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8.3. SR 06-20-1994 r I-\.( ( II .Yl~' E l\. River e e ITEM 8.3. MEMORANDUM TO: MAYOR & CITY COUNCIL FROM: LORI JOHNSON, FINANCE DIRECTOR DATE: JUNE 16, 1994 SUBJECT: RESOLUTION INITIATING THE PROCESS FOR THE SALE OF THE CITY'S $255,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1994D Attached is a copy of the resolution which must be adopted in order to proceed with financing of the library expansion. As the Council is aware, Moody's has already rated this issue as a Baal and information regarding this issue was included in the previous official statement. This issue is being negotiated versus competitively bid; however, indications at this time are that the rates will be as good as, if not better than, the rates on the previous three bond issues. The local Edward D. Jones office expressed interest in purchasing this entire bond issue; Springsted has been working with the national Edward D. Jones office to facilitate that transaction. It is anticipated that the resolution awarding the sale to Edward D. Jones will be presented at the June 27 meeting. RECOMMENDATION The City Council is asked to approve the attached resolution initiating the process for the sale of the City's $255,000 General Obligation Tax Increment Bond, Series 1994D. P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 e e e ." EXTRACT OF MINUTES OF A MEETING 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 City of Elk River, Minnesota, was duly called and held at the Elk River City Hall on June 20, 1994, 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 $255,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 19940 BE IT RESOLVED by the City Council (the "Council") of the City of Elk River (the "City"), Minnesota, as follows: 1. It is hereby determined: (a) The City has undertaken the following public development project (the "Improvements") and will incur the following public development costs thereof wi thin and for the benefit of its Development District No.1, all pursuant to Minnesota Statutes, Sections 469.124 through 469.134 and 469.174 through 469.179, and more specifically involving the expansion of the Elk River Public Library, 413 Proctor Avenue NW: Project Costs Less Other Available Funds Net project Costs Costs of Issuance Allowance for Discount Bidding Less Investment Earnings $550,000 (307.000) 243,000 10,420 3,825 ( 2.245) Net Bond Issue $255,000 (b) It is necessary for the City to issue its $255,000 General Obligation Tax Increment Bonds, Series 19940 (the "Bonds") , pursuant to the applicable 266233.1 e provisions of Minnesota statutes, Chapters 469 and 475, to provide financing for the Improvements. (c) The City has retained Springsted Incorporated, in saint Paul, Minnesota, as its independent financial advisor for the Bonds and is therefore authorized to sell the Bonds by a competitive negotiated sale in accordance with Minnesota statutes, section 475.60, Subdivision 2 (9) . 2. The terms and conditions of the Bonds and the sale thereof are fully set forth in the "Terms of Proposal" attached hereto as Exhibit A, and the Council shall meet at the time and place specified therein for the purposes of considering the bids for the purchase of the Bonds and considering the award of the sale of the Bonds. Adopted on June 20, 1994, by the Elk River City council. The motion for the adoption of the foregoing resolution was duly seconded by Councilmember and upon a vote being taken thereon, the following voted in favor thereof: e and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. - 266233.1 . . . EXHIBI~ 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 $255,000 CITY OF ELK RIVER, MINNESOTA GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 19940 Proposals for the Bonds will be received on Monday, June 27, 1994, until 12:00 Noon, Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. DETAILS OF THE BONDS The Bonds will be dated July 1, 1994, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 1995. Interest will be computed on the basis of a 360-day year of twelve 3D-day months. The Bonds will be issued in the denomination of 55,000 each, or in integral multiples thereof, as requested by the purchaser, and fully registered as to prinCipal and interest. Principal will be payable at the 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 thereof 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 immediately preceding month. The Bonds will mature February 1 in the years and amounts as follows: 1996 $10,000 1997 $15,000 199B $20,000 1999 $20,000 2000 $20,000 2001 $20,000 2002 $20,000 2003 $25,000 2004 $25,000 2005 $25,000 2006 $25,000 2007 $30,000 OPTIONAL REDEMPTION The City may elect on February 1, 2004, and on any day thereafter, to prepay Bonds due on or after February 1, 2005. Redemption may be in whole or in part and if in part, at the option of the City and in such order as the City shall determine and within a maturity by lot as selected by the registrar. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment income generated within the City's Tax Increment Financing Districts Nos. 1 and 3. The proceeds will be used to finance the expansion of the City library. e TYPE OF PROPOSALS e Proposals shall be for not less than $251,175 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $2,550, payable to the order of the City. If a check is used, it must accompany each proposal. Jf a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The City will deposit the check of the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. 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 Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The 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 Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter. the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. e REGISTRAR The City will name the registrar which Shall be subject to applicable SEe regulations. The City will pay for the services of the registrar. e e e CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, which opinion will be printed on the Bonds, and of customary closing papers, including a no-litigation certificate. On the date of settlement payment for the Bonds shall be made in federal. or equivalent, funds which shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the 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. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the 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 syndicate to which the Bonds are awarded 25 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated June 20, 1994 BY ORDER OF THE CIlY COUNCIL IsJ Patrick Klaers Administrator 4It 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 obligation Tax Increment Bonds, Series 1994D. WITNESS my hand as such City Clerk and the official seal 4It of the City this ____ day of , 1994. City Clerk (SEAL) e 266233.1