6.4A & 6.4B SR 11-07-1994
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ITEMS 6.4a. & 6.4b
MEMORANDUM
FROM:
MAYOR & CITY COUNCIL
LORI JOHNSON, FINANCE DIRECTORl?f~
TO:
DATE:
NOVEMBER 7, 1994
SUBJECT: RESOLUTION INITIATING THE
PROCESS FOR THE SALE OF THE
CITY'S $1,010,000 GENERAL
OBLIGATION WATER REVENUE
BOND, SERIES 1994D AND A
RESOLUTION INITIATING THE
PROCESS FOR THE SALE OF THE
CITY'S $1,550,000 GENERAL
OBLIGATION IMPROVEMENT BOND,
SERIES 1994E
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Water Revenue Bond Series 1994D
The Elk River Municipal Utilities has requested that the City of Elk River
authorize on its behalf $1,010,000 in General Obligation water revenue
bonds. This amount was determined based on a construction bid of $864,300
plus property acquisition and related engineering, legal, and bond issuance
costs. The Resolution is worded such that the amount of the bond will be
reduced if the City Council authorizes the transfer of Tax Increment
Financing District No.4 revenues to the water utility. The Statute allowing
the issuance of the water revenue bonds requires that water rates be set at
an amount adequate to cover the debt service of this bond issue.
In that regard, I requested that Bill Birrenkott provide the City with water
revenue forecasts and cash flow projections for this bond issue. Once that
information is available, the Council will be able to determine whether the
TIF proceeds are needed in order to finance the water tower or if the current
water revenues and connection charges are sufficient to support the entire
bond issue.
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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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1994E General Oblil!ation Improvement Bonds
The City will be issuing $1,550,000 in General Obligation improvement
bonds to finance the Western Area Phase II improvements. The construction
bid for this project is $1,500,000 plus related overhead costs. A reduction of
$500,000 from bond proceeds still available from the Elk Park Center project
results in a bond issue for this improvement project of $1,550,000. This bond
issue will be financed by special assessments and City contributions. As you
can see from the recommendations, a tax levy is required on this bond issue.
That tax levy can of course be eliminated or decreased if other funds such as
City MSA dollars are available.
Staff Recommendation
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The City Council is asked to approve the two attached Resolutions initiating
the process for the sale of the City's $1,010,000 General Obligation Water
Revenue Bond, Series 1994D and initiating the process for the sale of the
City's $1,550,000 General Obligation Improvement Bond, Series 1994E. The
sale date will be set for November 28. As I stated earlier, the water revenue
issue can be reduced. if necessary, based on the City Council's action on
November 14 in regard to a TIF contribution to the Utilities for the financing
of this project.
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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
November 7, 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.
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RESOLUTION INITIATING THE PROCESS FOR THE SALE
OF THE CITY'S $1,010,000 GENERAL OBLIGATION
WATER REVENUE 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 duly ordered the making of and has
undertaken or will undertake the pUblic improvements
described in the attached Exhibit A (the "Improvements")
within the City pursuant to and in full conformity with
Minnesota Statutes,. Section 444.075.
(b) It is necessary for the City to issue its
General Obligation Water Revenue Bonds, Series 19940 (the
"Bonds"), in an amount presently estimated not to exceed
$1,010,000 pursuant to Minnesota Statutes, Section
444.075 and Chapter 475, to provide financing for the
Improvements.
(c) The City has retained Springsted Incorporated,
in Saint Paul, Minnesota ("Springsted") , as its
independent financial advisor for the Bo~ds and is
therefore authorized to sell the Bonds by a competitive
negotiated sale in accordance with Minnesota Statutes,
Section 475.60, Subdivision 2(9).
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276403 _ 1
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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 B, 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 November 7, 1994, by the Elk River City Council.
Tbe motion for the adoption of the foregoing resolution was
duly .econded by Councilmember 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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276403.1
EXHIBIT A
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RE: $1,010,000 G.O. Water Revenue Bonds, Series 19940
Construction of Pedestal Spheriod Tank at Gary Street station:
Construction, Engineering and
Land Costs
Costs of Issuance
Allowance of Discount
$ 978,480
15,869
13.130
Total
$1,007,479
$1,010,000
Rounded for Issuance
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THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$1.010,000
CITY OF ELK RIVER., MINNESOTA
GENERAL OBLIGATION WATER REVENUE BONDS.
SERIES 1994D
Proposals for the Bonds will be received on Monday, November 2S, 1994, until 11 :00 A.M.,
Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
ofthe Bonds will be by the City Council at 6:00 P.M., Central Time, ottne same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612-223-3002) to Springsted.
