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HomeMy WebLinkAboutItem 06.ds s June 14, 2013 Item No. RESOLUTION AUTHORIZING ISSUANCE AND SALE OF $4,800,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A Proposed Action Move to a rove the Resolution Authorizing Issuance and Sale of $4,800,000 General Obligation Improvement Bonds Series 2013A. Passage of this motion will result in the financing of Improvement Project 13 -02, which is the reconstruction of streets. Overview The City Council, at its May 6, 2013 meeting approved the special assessments for the ,2013 street reconstruction project. Contracts -for the improvements were approved by the City-:Council: at the May 20 meeting. The proposed bond issue will finance the project construction costs. The debt will. be repaid with a combination of special assessments and property tax levies. Approximately :40 '0 . - of the project is financed with .special assessments with the remaining 60% of improvement = costs financed with property tax levies. The special assessments will be repaid over a 20 year period; the property tax portion of the debt will be amortized over a 10 year period. The bid opening for the bonds is at 10:00 a.m. on Monday July 15; results of the bid opening and recommendations will be presented to the City Council at its regular meeting that same night. Primary Issues to Consider • Call provisions. Bonds maturing 2/1/2024 and thereafter are callable 2/1/2023 or thereafter. Sunnorting Information • Springsted Recommendations for Issuance of Bonds Dennis a er, Financ rector Financial Impact: See attached Budgeted: Y Source: Taxes and Special Assessments Related Documents (CIP, ERP, etc.): Notes: CITY OF LAKEVILLE RESOLUTION Date: June 17, 2013 Resolution No. RESOLUTION AUTHORIZING ISSUANCE AND SALE OF $4,800,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota (the City), as follows: SECTION 1. PURPOSE It is hereby determined to be in the best interests of the City to issue its General Obligation Improvement Bonds, Series 2013A, in the aggregate principal amount of $4,800,000 (the Bonds), pursuant to Minnesota Statutes, Chapters 429 and 475, twf nance various improvement projects in the City. SECTION 2. TERMS OF PROPOSAL Springsted Incorporated, financial consultant to: the 'City, has presented to this Council a form of Terms of Proposal for the Bonds which is attached hereto and hereby approved and shall be placed on file by the Administrator. Each and all 'of the provisions of the Terms of Proposal are hereby adopted as the terms and conditions of the Bonds' and of the sale thereof. Springsted Incorporated is hereby authorized, pursuant to- Minnesota Statutes, Section 475.60, Subdivision 2, paragraph (9), to solicit proposals for the Bonds.on behalf of the City on a competitive basis without requirement of published notice. SECTION 3. SALE MEETING This Council shall meet at the time and place shown in the Terms of Proposal, for the purpose of considering proposals for the purchase of the Bonds and of taking such action thereon as may be in the best interests of the City. APPROVED AND ADOPTED this 17ffi day of June, 2013. CITY OF LAKEVILLE, Matt Little, Mayor ATTEST: Charlene Friedges, City Clerk City of Lakeville, Minnesota Recommendations for Issuance of Bonds $4,800,000 General Obligation Improvement Bonds, Series 2013A The City Council has under consideration the issuance of bonds to finance infrastructure improvement projects in various areas of the City. This document provides information relative to the proposed issuance. KEY EVENTS: The following summary schedule includes the timing of some of the key events that will occur relative to the bond issuance. June 17, 2013 City Council sets sale date and terms Week of July 8, 2013 Rating conference is conducted and receipt of rating July 15, 2013,10:30 AM Competitive bids are received July 15, 2013, 7:00 PM City Council considers award of Bonds Late August, 2013 (est.) Proceeds are received RATING: An application will be made to Moody's Investors Service for a rating on the Bonds. The City's general obligation debt is currently rated 'Aa1' by Moody's. THE MARKET: Performance of the tax - exempt market is often measured by the Bond Buyer's Index ( "1361 ") which measures the yield of high grade municipal bonds in the 20th year for general obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the BBI 25 Bond Index). The following chart illustrates