants
and other rights granted by this Resolution to the registered
owner of the certificate (with respect to the obligation thereof
so defeased) shall, to the extent permitted by l~w, cease. The
City may at any time discharge any or all of such obligation(s)
with respect to the Certificate, subject to the provisions of law
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now or hereafter authorizing or regulating such action, by
depositing irrevocably in escrow, with a suitable institution
qualified by law as an escrow agent for this purpose, cash or
securities which are backed by the full faith and credit of the
united states of America, bearing interest payable at such times
and at such rates and maturing on such dates and in such amounts
as shall be required and sufficient, subject to sale and/or
reinvestment in like securities, to pay saidobligation(s), which
may include any interest payment on such Certificate and/or
principal amount due thereon at a stated maturity (or if
irrevocable provision shall have been made for permitted prior
redemption of such principal amount, at such earlier redemption
date).
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18. with respect to the Equipment, the City has complied
and will continue to comply with the "Reimbursement Regulations"
provided in United states Treasury Regulations Section 1.103-18,
and any successor regulations as may be applicable, including
section 1.150-2. In particular, to the extent that any of the
proceeds of the certificate will be used to reimburse the City
for a cost of the Equipment theretofore paid and temporarily
financed by the City out of other City funds, prior to the
initial payment thereof (or within applicable time limits
thereafter) the City has made or will have made a duly qualifying
statement of its official intent to bond for such costs;
otherwise, the proceeds of the Certificate are to be used for
initial payment, and not for such reimbursement, of costs of t~e
Equipment.
Adopted by the Elk River City Council on August 30, 1993.
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C E R T I F I CAT ION
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I, the undersigned City Clerk of the City of Elk River,
Minnesota, do hereby certify the following:
The foregoing is true and correct copy of a Resolution on !
file and of record in the offices of the City, which Resolution
relates to the issuance by the City of its $109,500 General
Obligation Equipment certificate of 1993. Said Resolution was
duly adopted by the Elk River City Council at a regular or
special meeting of the Council held on August 30, 1993. Said i
meeting was duly called and regularly held and was open to the I
public and was held at the place at which meetings of the Council
are regularly held, a quorum of the Council being present and
acting throughout. Councilmember moved,
the adoption of the Resolution, which motion was seconded by .
Councilmember . A vote being taken ion
the motion, the following members of the Council voted in favor
of the Resolution:
and the following voted against the same:
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Whereupon said Resolution was declared duly passed and adopted.1
The Resolution is in full force and effect and no action has b~en
taken by the Council which would in any way alter or amend the i
Resolution.
WITNESS MY HAND officially as the City Clerk of the City qf
Elk River, Minnesota, this day of , 1993~
(SEAL)
city Clerk
City of Elk River, Minnesota
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