The URL can be used to link to this page

Home My WebLink AboutHRA Item 04June 6, 2016 Item No.________ HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION RELATING TO THE THIRD SHEET ICE ARENA PROJECT AND ITS REFINANCING UNDER MINNESOTA STATUTES, CHAPTERS 465, 469, 471 AND 475; CALLING FOR A PUBLIC HEARING THEREON Proposed Action Staff recommends adoption of the following motion: Move to approve a Resolution Relating to the Third Sheet Ice Arena Project and its Refinancing under Minnesota Statutes, Chapters 465, 469, 471 and 475; Calling for a Public Hearing Thereon. Overview Passage of this motion will result in a public hearing being held on July 5, 2016, to consider the refinancing of the HRA Lease Revenue Bonds, Series 2006. Primary Issues to Consider • None Supporting Information • Resolution (Prepared by Dorsey & Whitney, LLP) • Letter from Springsted, Inc. • Refunding Feasibility Analysis (Prepared by Springsted, Inc.) Financial Impact: $ Budgeted: Y☒ N☐ Source: Related Documents: (CIP, ERP, etc.): Envision Lakeville Community Values: Good Value for Public Services Report Completed by: Jerilyn Erickson, Finance Director Varies Taxes & School District Contribution - 1 - HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF LAKEVILLE, MINNESOTA RESOLUTION Date _____________________________ Resolution No. _______________________ Motion By ________________________ Seconded By ________________________ RESOLUTION RELATING TO THE THIRD SHEET ICE ARENA PROJECT AND ITS REFINANCING UNDER MINNESOTA STATUTES, CHAPTERS 465, 469, 471 AND 475; CALLING FOR A PUBLIC HEARING THEREON BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of the City of Lakeville, Minnesota (the Authority), as follows: SECTION 1 Recitals 1.1. Pursuant to the authority granted by Minnesota Statutes, Sections 465.71, 469.012, 469.041, 469.034, 469.035, 471.59, and 475.79, the Authority is authorized to issue to lease revenue bonds in anticipation of the collection of revenues of a project to finance or refinance the cost of acquisition, construction, reconstruction, improvement, or extension thereof. The Authority proposes to issue its Lease Revenue Refunding Bonds (Ice Arena Project), Series 2016A (the Bonds) for the purpose of refinancing costs of construction of the third sheet ice arena facility (the Facility) located at 8525 215th Street in the City of Lakeville, Minnesota (the City). The Facility is used for the benefit of qualified 501(c)(3) organizations, including but not limited to the Lakeville Hockey Association, other hockey and figure skating associations, the general public, the City, and Independent School District No. 194. The acquisition of the Facility was originally financed with proceeds of the Authority’s Lease Revenue Bonds (Ice Arena Project), Series 2006, dated, as originally issued, as of December 1, 2006 and issued in the original principal amount of $9,230,000 (the Refunded Bonds). The Facility is owned by the Authority, leased to the City pursuant to a lease-purchase agreement, and subleased to Lakeville Arenas, a Minnesota joint powers entity, for operation pursuant to a sublease agreement. - 2 - SECTION 2 Public Hearing 2.1. In compliance with Section 147(f) of the Internal Revenue Code of 1986, as amended, this Board of Commissioners is required to conduct a public hearing on the refinancing of the Facility and the Refunded Bonds by the issuance of the Bonds. A public hearing on the proposal to refinance the Facility and to issue the Bonds is hereby called and shall be held on July 5, 2016, at 6:30 p.m., at the City Hall, 20195 Holyoke Avenue, in the City of Lakeville, Minnesota. 2.2. The Chairperson or Secretary shall cause notice of the public hearing to be published in the official newspaper of the City at least once not fewer than fourteen (14) nor more than thirty (30) days prior to the date fixed for the public hearing. The notice to be published shall be in substantially the form attached as Exhibit A hereto. ADOPTED this 6th day of June, 2016 HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF LAKEVILLE, MINNESOTA By:_________________________________ Chairperson ATTEST: ________________________________ Secretary EXHIBIT A NOTICE OF PUBLIC HEARING ON THE ISSUANCE OF LEASE REVENUE BONDS UNDER MINNESOTA STATUTES, CHAPTERS 465, 469, 471 AND 475 THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF LAKEVILLE, MINNESOTA NOTICE IS HEREBY GIVEN that the Board of Commissioners of the Housing and Redevelopment Authority of the City of Lakeville, Minnesota (the Authority), will meet on July 5, 2016, at 6:30 o’clock p.m., at the City Hall, 20195 Holyoke Avenue, in the City of Lakeville, Minnesota, for the purpose of conducting a public hearing on a proposal that the Authority issue its lease revenue bonds in an aggregate principal amount not to exceed $8,100,000 (the Bonds), under Sections 465.71, 469.012, 469.041, 469.034, 469.035, 471.59, and 475.79, as amended, for the purpose of refinancing