6.1. ERMU SR 12-11-2007F,.
~. -.~
xlver
Pre-Sale Report
G.O. Water Revenue Refunding Bonds, Series 2008A
December, 2007
I'rol:>oscd Issue: $3,045,000 G.O. Water Revenue Refunding Bonds, Series 2008A
Pm-pose: Provide for a current refunding of the $395,000 of remaining principal of the
$820,000 G.O. Water Revenue Bonds, Series 1998B and a crossover refunding
for the $3,590,000 G.O. Water Revenue Bonds, Series 2001A. The 2001A
Bonds are not callable until February I, 2010, but proceeds of the Bonds are to
be escrowed until the call date. Savings on the 2001A Bonds would begin in
2010 while the 1998B Bonds would be called in early 2008 and savings would
commence later that year.
't'erm/Call Fcatiu ~: We do not anticipate changing the original teen of the 2001A or the 1998B
Bonds. The first interest payment on the new Bonds will be August 1, 2008.
The principal payments will be February 1, 2009, and the final payment is
February 1, 2022. We propose a call (pre-payment) date of February 1, 2017,
which is in nine years.
Proposed Savings: The interest rates on the prior bonds average over 4.75%. We expect interest
rates today to be at or below 4%. The savings of the two issues combined is
expected to be over $120,000 in future value savings and over $90,000 in present
value savings after any fees are paid. State law requires the savings to be at least
3% of refunded principal. If interest rates increase prior to the sale, we will
recommend in delay in the sale at no cost to the City.
Funding Sources: The funding source will be revenues from the City's water utility system
operated by the Elk River Municipal Utilities. State law under Chapter 444
allows the City to pledge its general obligation to water revenue bonds (unlike
electric revenue bonds). This means no debt service reserve or other rate
covenants are necessary. Because the taxpayers are pledging to pay debt service
if revenues are inadequate, G.O. bonds carry the lowest possible interest rates.
Other Issues: The Bonds are expected to be rated by Moody's at an "Aa3" level utilizing the
City's debt rating rather than the Utilities revenue bond rating. They may be
considered for bond insurance up to a "Aaa" level if qualified by private
insurance companies and if the winning bidder chooses to purchase bond
insurance.
Because the City expects to issue more than $5,000,000 in tax-exempt
obligations in 2008, the Bonds will be subject to arbitrage rebate. The escrow on
the crossover refunding bonds will be yield restricted and should not be a
concern for the City.
Because the City expects to issue less than $10,000,000 in tax-exempt
obligations in 2008, the Bonds will be bank qualified. This means the Bonds will
achieve a slightly lower interest rate.
Schedule:
Pre-Sale Report and Approval of
Bonds by Utility Commission:
Pre-Sale Report Review by City
Council:
Distribute Official Statement
Conference call with Moody's
Bond Safe and City Council
Resolution approving Bonds
December 11, 2007
December 17, 2007
January 11, 2008
Week of January 14, 2008
January 22, 2008
Estimated Closing Date: Week of February 11, 2008
Attachment: Resolution authorizing sale
Preliminary debt service schedules and sources and uses
Ehlers Contacts:
Financial Advisors: Mark Ruff (651) 697-8505
Sid Inman (651) 697-8507
Bond Analysts: Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Bond Sale Coordinator: Connie Kuck (651) 697-8527
The Official Statement for this financing will be mailed to the Council Members at their home address for review
prior to the sale date.
FREERS
8 ASSOCIATES INC
City of Elk River MN
Proposed Crossover Refunding of
$3,590,000 G.O. Water Revenue Bonds, Series 2001A &
Current Refunding of $820,000 G.O. Water Revenue Bonds, Series 1998B
Table of Contents
or,
ISSUE SUMMARY
Prior Original Debt Service
Debt Service Schedule
Total Issue Sources And Uses
Debt Service Comparison
City of Elk_River, MN _ ___
$3,590,000 G.O. Water Revenue Bonds, Series 2001A
Prior Original Debt Service
Date Principal Coupon Interest Total P+I Fiscal Total
08/01/2008 - - 60,397.50 60,397.50 -
02/Ol/2009 - - 60,397.50 60,397.50 120,795.00
08/01/2009 - - 60,397.50 60,397.50 -
02/Ol/2010 - - 60,397.50 60,397.50 120,795.00
08/01/2010 - - 60,397.50 60,397.50 -
02/O1/2011 160.000.00 4.100% 60,397.50 220,397.50 280,795.00
08/01/2011 - - 57,117.50 57,117.50 -
02/O1/2012 170,000.00 4.250% 57,717.50 227,117.50 284,235.00
08/01/2012 - - 53,808.00 53,808.00 -
02/Ol/2013 180,000.00 4.350% 53,505.00 233,505.00 287,010.00
08/01/2013 - - 49,590.00 49,590.00 -
02/Ol/2014 185,000.00 4.600% 49,590.00 234,590.00 284,180.00
08/OL/2014 - - 45,335.00 45,335.00 -
02/01/2015 195,000.00 4.600% 45,335.00 240,335.00 285,670.00
08/01/2015 - - 40,850.00 40,850.00 -
02/O1/2016 205,000.00 4.750% 40,850.00 245,850.00 286,700.00
08/01/2016 - - 35,981.25 35,981.25 -
02/O1/2017 215,000.00 4.750% 35,981.25 250,981.25 286,962.50
08/01/2017 - - 30,875.00 30,875.00 -
02/O1/2018 230,000.00 4.850% 30,875.00 260,875.00
_. 291,750.00
_.. .
