HomeMy WebLinkAboutItem 03
City of Lakeville
Finance Department
Memorandum
To: Mayor and Council
Justin Miller, City Administrator
From: Jerilyn Erickson, Finance Director
Date: May 29, 2018
Subject: 2018 Bond Issuance; 2009A Refunding Opportunity
The following projects are included in the 2018A bond issuance:
#18-02 - 2018 Street Reconstruction
#18-03 - Kenrick Avenue Improvements
The 2018A bond issuance is estimated to be $8,580,000. It reflects the following:
1) City equity contribution of $50,000 for the 2018 street reconstruction project. This is
funded by the $50,000 included in the 2018 tax levy.
2) Bond Structure – The term of the bonds is 10 years. The structure of the 2018A bonds
is compliant with the City’s Debt Policy such that the total maturity length is equal to
or less than 20 years and at least 50% of the principal will be retired within 10 years.
Financial Impacts
Based on the current bond estimate, the following chart shows the estimated annual
contributions that would be needed to fund the debt payments:
Debt Service Tax Levy $607k . . . $618k
Water Operating Fund $57k . . . $62k
The 2019 debt service levy is estimated to be as follows:
Amount % Change
2018 Debt Service Levy $5,469,418
Levy Adjustment for Existing Debt* 1,160,818 21.2%
Levy for New 2018A Bond Issue 617,672 11.3%
Subtotal 1,778,490 32.5%
Estimated 2019 Debt Service Levy $7,247,908
*Does not reflect the impact of any refunding opportunities.
The $1,778,490 increase in debt service levy represents a 6.35% increase based on the total
2018 property tax levy. The 2018 debt service levy was reduced using one-time funds of
about $1 million; therefore, the increase from 2018 to 2019 is larger. The 2019 total tax levy
will also be impacted by other adjustments to revenues and expenditures, service levels,
project funding, etc.
Refunding Opportunity
Springsted Inc. will be discussing the following refunding opportunity:
2009 Taxable General Obligation Street Reconstruction Bonds
Council Direction
Staff is seeking feedback regarding the 2018A bond issuance as well as the refunding of the
2009 Taxable General Obligation Street Reconstruction Bonds.
Attachment: Series 2018A Summary (16 pages)
Series 2018B Summary (8 pages)
City of Lakeville, Minnesota
Recommendations for Issuance of Bonds
$8,580,000 General Obligation Bonds, Series 2018A
The City Council has under consideration the issuance of bonds (the “2018A Bonds”) to finance (i) various street
reconstruction projects (the “Street Reconstruction Portion”), (ii) street improvement projects (the “Street
Improvement Portion”), and (iii) water utility improvements (the “Water Utility Portion”) within the City. This
document provides information relative to the proposed issuance. The 2018A Bonds thus has five components each
based on their source of repayment and related statutory authority. The 2018 Street Reconstruction and Kenrick
Avenue Projects each have two portions: a portion repaid by property taxes, and a portion repaid by special
assessments. The remaining component is funded by the Water Utility. The Recommendations discuss each portion
individually.
The City is applying a substantial amount of available funds from a variety of sources to reduce the principal amount
and to reduce a portion of the capitalized interest relating to the special assessment and water components. The
attached detailed sources and uses profiles these sources.
KEY EVENTS: The following summary schedule includes the timing of some of the key events that will
occur relative to the bond issuance.
June 4, 2018 City Council considers Parameters Resolution
authorizing the Bond sale
Week of June 11, 2018 Rating conference is conducted
June 26, 2018, 10:30 AM Competitive proposals are received
June 26, 2018 City Official considers award of bonds with
authority delegated by Parameters Resolution
July 2, 2018, 7:00 PM City Council considers Resolution for ratification
July 25, 2018 Proceeds are received
RATING: An application will be made to Moody’s Investors Service for a rating on the 2018A Bonds.
The City’s general obligation debt is currently rated 'Aa1' by Moody’s.
Study No.: 0483.154 May 24, 2018
Page 2
THE MARKET: General performance of the tax-exempt market is often measured by the Bond Buyer’s
Index (“BBI”) which measures the yield of high grade municipal bonds in the 20 th year for
general obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the
BBI Revenue Bond Index). The following chart illustrates these two indices over the past
five years
POST ISSUANCE
COMPLIANCE:
The issuance of these bonds will result in post-issuance compliance responsibilities. The
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 this issue has been structured. Post-issuance compliance responsibilities
for tax-exempt issues 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. Under certain
circumstances any “excess earnings” will need to be paid to the IRS to maintain the tax -
exempt status of the 2018A Bonds. Any interest earnings on gross bond proceeds or debt
service funds should not be spent until it has been determined based on actual facts that
they are not “excess earnings” as defined by the IRS Code.
The arbitrage rules provide for spend-down exceptions for proceeds that are spent within
either a 6-month, 18-month or 24-month period in accordance with certain spending criteria.
Proceeds that qualify for an exception will be exempt from rebate. These exceptions are
based on actual expenditures and not based on reasonable expectations; and expenditures,
including any investment proceeds, will have to meet the spending criteria to qualify for the
exclusion. The City expects to meet the 18-month spending exception on the 2018A Bonds.
Page 3
Regardless of whether the issue qualifies for an exemption from the rebate provisions, yield
restriction provisions will apply to Bond proceeds (including interest earnings) unspent after
three years and the debt service fund throughout the term of the Bonds. These moneys
should be monitored until the Bonds are retired.
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 and the City have entered into an Agreement for Municipal Advisor Services,
under which Springsted will provide arbitrage and continuing disclosure compliance services
for the City.
RISKS/SPECIAL
CONSIDERATIONS:
The outcome of this financing will rely on the market conditions at the time of the sale. Any
projections included herein are estimates based on current market conditions.
Principal payments have been structured around projected future assessment collections. If
actual assessment collections are different than projected (lower annual collections due to
delinquencies or prepayments), the levy requirements will differ from what is shown in these
Recommendations.
Prepaid Assessment Amounts were provided by City Staff. Any estimates included herein
are subject to change and may result in a change in the par amount of the 2018A Bonds
prior to the sale date.
SCHEDULES
ATTACHED:
Schedules attached include the following:
• Sources and Uses of Funds
• Net Debt Service as a whole and by purpose, given the current interest rate
environment.
• Estimated Assessment Income
• Estimated Aggregate Water Utility Debt Service
SALE TERMS AND
MARKETING:
Variability of Issue Size: A specific provision in the sale terms permits modifications to the
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: 2018A Bonds maturing on or after February 1, 2028 may be
prepaid at a price of par plus accrued interest on or after February 1, 2027.
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
2018A Bonds are designated as bank qualified.
