5.2. SR 05-13-1996**ITEM 5.2.**
:ty of
E
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM
Mayor & City Council
Lori Johnson, Assistant City
Administrator
May 13, 1996
Resolution Authorizing the Sale of and
Setting the Sale Date for $2,655,000 G.O.
Sewer Revenue Bonds and $500,000 G.O.
Improvement Bonds
The city is prepared to issue bonds for the Wastewater Treatment Plant
expansion and the Hillside Crossing II public improvements. Attached is a
copy of Springsted's Recommendations for the above-referenced issues. The
resolution will be distributed Monday.
The general obligation sewer revenue bonds will be paid from the net
revenues of the sewer fund. As you will recall, sewer rates were increased in
1994 for the years 1994, 1995, and 1996 in anticipation of this expansion
project. The city will need to monitor sewer rates and connection charges to
ensure that sufficient net revenues are available to meet the fund's debt
requirements. Please refer to Page 3 of the Recommendations for the details
of the bond issue. As discussed during the audit presentation, sewer funds
totaling $1,000,000 will be used to fund this project.
The second issue is for public improvements to be installed in the Hillside
Crossing II development. The developer has placed a letter of credit with the
city for these improvements and has prepaid $150,000 of assessments. The
project costs are approximately $596,000. Because the developer has
requested in writing that the first special assessment payment be delayed
until 1998, additional capitalized interest has been added to the bond issue.
This bond issue totals $500,000.
Action Requested
The City Council is asked to approve the resolution authorizing the issuance
of and setting the sale date of June 3 for $2,655,000 G.O. sewer revenue
bonds, series 1996A and $500,000 G.O. improvement bonds, series 1996B.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
Recommendations
For
City of Elk River, Minnesota
$2,655,000
General Obligation Sewer Revenue Bonds, Series 1996A
$500,000
General Obligation Improvement Bonds, Series 1996B
Presented to:
Mayor Hank Duitsman
Members, City Council
Mr. Patrick Klaers, Administrator
Ms. Lori Johnson, Finance Director
City of Elk River
13065 Orono Parkway
Elk River, MN 55330-0409
Study No.: E0894L2R2
SPRINGSTED Incorporated
May 8, 1996
SPRINGSTED
Public Finance Advisors
RECOMMENDATIONS
Re:
$2,655,000 General Obligation Sewer Revenue Bonds, Series 1996A
$500,000 General Obligation Improvement Bonds, Series 1996B
We recommend the following for the bonds:
1. Action Requested
2. Sale Date and Time
3. Authority for Each Bond Issue
4. Prepayment Provisions
5. Credit Rating Comments
6. Bank Qualification
To establish the date and time of receiving
bids and establish the terms and conditions
of the offering.
Monday, June 3, 1996 at 11:30 A.M. with
award by the City Council at 6:00 P.M. that
same day.
The bonds are being issued pursuant to
Minnesota Statutes, Chapter 475.
Additionally, the Series 1996A Bonds are
being issued under Minnesota Statutes,
Chapter 429 and the Series 1996B Bonds
are being issued under Minnesota Statutes,
Chapter 444.
The City may elect on February 1, 2006, and
on any day thereafter, to prepay the
Series 1996A Bonds due on or after
February 1, 2007 at a price of par plus
accrued interest. Due to the short maturity
schedule for the Series 1996B Bonds, the
Series 1996B Bonds will not be callable in
advance of their stated maturity dates.
The City is currently rate "Baal" by Moody's
Investors Service. These issues require a
rating application to assure continuation of
the rating.
The City does not expect to issue more than
$10,000,000 of tax-exempt obligations in
1996 and therefore these issues will be bank
qualified. This will mean lower interest rates
for the City than if the bonds were not bank
qualified.
City of Elk River, Minnesota
May 6, 1996
7. Arbitrage Rebate Requirements
8. Bona Fide Debt Service Fund
9. Economic Life
10. Federal Reimbursement Regulations
11. Continuing Disclosure
The bonds are subject to the federal
arbitrage requirements. However, the City
does not expect to issue more than
$5,000,000 of tax-exempt debt in 1996.
Therefore, the City will be exempt from
reporting and rebating arbitrage earnings to
the federal government as a small issuer.