08/01/2018 - - 25,297.50 25,297.50 -
02/Ol/2019 240,000.00 4.850% 25,297.50 265,297.50 290,595.00
08/01/20!9 - - 19,477.50 19,477.50 -
02/O1/2020 250,000.00 4.900% 19,477.50 269,477.50 288,955.00
08/01/2020 - - 13,352.50 13,352.50 -
02/01/2021 265,000.00 4.900% 13,352.50 278,352.50 291,705.00
08/01 /2021 - - 6,860.00 6,860.00 -
02/O1/2022 280,000.00 4.900% 6,860.00 286,860.00 293,720.00
Total $2,575,000.00 - 51,118,867.50 $3,693,867.50 -
Yield Statistics
Average Life 9.093 Years
Weighted Average Maturity (Par Basis) 9.093 Years
Average Coupon
_. 4.7784220%
Refunding Bond Information
Refunding Dated Date 2/0]/2008
Refunding Delivery Date 2/0]/2008
Ser 01A $3.59M GO Wtr Rev ~ SINGLE PURPOSE ~ [ t/ 1/2007 ~ 11:51 AM
City of Elk River, MN
$820,000 G.O. Water Revenue Bonds, Series 1998B
City of Elk River, MN _ _ _
Proposed Crossover Refunding of
$3,590,000 G.O. Water Revenue Bonds, Series 2001 A &
Current Refunding of $820,000 G.O. Water Revenue Bonds, Series 1998B
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
02/0l/2008 - - _ _
08/01/2008 - - 55,725.50 55,725.50 -
02/O1/2009 60,000.00 3.400% 55,725.50 115,725.50 171,45].00
08/01/2009 - - 54,705.50 54,705.50 -
02/O1/2010 65,000.00 3.400% 54,705.50 119,705.50 174,411.00
08/01/2010 - - 53,600.50 53,600.50 -
02/Ol/2011 245,000.00 3.400% 53,600.50 298,600.50 352,201.00
08/01/2011 - - 49,435.50 49,435.50 -
02/01/2012 255,000.00 3.450% 49,435.50 304,435.50 353,871.00
08/01/2012 - - 45,036.75 45,036.75 -
02/01/2013 265,000.00 3.500% 45,036.75 310,036.75 355,073.50
08/01/2013 - - 40,399.25 40,399.25 -
02/Ol/2014 270,000.00 3.550% 40,399.25 310,399.25 350,798.50
08/01/2014 - - 35,606.75 35,606.75 -
02/O1/20I5 205,000.00 3.600% 35,606.75 240,606.75 276,213.50
08/01/2015 - - 31,916.75 31,916.75 -
02/O1-/2016 215,000.00 3.650% 31,916.75 246,916.75 278,833.50
08!01/2016 - - 27,993.00 27,993.00 -
02/Ol/2017 220,000.00 3.700% 27,993.00 247,993.00 275,986.00
08/01/2017 - - 23,923.00 23,923.00 -
02/01/2018 230,000.00 3.750% 23,923.00 253,923.00 277,846.00
08/01/2018 - - 19,610.50 19,610.50 -
02/01/2019 240,000.00 3.800% 19,610.50 259,610.50 279,221.00
08/01/2019 - - 15,050.50 15,050.50 -
02/O1/2020 250,000.00 3.850% 15,050.50 265,050.50 280,101.00
08/01/2020 - - 10,238.00 10,238.00 -
02/01/2021 260,000.00 3.880% 10,238.00 270,238.00 280,476.00
08/01/2021 - - 5,194.00 5,194.00 -
02/O1/2022 265,000.00 3.920% 5,194.00 270,194.00 275,388.00
Total $3,045,000.00 - 5936,871.00 $3,981,871.00 -
Yield Statistics
Bond Year Dollars
Average Life
Average Coupon
Net Interest Cost (NIC)
True Interest Cost (TIC)
Bond Yield for Arbitrage Purposes
All Inclusive Cost (AIC)
$25,055.00
8.228 Years
3.7392576%
_3.8850968%
_ ... .