The City intends on undertaking an additional bond issuance to be conducted as a current
refunding sold more than 15 days from the date of sale on the 2018A Bonds. It has been
determined that the issuance of such additional bonds would not otherwise prevent the
2018A Bonds to be sold and issued as Qualified Tax-Exempt Bonds.
Page 4
SUPPLEMENTAL
INFORMATION AND
BOND RECORD:
Supplementary information will be available to staff including detailed terms and conditions
of sale, comprehensive structuring schedules and information to assist in meeting post-
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.
$5,275,000 Street Reconstruction Portion
Description of Purpose
PURPOSE: Proceeds of the Street Reconstruction Portion and other available funds of the City will be
used to finance street reconstruction projects related to the 2018 Reconstruction and
Kenrick Avenue projects of the City. Available funds of the City in the total amount of
$318,597, and as detailed on the sources and uses of funds, will be used to reduce the
borrowing.
STATUTORY
REQUIREMENTS:
Statutory Authority: The Street Reconstruction Portion is being issued pursuant to
Minnesota Statutes, Chapter 475 and Section 475.58 (Subd. 3b).
Statutory Requirements: Pursuant to Minnesota Statutes, Section 475.58 (Subd. 3b), the
City must have a five-year Street Reconstruction Plan and comply with the public hearing
requirements. The public hearing was held on November 20, 2017.
SECURITY AND
SOURCE OF
PAYMENT:
The Street Reconstruction Portion of the 2018A Bonds will be a general obligation of the
City, secured by its full faith and credit and taxing power. The Street Reconstruction Portion
will be paid from ad valorem property taxes. Additionally, the City will capitalize the first
interest payment due on this Portion.
The City will make its first levy for the Street Reconstruction Portion in 2018 for first
collection in 2019. Each year’s collection of taxes will be used to make the August 1
interest payment due in the collection year and the February 1 principal and interest
payment due in the following year. The February 1, 2019 interest payment will be made
with capitalized interest of the 2018A Bonds.
STRUCTURING
SUMMARY:
In consultation with the City, the Street Reconstruction Portion of the 2018A Bonds has
been structured with two individual purposes according to the related projects to result in
level annual debt service over a repayment term of ten years.
In the likely event the City receives a surplus premium bid for the 2018A Bonds, the City will
decide at the time of sale whether to keep any surplus bid premium and how much for each
purpose.
Page 5
$2,815,000 Street Improvement Portion
Description of Portion
PURPOSE: Proceeds of the Street Improvement Portion and prepaid assessments will be used to
finance street improvement projects related to the 2018 Reconstruction and Kenrick Avenue
projects of the City. Prepaid assessments in the total amount of $173,929, and as detailed
on the sources and uses of funds, are used to reduce the borrowing and to eliminate the
need for capitalized interest for the February 1, 2019 debt service payment.
AUTHORITY: Statutory Authority: The Street Improvement Portion is being issued pursuant to Minnesota
Statues, Chapters 429 and 475.
Statutory Requirements: Pursuant to Minnesota Statute 429, at least 20% of the City’s
share of the projected cost of the project must be paid from special assessments. The
projects being financed meet this requirement.
SECURITY AND
SOURCE OF
PAYMENT:
The Street Improvement Portion of the 2018A Bonds will be a general obligation of the City,
secured by its full faith and credit and taxing power. The City will pledge special
assessments in the principal amount of $3,025,061 with estimated prepaid assessments in
the amount of $173,929 being collected prior to settlement of the 2018A Bonds.
Assessments, net of prepaid collections, in the amount of $2,851,132, are expected to be
filed in the fall of 2018 for first collection in 2019. The assessments will be collected over a
term of ten years with equal payments of principal. Interest on the unpaid balance will be
charged at a rate of 5.00%.
The City will also be required to levy ad valorem property taxes for repayment of the Street
Improvement Portion and will make its first levy in 2018 for collection in 2019. Each year’s
collection of tax levies and assessments will be used to make the August 1 interest payment
due in the collection year and the February 1 principal and interest payment due in the
following year. A portion of prepaid assessments will be used to pay the February 1, 2019
interest payment on the Street Improvement Portion.
STRUCTURING
SUMMARY:
In consultation with the City, the Street Improvement Portion of the 2018A Bonds has been
structured with two individual purposes according to the related projects and accounting for
anticipated assessment collections to result in a level annual levy requirement over a
repayment term of ten years.
$490,000 Water Utility Portion
Description of Portion
PURPOSE: The proceeds of the Water Utility Portion and other available funds of the City will be used
to finance various utility improvements related to the 2018 Reconstruction and Kenrick
Avenue projects. Additional funds will be used from prior bond proceeds and other
available funds of the City to finance these projects in the total amount of $1,100,490, as
detailed on the sources and uses.
Page 6
AUTHORITY: Statutory Authority: The Water Utility Portion is being issued pursuant to Minnesota
Statutes, Chapters 444 and 475.
Statutory Requirements: Pursuant to Minnesota Statutes, Chapter 444 and the resolution
awarding the Bonds, the City will covenant to maintain water rates in an amount sufficient to
generate revenues to support the operation of the water utility fund and to pay debt service.
The City is required to annually review the budget of the water utility fund to determine
whether currents rates and charges are sufficient and to adjust them as necessary. The
City has three issues outstanding with all or a portion of debt service payable from the
pledged net revenues of the water utility fund; the City’s $8,280,000 General Obligation
Water Utility Revenue Bonds, Series 2016A, the $6,075,000 Water Fund portion of the
City’s $22,250,000 General Obligation Bonds, Series 2016B, and the $835,000 Water Fund
portion of the City’s $10,165,000 General Obligation Bonds, Series 2017A. Together, these
issues, and the anticipated debt service of the Water Utility Portion have an estimated
maximum annual debt service of $1,309,543.
SECURITY AND
SOURCE OF
PAYMENT:
The Water Utility Portion is a general obligation of the City, secured by its full faith and
credit and taxing power. In addition, the City will pledge net revenues of its water system.
The City will use net revenues of its water system to pay the debt service on the Water
Utility Portion as it becomes due. The City does not anticipate a need to levy for this portion
of the 2018A Bonds.
STRUCTURING
SUMMARY:
In consultation with the City, the Water Utility Portion of the 2018A Bonds was structured to
provide approximately level annual debt service over a term of ten years.