Signed Proposals, without final price or coupons. may be submitted to Springsted prior to the
time of sale. The bidder shall be responsible for submitting to Springsted the final proposal
price and coupons, by telephone (612-223-3000) or fax (612-223-3002) for inclusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms af Proposal,
within a one-hour period prior to the time of sale established above, but no proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, Bellevue, Washington 9Soo4, telephone: (206) 635-3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each bid shall be deemed to constitute a contract between the bidder and the
City to purchase the Bonds regardless of the manner of the bid submitted.
DETAILS OF THE BONDS
The Bonds will be dated December 1, 1994, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 1995. Interest will
be computed on the basis of a 36O-day year of twelve 30-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 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 535,000 2000 $55.000 2004 570,000 2008 $ 85,000
1997 $50,000 2001 560,000 2005 $75,000 2009 5 90,000
1998 550,000 2002 $60,000 2006 5S0,OOO 2010 $100,000
1999 $55,000 2003 $65,000 2007 5S0,000
e 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
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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 net
revenues of the water utility. The proceeds will be used to finance the construction of
improvements to the City's water utility.
TYPE OF PROPOSALS
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Proposals shall be for not less than $996,S70 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 $10,100, payable to
the order of the City. If a check is used. it must accompany each proposal. If a Financial
Surety Bond is used, it must be from an insurance company licensed to issue such a bond in
the State of Minnesota, and preapproved by the 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 r~quirem~nt.
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/S 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
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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.
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Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the
purchaser shalf not constitute 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 the services of the registrar.
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.
SElTLEMENT
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 shal~ have b~en
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 purchasers 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 40 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 November 7, 1994
BY ORDER OF THE CITY COUNCIL
Isl Patrick Klaers
Administrator
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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
November 7, 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 $1,550,000 GENERAL OBLIGATION
IMPROVEMENT BONDS, SERIES 1994E
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 duly ordered the making of and has
undertaken or will undertake the assessable public
improvements described in the attached Exhibit A (the
"Improvements") within the City pursuant to and in full
conformity with Minnesota Statutes, Chapter 429.
(b) It is necessary for the City to issue its
$1,550,000 General Obligation Improvement Bonds, Series
1994E (the "Bonds"), pursuant to Minnesota Statutes,
Chapters 429 and 475, to provide financing for the
Improvements.
(c) The City has retained Springsted Incorporated,
in Saint Paul, Minnesota ("Springsted") , 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).
276404.1
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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 B, 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 November 7, 1994, by the Elk River City Council.
The .otion 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:
and the following voted against the same:
Whereupon said resolution was declared duly passed and
adopted.
276404.1
EXHIBIT A
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Re: $1,550,000 G.O. Improvement Bonds, Series 1994E
street, Water, Sanitary Sewer and Storm Sewer Public Improvements
(Western Area Phase II Project):
Net Project Costs
$1,504,660
Costs of Issuance
21,671
Allowance for Discount
20.150
Total
$1,546,481
Rounded for Issuance
$1,550,000
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THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
'SSUr! ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
51,550,000
CITY OF ELK RIVER, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS,
SERIES 1894E
Proposals for the Bonds will be received 0" Monday, November 28, 1994, until 11:00A.M.,
Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
ofthe Bonds will be by the City Council at 6:00 P.M.. Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612-223-3002) to Springsted.
Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the
time of sale. The bidder shall be responsible for submitting to Springsted the final proposal
price and coupons, by telephone (612-223-3000) or fax (612-223-3002) for inclusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal,
within a one-hour period prior to the time of safe established above, but no proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, BeUevue, Washington 9S004, telephone: (206) 635-3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each bid shall be deemed to constitute a contract between the bidder and the
City to purchase the Bonds regardless of the manner of the bid submitted.
DETAILS OF THE BONOS
The Bonds will be dated December 1, 1994, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 1995. Interest will
be computed on the basis of a 36()..day year of twelve 30-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 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:
1995 $ 95,000 2000 $105,000 2004 $105,000 2008 $100,000
1997 $110,000 2001 $105,000 2005 $105,000 2009 $100,000
1998 5105,000 2002 $105,000 2006 $105,000 2010 $100,000
1999 $105,000 2003 $105,000 2007 $100,000
e 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
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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 special
assessments against benefited property. The proceeds will be used to finance various
improvements within the City.
TYPE OF PROPOSALS
Proposals shall be for not less than $1,529.850 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 $15,500,
payable to the order of the City. If a check is used, it must accompany each proposal. If a
Financial Surety Bond is used, it must be from an insurance company. licensed to issue such a
bond in the State of Minnesota, and preapproved by the 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 adjoumed, 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.