these two indices over the past five years. BBI 25-bond (Revenue) and 20 -band (G.O.) Rates for 5 Years Ending 61612013 g$ 15% _ 5 -0% 5.5% a 5.0% •�+� 4.5% 4.0% 3.5 CF O O - ' s O"'O � h`+ �,,� �`i � r_m_ 6Bi 25 Bond --150 21) eared tatss prepamed Dy SX01,gs haafpo' 'a:ed A h _.. S�v , A NO a. M *,� YY POST ISSUANCE The issuance of these bonds will result in post- issuance compliance responsibilities. The COMPLIANCE: responsibilities are in two primary areas: i) compliance with federal arbitrage requirements and ii} compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as your issue has been structured. Post - issuance compliance responsibilities for your tax- exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. The arbitrage rules provide an exception from rebate provisions for gross proceeds that are spent within an 18 -month period in accordance with certain spending criteria. The City expects to meet the 18 -month spending exception and gross proceeds that meet the test will qualify for an exception to rebate. Yield restriction provisions will apply to the debt service fund and any project proceeds unspent after three years under certain conditions and the funds should be monitored throughout the life of the Bonds. Secondary disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. Springsted currently provides arbitrage and continuing disclosure compliance services to the City under separate contracts. Contract amendments adding this issue will be provided to city staff. SUPPLEMENTAL Supplementary information will be available to staff including detailed terms and conditions INFORMATION AND of sale, comprehensive structuring schedules and information to assist in meeting post - BOND RECORD: issuance compliance responsibilities. Upon completion of the financing, a bond record will be provided that contains pertinent documents and final debt service calculations for the transaction. PURPOSE: The proceeds of the Bonds will be used to finance street and storm sewer improvements at Valley Park, 204th Street and Clay's Acres. AUTHORITY: The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. SECURITY AND The Bonds will be general obligations of the City, secured by its full faith and credit and SOURCE OF taxing power. The Bonds will be repaid from a combination of ad valorem property taxes PAYMENT: and special assessments against benefited properties. Assessments in the principal amount of $2,090,000 will be spread over a term of 20 years with equal annual installments of principal with interest charged on the unpaid balance at a rate of 3.26%. Assessments are expected to be filed on or about November 1, 2013 for first collection in 2014. Interest on the assessments will commence as of January 1, 2014, The City will need to levy for a portion of debt service. The City will make its first levy in 2013 for collection in 2014. Each year's collection of assessments and taxes will be used to pay the interest to come due on August 1 and the principal and interest due the following February 1. Springsted Paget STRUCTURING At the direction of the City, the Bonds were structured by repayment source, with a portion SUMMARY: to be paid by tax levies and another portion to be paid primarily by special assessments. The tax levy portion has been amortized over a term of 10 years with level annual debt service payments. The assessed portion was amortized over a term of 20 years with principal structured around the projected assessment revenue to provide for a level annual levy requirement. SCHEDULES Schedules attached include a sources and uses of funds, estimated assessment income ATTACHED: and estimated debt service requirements, given the current interest environment. RISKSISPECIAL The outcome of this financing will rely on the market conditions at the time of the sale. Any CONSIDERATIONS: projections included herein are estimates based on current market conditions. SALE TERMS AND Variability of Issue Size A specific provision in the sale terms permits modifications to the MARKETING: issue size and/or maturity structure to customize the issue once the price and interest rates are set on the day of sale. Prepayment Provisions: Bonds maturing on or after February 1, 2023 may be prepaid at a price of par plus accrued interest on or after February 1, 2022. Bank Qualification: The City does not expect to issue more than $10 million in tax - exempt obligations that count against the $10 million limit for this calendar year; therefore, the Bonds are designated as bank qualified. Springstld Page $4,800,000 City of Lakeville, Minnesota General Obligation Improvement Bonds Series 2013A Total Issue Sources And Uses Dated 08/15/2013 1 Delivered 08/15/2013 Assessea Portion Sources OF Funds 3,760,970.00 Par Amount of Bonds. ................................................. $2.090,000.00 Total Sources ............................ ............................... $2,090,000.00 Uses Of Funds 57,600.00 Primary Purpose Fund .................. ............................... 1,633,798.00 Engineering .................................. ............................... 255.435.00 Other Project Costs ...................... ............................... 153,346.00 Total Underwriter's Discount (1.200°0 ..................... 25,080.00 Costs of Iss uance ........................ ............................... 21.444.27 Rounding Amount ........................ ............................... 896.73 Total Uses .................................. ............................... $2,090,000.00 20BA 00hp-- -tBond I L.... 3--y 161512 013 1 3:33 Pfd I ax Levy Issue Portion Summary $2,710,000.00 $4,800,000.00 $2,710,000.00 $4,800,000.00 2,127,172.00 3,760,970.00 332,571.00 588,006.00 188,769.00 342,115.00 32,520.00 57,600.00 27,805.73 49,250.00 1,162.27 2,059.00 $2,710,000.00 $4,800,000.00 Springsted Page 4 $4,800,000 City of Lakeville, Minnesota General Obligation Improvement Bonds Series 2013A Aggregate Debt Service DATE 2013A GO Improvement Bonds Assessed Portion 2013A GO Improvement Bonds Tax Levy Portion TOTAL 0210112015 165,895.30 304,470.80 470,366.10 02101/2016 183,094.00 303,044.50 466,138.50 02101/2017 162,369.50 301,406.50 463,776.00 02/01/2018 156,127.50 303,598.50 459,726.00 02/01/2019 154,686.50 305,127.00 459,813.50 02/01/2020 152,959.50 300,888.00 453,847.50 02/01/2021 145,957.50 300,974.00 446,931.50 02/01/2022 143,784.00 305,281.50 449,065.50 02/01/2023 141,453.00 303,954.50 445,407.50 02/01/2024 138,996.00 302,168.50 441,164.50 02/01/2025 136,444.50 136,444.50 02101!2026 133,777.50 133,777.50 02/01/2027 125,995.00 - 125,995.00 02/01/2028 123,155.00 123,155.00 02/01/2029 120,165.00 120,165.00 02/01/2030 117,035.00 117,035.00 02/01/2031 113,815.00 113,815.00 02/01/2032 110,525.00 = 110,525.00 02/01/2033 107,125.00 - 107,125.00 02/01/2034 108,675.00 108,675.00 Total $2,722,034.80 $3,030,913.80 $5,752,948.60 Par Amounts Of Selected Issues 2013AGO lrrp- Assessed fbrtion ....................................................................................... ............................... 2,090,000.00 2013A GO hp-Tax Levy Fbrt ion .... ............................... 2,710,000.00 TOTAL................................................................................................................................ ............................... 4,800,000.00 Aggregate 1 61512073 1333 PM j k Page 5 $4,800,000 City of Lakeville, Minnesota General Obligation Improvement Bonds Series 2013A NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I Net New D1S 105% of Total Assessment Income Levy Required 02101/2014 AverageLif e ................................................................................................................................................. ............................... - AverageCoupon ........................................................................................................................................... ............................... 2.4338888% NetInterest Cost ( NIC) ................................................................................................................................... ............................... 2.5810027% TrueInterest Cost ( TIC) ................................................................................................................................. ............................... 2.5558060% 02/01/2015 335,000.00 0.450% 135,366.10 470,366.10 470,366.10 493,884.41 172,425.00 321,459.41 02/01/2016 375,000.00 0.630% 91,138.50 466,138.50 466,138.50 489,445.43 169,028.76 320,416.67 02/01/2017 375,000.00 1.080% 88,776.00 463,776.00 463,776.00 486,964.80 165,632.50 321,332.30 02/01/2018 375,000.00 1.310% 84,726.00 459,726.00 459,726.00 482,712.30 162,236.26 320,476.04 02/01/2019 380,000.00 1.570% 79,813.50 459,843.50 459,813.50 482,804.18 158,840.00 323,964.18 02/01/2020 380,000.00 1.820% 73,847.50 453,847.50 453,847.50 476,539.88 155,443.76 321,096.12 02/01/2021 380,000.00 2. 