Springsted provides arbitrage rebate
services under separate contract, copies of
which have been provided to your staff. A
summary of the arbitrage rules has been
provided to your staff for informational
purposes.
The City must maintain a bona fide debt
service fund for each of the issues or be
subject to yield restriction. See the
summary of arbitrage rules for an
explanation.
The average life of the bonds cannot exceed
120% of the economic life of the projects to
be financed. The economic life of the
wastewater treatment plant is 40 to 50
years, and the economic life of the street
improvements is 20 years. The bonds are
therefore within the economic life
requirements.
Federal reimbursement regulations require
the City to make a declaration, within 60
days of the actual payment, of its intent to
reimburse itself from expenses paid prior to
the receipt of bond proceeds. It is our
understanding the City has taken whatever
actions are necessary to comply with the
federal reimbursement regulations.
These issues are the City's first issues
subject to the new continuing disclosure
requirements. The new SEC rules require
the City to undertake an annual update of its
Official Statement information and report any
material events to the national repositories.
Springsted provides continuing disclosure
services under separate contract, copies of
which have been provided to your staff. ^
summary of the SEC's continuing disclosure
requirements has been provided to your staff
for informational purposes.
Page 2
City of Elk River, Minnesota
May 8, 1996
DISCUSSION
General Obligation Sewer Revenue Bonds, Series 1996A
The proceeds of the Series 1996A Bonds, along with a $1,000,000 cash contribution from the
City's Sewer Utility Fund, will be used to finance construction of a wastewater treatment plant.
Construction is expected to begin in spring 1996 and be completed by fall 1997. The principal
amount of $2,655,000 includes:
Construction Costs
Engineering
Contingency
$ 3,293,000
197,000
100,000
Subtotal
Less: City Cash Contribution
Plus: Costs of Issuance
Allowance for Discount Bidding
Less: Investment Earnings
$ 3,590,000
(1 ,ooo,ooo)
27,434
39,825
(2.259)
Total Series 1996A Bond Issue
$ 2.655.O00
The first interest payment is due February 1, 1997. Principal is due each February 1, 1997
through 2016 as shown on page 5 of these recommendations. The City will repay the Series
1996A Bonds from net revenues of the City's Sewer Utility.
General Obligation Improvement Bonds, Series 1996B
The proceeds of the Series 1996B Bonds will be used to finance the Hillside Crossing II Project,
including street and utility improvements within the City. The principal amount of $500,000
includes:
Project Costs
Less: Prepayments of Special Assessments*
$ 596,000
(150,000)
Subtotal $ 446,000
Plus: Capitalized Interest 39,500
Costs of Issuance 12,285
Allowance for Discount Bidding 6,000
Less: Investment Earnings (3,785)
Total Series 1996B Bond Issue
$ 5oo.oo0
* Represents Developer's prepayment for one parcel
Interest payments due through February 1, 1998 will be made from capitalized interest included
in the Series 1996B Bonds. Principal is due each February 1, 1999 through 2004 as shown on
page 6 of these recommendations. Assuming special assessments are collected as scheduled,
the Series 1996B Bonds will be repaid solely from special assessments and the City will not
need to make a tax levy for the repayment of the Series 1996B Bonds.
The projection of special assessment income is shown on page 7 of these recommendations.
Special assessments, totaling $465,000 of principal, are expected to filed on or before June 1,
1996. Assessments will be filed over a term of six years with equal annual payments of
Page 3
City of Elk River, Minnesota
May 8, 1996
principal with interest charged on the unpaid balance at a rate of approximately 1.5% over the
net interest rate on the Series 1996B Bonds.