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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.
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.
SEffiEMENT
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 60 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 jf 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 November 7, 1994
BY ORDER OF THE CITY COUNCIL
Isl Patrick Klaers
Administrator
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Recommendations
For
City of Elk River, Minnesota
$1,010,000
General Obligation Water Revenue Bonds,
Series 19940
$1,550,000
General Obligation Improvement Bonds, Series 1994E
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Study No.E0894S2T2
SPRINGSTED Incorporated
November 3, 1994
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Recommendations for
City of Elk River, Minnesota
$1,010,000
General Obligation Water Revenue Bonds,
Series 1994D
EXECUTIVE SUMMARY
This summary is intended to highlight data contained in these recommendations. It is intended
to be an adjunct to the recommendations and not to be used solely as the basis of
determination of actions required. Your actions should be based on the information more fully
set forth in the recommendations.
1. Action Requested
To establish the date and time of receiving
bids and establish the terms and conditions
of the Offering.
Proceeds of the issue will be used to finance
the construction of a pedestal spherical tank
at the Gary Street location.
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2. Type and Purpose of Offering
6. Optional Redemption
$1,010,000
February 1, 1996 through 2010
Net revenues of the water utility and ad
valorem tax levies, jf necessary.
February 1,2004, and on any day thereafter,
to prepay Bonds due on or after February 1,
2005.
3. Principal Amount of Offering
4. Repayment Term
5. Source of Debt Service Revenues
7. Credit Rating Comments
8. Sale Date and Time
9. Award Date and Time
e 10. Comments
Moody's rating recommended. The City's
current rating is KBaa1."
Monday, November2B, 1994 at 11:00 A.M.
Monday, November 28,1994 at 6:00 P.M.
The City is to inform Springsted as to its
decision, concerning if it will use TIF District
No.4 monies to reduce the size of this
issuance.
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Recommendations for
City of Elk River, Minnesota
$1,550,000
General Obligation Improvement Bonds, Series 1994E
EXECUTIVE SUMMARY
This summary is intended to highlight data contained in these recommendations. It is intended
to be an adjunct to the recommendations and not to be used solely as the basis of
determination of actions required. Your actions should be based on the information more fully
set forth in the recommendations.
1. Action Requested
To establish the date and time of receiving
bids and establish the terms and conditions
of the Offering.
Proceeds of the issue will be used to finance
water trunk and laterals, sanitary sewer
trunk and laterals, storm sewer and street
improvements for the City's Western Area
Phase I!.
2. Type and Purpose of Offering
3. Principal Amount of Offering
4. Repayment Term
5. Source of Debt Service Revenues
$1,550,000
February 1, 1996 through 2010
Special assessments against benefited
property with any shortfall covered by MSA
project funds and ad valorem taxes.
February 1, 2004, and on any day thereafter,
to prepay Bonds due on or after February 1,
2005.
6. Optional Redemption
7. Credit Rating Comments
Moody's rating recommended. The City's
current rating is "Baa1."
8. Sale Date and Time
9. Award Date and Time
Monday, November 28,1994 at 11:00 A.M.
Monday, November 28, 1994 at 6:00 P.M.
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II
SPRINGSTED
120 South Sixth Street
SUite 2507
Minneapolis. MN 55402.1800
16121333-9177
Fax: (612] 349.5230
PUBLIC FINANCe AOVISORS
Home Office
85 East Seventh Place
Suire 100
Saint Paul. MN 55101.2143
16121 223.3000
Fax; 16121 223-3002
16655 West 81uemound Road
SUite 290
BroOkfield, WI 53005.5935
(414) 782.8222
Fax; 14141 782.2904
6800 College Boulevard
Suite 600
Overland Park. KS 66211.1533
19131 345.8062
Fax: (9131 345-1770
November 3, 1994
1800 K Streat NW
Suite 831
Washington. DC 20006.2200
[202] 466.3344
Fax: (2021 223,1362
Mayor Henry Duitsman
Honorable City Council
Mr. Patrick Klaers, Administrator
Ms. Lori Johnson, Finance Director
Elk River City Hall
13065 Orono Parkway
Elk River, MN 55330
Re: Recommendations for the Issuance of:
$1,010,000 General Obligation Water Revenue Bonds, Series 19940
$1,550,000 General Obligation Improvement Bonds, Series 1994E
We respectfully request your consideration of our recommendations for the issuance of the
above-named bond issues in accordance with the attached Terms of Proposal. We will discuss
each of these issues separately and then items common to both issues.