070% 66, 931.50 446 ,931.50 446,931.50 469,278.08 152,047.50 317,230.58 02/01/2022 390,000.00 2.220% 59,065.50 449,065.50 449,065.50 471,518.78 148,651.26 322,867.52 02101!2023 395,000.00 2.340% 50,407.50 445,407.50 445,407.50 467,677.88 145,255.00 322,422.88 02/01/2024 400,000.00 2.430% 41,164.50 441,164.50 441,164.50 463,222.73 141,858.76 321,363.97 02/01/2025 105,000.00 2.540% 31,444.50 136,444.50 136,444.50 143,266.73 138,462.50 4,804.23 02/01/2026 105,000.00 2.650% 28,777.50 133,777.50 133,777.50 140,466.38 135,066.26 5,400.12 02101!2027 100,000.00 2.840% 25,995.00 125,995.00 125,995.00 132,294.75 131,670.00 624.75 02/01/2028 100,000.00 2.990% 23,155.00 123,155.00 123,155.00 129,312.75 128,273.76 1,038.99 02/01/2029 100,000.00 3.130% 20,165.00 120,165.00 120,165.00 126,173.25 124,877.50 1,295.75 02/01/2030 100,000.00 3.220% 17,035.00 117,035.00 117,035.00 122,886.75 121,481.26 1,405.49 02/01/2031 100,000.00 3.290% 13,815.00 113,815.00 113,815.00 119,505.75 118,085.00 1,420.75 02/01/2032 100,000.00 3.400% 10,525.00 110,525.00 110,525.00 116,051.25 114,688.76 1,362.49 02/01/2033 100,000.00 3.450% 7,125.00 107,125.00 107,125.00 112,481.25 111,292.50 1,188.75 02/01/2034 105,000.00 3.500% 3,676.00 108,675.00 108,675.00 114,108.75 107,896.26 6,212.49 Total $4,800,000.00 - $952,948.60 $5,752,948.60 $5,752,948.60 $6,040,596.03 $2,803,212.60 $3,237,383.43 Dated............................................................................................................................................................. ............................... 8/15/2013 DeliveryDate. ....................... ................................................................................................................................................... 8/1512013 FirstCoupon Date .................................................................................................................... ............................... ...................... 810 1 1201 4 Yield Statistics BondYear Dollars ......................................................................................................................................... ............................... $39,153.33 AverageLif e ................................................................................................................................................. ............................... 8.157 Years AverageCoupon ........................................................................................................................................... ............................... 2.4338888% NetInterest Cost ( NIC) ................................................................................................................................... ............................... 2.5810027% TrueInterest Cost ( TIC) ................................................................................................................................. ............................... 2.5558060% BondYield for Arbitrage Purposes... ........................................................................................................................................... 2.3891961% AllInclusive Cost ( AIC) .................................................................................................................................. ............................... 2.7006539% IRS Form 8038 NetInterest Cost ............................................................................................................................................ ............................... 2.4338888% WeightedAverage P& turity ........................................................................................................................... ............................... 