7 Page 7
$8,580,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
Issue Summary
Total Issue Sources And Uses
Dated 07/25/2018 | Delivered 07/25/2018
Water Utility Portion
2018
Reconstruction
Levy
Kenrick Avenue
Levy
2018
Reconstruction
Assessments
Kenrick Avenue
Assessments
2018 Reconstruction
Water Issue Summary
Sources Of Funds
Par Amount of Bonds.....................................................................................................................................................................................$3,650,000.00 $1,625,000.00 $2,490,000.00 $325,000.00 $490,000.00 $8,580,000.00
Transfers from Prior Bond Proceeds......................................................................................................................................................................----722,000.00 722,000.00
Water Fund..............................................................................................................................................................................................-254,099.00 ---254,099.00
Sanitary Sewer Fund.....................................................................................................................................................................................-14,498.00 --196,574.00 211,072.00
Prepaid Assessments to Reduce Borrowing.................................................................................................................................................................--16,478.29 120,554.25 -137,032.54
Environmental Resources Fund............................................................................................................................................................................----114,731.00 114,731.00
Storm Sewer Fund........................................................................................................................................................................................----67,185.00 67,185.00
Planned Issuer Equity Contribution......................................................................................................................................................................50,000.00 ----50,000.00
Prepaid Assessments for 2/1/19 Interest Payment.........................................................................................................................................................--32,641.71 4,254.75 -36,896.46
Total Sources...........................................................................................................................................................................................$3,700,000.00 $1,893,597.00 $2,539,120.00 $449,809.00 $1,590,490.00 $10,173,016.00
Uses Of Funds
Deposit to Project Construction Fund....................................................................................................................................................................3,587,422.00 1,579,064.00 2,463,789.00 438,795.00 -8,069,070.00
Water Improvements......................................................................................................................................................................................-254,099.00 --1,201,097.00 1,455,196.00
Sewer Improvements......................................................................................................................................................................................-14,498.00 --263,759.00 278,257.00
Environmental Improvements..............................................................................................................................................................................----114,731.00 114,731.00
Deposit to Capitalized Interest (CIF) Fund..............................................................................................................................................................48,662.25 21,667.71 32,641.71 4,254.75 -107,226.42
Total Underwriter's Discount (1.000%)..................................................................................................................................................................36,500.00 16,250.00 24,900.00 3,250.00 4,900.00 85,800.00
Costs of Issuance.......................................................................................................................................................................................24,573.76 10,946.93 16,774.93 2,188.98 5,740.40 60,225.00
Rounding Amount.........................................................................................................................................................................................2,841.99 (2,928.64)1,014.36 1,320.27 262.60 2,510.58
Total Uses..............................................................................................................................................................................................$3,700,000.00 $1,893,597.00 $2,539,120.00 $449,809.00 $1,590,490.00 $10,173,016.00
Series 2018A Improvement | Issue Summary | 5/23/2018 | 8:57 AM
Street Improvement PortionStreet Reconstruction Portion
888 Page 8
$8,580,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
Issue Summary
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total Assessment Water System
Revenue
Levy
Required
02/01/2019 --113,759.67 113,759.67 (107,226.42)6,533.25 6,859.91 -6,859.91 -
02/01/2020 850,000.00 2.100%220,180.00 1,070,180.00 -1,070,180.00 1,123,689.00 445,489.38 60,527.25 617,672.37
02/01/2021 835,000.00 2.200%202,330.00 1,037,330.00 -1,037,330.00 1,089,196.50 413,414.16 59,535.00 616,247.34
02/01/2022 830,000.00 2.300%183,960.00 1,013,960.00 -1,013,960.00 1,064,658.00 399,158.48 58,495.50 607,004.02
02/01/2023 840,000.00 2.400%164,870.00 1,004,870.00 -1,004,870.00 1,055,113.50 384,902.84 57,408.75 612,801.91
02/01/2024 850,000.00 2.500%144,710.00 994,710.00 -994,710.00 1,044,445.50 370,647.16 61,524.75 612,273.59
02/01/2025 855,000.00 2.650%123,460.00 978,460.00 -978,460.00 1,027,383.00 356,391.52 60,212.25 610,779.23
02/01/2026 865,000.00 2.750%100,802.50 965,802.50 -965,802.50 1,014,092.63 342,135.84 58,821.00 613,135.79
02/01/2027 875,000.00 2.800%77,015.00 952,015.00 -952,015.00 999,615.75 327,880.20 57,377.25 614,358.30
02/01/2028 885,000.00 2.900%52,515.00 937,515.00 -937,515.00 984,390.75 313,624.52 61,157.25 609,608.98
02/01/2029 895,000.00 3.000%26,850.00 921,850.00 -921,850.00 967,942.50 299,368.88 59,482.50 609,091.12
Total $8,580,000.00 -$1,410,452.17 $9,990,452.17 (107,226.42)$9,883,225.75 $10,377,387.04 $3,653,012.98 $601,401.41 $6,122,972.65
Dated.....................................................................................................................................................................................................................................................................................................................................7/25/2018
Delivery Date.............................................................................................................................................................................................................................................................................................................................7/25/2018
First Coupon Date.........................................................................................................................................................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars.........................................................................................................................................................................................................................................................................................................................$52,153.00
Average Life..............................................................................................................................................................................................................................................................................................................................6.078 Years
Average Coupon............................................................................................................................................................................................................................................................................................................................2.7044507%
Net Interest Cost (NIC)...................................................................................................................................................................................................................................................................................................................2.8689666%
True Interest Cost (TIC)..................................................................................................................................................................................................................................................................................................................2.8794173%
Bond Yield for Arbitrage Purposes.........................................................................................................................................................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC)..................................................................................................................................................................................................................................................................................................................3.0095679%
IRS Form 8038