51,010,000 General Obligation Water Revenue Bonds, Series 19940
These bonds are being issued pursuant to Minnesota Statutes, Chapters 444 and 475.
Proceeds will be used to finance the construction of a Pedestal Spherical Tank at the Gary
Street location. It is also our understanding that the City Council will make the decision as to
whether or not they will use revenues of the City's TIF District No.4 to reduce the amount to be
financed for this issue. The following represent the two options for the Series 1994D Bonds.
Option I without revenues from TIF District NO.4 and Option II with revenues from the TIF
District No.4 as follows:
Option I
Project Costs.
Costs of Issuance
Allowance for Discount Bidding (1.3%)
Total Series 19940 Bonds
$ 978,480
18,593
12.927
$1,010,000
*
Includes land purchases and engineering.
City of Elk River, Minnesota
November 3, 1994
e Option 1/
Project Costs"
Less: Other Financing Sources
TIF No.4
$978,480
1429.329)
$549,151
13,439
7410
$570,000
Amount to be Financed
Plus: Costs of Issuance
Allowance for Bidding Discount (1.3%)
Total Series 19940 Bonds
.. Includes land purchases and engineering.
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Attached as Appendices I and II are the alternative maturity schedules for this issue. The issue
has been structured to provide for even annual payments over a 15-year period, with principal
due February 1, 1996 through 2010. The Terms of Proposal has been written assuming the full
issuance of $1,010,000. If the Council chooses to reduce the issue by TIF No. 4 revenue
contributions, the Terms will be rewritten to reflect the smaller size and the maturity schedule in
Appendix II.
Pursuant to Minnesota Statutes, Chapter 444, upon the successful sale of the bonds, the City
will covenant to charge rates sufficient to generate net revenues of its water utility to meet the
debt service requirements on the bonds. The City will also pledge its full faith and credit and
unlimited taxing authority as a backup security for this issue. However, any tax levies made to
prOVide debt service payments should be temporary in nature and an adjustment of rates and
charges would be required. Net revenues generated each year by the water utility will be used
to make the August 1 interest payment and the subsequent February 1 principal and interest
payment. .
The City currently has no other debt outstanding which is payable from net revenues of the
water utility.
$1,550,000 General Obligation Improvement Bonds, Series 1994E
These bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475.
Proceeds will be used to finance water trunk and laterals, sanitary sewer trunk and lateral,
storm sewer and street improvements for the City's Western Area Phase II. This issue will be
paid primarily from special assessments against benefited property with any shortfall to be
funded with the City's controlled MSA project funds. The composition of the issue is as follows:
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Project Costs.
Less: Other Financing Sources
1994 Surplus Bond Proceeds
Total to be Financed
Plus: Costs of Issuance
Allowance for Bidding Discount (1.3%)
Total Series 1994E Bonds
$2,004,660
(500.000)
$1,504,660
25,190
20.150
$1,550,000
.. Includes engineering, administration, legal and other.
Paae 2
City of Elk River, Minnesota
November 3, 1994
e Appendix III sets forth the projections of assessment income for the City's Western Area Phase
II. The City has considered assessing $1,512,129, of which $97,198 is either being deleted or
under further review by the City. This process leaves $1,405,129 of gross assessments, of
which $81,948 is to come from trunk lateral credit. The net assessable amount is therefore
$1,323,181. These assessments will be filed in even annual installments of principal over a 15-
year term with interest charged at a rate approximately 1.5% above the rate received on the
bonds. For purposes of these projections, we have used an estimated assessment rate of
7.5%.
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The assessments are expected to be filed on or before December 1, 1994 and interest on the
assessments will begin accruing on that date. We understand the first collection of the
assessments will be in 1995. Based on these assumptions, the projected assessment income
for the City's Western Area Phase II is shown in Appendix III.
Appendix IV is the recommended maturity schedule for the Series 1994E Bonds. We
recommend these bonds mature February 1, 1996 through 2010 as shown in Column 3. The
issue has been structured to best fit the projected assessment collections and provides for an
even net annual requirement as shown in Co.lumn 9.
These bonds will be secured by the City's general obligation taxing authority in addition to the
special assessments being pledged. The assessment income developed in Appendix III is
shown in Column 8. We understand the City intends to use MSA project funds to cover any
shortfall. The estimated annual debt service estimates annual net requirements at the
statutorily required 105% of debt service. As with all improvement issues, the timing of principal
repayment assumes that assessments will be filed and collected in the years and amounts
estimated. Any significant deviation from these assumptions may result in a cash shortfall.
The first payment on the Improvement Bonds will be an interest payment due August 1, 1995.