8.157 Years 20BA GO hnium —en: Bond Ilssue Summary l 613120B 3.33 PM Page 6 $2,090,000 City of Lakeville, Minnesota General Obligation Improvement Bonds, Series 2013A 2013 Projects ASSESSMENT INCOME Data Principal Coupon Interest Total P +I 12/31/2014 104,500.00 3.250% 67,925.00 172,425.00 12131!2015 104,500.00 3.250% 64,528.76 169,028.76 12139!2016 104,500.00 3.250% 61,132.50 165,632.50 12/39/2017 104,500.00 3.250% 57,736.26 162,236.26 12/31/2018 104,500.00 3.250% 54,340.00 158,840.00 12131/2019 104,500.00 3.250% 50,943.76 155,443.76 12/31/2020 104,500.00 3.250% 47,547.50 152,047.50 12!3112021 104,500.00 3.250% 44,151.26 148,651.26 12131/2022 104,500.00 3.250% 40,755.00 145,255.00 12/31/2023 104,500.00 3.250% 37,358.76 141,858.76 12/31/2024 104,500.00 3.250% 33,962.50 138,462.50 12/31/2025 104,500.00 3.250% 30,566.26 135,066.26 12/31/2026 104,500.00 3.250% 27,170.00 131,670.00 12/31/2027 104,500.00 3.250% 23,773.76 128,273.76 12/31/2028 904,500.00 3.250% 20,377.50 124,877.50 12/31/2029 104,500.00 3.250% 16,981.26 121,481.26 12/31/2030 104,500.00 3.250% 13,585.00 118,085.00 12/31/2031 104,500.00 3.250% 10,188.76 114,688.76 12/31/2032 104,500.00 3.250% 6,792.50 111,292.50 12/31/2033 104,500.00 3.250% 3,396.26 107,896.26 Total $2,090,000.00 - $713,212.60 $2,803,212.60 SIGNIFICANT DATES Fling Date ............................................................................................................................. ............................... 1/01/2014 FirstPayment Data .............................................................................................................. ............................... 12/31/2014 2 ODA Asaer —.1. I SLVGLEPURPOSB i 615.7013 i 3:29PM Springsted Page $2,090,000 City of Lakeville, Minnesota General Obligation Improvement Bonds Series 2013A- Assessed Portion NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +1 Net New = 105 %of Total Assessment Levy Required 02101/2014 - - - 02101/2015 95,000.00 0.450% 70,895.30 165,895.30 165,895.30 174,190.07 172,425.00 1,765.07 02/01/2016 115,000.00 0.630% 48,094.00 163,094.00 163,094.00 171,248.70 169,028.76 2,219.94 02!0112017 115,000.00 1.080% 47,369.50 162,369.50 162,369.50 170,487.98 165,632.50 4,855.48 02/01/2018 110,000.00 1.310% 46,127.50 156,127.50 156,127.50 163,933.88 162,236.26 1,697.61 02/01/2019 110,000.00 1.570% 44,686.50 154,686.50 154,686.50 162,420.83 158,840.00 3,580.83 02/01/2020 110,000.00 1.820% 42,959.50 152,959.50 152,959.50 160,607.48 155,443.76 5,163.72 02/01/2021 105,000.00 2.070% 40,957.50 145,957.50 145,957.50 153,255.38 152,047.50 1,207.88 02/01/2022 105,000.00 2.220% 38,784.00 143,784.00 143,784.00 150,97120 148,651.26 2,321.94 02/01/2023 105,000.00 2.340% 36,453.00 141,453.00 141,453.00 148,525.65 145,255.00 3,270.65 02/01/2024 105,000.00 2.430% 33,996.00 138,996.00 138,996.00 145,945.80 141,858.76 4,087.04 02/01/2025 105,000.00 2.540% 31,444.50 136,444.50 136,444.50 143,266.73 138,462.50 4,804.23 02/01/2026 105,000.00 2.650% 28,777.50 133,777.50 133,777.50 140,466.38 135,066.26 5,400.11 02/01/2027 100,000.00 2,840% 25,995.00 125,995.00 125,995.00 132,294.75 131,670.00 624.75 02/01/2028 100,000.00 2.990% 23,155.00 123,155.00 123,155.00 129,312.75 128,273.76 1 02/01/2029 100,000.00 3.130% 20,165.00 120,165.00 120,165.00 126,173.25 124,877.50 1,295.75 02/01/2030 100,000.00 3.220% 17,035.00 117,035.00 117,035.00 122,886.75 121,481.26 1,405.49 02/01/2031 100,000.00 3.290% 13,815.00 113,815.00 113,615.00 119,505.75 118,085.00 1,420.75 02/01/2032 100,000.00 3.400% 10,525.00 110,525.00 110,525.00 116,051.25 114,688.76 1,362.49 02/01/2033 100,000.00 3.450% 7,125.00 107,125.00 107,125.00 112,481.25 111,292.50 1,188.75 02/01/2034 105,000.00 3.500% 3,675.00 108,675.00 108,675.00 114,108.75 107,896.26 6,212.49 Total $2,090,000.00 - $632,034.80 $2,722,034.80 $2,722,034.80 $2,858,136.54 $2,803,212.60 $54,923.94 Dated— ................................................................................... ..................................................................................................... 81152013 DeliveryDate ........................................................................................................................... ............................... ...................... 8 /15/2013 FirstCoupon Date .................................................................................................................... ............................... ...................... 810112014 Yield Statistics BondYear Dol lars .................................................................................................................... ............................... ..................... $22.568.72 AverageLife ................................................................................................................................................. ............................... 10.798 Years AverageCoupon ........................................................................................................................................... ............................... 