Net Interest Cost......................................................................................................................................................................................................................................................................................................................2.7044507%
Weighted Average Maturity.................................................................................................................................................................................................................................................................................................................6.078 Years
Series 2018A Improvement | Issue Summary | 5/23/2018 | 8:57 AM
999 Page 9
$3,650,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
2018 Reconstruction Levy
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I CIF Net New D/S 105% Overlevy
02/01/2019 --48,662.25 48,662.25 (48,662.25)--
02/01/2020 330,000.00 2.100%94,185.00 424,185.00 -424,185.00 445,394.25
02/01/2021 335,000.00 2.200%87,255.00 422,255.00 -422,255.00 443,367.75
02/01/2022 340,000.00 2.300%79,885.00 419,885.00 -419,885.00 440,879.25
02/01/2023 350,000.00 2.400%72,065.00 422,065.00 -422,065.00 443,168.25
02/01/2024 360,000.00 2.500%63,665.00 423,665.00 -423,665.00 444,848.25
02/01/2025 365,000.00 2.650%54,665.00 419,665.00 -419,665.00 440,648.25
02/01/2026 375,000.00 2.750%44,992.50 419,992.50 -419,992.50 440,992.13
02/01/2027 385,000.00 2.800%34,680.00 419,680.00 -419,680.00 440,664.00
02/01/2028 400,000.00 2.900%23,900.00 423,900.00 -423,900.00 445,095.00
02/01/2029 410,000.00 3.000%12,300.00 422,300.00 -422,300.00 443,415.00
Total $3,650,000.00 -$616,254.75 $4,266,254.75 (48,662.25)$4,217,592.50 $4,428,472.13
SIGNIFICANT DATES
Dated Date..............................................................................................................................................................................................7/25/2018
Delivery Date...........................................................................................................................................................................................7/25/2018
First Coupon Date.......................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars.......................................................................................................................................................................................$22,700.83
Average Life............................................................................................................................................................................................6.219 Years
Average Coupon..........................................................................................................................................................................................2.7146790%
Net Interest Cost (NIC).................................................................................................................................................................................2.8754660%
True Interest Cost (TIC)................................................................................................................................................................................2.8859908%
Bond Yield for Arbitrage Purposes.......................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC)................................................................................................................................................................................3.0081762%
IRS Form 8038
Net Interest Cost.......................................................................................................................................................................................2.7146790%
Weighted Average Maturity...............................................................................................................................................................................6.219 Years
Series 2018A Improvement | 2018 Reconstruction Levy | 5/23/2018 | 8:57 AM
Page 10
$2,490,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
2018 Reconstruction Assessments
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total Assessment Levy
Required
02/01/2019 --32,641.71 32,641.71 (32,641.71)----
02/01/2020 290,000.00 2.100%63,177.50 353,177.50 -353,177.50 370,836.38 393,709.69 (22,873.32)
02/01/2021 270,000.00 2.200%57,087.50 327,087.50 -327,087.50 343,441.88 365,362.60 (21,920.73)
02/01/2022 260,000.00 2.300%51,147.50 311,147.50 -311,147.50 326,704.88 352,763.88 (26,059.01)
02/01/2023 255,000.00 2.400%45,167.50 300,167.50 -300,167.50 315,175.88 340,165.18 (24,989.31)
02/01/2024 250,000.00 2.500%39,047.50 289,047.50 -289,047.50 303,499.88 327,566.46 (24,066.59)
02/01/2025 245,000.00 2.650%32,797.50 277,797.50 -277,797.50 291,687.38 314,967.76 (23,280.39)
02/01/2026 240,000.00 2.750%26,305.00 266,305.00 -266,305.00 279,620.25 302,369.04 (22,748.79)
02/01/2027 235,000.00 2.800%19,705.00 254,705.00 -254,705.00 267,440.25 289,770.34 (22,330.09)
02/01/2028 225,000.00 2.900%13,125.00 238,125.00 -238,125.00 250,031.25 277,171.62 (27,140.37)
02/01/2029 220,000.00 3.000%6,600.00 226,600.00 -226,600.00 237,930.00 264,572.92 (26,642.92)
Total $2,490,000.00 -$386,801.71 $2,876,801.71 (32,641.71)$2,844,160.00 $2,986,368.00 $3,228,419.49 (242,051.49)
Dated..........................................................................................................................................................................................................................................................7/25/2018
Delivery Date..................................................................................................................................................................................................................................................7/25/2018
First Coupon Date..............................................................................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars..............................................................................................................................................................................................................................................$14,421.50
Average Life...................................................................................................................................................................................................................................................5.792 Years
Average Coupon.................................................................................................................................................................................................................................................2.6821184%
Net Interest Cost (NIC)........................................................................................................................................................................................................................................2.8547773%
True Interest Cost (TIC).......................................................................................................................................................................................................................................2.8651182%
Bond Yield for Arbitrage Purposes..............................................................................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC).......................................................................................................................................................................................................................................2.9957190%
IRS Form 8038
Net Interest Cost..............................................................................................................................................................................................................................................2.6821184%
Weighted Average Maturity......................................................................................................................................................................................................................................5.792 Years
Series 2018A Improvement | 2018 Reconstruction Asses | 5/23/2018 | 8:57 AM
111111 Page 11
$2,519,742
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
2018 Reconstruction Assessments
ASSESSMENT INCOME -- Accrual Basis
Calendar
Year
Principal Coupon Interest Total P+I
2018 ----
2019 251,974.20 5.000%141,735.49 393,709.69
2020 251,974.20 5.000%113,388.40 365,362.60
2021 251,974.20 5.000%100,789.68 352,763.88
2022 251,974.20 5.000%88,190.98 340,165.18
2023 251,974.20 5.000%75,592.26 327,566.46
2024 251,974.20 5.000%62,993.56 314,967.76
2025 251,974.20 5.000%50,394.84 302,369.04
2026 251,974.20 5.000%37,796.14 289,770.34
2027 251,974.20 5.000%25,197.42 277,171.62
2028 251,974.20 5.000%12,598.72 264,572.92
-$2,519,742.00 -$708,677.49 $3,228,419.49
SIGNIFICANT DATES
Filing Date.............................................................................................................................................................................................11/16/2018
First Payment Date......................................................................................................................................................................................12/31/2019
Series 2018A Improvement | 2018 Reconstruction Asses | 5/22/2018 | 1:54 PM
Page 12
$490,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
2018 Reconstruction Water
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I Net New D/S 105%
Overlevy
02/01/2019 --6,533.25 6,533.25 6,533.25 6,859.91