The 1995 first-half collections of assessments will be used to cover the August 1 interest
payment due and second-half assessment collections, as well as surplus first-half collections,
will be used to make the subsequent February 1 principal and interest payment.
Common to Both Issues
Underwriter's Discount
Included in each issue is an allowance for discount bidding, which provides the underwriters
with all or a portion of their profit and/or working capital needed to remarket the bonds. The
City has used this feature for its previous issues and we recommend its continued use here.
Call Feature
We also recommend that the bonds for each issue maturing in 2005 and longer be subject to
prepayment as early as 2004 and thereafter without penalty. This call feature gives the City the
flexibility to refund either of the issues in the future if circumstances so warrant or call a portion
of the Improvement Bonds if prepayments are significant.
Credit Rating
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Included as part of the issuance costs for each issue is a proviSion for a rating from Moody's
Investors Service of New York. The total Moody's rating fee will be pro-rated between the two
issues. We will assist the City in providing the information needed by Moody's to conduct their
rating analysis.
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City of Elk River, Minnesota
November 3,1994
Federal Arbitrage/Rebate
These issues are subject to federal arbitrage regulations. Generally speaking. all arbitrage
profits (the yield difference between the earnings on the investment of proceeds and the yield
on the obligations) must be rebated to the U.S. Treasury. There are some exemptions to the
rebate requirement, which include:
(i) A small issuer exemption if the obligations are for governmental purposes and the issuer
reasonably expects to issue not more than $5,000,000 of tax-exempt obligations during
the calendar year.
(ii) A 6-month exemption if all of the proceeds are expended within 6 months of issuance.
(iii) An 18-month expenditure test if at least 15% of proceeds are expended within 6 months.
60% within 12 months and 100% within 18 months.
(iv) A 2-year expenditure test if at least 75% of the proceeds of the issue are used for
construction and if 10% is expended within 6 months, 45% within 12 months, 75% within
18 months and 100% within 2 years. If it is reasonably required that a retainage be
maintained to enforce the completion of a contract, up to 5% of the proceeds may be
retained for an additional 12 months.
Please note that exemptions (ii). (iii) and (iv) are based on a test of absolute requirements
which include the additional income earned from the reinvestment of proceeds.
The City should be able to meet the requirements of items (iii) or (iv) for these issues. If there
is some question about meeting the exemption requirements for any of the issues, then the City
can elect to either rebate the arbitrage earnings on the unexpended portion. or pay a penalty
with respect to the close of each 6-month period after the date the obligations are issued equal
to 1.5% of the amount by which unexpended proceeds exceed the percentages allowed during
each period. The penalty is effectively 3% per year and is computed on any excess
unexpended proceeds until the obligations are no longer outstanding.
A 1993 change in the arbitrage regulations will require special attention be paid to the
accumulation and investment of monies in the debt service fund for each issue. Investments of
funds which exceed a bona fide fund level will have to be restricted to the yield of the bonds.
A bona fide debt service fund is defined as a fund which is used to achieve a proper matching
of revenues with principal and interest payments within each bond year and is depleted at least
once each bond year except for a reasonable carryover amount which may not exceed the
greater of:
1. The earnings on the fund for the preceding bond year; or
2. One-twelfth of the principal and interest payments on the issue for the immediately
preceding bond year.
Any earnings from the City's bona fide debt service fund are exempt from rebate.
Amounts in a debt service fund in excess of the amount of a bona fide debt service fund are
restricted to an investment rate equal to or less than the bond yield and may be invested in
market rate obligations, if their yield is at or below the bond yield: in specially restricted State
and Local Government Series (SLGS) issued by the U.S. Treasury; or in eligible tax-exempt
obligations.
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City of Elk River, Minnesota
November 3, 1994
A debt service fund can lose its bona fide status when the issuer accumulates excess
investment eamings or special assessment prepayments in the case of the Improvement
Bonds. It is important to monitor the funds to assure compliance with the new regulations.
Economic Life of Financed Proiects
The 1993 "final" arbitrage regulations brought all tax-exempt issues into the calculation of
"economic life." Previously, this requirement was only for private activity bonds. The intent of
this requirement is that the U.S. Treasury does not want tax-exempt debt outstanding longer
than is necessary 1 thus creating more tax-exempt obligations in the marketplace than are
needed. The general safe harbor for assuring that the issues comply with the regulations is if
the average maturity of the bonds does not exceed 120% of the economic life of the financed
projects. The I mprovement Bonds and the Water Revenue Bonds are being issued for
improvements which, under the Treasury guidelines, have an economic life of 20 years. The
average maturity of these issues doesn't exceed 10 years, so both issues are in compliance
with this regulation.