the Authority’s Lease Revenue Bonds (Ice Arena Project), Series 2006, dated, as originally issued, as of December 1, 2006 and issued in the original principal amount of $9,230,000 (the Refunded Bonds). The Refunded Bonds were issued for the purpose of financing a portion or all of the costs of construction of the third sheet ice arena facility (the Facility) located at 8525 215th Street in the City of Lakeville, Minnesota (the City) used for the benefit of qualified 501(c)(3) organizations, including but not limited to the Lakeville Hockey Association, other hockey and figure skating associations, the general public, the City, and Independent School District No. 194. The Facility is owned by the Authority, leased to the City pursuant to a lease-purchase agreement, and subleased to Lakeville Arenas, a Minnesota joint powers entity, for operation pursuant to a sublease agreement. The Bonds to be issued will not constitute a general obligation of the Authority or the City, but will be a limited obligation payable solely from funds received by the Authority pursuant to the lease- purchase agreement. No holder of the Bonds shall ever have the right to compel any exercise of the taxing power of the Authority or the City to pay the Bonds or the interest thereon, nor to enforce payment against any property of the Authority or the City except the property pledged to the payment thereof. Before issuing the Bonds, the Authority will enter into an agreement with the City whereby the City will be obligated to make payments at least sufficient at all times to pay the principal of and interest on the Bonds when due. All persons interested may appear and be heard at the time and place set forth above, or may file written comments with the Secretary of the Authority prior to the date of the hearing set forth above. Dated: June 6, 2016 BY ORDER OF THE BOARD OF COMMISSIONERS /s/ ___________________________________________ Secretary Refunding Feasibility Analysis For the City of Lakeville Housing and Redevelopment Authority, Minnesota From: David MacGillivray, Chairman Dated: May 18, 2016 Introduction The City has been monitoring any refinancing opportunities with our assistance. One such issue has been the 2006 HRA Lease Revenue Bonds, the proceeds of which were used to construct an ice arena. This information describes the estimated interest cost savings by proceeding with a refunding in the current market. All savings estimates are after consideration of all costs of issuance and underwriter’s compensation. Summary of Outstanding Issues Reviewed (Shaded Issues Indicate Potential Refunding Candidates) Issue Refunding Type Est. Net Future Value Present Value Benefit PV Savings/PV of Refunded Debt Service 2006 HRA Lease Revenue Bonds* Full Advanced $1,002,280.41 $838,413.72 9.407% Summary Information on Potential Candidate Issues The table above indicates one issue with potential savings that merits further review. For this candidate, we have prepared a profile of significant financial statistics and estimates from the refunding feasibility analysis. This information should be viewed as preliminary and as a general indicator of the individual issue’s refunding feasibility. We recommend an additional discussion take place as to the decision to proceed with the refunding. In the concluding section to this analysis, “Next Steps”, we have listed several topics which would facilitate the decision on the appropriateness of moving ahead at this time. Refunding Feasibility Analysis May 18, 2016 Page 2 Issue 1 Original Issue Size $9,230,000 Refunding Issue Size $8,025,000 Type Lease Revenue Bonds Refunded Issue 2016 Refunding Issue 2006 Type of Refunding Full Advanced Refunded Issue Call Date and Terms February 1, 2017 @ 100% Actual Positive and (Negative) Arbitrage ($98,843.40) Net Future Value of Savings $1,002,280.41 Net Present Value of Savings $838,413.72 Net PV Savings to PV of Refunded Debt Service 9.407% Average Rate on Refunded Bonds 4.585% Average Rate on Refunding Bonds 2.621% More detailed financial summaries are attached for each issue. Current Municipal Market Refunding Feasibility Analysis May 18, 2016 Page 3 Next Steps Before a final decision is made on whether to proceed, we recommend you consider the unique characteristics of this financing and your additional borrowing plans this year. We would like to discuss in the near future the following considerations and determine the true viability of the refunding for interest cost savings or any other related potential objectives from debt restructuring. Among the financing’s particular characteristics, we recommend you consider the following: • Review the current cash balance in the debt service fund and apply any build-up of excess funds to the refunding. This will help to establish both the compliance with arbitrage/rebate regulations and a more accurate overall financial profile of the refunding. • Examine the current revenue stream(s) in order to better match the debt