02/01/2020 45,000.00 2.100%12,645.00 57,645.00 57,645.00 60,527.25
02/01/2021 45,000.00 2.200%11,700.00 56,700.00 56,700.00 59,535.00
02/01/2022 45,000.00 2.300%10,710.00 55,710.00 55,710.00 58,495.50
02/01/2023 45,000.00 2.400%9,675.00 54,675.00 54,675.00 57,408.75
02/01/2024 50,000.00 2.500%8,595.00 58,595.00 58,595.00 61,524.75
02/01/2025 50,000.00 2.650%7,345.00 57,345.00 57,345.00 60,212.25
02/01/2026 50,000.00 2.750%6,020.00 56,020.00 56,020.00 58,821.00
02/01/2027 50,000.00 2.800%4,645.00 54,645.00 54,645.00 57,377.25
02/01/2028 55,000.00 2.900%3,245.00 58,245.00 58,245.00 61,157.25
02/01/2029 55,000.00 3.000%1,650.00 56,650.00 56,650.00 59,482.50
Total $490,000.00 -$82,763.25 $572,763.25 $572,763.25 $601,401.41
SIGNIFICANT DATES
Dated Date..............................................................................................................................................................................................7/25/2018
Delivery Date...........................................................................................................................................................................................7/25/2018
First Coupon Date.......................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars.......................................................................................................................................................................................$3,048.17
Average Life............................................................................................................................................................................................6.221 Years
Average Coupon..........................................................................................................................................................................................2.7151813%
Net Interest Cost (NIC).................................................................................................................................................................................2.8759336%
True Interest Cost (TIC)................................................................................................................................................................................2.8864723%
Bond Yield for Arbitrage Purposes.......................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC)................................................................................................................................................................................3.0997891%
IRS Form 8038
Net Interest Cost.......................................................................................................................................................................................2.7151813%
Weighted Average Maturity...............................................................................................................................................................................6.221 Years
Series 2018A Improvement | 2018 Reconstruction Water | 5/23/2018 | 8:57 AM
131313 Page 13
$1,625,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
Kenrick Avenue Levy
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I CIF Net New D/S 105% Overlevy
02/01/2019 --21,667.71 21,667.71 (21,667.71)--
02/01/2020 145,000.00 2.100%41,937.50 186,937.50 -186,937.50 196,284.38
02/01/2021 150,000.00 2.200%38,892.50 188,892.50 -188,892.50 198,337.13
02/01/2022 150,000.00 2.300%35,592.50 185,592.50 -185,592.50 194,872.13
02/01/2023 155,000.00 2.400%32,142.50 187,142.50 -187,142.50 196,499.63
02/01/2024 160,000.00 2.500%28,422.50 188,422.50 -188,422.50 197,843.63
02/01/2025 165,000.00 2.650%24,422.50 189,422.50 -189,422.50 198,893.63
02/01/2026 170,000.00 2.750%20,050.00 190,050.00 -190,050.00 199,552.50
02/01/2027 175,000.00 2.800%15,375.00 190,375.00 -190,375.00 199,893.75
02/01/2028 175,000.00 2.900%10,475.00 185,475.00 -185,475.00 194,748.75
02/01/2029 180,000.00 3.000%5,400.00 185,400.00 -185,400.00 194,670.00
Total $1,625,000.00 -$274,377.71 $1,899,377.71 (21,667.71)$1,877,710.00 $1,971,595.50
SIGNIFICANT DATES
Dated Date..............................................................................................................................................................................................7/25/2018
Delivery Date...........................................................................................................................................................................................7/25/2018
First Coupon Date.......................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars.......................................................................................................................................................................................$10,109.58
Average Life............................................................................................................................................................................................6.221 Years
Average Coupon..........................................................................................................................................................................................2.7140358%
Net Interest Cost (NIC).................................................................................................................................................................................2.8747744%
True Interest Cost (TIC)................................................................................................................................................................................2.8853397%
Bond Yield for Arbitrage Purposes.......................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC)................................................................................................................................................................................3.0075465%
IRS Form 8038
Net Interest Cost.......................................................................................................................................................................................2.7140358%
Weighted Average Maturity...............................................................................................................................................................................6.221 Years
Series 2018A Improvement | Kenrick Avenue Levy | 5/23/2018 | 8:57 AM
141414 Page 14
$325,000
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
Kenrick Avenue Assessments
NET DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total Assessment Levy
Required
02/01/2019 --4,254.75 4,254.75 (4,254.75)----
02/01/2020 40,000.00 2.100%8,235.00 48,235.00 -48,235.00 50,646.75 51,779.69 (1,132.94)
02/01/2021 35,000.00 2.200%7,395.00 42,395.00 -42,395.00 44,514.75 48,051.56 (3,536.81)
02/01/2022 35,000.00 2.300%6,625.00 41,625.00 -41,625.00 43,706.25 46,394.60 (2,688.35)
02/01/2023 35,000.00 2.400%5,820.00 40,820.00 -40,820.00 42,861.00 44,737.66 (1,876.66)
02/01/2024 30,000.00 2.500%4,980.00 34,980.00 -34,980.00 36,729.00 43,080.70 (6,351.70)
02/01/2025 30,000.00 2.650%4,230.00 34,230.00 -34,230.00 35,941.50 41,423.76 (5,482.26)
02/01/2026 30,000.00 2.750%3,435.00 33,435.00 -33,435.00 35,106.75 39,766.80 (4,660.05)
02/01/2027 30,000.00 2.800%2,610.00 32,610.00 -32,610.00 34,240.50 38,109.86 (3,869.36)
02/01/2028 30,000.00 2.900%1,770.00 31,770.00 -31,770.00 33,358.50 36,452.90 (3,094.40)
02/01/2029 30,000.00 3.000%900.00 30,900.00 -30,900.00 32,445.00 34,795.96 (2,350.96)
Total $325,000.00 -$50,254.75 $375,254.75 (4,254.75)$371,000.00 $389,550.00 $424,593.49 (35,043.49)
Dated..........................................................................................................................................................................................................................................................7/25/2018
Delivery Date..................................................................................................................................................................................................................................................7/25/2018
First Coupon Date..............................................................................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars..............................................................................................................................................................................................................................................$1,872.92
Average Life...................................................................................................................................................................................................................................................5.763 Years
Average Coupon.................................................................................................................................................................................................................................................2.6832347%
Net Interest Cost (NIC)........................................................................................................................................................................................................................................2.8567608%
True Interest Cost (TIC).......................................................................................................................................................................................................................................2.8669606%
Bond Yield for Arbitrage Purposes..............................................................................................................................................................................................................................2.6961590%