3.9066732%
3.7302036%
4.0784896%
IRS Form 8038
Net Interest Cost 3.7392576%
Weighted Average Maturity 8228 Years
08 xover of Ser 01 A 8 cur ~ Issue Summary ~ 11/ 112007 ~ 11:51 AM
Issue Sources And
Sources Of Funds
Par Amount of Bonds $2,645,000.00 $400,000.00 $3,045,000.00
Proposed Crossover Refunding of
$3,590,000 G.O.
Current Refunding of $820,000 G.O. Water Revenue Bonds, Series
Uses Of Funds
Total Underwriter's Discount (L200%) 31,740.00 4,800.00 36,540.00
Costs of Issuance 30,402.30 4,597.70 35,000.00
Deposit to Current Refunding Fund 2,578,078.12 395,000.00 2,973,078.12
Rounding Amount 4,779.58 (4,397.70) 381.88
Total Uses $2,645,000.00 $400,000.00 $3,045,000.00
City of E!k River, MN _
Proposed Crossover Refunding of
$3,590,000 G.O. Water Revenue Bonds, Series 2001A &
Current Refunding of $820,000 G.O. Water Revenue Bonds, Series 1998B
Debt Service Comparison
Date Total P+I PCF Existing D/S Net New D/S Old Net D/S Savings
02/01/2008 - - - (381.88) - 381.88
02/01/2009 171,451.00 (97,641.00) 120,795.00 194,605.00 199,610.00 5,005.00
02/01/2010 174,4] 1.00 (2,672,641.00) 2,695,795.00 197,565.00 196,910.00 (655.00)
02/01/2011 352,201.00 - - 352,201.00 359,150.00 6,949.00
02/01/2012 353,871.00 - - 353,871.00 359,535.00 5,664.00
02/01/2013 355,073.50 - - 355,073.50 364,190.00 9,116.50
02/01/2014 350,798.50 - - 350,798.50 362,930.00 12,131.50
02/01/2015 276,213.50 - - 276,213.50 285,670.00 9,456.50
02/01/2016 278,833.50 - - 278,833.50 286,700.00 7,866.50
02/01/2017 275,986.00 - - 275,986.00 286,962.50 10,976.50
02/01/2018 277,846.00 - - 277,846.00 291,750.00 13,904.00
02/01/2019 279,221.00 - - 279,221.00 290,595.00 11,374.00
02/01/2020 280,101.00 - - 280,101.00 288,955.00 8,854.00
02/01/2021 280,476.00 - - 280,476.00 291,705.00 11,229.00
02/01/2022 275,388.00 - - 275,388.00 293,720.00 18,332.00
Total $3,981,871.00 (2,770,282.00) 52,816,590.00 $4,027,797.12 $4,158,382.50 $130,585.38
PV Analysis Summary (Net to Net)
Gross PV Debt Service Savings ..................... 95,883.57
Net PV Cashflow Savings @ 3.730%(Bond Yield)..... 95,883.57
Contingency or Rounding Amount .................... 381.88
Net Present Value Benefit $96,265.45
Net PV Benefit / $2,954,378.20 PV Refunded Debt Service 3,25g%
Net PV Benefit / $2,575,000 Refunded Principal... 3.738%
Net PV Benefit / $3,045,000 Refunding Principal.. 3.161%
Refunding Bond Information
Refunding Dated Date 2/01/2008
Refunding Delivery Date 2/01/2008
08 xover of Ser 01A 8 cur ~ Issue Summary ~ 111 1/2007 ~ 11:51 AM - -
City of Elk River, MN
Proposed Crossover Refunding of
$3,590,000 G.O. Water Revenue Bonds, Series 2001A &
Current Refunding of $820,000 G.O. Water Revenue Bonds, Series 1998B
~~
Current Refunding Escrow
Date Principal Rate Interest Receipts Disbursements Cash Balance
02/01/2008 - - - 395,770.12 395,000.00 770.12
08/01/2008 - - 48,050.97 48,050.97 48,820.50 0.59
02/01/2009 1,539.00 - 48,050.97 49,589.97 48,820.50 770.06
08/01/2009 - - 48,050.97 48,050.97 48,820.50 0.53
02/01/2010 2,575,769.00 3.731% 48,050.97 2,623,819.97 2,623,820.50 -
Total $2,577,308.00 - $192,203.88 $3,165,282.00 $3,165,282.00 -
Investment Parameters
Investment Model [PV, GIC, or Securities]
Default investment yield target
Securities
Unrestricted
Cash Deposit
Cost of Investments Purchased with Bond Proceeds
Total Cost of Investments
Target Cost of Investments at bond yield
Actual positive or (negative) arbitrage
Yield to Receipt
Yield for Arbitrage Purposes
State and Local Government Series (SLGS) rates for
395,770.12