Respectfully submitted,
SPRI NGSTED I~ncorporated
PJP
Provided to Staff:
a) Summary of Arbitrage Rules
b) Summary of Continuing Disclosure Requirements
c) Rebate and Continuing Disclosure Contracts
Page 4
City of Elk River, Minnesota
General Obligation Sewer Revenue Bonds
Series 1996A
Prepared May 8, 1996
By SPRINGSTED Incorporated
Dated: 7- 1-1996
Mature: 2- 1
First Interest: 2- 1-1997
Year of Year of
Revenue Mat. Principai Rates
(1) (2) (3) (4)
Total
Principal
Interest & Interest
(5) (6)
1996 1997 135,000 4.50%
1997 1998 80~000 4.60%
1998 1999 85,000 4.75%
1999 2000 90,000 4.90%
2000 2001 95,000 4.95%
2001 2002 95,000 5.05%
2002 2003 100,000 5.15%
2003 2004 110~000 5.20%
2004 2005 115~000 5.25%
2005 2006 120,000 5.35%
2006 2007 125~000 5.55%
2007 2008 130,000 5.60%
2008 2009 140,000 5.70%
2009 2010 150~000 5.80%
2010 2011 155,000 5.90%
2011 2012 165,000 5.95%
2012 2013 175~000 6.05%
2013 2014 185,000 6.05%
2014 2015 195,000 6.10%
2015 2016 210~000 6.15%
86,032 221,032
141,409 221,409
137,729 222,729
133,691 223,691
129,281 224,281
124,578 219,578
119,780 219,780
114,630 224,630
108,910 223,910
102,872 222,872
96~452 221,452
89,514 219,514
82,234 222,234
74~254 224~254
65,554 220,554
56,409 221,409
46~591 221~591
36,003 221,003
24,810 219,810
12~915 222~915
TOTALS: 2,655,000
1,783,648 4,438,648
Bond Years: 30,693.75
Avg. Maturity: 11.56
Avg. Annual Rate: 5.811%
T.I.C. Rate: 5.961%
Annual Interest:
Plus Discount:
Net Interest:
N.I.C. Rate:
1,783~648
39,825
1,823,473
5.941%
Interest rates are estimates; changes may cause significant
alterations of this schedule.
The actual underwriter's discount bid may also vary.
Page 5
City of Elk River, Minnesota
General Obligation Improvement Bonds
Series 1996B
Dated: 7- 1-1996
Mature: 2- 1
First Interest: 2- 1-1997
SCHEDULE nst
Total Capital- Net
Year of Year of Principal 1zed Levy
Levy Mat. Principal Rates Interest & Interest Interest Required
(1) (2) (3) (4) (5) (6) (7) (8)
1995 1997 0 0.00% 14,503 14,503 14,600 0
1996 1998 0 0.00% 24,862 24,862 24,900 0
1997 1999 125,000 4.75% 24,862 149,862 0 149,862
1998 2000 80,000 4.90~ 18,924 98,924 0 98,924
1999 2001 75~000 4.95% 15,004 90,004 0 90,004
2000 2002 75,000 5.05% 11,291 86,291 0 86,291
2001 2003 75,000 5.15% 7,503 82,503 0 82,503
2002 2004 70,000 5.20~ 3,640 73,640 0 73,640
TOTALS: 500,000 120,589 620~589 39,500 581,224
Prepared May 8, 1996
By SPRINGSTED Incorporated
Projected Total
105% Assessaent Net
of Total Incoae Requirement
(9) (10) (11)
Annual
Surplus
(12)
0 0 0 97
0 0 0 38
157,355 158~678 0 1,323
103,870 103,656 214 0
94,504 98,425 0 3,921
90,606 93,194 0 2,588
86,628 87,963 0 1,335
77,322 82,731 0 5,409
610,285 624,647 214
Bond Years: 2,396.67 Annual Interest: 120,589
Avg. Maturity: 4.79 Plus Discount: 6,000
Avg. Annual Rate: 5.032~ Net Interest: 126~589
T.I.C. Rate: 5.314% N.I.C. Rate: 5.282~
Interest rates are estlaates; changes say cause significant alterations of this schedule.
The actual unde~wrtter's discount bid may also vary.
City of Elk River,
General Obligation
Minnesota
Iaproveaent Bonds
PROJECTED ASSESSMENT INCOME
Prepared May 8, 1996
By SPRINGSTED Incorporated
Filing Collect
Year Year
1997 1998
1998 1999
1999 2000
2000 2001
2001 2002
2002 2003
TOTALS
Filing Date: 6/ 1/1996
Interest
Principal @ 6.750% Total
77,500 81,178a 158,678
77,500 26,156 103,656
77,500 20,925 98,425
77,500 15,694 93,194
77,500 10,463 87,963
77,500 5,231 82,731
465,000 159,647 624,647
a) Includes interest froa filing
date to 12/31/1998.