All Inclusive Cost (AIC).......................................................................................................................................................................................................................................2.9982194%
IRS Form 8038
Net Interest Cost..............................................................................................................................................................................................................................................2.6832347%
Weighted Average Maturity...............................................................................................................................................................................5.763 Years
Series 2018A Improvement | Kenrick Avenue Assessment | 5/23/2018 | 8:57 AM
Page 15
$331,390
The City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
Kenrick Avenue Assessments
ASSESSMENT INCOME -- Accrual Basis
Calendar
Year
Principal Coupon Interest Total P+I
2018 ----
2019 33,139.00 5.000%18,640.69 51,779.69
2020 33,139.00 5.000%14,912.56 48,051.56
2021 33,139.00 5.000%13,255.60 46,394.60
2022 33,139.00 5.000%11,598.66 44,737.66
2023 33,139.00 5.000%9,941.70 43,080.70
2024 33,139.00 5.000%8,284.76 41,423.76
2025 33,139.00 5.000%6,627.80 39,766.80
2026 33,139.00 5.000%4,970.86 38,109.86
2027 33,139.00 5.000%3,313.90 36,452.90
2028 33,139.00 5.000%1,656.96 34,795.96
-$331,390.00 -$93,203.49 $424,593.49
SIGNIFICANT DATES
Filing Date.............................................................................................................................................................................................11/16/2018
First Payment Date......................................................................................................................................................................................12/31/2019
Series 2018A Improvement | Kenrick Avenue Assessment | 5/22/2018 | 1:54 PM
Page 16
$490,000
City of Lakeville, Minnesota
General Obligation Bonds, Series 2018A
2018 Reconstruction Water
Aggregate Water Utility Debt Service
DATE 2016A GO
Utility Rev
Bonds
2016B GO
Bonds
Water Portion
2017A GO
Bonds
Water Portion
2018A GO
Bonds
Water Portion
(Estimated)
TOTAL
2018 612,075.00 528,837.50 33,885.00 -1,174,797.50
2019 614,325.00 527,212.50 91,275.00 12,855.75 1,245,668.25
2020 610,700.00 534,587.50 103,150.00 57,172.50 1,305,610.00
2021 611,200.00 537,612.50 104,525.00 56,205.00 1,309,542.50
2022 610,700.00 535,912.50 105,650.00 55,192.50 1,307,455.00
2023 609,200.00 527,312.50 101,650.00 54,135.00 1,292,297.50
2024 611,575.00 527,312.50 102,525.00 57,970.00 1,299,382.50
2025 620,050.00 526,312.50 103,150.00 56,682.50 1,306,195.00
2026 615,200.00 528,812.50 103,525.00 55,332.50 1,302,870.00
2027 585,500.00 378,962.50 104,650.00 53,945.00 1,123,057.50
2028 580,650.00 377,712.50 106,575.00 57,447.50 1,122,385.00
2029 583,125.00 379,687.50 -55,825.00 1,018,637.50
2030 578,125.00 379,787.50 --957,912.50
2031 577,750.00 379,587.50 --957,337.50
2032 581,850.00 379,087.50 --960,937.50
2033 580,425.00 378,287.50 --958,712.50
2034 578,550.00 253,906.25 --832,456.25
2035 -----
Total $10,161,000.00 $7,680,931.25 $1,060,560.00 $572,763.25 $19,475,254.50
Par Amounts Of Selected Issues
2016A GO Utility Rev Bonds...........................................................................................................................................................................................8,280,000.00
2016B Water Fund Portion...............................................................................................................................................................................................................................................................6,075,000.00
2017A Water Fund Portion............................................................................................................................................................................................................835,000.00
2018A Water Fund Portion............................................................................................................................................................................................................490,000.00
TOTAL...................................................................................................................................................................................................15,490,000.00
Aggregate | 5/19/2016 | 11:13 AM
City of Lakeville, Minnesota
Recommendations for Issuance of Bonds
$3,410,000 General Obligation Street Reconstruction Refunding Bonds, Series 2018B
(the “Series 2018B Bonds”)
The Council has under consideration the issuance of bonds to refund an outstanding general obligation street
reconstruction bond issue 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 4, 2018 Board sets sale date and terms
Week of June 11, 2018 Rating conference is conducted
July 16, 2018, 11:00 a.m. Competitive proposals are received
July 16, 2018, 7:00 p.m. Council considers award of the Bonds
August 16, 2018 Proceeds are received
September 20, 2018 Series 2009A Bonds redemption date.
RATING: An application will be made to Moody’s Investors Service for a rating on the 2018B Bonds.
The City’s general obligation debt is currently rated 'Aa1' by Moody’s.
THE MARKET: General performance of the tax-exempt market is often measured by the Bond Buyer’s
Index (“BBI”) which measures the yield of high grade municipal bonds in the 20 th year for
general obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the
BBI Revenue Bond Index). The following chart illustrates these two indices over the past
five years.
Study No.: 0483.15X May 25, 2018
Page 2
POST ISSUANCE
COMPLIANCE:
The issuance of the Series 2018B Bonds will result in post-issuance compliance
responsibilities. The 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 this issue has been structured. Post-issuance compliance responsibilities
for this 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. Under
certain circumstances any “excess earnings” will need to be paid to the IRS to maintain the
tax-exempt status of the Series 2018B Bonds. Any interest earnings on gross bond
proceeds or debt service funds should not be spent until it has been determined based on
actual facts that they are not “excess earnings” as defined by the IRS Code.
The arbitrage rules provide for spend-down exceptions for proceeds that are spent within
either a 6-month, 18-month or 24-month period in accordance with certain spending
criteria. Proceeds that qualify for an exception will be exempt from rebate. These
exceptions are based on actual expenditures and not based on reasonable expectations;
and expenditures, including any investment proceeds, will have to meet the spending
criteria to qualify for the exclusion. Since this issue is a current refunding, proceeds will be
expended within 90 days of closing; therefore, the Series 2018B Bonds will meet the 6-
month spending exception.
Regardless of whether the issue qualifies for an exemption from the rebate provisions,
yield restriction provisions will apply to Bond proceeds (including interest earnings) unspent
after three years and the debt service fund throughout the term of the Series 2018B Bonds.
These moneys should be monitored until the Bonds are retired.
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 both arbitrage and continuing disclosure services to the City.
Springsted will work with City staff to include the Series 2018B Bonds under the existing
Agreement for Municipal Advisor Services
SUPPLEMENTAL
INFORMATION AND
BOND RECORD:
Supplementary information will be available to staff including detailed terms and conditions
of sale, comprehensive structuring schedules and information to assist in meeting post -
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.
Page 3
PURPOSE: The Series 2018B Bonds will be a current refunding with the Series 2009A Bonds being
called for redemption on September 20, 2018. The purpose of this refunding transaction is
to (i) eliminate the risk the federal government will further reduce or eliminate the federal
direct pay tax credit on which the City relies to make a substantial portion of the debt
service payments on the Series 2009A Bonds and (ii) to achieve interest cost savings.
As part of the American Recovery and Reinvestment Act (ARRA) of 2009, municipal
issuers such as the City were permitted to issue taxable “Build America Bonds” or “BABs”
as an alternative to traditional tax-exempt municipal bonds to fund public capital
expenditures. Under the ARRA, BABs were issued with a 35% direct payment tax credit,
whereby the issuer receives a semi-annual tax credit directly from the federal government
equal to 35% of the interest payments on the bonds.
On March 1, 2013, the President issued a sequestration order (“sequestration”) which
required automatic spending cuts. The results of sequestration included a reduction in the
amount of the federal subsidies paid to state and local governments for certain bond
programs authorized as part of the ARRA program. For each of the past four years there
has been a reduction in the direct pay tax credit. For federal fiscal year 2018 (ending
September 30, 2018), that reduction amount is equal to 6.6%.
It is important to note that the current sequestration rate is applicable only to the federal
fiscal year 2018; however, a bill passed in January 2018, extends the sequestration
through federal fiscal year 2025. Previous legislation had extended the original sunset
provision from 2023 to 2024. Sequestration was originally set to sunset in 2021.