2,577,308.00
$2,973,078.12
$2,973,033.75
(44.37)
3.7298651%
3.7302036%
10/30/2007
08 xovar of Ser 01A B cur ~ Issue Summary 111/ 1/2007 ~ 11:51 AM
City of Elk River, MN
Proposed Crossover Refunding of
$3,590,000 G.O. Water Revenue Bonds, Series 2001A
Debt Service Comparison
Date Total P+I PCF Existing DIS Net New D/S Old Net D/S Savings
02/01/2008 - - - (4,779.58) - 4,779.58
02/01/2009 97,641.00 (97,641.00) 120,795.00 ]20,795.00 120,795.00 -
02/O1/2010 97,641.00 (2,672,641.00) 2,695,795.00 120,795.00 120,795.00 -
02/Ol/2011 277,641.00 - - 277,641.00 280,795.00 3,154.00
02/01/2012 276,521.00 - - 276,521.00 284,235.00 7,714.00
02/01/2013 280,138.50 - - 280,138.50 287,010.00 6,871.50
02/01/2014 278,313.50 - - 278,313.50 284,]80.00 5,866.50
02/01/2015 276,213.50 - - 276,213.50 285,670.00 9,456.50
02/01/2016 278,833.50 - - 278,833.50 286,700.00 7,866.50
02/01/2017 275,986.00 - - 275,986.00 286,962.50 10,976.50
02/01/2018 277,846.00 - - 277,846.00 291,750.00 13,904.00
02/01/2019 279,221.00 - - 279,221.00 290,595.00 11,374.00
02/01/2020 280,101.00 - - 280,]01.00 288,955.00 8,854.00
02/01/2021 280,476.00 - - 280,476.00 291,705.00 11,229.00
02!01/2022 275,388.00 - - 275,388.00 293,720.00 18,332.00
Total $3,531,961.00 (2,770,282.00) $2,816,590.00 $3,573,489.42 $3,693,867.50 $120,378.08
PV Analysis Summary (Net to Net)
Gross PV Debt Service Savings ..................... 82,989.98
Net PV Cashflow Savings @ 3.730°/ (Bond Yield)..... 82,989.98
Contingency or Rounding Amount .................... 4,779.58
Net Present Value Benefit $87,769.56
Net PV Benefit / $2,544,815.22 PV Refunded Debt Service 3.449%
Net PV Benefit / $2,575,000 Refunded Principal... 3.409%
Net PV Benefit / $2,645,000 Refunding Principal.. 3.318%
Refunding Bond Information
Refunding Dated Date 2/01/2008
Refunding Delivery Date 2/01/2008
08 xover of Ser OtA 8 cur I Ser OtA E3.59M XOVEF 1 11/ 1/2007 1 11:51 AM
City of Elk River, MN ____ ____ _
Proposed Current Refunding of
$820,000 G.O. Water Revenue Bonds , Series 1998B
~ Debt Service Comparison
Net New
Date Total P+I D/S Old Net D/S Savings
02/01/2008 - 4,397.70 - 4 397.70
( )
02/01 /2009 73,810.00 73,810.00 78,815.00 5,005.00
02/01/2010 76,770.00
' 76,770.00 76,115.00 (655.00)
02/01/2011 74,560.00 74,560.00 78,3SS.00 3,795.00
02!01 /2012 77,350.00 77,350.00 75,300.00 (2,OS0.00)
~ 02/01/2013 74,935.00 74,935.00 77,180.00 2,245.00
02/01/2014 72,485.00 72,485.00 78,750.00 6,265.00
Total $449,910.00 $454,307.70 $464,515.00 $] 0,207.30
PV Analysis Summary (Net to Net)
~ Gross PV Debt Service Savings ..................... 12,893.58
Net PV Cashflow Savings @ 3.730%(Bond Yield)..... 12,893.58
Contingency or Rounding Amount .................._ (4,397.70)
Net Present Value Benefit $8,495.88
Net PV Benefit / $409,562.98 PV Refunded Debt Service 2.074%
Net PV Benefit / $395,000 Refunded Principal.. 2.15 ]
Net PV Benefit / $400,000 Refunding Principal.. 2.124%
Refunding Bond Information
Refunding Dated Dale 2/01/2008
Refunding Delivery Date _ 2/01/2008
08 xover of Ser 01A 8 cur ~ Ser 980 $820K CURR ~ 11/ 1/2007 ~ 11:51 AM
EXTRACT OF MINUTES OF A MEETING OF THE
PUBLIC UTILITIES COMMISSION
OF THE CITY OF ELK RIVER, MINNESOTA
HELD: December 11, 2007
Pursuant to due call and notice thereof, a regular or special meeting of the Public Utilities
Commission of the City of Elk River, Minnesota, was duly held at the office of the Public
Utilities Commission in the City of Elk River, Minnesota on December 11, 2007, at