Bank Qualification
In 1986 tax provisions enacted by the U.S. Treasury reduced the ability of banks and other
financial institutions to use tax-exempt interest as an offset against other interest expense. This
made tax-exempt obligations less attractive to these financial institutions since they did not get
the full benefit of the tax exemption. There is an exclusion from this provision for issuers who
will not sell more than $10,000,000 of tax-exempt obligations in a calendar year. It is our
understanding that the previously issued Series 1994A, Band C plus these issues, Series
19940 and E do not exceed $10,000,000; and that the City will not issue in excess of
$10,000,000 of tax-exempt obligations in 1994. Therefore, these issues can be designated
"bank qualified." Typically, bank qualified issues receive rates lower than issues which are not
bank qualified. We have taken this into consideration in our interest rate estimates.
Federal Reimbursement Regl,.llations
The U.S. Treasury has enacted reimbursement regulations to regulate issuers who wish to
issue tax-exempt obligations to recover costs of prior expenditures. The reimbursement
regulations require that if the issuer proposes to reimburse itself for expenses they paid prior. to
the receipt of proceeds, it must have made a declaration of that intent within 60 days of the
actual payment of the expense. There are exemptions for architectural and engineering fees
and miscellaneous start-up costs. It is our understanding the City is aware of these regulations
and has taken whatever action .is necessary to comply with the federal reimbursement
regulations in regard to these issues.
Bond Sale E'rqcedures
Proposals for these issues will be received on Monday, November 28, 1994, at 11 :30 A.M. in
the offices of Springsted Incorporated, at which time they will be verified and checked for
accuracy. A representative of Springsted will then present our recommendations as to the
acceptability of proposals received to the City Council at its meeting that evening at 6:00 P.M.
Your bond proceeds should be available in late December.
Respectfully submitted,
.L~'l~d~Mf.~~~-
SPRINGSTED Incorporated
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APPENDIX I
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City of Elk River, Minnesota Prepared November 1, 1994
$1,010,000 G.O. Water Revenue Bonds, Series 1994 By SPRINGSTED Incorporated
Not Reduced by TIF No. 4 Contribution
Dated: 12. 1.1994
Mature: 2- 1
First Interest: 8- 1-1995
Total
Year of Year of Principal 105%
Revenue Mat. Principal Rates Interest & Interest. of Total
(1 ) (2) (3) (4) (5) (6) (7)
1995 1996 35,000 4.55% 67,358 102,358 107,476
1996 1997 50,000 4.80% 56,142 106 , 142 111,449
1997 1998 50,000 5.00% 53,742 103,742 108,929
1998 1999 55,000 5.20% 51,242 106,242 111,554
1999 2000 55,000 5.35% 48,382 103,382 108,551
2000 2001 60,000 5.45% 45,439 105,439 11 0 , 711
2001 2002 60,000 5.55% 42 , 169 1 02 , 1 69 107,277
2002 2003 65,000 5.65% 38,839 103,839 1 09,031
2003 2004 70,000 5.75% 35 , 166 1 05 , 1 66 110, 424
2004 2005 75,000 5.85% 31,141 1 06, 141 111 ,448
2005 2006 80,000 5.95'" 26,753 106,753 112,091
2006 2007 80,000 6.05'" 21,993 101,993 107,093
e 2007 2008 85,000 6.15% 17 , 153 102 , 153 107,261
2008 2009 90,000 6.25% 11,925 101,925 107,021
2009 2010 100,000 6.30% 6,300 106,300 111 ,615
TOTALS: 1,010,000 553,744 1,563,744 1,641,931
Bond Years:
Avg. Maturity:
Avg. Annual Rate:
T. 1. C . Rate:
9,333.33
9.24
5.933%
6.090%
Annual Interest:
Plus Discount:
Net Interest:
N. I. C. Rate:
553,744
13, 130
566,874
6.074%
Total Debt Service (Average of Revenue Years: 1995-2009)
Column 7: $ 109,462
Interest rates are estimates; changes may cause significant
alterations 01 this schedule.
The actual underwriter's discount bid may also vary.