service of the new refunding issue to future revenue expectations. This may result in a refunding structure that complements your overall revenue repayment source objectives. • The HRA Bonds have a debt service reserve. At this initial stage we need to confirm the DSR funding came from bond proceeds and the current investment rate. • Determine if the original issue or its debt service fund has any arbitrage liability. • Discuss your desired minimum threshold for savings. We appreciate your consideration of these initial estimates and the potential for Lakeville. Preliminary $8,025,000 City of Lakeville HRA, Minnesota Lease Revenue Refunding Bonds, Series 2016 Full Advance Refunding of Series 2006 Lease Preliminary Feasibility Summary Dated 07/01/2016 | Delivered 07/01/2016 Sources Of Funds Par Amount of Bonds.....................................................................................................................................................................................$8,025,000.00 Transfers from Prior Issue DSR Funds....................................................................................................................................................................700,987.50 Total Sources...........................................................................................................................................................................................$8,725,987.50 Uses Of Funds Deposit to Net Cash Escrow Fund.........................................................................................................................................................................7,913,411.44 Deposit to Debt Service Reserve Fund (DSRF).............................................................................................................................................................634,987.50 Total Underwriter's Discount (1.275%)..................................................................................................................................................................102,318.75 Costs of Issuance.......................................................................................................................................................................................75,000.00 Rounding Amount.........................................................................................................................................................................................269.81 Total Uses..............................................................................................................................................................................................$8,725,987.50 ISSUES REFUNDED AND CALL INFORMATION Prior Issue Call Price..................................................................................................................................................................................100.000% Prior Issue Call Date...................................................................................................................................................................................2/01/2017 SAVINGS INFORMATION Net Future Value Benefit................................................................................................................................................................................$1,002,280.41 Net Present Value Benefit...............................................................................................................................................................................$838,413.72 Net PV Benefit / $8,912,968.71 PV Refunded Debt Service.................................................................................................................................................9.407% BOND STATISTICS Average Life............................................................................................................................................................................................8.545 Years Average Coupon..........................................................................................................................................................................................2.6210587% Net Interest Cost (NIC).................................................................................................................................................................................2.7702630% True Interest Cost (TIC)................................................................................................................................................................................2.7677432% Series 2016 Ref 2006 Leas | SINGLE PURPOSE | 4/20/2016 | 3:11 PM Preliminary $8,025,000 City of Lakeville HRA, Minnesota Lease Revenue Refunding Bonds, Series 2016 Full Advance Refunding of Series 2006 Lease Debt Service Comparison Date Total P+I DSR Net New D/S Old Net D/S Savings 02/01/2017 590,411.25 (1,851.77)588,559.48 657,257.56 68,698.08 02/01/2018 605,370.00 (3,174.94)602,195.06 668,082.56 65,887.50 02/01/2019 604,780.00 (3,174.94)601,605.06 667,782.56 66,177.50 02/01/2020 603,690.00 (3,174.94)600,515.06 666,807.56 66,292.50 02/01/2021 606,870.00 (3,174.94)603,695.06 670,157.56 66,462.50 02/01/2022 614,445.00 (3,174.94)611,270.06 677,607.56 66,337.50 02/01/2023 615,842.50 (3,174.94)612,667.56 678,932.56 66,265.00 02/01/2024 611,580.00 (3,174.94)608,405.06 674,357.56 65,952.50 02/01/2025 611,740.00 (3,174.94)608,565.06 674,107.56 65,542.50 02/01/2026 615,960.00 (3,174.94)612,785.06 677,957.56 65,172.50 02/01/2027 614,092.50 (3,174.94)610,917.56 680,682.56 69,765.00 02/01/2028 616,217.50 (3,174.94)613,042.56 681,632.56 68,590.00 02/01/2029 621,907.50 (3,174.94)618,732.56 686,426.32 67,693.76 02/01/2030 625,957.50 (3,174.94)622,782.56 689,832.56 67,050.00 02/01/2031 628,572.50 (3,174.94)625,397.56 691,851.32 66,453.76 02/01/2032 634,987.50 (638,162.44)(3,174.94) (3,504.94)(330.00) Total $9,822,423.75 (684,463.37) $9,137,960.38 $10,139,970.98 $1,002,010.60 PV Analysis Summary (Net to Net) Net FV Cashflow Savings.................................................................................................................................................................................1,002,010.60 Gross PV Debt Service Savings...........................................................................................................................................................................887,968.71 Effects of changes in DSR investments...................................................................................................................................................................(49,824.80) Net PV Cashflow Savings @ 2.595%(Bond Yield)...........................................................................................................................................................838,143.91 Contingency or Rounding Amount..........................................................................................................................................................................269.81 Net Future Value Benefit................................................................................................................................................................................$1,002,280.41 Net Present Value Benefit...............................................................................................................................................................................$838,413.72 Net PV Benefit / $2,874,265.50 PV Refunded Interest.....................................................................................................................................................29.170% Net PV Benefit / $8,912,968.71 PV Refunded Debt Service.................................................................................................................................................9.407% Net PV Benefit / $7,585,000 Refunded Principal.........................................................................................................................................................11.054% Net PV Benefit / $8,025,000 Refunding Principal........................................................................................................................................................10.448% Refunding Bond Information Refunding Dated Date....................................................................................................................................................................................7/01/2016 Refunding Delivery Date.................................................................................................................................................................................7/01/2016 Series 2016 Ref 2006 Leas | SINGLE PURPOSE | 4/20/2016 | 3:11 PM Preliminary $9,230,000 Lakeville HRA, Minnesota Lease Revenue Bonds, Series 2006 Debt Service To Call And To Maturity Date Refunded Bonds Refunded Interest D/S To Call Principal Coupon Interest Refunded D/S 08/01/2016 - 172,881.25 172,881.25 - - 172,881.25 172,881.25 02/01/2017 7,585,000.00 172,881.25 7,757,881.25 315,000.00 4.500% 172,881.25 487,881.25 08/01/2017 ---- - 165,793.75 165,793.75 02/01/2018 --- 340,000.00 4.500% 165,793.75 505,793.75 08/01/2018 ---- - 158,143.75 158,143.75 02/01/2019 --- 355,000.00 4.500% 158,143.75 513,143.75 08/01/2019 ---- - 150,156.25 150,156.25 02/01/2020 --- 370,000.00 4.500% 150,156.25 520,156.25 08/01/2020 ---- - 141,831.25 141,831.25 02/01/2021 --- 390,000.00 4.500% 141,831.25 531,831.25 08/01/2021 ---- - 133,056.25 133,056.25 02/01/2022 --- 415,000.00 4.500% 133,056.25 548,056.25 08/01/2022 ---- - 123,718.75 123,718.75 02/01/2023 --- 435,000.00 4.500% 123,718.75 558,718.75 08/01/2023 ---- - 113,931.25 113,931.25 02/01/2024 --- 450,000.00 4.500% 113,931.25 563,931.25 08/01/2024 ---- - 103,806.25 103,806.25 02/01/2025 --- 