2.8004900% NetInterest Cost ( NIC) ................................................................................................................................... ............................... 2.9116172% TrueInterest Cost ( TIC) ................................................................................................................................. ............................... 2.8879676% Bond Yield for Arbitrage Purposes ............................................................................................................... ............................... 2.3891961% AllInclusive Cost (AC) .................................................................................................................................. ............................... 3.0036340% IRS Form 8038 NetInterest Cost .................................. ............................... Weighted Average Maturity ................. ............................... ...................................................... ............................... 2.8004900% ...................................................... ............................... 10.798 Years 2013A G03gprovemeni Bond I Assessed Portion 1 6/3/7013 I3.33PM Springsted Page $2,710,000 City of Lakeville, Minnesota General Obligation Irnprovement Bonds Series 2013A - Tax Leery Portion DEBT SERVICE SCHEDULE Data Principal Coupon Interest Total P +I 105% Le 02/01/2014 - - 02/01/2015 240,000.00 0.450% 64,470.80 304,470.80 319,694.34 02/01/2016 260,000.00 0.630% 43,044.50 303,044.50 318,196.73 02/01/2017 260,000.00 1.080% 41,406.50 301,406.50 316,476.83 02/01/2018 265,000.00 1.310% 38,598.50 303,598.50 318,778.43 02/01/2019 270,000.00 1.570% 35,127.00 305,127.00 320,383.35 02/01/2020 270,000.00 1.820% 30,888.00 300,888.00 315,932.40 02/01/2021 275,000.00 2.070% 25,974.00 300,974.00 316,022.70 02/01/2022 285,000.00 2.220% 20,281.50 305,281.50 320,545.58 02/01/2023 290,000.00 2.340% 13,954.50 303,954.50 319,152.23 02/01/2024 295,000.00 2.430% 7,168.50 302,168.50 317,278.93 Total $2,710,000.00 - $320,913.80 $3,030,913.80 $3,182,459.49 SIGNIFICANT DATES Dated........................................................... ............................... DeliveryDate ............................................... ............................... First Coupon Date ........................................ ............................... Yield Statistics Bond Year Dollars ....................................... ............................... AverageLif e ............................................... ............................... AverageCoupon ......................................... ............................... Net Interest Cost (NC) ................................. ............................... True Interest Cost ( TIC) ............................... ............................... Bond Yield for Arbitrage Purposes ............. ............................... All Inclusive Cost ( AIC) ................................ ............................... IRS Form 8038 NetInterest Cost... ...................................................................... Weighted Average Maturity ......................... ............................... Interest rates are estimates. Changes in rates may cause significant alterations to this schedule. The actual underwriter's discount bid may also vary. 2013A G03np.owwnt Bond I Tax L- yP-tkn 1613129B 13 :33 PM ........................................ ............................... 8/15/2013 ........................................ ............................... 8115/2013 ................................ ..... ....1.— ........................ 8/01/2014 ..................................... ............................... $16,584.61 .................................... ............................... 6.120 Years ..................................... ............................... 1.9350095% ................................. ... ... .........I ... I.............. 2.1310949% ..................................... ............................... 2.1332316% ..................................... ............................... 2.3891961% .............................................................. I.... 2.3169006% .......................... ............................... 1.9350095% .......................... ............................... 6.120 Years .5nringsted Page