o'clock .M.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION CONCURRING IN THE ACTION OF THE CITY COUNCIL OF THE CITY
OF ELK RIVER, MINNESOTA, IN PROVIDING FOR THE SALE OF $3,590,000 GENERAL
OBLIGATION WATER REVENUE REFUNDING BONDS, SERIES 2008A
BE IT RESOLVED by the Board of Commissioners of the Public Utilities Commission
of the City of Elk River, Minnesota (the "Commission"), as follows:
Section 1. Recitals. The City of Elk River, Minnesota (the "City") owns and operates
a municipal water system (the "System") which is under the jurisdiction of the Public Utilities
Commission of the City of Elk River, Minnesota (the "Commission"). On the date hereof, the
City Council adopted a resolution providing for the sale of $3,590,000 General Obligation Water
Revenue Refunding Bonds, Series 2008A (the "Bonds"). The City Council will, at a later date,
adopt another resolution which will provide for the issuance of the Bonds. Proceeds of the
Bonds will be used, pursuant to a current refunding, to refund $395,000 aggregate principal
amount of the City's General Obligation Water Revenue Bonds, Series 1998B, dated December
1, 1998, and, pursuant to a crossover refunding, to refund $3,590,000 aggregate principal amount
of the City's General Obligation Water Revenue Bonds, Series 2001A, dated October 1, 2001
(together, the "Refunded Bonds"). Proceeds of the Refunded Bonds were used to finance
improvements to the System.
Section 2. Refunding_Purpose. The refunding of the Refunded Bonds, is consistent
with covenants made with the holders thereof, and is necessary and desirable for the reduction of
debt service cost to the City and thus to the Commission. Proceeds of the Bonds shall be
expended on costs relating to the refunding of the Refunded Bonds and shall not be expended on
or devoted to any other uses.
Section 3. System Revenues Pledged. The Commission hereby acknowledges that
the Refunded Bonds are and that the Bonds will be payable from the net revenues of the System.
2114205x1
Section 4. Declaration. The Board hereby finds, determines and declares that the
issuance of the Bonds is necessary and in the best interests of the Commission and concurs in the
resolutions of the City Council providing for the issuance and sale of the Bonds. The
Commission hereby joins in and adopts said resolutions, including all the covenants and
agreements therein contained, with the same force and effect as if said resolutions had been
adopted by the Board.
thereof:
The motion for the adoption of the foregoing resolution was seconded by member
and upon a vote being taken thereon, the following voted in favor
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
2iia2os~~ 2
STATE OF MINNESOTA
COUNTY OF SHERBURNE
PUBLIC UTILITIES COMMISSION
OF THE CITY OF ELK RIVER, MINNESOTA
I, the undersigned, being the duly qualified and acting Secretary of the Public Utilities
Commission of the City of Elk River, Minnesota, DO HEREBY CERTIFY that I have carefully
compared the attached and foregoing extract of minutes of a meeting of the Board of
Commissioners, held on the date therein indicated, with the original thereof on file and of record
in my office and that the same~is a full, true and complete transcript insofar as the same relates to
Concurring in the Action of the City Council of the City of Elk River, Minnesota, in Providing
for the Sale of $3,590,000 General Obligation Water Revenue Refunding Bonds, Series 2008A.
Dated December I I, 2007.
Secretary
Public Utilities Commission
of the City of Elk River, Minnesota
z~iazos~~