470,000.00 4.500% 103,806.25 573,806.25 08/01/2025 ---- - 93,231.25 93,231.25 02/01/2026 --- 495,000.00 4.500% 93,231.25 588,231.25 08/01/2026 ---- - 82,093.75 82,093.75 02/01/2027 --- 520,000.00 4.625% 82,093.75 602,093.75 08/01/2027 ---- - 70,068.75 70,068.75 02/01/2028 --- 545,000.00 4.625% 70,068.75 615,068.75 08/01/2028 ---- - 57,465.63 57,465.63 02/01/2029 --- 575,000.00 4.625% 57,465.63 632,465.63 08/01/2029 ---- - 44,168.75 44,168.75 02/01/2030 --- 605,000.00 4.625% 44,168.75 649,168.75 08/01/2030 ---- - 30,178.13 30,178.13 02/01/2031 --- 635,000.00 4.625% 30,178.13 665,178.13 08/01/2031 ---- - 15,493.75 15,493.75 02/01/2032 --- 670,000.00 4.625% 15,493.75 685,493.75 Total $7,585,000.00 $345,762.50 $7,930,762.50 $7,585,000.00 - $3,312,037.52 $10,897,037.52 Yield Statistics Base date for Avg. Life & Avg. Coupon Calculation.......................................................................................................................................................7/01/2016 Average Life............................................................................................................................................................................................9.109 Years Average Coupon..........................................................................................................................................................................................4.5849756% Weighted Average Maturity (Par Basis)...................................................................................................................................................................9.109 Years Weighted Average Maturity (Original Price Basis)........................................................................................................................................................9.109 Years Refunding Bond Information Refunding Dated Date....................................................................................................................................................................................7/01/2016 Refunding Delivery Date.................................................................................................................................................................................7/01/2016 Series 2006 Lease | SINGLE PURPOSE | 4/20/2016 | 3:11 PM Preliminary $8,025,000 City of Lakeville HRA, Minnesota Lease Revenue Refunding Bonds, Series 2016 Full Advance Refunding of Series 2006 Lease Escrow Fund Cashflow Date Principal Rate Interest Receipts Disbursements Cash Balance 07/01/2016 ---0.44 -0.44 08/01/2016 172,856.00 0.170% 24.95 172,880.95 172,881.25 0.14 02/01/2017 7,740,555.00 0.380% 17,326.11 7,757,881.11 7,757,881.25 - Total $7,913,411.00 - $17,351.06 $7,930,762.50 $7,930,762.50 - Investment Parameters Investment Model [PV, GIC, or Securities]...............................................................................................................................................................Securities Default investment yield target.........................................................................................................................................................................Bond Yield Cash Deposit............................................................................................................................................................................................0.44 Cost of Investments Purchased with Bond Proceeds........................................................................................................................................................7,913,411.00 Total Cost of Investments...............................................................................................................................................................................$7,913,411.44 Target Cost of Investments at bond yield................................................................................................................................................................$7,814,568.04 Actual positive or (negative) arbitrage.................................................................................................................................................................(98,843.40) Yield to Receipt........................................................................................................................................................................................0.3829874% Yield for Arbitrage Purposes............................................................................................................................................................................2.5953820% State and Local Government Series (SLGS) rates for......................................................................................................................................................4/20/2016 Series 2016 Ref 2006 Leas | SINGLE PURPOSE | 4/20/2016 | 3:11 PM