Additional reductions in the federal credit separate from and in addition to sequestration
remain a possibility for future years.
The decision to proceed with a refunding of an ARRA bond has more elements than a
standard current refunding, specifically:
- Probability that the current federal position on sequestration is reversed with the
jurisdiction then receiving its full 35% direct payment credit;
- Probability that in the near term municipal tax-exempt interest rates will be notably
lower thereby increasing the potential interest cost savings.
Proceeds of the Series 2018B Bonds will be used to refund the outstanding February 1,
2019 through February 1, 2030 maturities of the City’s Taxable General Obligation Street
Reconstruction Bonds, Series 2009A (Build America Bonds), dated December 30, 2009
(the “Series 2009A Bonds”).
The Series 2009A Bonds were originally issued to finance interchange improvements at
County State Aid Highway (C.S.A.H.) 70 and Interstate 35 within the City.
AUTHORITY: The Series 2018B Bonds are being issued pursuant to Minnesota Statutes, Chapter 475
and Section 475.58 (Subd. 3b).
SECURITY AND
SOURCE OF
PAYMENT:
The Series 2018B Bonds will be general obligations of the City, secured by its full faith and
credit and taxing power. The Series 2018B Bonds will be repaid from ad valorem property
taxes.
Page 4
On September 20, 2018, the anticipated call date of the Series 2009A Bonds, the proceeds
of the Series 2018B Bonds will be used to redeem the remaining $3,320,000 outstanding
principal of the Series 2009A Bonds and the interest accrued thereon. Beginning with the
February 1, 2019 debt service payment, the City will make debt service payments on the
Series 2018B Bonds and start realizing the interest cost savings.
The City levied for the Series 2009A Bonds in 2017 for collection in 2018. The second-half
collection and any surplus first-half collections for the Series 2009A Bonds will pay the
February 1, 2019 principal and interest payment on the Series 2018B Bonds following the
refunding. Each subsequent year’s first-half collection of taxes will be used to pay the
August 1 interest payment due in the year of collection. Second-half collection of taxes
plus surplus first-half collections will be used to pay the February 1 principal and interest
payment due in the following year.
STRUCTURING
SUMMARY:
In consultation with City staff, the Series 2018B Bonds have been structured to result in
approximately level annual savings over a term matching the remaining term of the Series
2009A Bonds.
Based on the mid-May interest rate market, this refunding is projected to result in total net
future value savings of approximately $114,534, with a net present value of $99,583.
These savings are after payment of all expenses related to the Series 2018B Bonds and
assume the current sequestration rate.
SCHEDULES
ATTACHED:
Schedules attached for the Series 2018B Bonds include: preliminary refunding summary,
estimated interest cost savings and debt service requirements for the Series 2018B Bonds,
and debt service to maturity and to the anticipated call date of the 2009A Bonds.
RISKS/SPECIAL
CONSIDERATIONS:
The outcome of this financing will rely on the market conditions at the time of the sale.
Schedules included are for illustrative purposes based on current market conditions and do
not represent the final pricing for the Series 2018B Bonds.
SALE TERMS AND
MARKETING:
Variability of Issue Sizes: A specific provision in the sale’s terms permits modifications to
the 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: 2018B Bonds maturing on or after February 1, 2028 may be
prepaid at a price of par plus accrued interest on or after February 1, 2027.
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
Series 2018B Bonds are designated as bank qualified.
Prior to the sale of the Series 2018B Bonds, the City will issue General Obligation Bonds,
Series 2018A in the anticipated amount of $8,575,000. It has been determined that the
amount of the Series 2018B Bonds above the refunded par amount of the Series 2009A
Bonds is the only amount of the Series 2018B Bonds attributable towards the bank
qualification limit for this issue. Therefore, given that the Series 2018B Bonds are to be
sold more than 15 days after the sale of the Series 2018A Bonds and the combined par
amount of the Series 2018A and Series 2018B Bonds attributable towards this limit is
under $10 million, both bond issues are able to be issued as bank qualified.
Page 5
$3,410,000
City of Lakeville, Minnesota
General Obligation Street Reconstruction Refunding Bonds, Series 2018B
Current Refunding of Series 2009A BABs
Refunding Summary
Dated 08/16/2018 | Delivered 08/16/2018
Sources Of Funds
Par Amount of Bonds.....................................................................................................................................................................................$3,410,000.00
Total Sources...........................................................................................................................................................................................$3,410,000.00
Uses Of Funds
Total Underwriter's Discount (1.000%)..................................................................................................................................................................34,100.00
Costs of Issuance.......................................................................................................................................................................................29,060.00
Deposit to Current Refunding Fund.......................................................................................................................................................................3,343,807.88
Rounding Amount.........................................................................................................................................................................................3,032.12
Total Uses..............................................................................................................................................................................................$3,410,000.00
ISSUES REFUNDED AND CALL INFORMATION
Prior Issue Call Price..................................................................................................................................................................................100.000%
Prior Issue Call Date...................................................................................................................................................................................9/20/2018
SAVINGS INFORMATION
Net Present Value Benefit...............................................................................................................................................................................$99,583.26
BOND STATISTICS
Average Life............................................................................................................................................................................................6.262 Years
Average Coupon..........................................................................................................................................................................................2.7824692%
Net Interest Cost (NIC).................................................................................................................................................................................2.9421664%
True Interest Cost (TIC)................................................................................................................................................................................2.9528281%
Series 2018B Ref 2009A BA | SINGLE PURPOSE | 5/24/2018 | 10:57 AM
Page 6
$3,410,000
City of Lakeville, Minnesota
General Obligation Street Reconstruction Refunding Bonds, Series 2018B
Current Refunding of Series 2009A BABs
Debt Service Comparison
Date Total P+I Net New D/S Old Net D/S Savings
02/01/2019 285,580.83 285,580.83 296,650.44 11,069.61
02/01/2020 338,640.00 338,640.00 345,768.72 7,128.72
02/01/2021 338,285.00 338,285.00 348,413.42 10,128.42
02/01/2022 337,305.00 337,305.00 345,580.20 8,275.20
02/01/2023 336,210.00 336,210.00 347,334.74 11,124.74
02/01/2024 339,730.00 339,730.00 348,584.44 8,854.44
02/01/2025 337,730.00 337,730.00 349,134.12 11,404.12
02/01/2026 340,177.50 340,177.50 349,145.30 8,967.80
02/01/2027 337,065.00 337,065.00 348,604.56 11,539.56
02/01/2028 338,665.00 338,665.00 347,498.42 8,833.42
02/01/2029 339,675.00 339,675.00 345,709.06 6,034.06
02/01/2030 335,075.00 335,075.00 343,216.32 8,141.32
Total $4,004,138.33 $4,004,138.33 $4,115,639.74 $111,501.41
PV Analysis Summary (Net to Net)
Net FV Cashflow Savings.................................................................................................................................................................................111,501.41
Gross PV Debt Service Savings...........................................................................................................................................................................428,691.85