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APPENDIX II
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City of Elk River, Minnesota Prepared November 1, 1994
$570,000 G.O. Water Revenue Bonds, Series 19940 By SPRINGSTEO Incorporated
Reduced By TIF District No.4 Contribution
Dated: 12- 1-1994
Mature: 2- ,
First Interest: 8- 1 - 1 995
Total
Year of Year of Principal 105%
Revenue Mat. PrinCipal Rates Interest & Interest 01 Total
(1 ) (2) ( 3) (4) (5) (6) (7)
'995 1996 20,000 4.55% 37,975 57,975 60,874
1996 1997 30,000 4.80% 31,640 61,640 64,722
1997 1998 30,000 5.00% 30,200 60,200 63,210
1998 1999 30,000 5.20% 28,700 58,700 61,635
1999 2000 30,000 5.35% 27 , 140 57 J 140 59,997
2000 2001 35,000 5.45% 25,535 60,535 63,562
2001 2002 35,000 5.55% 23,627 58,627 6',558
2002 2003 35,000 5.65% 21,684 56,684 59,518
2003 2004 40,000 5.75% 19,706 59,706 62,691
2004 2005 40,000 5.85% 17,406 57,406. 60,276
2005 2006 45,000 5.95% 15,066 60,066 63,0"69
2006 2007 45,000 6.05% 12,388 57,388 60,257
e 2007 2008 50,000 6. 15% 9,665 59,665 62,648
2008 2009 50,000 6.25% 6,590 56,590 59,420
2009 2010 55,000 6.30% 3,465 58,465 61,388
TOTALS: 570,000 310,787 880,787 924,825
Bond Years:
Avg. Maturity:
Avg. Annual Rate:
T.I.C. Rate:
Annual Interest:
Plus Discount:
Net Interest:
N.I.C. Rate:
5,240.00
9.19
5.931%
6.089%
310,787
7,410
318,197
6.072%
Interest rates are estimatesj changes may cause significant
alterations of this schedule.
The actual underwriter's discount bid 'may also vary.
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APPENDIX III
C1ty 01 Elk River, Minnesota
G.O. Improvement Bonds, Series 1994
Prepared November 3, 1994
By SPRINGSTED Incorporated
PROJECTED ASSESSMENT INCOME
Western Area Phase II (15 yrs)
Filing Date: 121 111994
Filing Collect Interest
Year Year Princ1pal @ 7.5001& Total
------- --------- ---.......
1994 1995 88,212 99,510a 187,722
1995 1996 88,212 92,623 180,835
1996 1997 88,212 86,007 174,219
1997 1998 88,212 79,391 167,603
1998 1999 88,212 72,775 160,987
1999 2000 88,212 66, 159 154,371
2000 2001 88,212 59,543 147,755
2001 2002 88,212 52,927 141 , 1 39
2002 2003 88,212 46,311 134,523
2003 2004 88,212 39,695 127,907
2004 2005 88,212 33,080 121,292
2005 2006 88,212 26,464 114,676
2006 2007 88,212 19,848 108,060
2007 2008 88,212 13,232 101.444
2008 2009 88,213 6,616 94,829
TOTALS 1 ,323,181 794,181 2,117,362
a) Includes interest from f111ng
date to 121 111995.
Pace a
APPENDIX IV
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City of Elk River, Minnesota Prepared November 3, 1994
$1,550,000 G.O. Improvement Bonds, Series 1994 By SPRINGSTED Incorporated
Dated: 12- 1-1994
Mature: 2- 1
First Interest: 8- 1 - 1 995
Total Projected Total
Year of Year 01 Principal 1 05% Assessment Net
Levy Mat. Principal Rates Interest & Interest of Total Income Requirement
( 1 ) (2) (3) (4) (5) (6) (7) (8) ( 9)
1994 1996 95,000 4.55% 101,026 196,026 205,827 187,722 18,105
1995 1997 1 10, 000 4.80% 82,271 192,271 201,885 180,835 21,050
1996 1998 105,000 5.001\1 76,991 181,991 191,091 174,219 16,872
1997 1999 105,000 5.20% 71,741 176,741 185,578 167,603 17 , 975
1998 2000 105,000 5.35% 66,281 171,281 179 , 845 160,987 1 8 , 858
1999 2001 105,000 5.45% 60,663 165,663 173,946 154,371 19,575
2000 2002 105,000 5.55'- 54,940 159,940 167,937 147,755 20 , 182
2001 2003 105,000 5.651\1 49,112 154 , 112 161,818 141,139 20,679
2002 2004 105,000 5.75% 43, 179 148,179 155,588 134,523 21,065
2003 2005 105,000 5.85"- 37,141 142,141 149,248 127,907 21,341
2004 2006 105,000 5.95'- 30,998 135,998 142,798 1"21,292 . 21,506
2005 2007 100,000 6.05% 24,750 124,750 130,988 114, 676 16,312
e 2006 2008 100,000 6. 15"- 18,700 118,700 124,635 108,060 16,575
2007 2009 100,000 6.25"- 12,550 112,550 118,178 101,444 16,734
2008 2010 100,000 6.30'- 6,300 106,300 111,615 94,829 16,786
TOTALS: 1,550,000 736,643 2,286,643 2,400,977 2,117,362 283,615
Bond Years:
Avg. Maturity:
Avg. Annual Rate:
T. I. C. Rate:
12,588.33
8.12
5.852%
6.025%
Annual Interest:
Plus Discount:
Net Interest:
N. I. o. Rate:
736,643
20,150
756,793
6.012%
Interest rates are estimates; changes may cause significant alterations of this schedule.