Page 7
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OFPROPOSAL
$2,655,000
CITY OF ELK RIVER, MINNESOTA
GENERAL OBLIGATION SEWER REVENUE BONDS, SERIES 1996A
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Monday, June 3, 1996, until 11:30 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 OFPROPOSALS
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
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner of the Proposal submitted.
DETAILS OF THE BONDS
The Bonds will be dated July 1, 1996, as the date of original issue, and will bear interest
payable on February I and August 1 of each year, commencing February 1, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Bonds will mature February 1 in the years and amounts as follows:
1997 $135,000 2002 $ 95,000 2007 $125,000 2012 $165,000
1998 $ 80,000 2003 $100,000 2008 $130,000 2013 $175,000
1999 $ 85,000 2004 $110,000 2009 $140,000 2014 $185,000
2000 $ 90,000 2005 $115,000 2010 $150,000 2015 $195,000
2001 $ 95,000 2006 $120,000 2011 $155,000 2016 $210,000
BOOK ENTRY SYSTEM
The Bonds will be issued by means of a book entry system with no physical distribution of
Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,
Page 8
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
New York, New York, which will act as securities depository of the Bonds. Individual purchases
of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single
maturity through book entries made on the books and records of DTC and its participants.
Principal and interest are payable by the registrar to DTC or its nominee as registered owner of
the Bonds. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants will be the responsibility of such participants and other nominees of beneficial
owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the
Bonds with DTC.
REGISTRAR
The City will name the registrar which shall be subject to applicable SEC regulations. The City
will pay for the services of the registrar.
OPTIONAL REDEMPTION
The City may elect on February 1, 2006, and on any day thereafter, to prepay Bonds due on or
after February 1, 2007. Redemption may be in whole or in part and if in part at the option of the
City and in such manner as the City shall determine. If less than all Bonds of a maturity are
called for redemption, the City will notify DTC of the particular amount of such maturity to be
prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to
be redeemed and each participant will then select by lot the beneficial ownership interests in
such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest.
SECURITY AND PURPOSE
The 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 City's sewer utility. The proceeds will be used for construction of a waste water
plant.
TYPE OF PROPOSALS
Proposals shall be for not less than $2,615,175 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 $26,550,
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.
Page 9
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.
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, 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.
CONTINUING DISCLOSURE
On the date of the actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking whereunder the City will covenant to provide, or cause to be
provided, annual financial information, including audited financial statements of the City, and
notices of certain material events, as specified in and required by SEC Rule 15c2-12(b)(5).
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.
Page 10
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 105 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 May 13, 1996
BY ORDER OF THE CITY COUNCIL
/si Patrick Klaers
Administrator
Page 11
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OFPROPOSAL
$500,000
CITY OF ELK RIVER, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 1996B
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Monday, June 3, 1996, until 11:30A.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
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders
are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner of the Proposal submitted.
DETAILS OF THE BONDS
The Bonds will be dated July 1, 1996, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing February 1, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Bonds will mature February 1 in the years and amounts as follows:
1999 $125,000 2001 $75,000 2003 $75,000
2000 $ 80,000 2002 $75,000 2004 $70,000
BOOK ENTRY SYSTEM
The Bonds will be issued by means of a book entry system with no physical distribution of
Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
New York, New York, which will act as securities depository of the Bonds. Individual purchases
of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single
Page 12
maturity through book entries made on the books and records of DTC and its participants.
Principal and interest are payable by the registrar to DTC or its nominee as registered owner of
the Bonds. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants will be the responsibility of such participants and other nominees of beneficial
owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the
Bonds with DTC.
REGISTRAR
The City will name the registrar which shall be subject to applicable SEC regulations.
will pay for the services of the registrar.
OPTIONAL REDEMPTION
The City
The Bonds will not be subject to payment in advance of their respective stated maturity dates.
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 for street improvements in
the City.
TYPE Of PROPOSALS
Proposals shall be for not less than $494,000 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 $5,000, 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 51100 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.
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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, 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.
CONTINUING DISCLOSURE
On the date of the actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking whereunder the City will covenant to provide, or cause to be
provided, annual financial information, including audited financial statements of the City, and
notices of certain material events, as specified in and required by SEC Rule 15c2-12(b)(5).
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 20 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 May 13, 1996
BY ORDER OF THE CITY COUNCIL
/si Patrick Klaers
Administrator
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