Effects of changes in Federal Credit.........................................................................................................................................................................(332,140.71)
Net PV Cashflow Savings @ 2.773%(Bond Yield)...........................................................................................................................................................96,551.14
Contingency or Rounding Amount..........................................................................................................................................................................3,032.12
Net Future Value Benefit................................................................................................................................................................................$114,533.53
Net Present Value Benefit...............................................................................................................................................................................$99,583.26
Net PV Benefit / $1,039,541.16 PV Refunded Interest.....................................................................................................................................................9.580%
Net PV Benefit / $3,838,691.85 PV Refunded Debt Service.................................................................................................................................................2.594%
Net PV Benefit / $3,320,000 Refunded Principal.........................................................................................................................................................2.999%
Net PV Benefit / $3,410,000 Refunding Principal........................................................................................................................................................2.920%
Refunding Bond Information
Refunding Dated Date....................................................................................................................................................................................8/16/2018
Refunding Delivery Date.................................................................................................................................................................................8/16/2018
Series 2018B Ref 2009A BA | SINGLE PURPOSE | 5/24/2018 | 10:57 AM
Page 7
$3,410,000
City of Lakeville, Minnesota
General Obligation Street Reconstruction Refunding Bonds, Series 2018B
Current Refunding of Series 2009A BABs
DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I 105% Levy
02/01/2019 245,000.00 2.000%40,580.83 285,580.83 299,859.87
02/01/2020 255,000.00 2.100%83,640.00 338,640.00 355,572.00
02/01/2021 260,000.00 2.300%78,285.00 338,285.00 355,199.25
02/01/2022 265,000.00 2.300%72,305.00 337,305.00 354,170.25
02/01/2023 270,000.00 2.400%66,210.00 336,210.00 353,020.50
02/01/2024 280,000.00 2.500%59,730.00 339,730.00 356,716.50
02/01/2025 285,000.00 2.650%52,730.00 337,730.00 354,616.50
02/01/2026 295,000.00 2.750%45,177.50 340,177.50 357,186.38
02/01/2027 300,000.00 2.800%37,065.00 337,065.00 353,918.25
02/01/2028 310,000.00 2.900%28,665.00 338,665.00 355,598.25
02/01/2029 320,000.00 3.000%19,675.00 339,675.00 356,658.75
02/01/2030 325,000.00 3.100%10,075.00 335,075.00 351,828.75
Total $3,410,000.00 -$594,138.33 $4,004,138.33 $4,204,345.25
SIGNIFICANT DATES
Dated...................................................................................................................................................................................................8/16/2018
Delivery Date...........................................................................................................................................................................................8/16/2018
First Coupon Date.......................................................................................................................................................................................2/01/2019
Yield Statistics
Bond Year Dollars.......................................................................................................................................................................................$21,352.92
Average Life............................................................................................................................................................................................6.262 Years
Average Coupon..........................................................................................................................................................................................2.7824692%
Net Interest Cost (NIC).................................................................................................................................................................................2.9421664%
True Interest Cost (TIC)................................................................................................................................................................................2.9528281%
Bond Yield for Arbitrage Purposes.......................................................................................................................................................................2.7727509%
All Inclusive Cost (AIC)................................................................................................................................................................................3.1083901%
IRS Form 8038
Net Interest Cost.......................................................................................................................................................................................2.7824692%
Weighted Average Maturity...............................................................................................................................................................................6.262 Years
Interest rates are estimates. Changes in rates may
cause significant alterations to this schedule.
The actual underwriter's discount bid may also vary.
Series 2018B Ref 2009A BA | SINGLE PURPOSE | 5/24/2018 | 4:16 PM
Page 8
$4,945,000
City of Lakeville, Minnesota
Taxable General Obligation Street Reconstruction Bonds, Series 2009A
(Build America Bonds - Direct Pay)
Debt Service To Maturity And To Call
Date Refunded
Bonds
Refunded
Interest
D/S To Call Principal Coupon Interest Refunded
D/S
08/16/2018 -------
09/20/2018 3,320,000.00 23,807.88 3,343,807.88 ----
02/01/2019 ---230,000.00 4.500%87,457.50 317,457.50
08/01/2019 -----82,282.50 82,282.50
02/01/2020 ---235,000.00 4.650%82,282.50 317,282.50
08/01/2020 -----76,818.75 76,818.75
02/01/2021 ---245,000.00 4.750%76,818.75 321,818.75
08/01/2021 -----71,000.00 71,000.00
02/01/2022 ---250,000.00 4.900%71,000.00 321,000.00
08/01/2022 -----64,875.00 64,875.00
02/01/2023 ---260,000.00 5.000%64,875.00 324,875.00
08/01/2023 -----58,375.00 58,375.00
02/01/2024 ---270,000.00 5.200%58,375.00 328,375.00
08/01/2024 -----51,355.00 51,355.00
02/01/2025 ---280,000.00 5.300%51,355.00 331,355.00
08/01/2025 -----43,935.00 43,935.00
02/01/2026 ---290,000.00 5.400%43,935.00 333,935.00
08/01/2026 -----36,105.00 36,105.00
02/01/2027 ---300,000.00 5.500%36,105.00 336,105.00
08/01/2027 -----27,855.00 27,855.00
02/01/2028 ---310,000.00 5.650%27,855.00 337,855.00
08/01/2028 -----19,097.50 19,097.50
02/01/2029 ---320,000.00 5.800%19,097.50 339,097.50
08/01/2029 -----9,817.50 9,817.50
02/01/2030 ---330,000.00 5.950%9,817.50 339,817.50
Total $3,320,000.00 $23,807.88 $3,343,807.88 $3,320,000.00 -$1,170,490.00 $4,490,490.00
Yield Statistics
Base date for Avg. Life & Avg. Coupon Calculation.......................................................................................................................................................8/16/2018
Average Life............................................................................................................................................................................................6.360 Years
Average Coupon..........................................................................................................................................................................................5.5084540%
Weighted Average Maturity (Par Basis)...................................................................................................................................................................6.360 Years
Weighted Average Maturity (Original Price Basis)........................................................................................................................................................6.360 Years
Refunding Bond Information
Refunding Dated Date....................................................................................................................................................................................8/16/2018
Refunding Delivery Date.................................................................................................................................................................................8/16/2018
2009A TAX GO Bonds (BABs) | SINGLE PURPOSE | 5/24/2018 | 10:57 AM