The actual underwriter's discount bid may also vary.
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THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$1,010,000
CITY OF ELK RIVER. MINNESOTA
GENERAL OBLIGATION WATER REVENUE BONDS.
SERIES 19940
Proposals for the Bonds will be received on Monday, November 28, 1994, until 11 :00 A.M.,
Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
of the Bonds will be by the City Council at 6:00 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612-223-3002) to Springsted.
Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the
time of sale. The bidder shall be responsible for submitting to Springsted the final proposal
price and coupons, by telephone (612-223-3000) or fax (612-223-3002) for inclusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARllY Rules of Participation and the Terms of Proposal,
within a one-hour period prior to the time of sale established above, but no proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall.control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE.
Suite 100, Bellevue, Washington 98004, telephone: (206) 635-3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each bid shall be deemed to constitute a contract between the bidder and the
City to purchase the Bonds regardless of the manner of the bid submitted.
DETAILS OF THE BONDS
The Bonds will be dated December 1, 1994. as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 1995. Interest will
be computed on the basis of a 36Q-.day year of twelve 30-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 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 $35,000 2000 $55,000 2004 $70,000 2008 $ 85,000
1997 $50,000 2001 $60,000 2005 $75,000 2009 $ 90,000
1998 $50,000 2002 $60,000 2006 $80,000 2010 $100,000
1999 $55,000 2003 $65,000 2007 $80,000
e 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
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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 net
revenues of the water utility. The proceeds will be used to finance the construction of
improvements to the City's water utility.
TYPE OF PROPOSALS
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Proposals shall be for not less than $996,870 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 $10,100, payable to
the order of the City. If a check is used, it must accompany each proposal. If a Financial
Surety Bond is used, it must be from an insurance company licensed to issue such a bond in
the State of Minnesota, and preapproved by the 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
e
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.
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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.
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.
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
e
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 (S12) 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 40 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.
e
Dated November 7,1994
BY ORDER OF THE CITY COUNCIL
1st Patrick Klaers
Administrator
Psae 12
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e
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$1,550.000
CITY OF ELK RIVER. MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS.
SERIES 1994E
Proposals for the Bonds will be received on Monday, November 28, 1994, until 11 :00 A.M.,
Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
of the Bonds will be by the City Council at 6:00 P.M.. Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612-223-3002) to Springsted.
Signed Proposals. without final price or coupons. may be submitted to Springsted prior to the
time of sale. The bidder shall be responsible for submitting to Springsted the final proposal
price and coupons. by telephone (612-223-3000) or fax (612-223-3002) for inclusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal,
within a one-hour period prior to the time of sale established above, but no proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, Bellevue, Washington 98004, telephone: (206) 635-3545. Neither the City nor
Spri(Jgsted In.90rporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each bid shall be deemed to constitute a contract between the bidder and the
City to purchase the Bonds regardless of the manner of the bid submitted.
DETAilS OF THE BONDS
The Bonds will be dated December 1, 1994, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1. 1995. Interest will
be computed on the basis of a 360-day year of twelve 30-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 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 $ 95,000 2000 $105,000 2004 $105,000 2008 $100,000
1997 $110,000 2001 $105,000 2005 $105,000 2009 $100,000
1998 $105,000 2002 $105,000 2006 $105,000 2010 $100,000
1999 $105,000 2003 $105,000 2007 $100,000
e 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
Page 13
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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 special
assessments against benefited property. The proceeds will be used to finance various
improvements within the City.
TYPE OF PROPOSALS
Proposals shall be for not less than $1,529,850 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 $15,500,
payable to the order of the City. If a check is used, it must accompany each proposal. If a
Financial Surety Bond is used, it must be from an insurance company licensed to issue such a
bond in the State of Minnesota, and preapproved by the 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, (Hi) 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. .
g~"A 1 A
.
.
,
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.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSI? 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 60 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 November 7. 1994
BY ORDER OF THE CITY COUNCIL
/s/ Patrick Klaers
Administrator
Paoe 15