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HomeMy WebLinkAbout2012-099 Council Resolution• • CITY OF LINO LAKES RESOLUTION NO. 12 -99 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF APPROXIMATELY $2,030,000 GENERAL OBLIGATION BONDS, SERIES 2012A BE IT RESOLVED By the City Council of the City of Lino Lakes, Anoka County, Minnesota (the "City ") as follows: 1. It is hereby determined that: (a) at a duly called and regularly held general election on November 2, 2010, the voters of the City approved the issuance and sale by the City of up to $1,840,000 general obligation bonds of the City pursuant to Minnesota Statutes Chapter 475 (the "Act "); (b) the purpose of the bonds as approved by the voters is to provide financing for the construction of traffic signals and other improvements to the intersection of Main Street and Lake Drive and the intersection of Birch Street and Ware Road in the City (the "Interchange Improvements "): (c) the City is also authorized by Minnesota Statutes, Chapter 475 (the "Act ") and section 475.67, subdivision 3, of the Act to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City Council to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment_ (c) Section 475.67, subdivision 4 of the Act permits the sale of refunding obligations during the six month period prior to the date on which the obligations -to be refunded may be called for redemption; (d) the outstanding bonds to be refunded (the "Refunded Bonds ") consist of the $2,090,000 General Obligation Improvement and Refunding Bonds, Series 2003A, dated December 1, 2003, of which $425,000 in principal amount is currently outstanding and is callable on February 1, 2013. (e) it is necessary and expedient to the sound financial management of the affairs of the City to issue $2,030,000 General Obligation Bonds, Series 2012A (the "Bonds ") to (a) provide financing for the Interchange Improvements; and (b) effect a current refunding of the Refunded Bonds, summarized as follows Construction Fund (Interchange Improvements) Redemption of Refunded Bonds Underwriters Discount Allowance $1,519,000.00 425,000.00 16,240.00 • • • Costs of Issuance Capitalized Interest Rounding Amount Total 41,225.00 27,286.33 1,248.67 $2,030,000.00 2. To provide financing for the above purposes, the City will therefore issue and sell its Bonds in the approximate amount of $2,030,000. To provide in part the additional interest required to market the Bonds at this time, additional Bonds will be issued in the amount of $2,013,760. The excess of the purchase price of the Bonds over the sum of $16,240 will be credited to the debt service fund for the Bonds for the purpose of paying interest first coming due on the additional Bonds, unless otherwise provided in the resolution awarding sale of the Bonds. The amounts cited above are subject to adjustment in accordance with the Terms of Proposal. The Bonds will be issued, sold and delivered in accordance with the terms of the following Official Terms of Proposal: THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $2,030,000* CITY OF LINO LAKES, MINNESOTA GENERAL OBLIGATION BONDS, SERIES 2012A (BOOK ENTRY ONLY) Proposals for the Bonds and the Good Faith Deposit ( "Deposit ") will be received on Monday, October 22, 2012, until 11:30 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be- opened and tabulated. Consideration for award of the Bonds will be by the City Council at 6:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted. (a) Sealed Biddin'. Proposals may be submitted in a sealed envelope or by fax (651) 223 -3046 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (651) 223 -3000 or fax (651) 223 -3046 for inclusion in the submitted Proposal. Preliminary; subject to change. • • • OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY ®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all Bids submitted to PARITY ®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY® shall be responsible for a bidder's failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY ®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Bonds, and P ARITY® is not an agent of the City. If any provisions of this Terms of Proposal conflict with information provided by PARITY ®, this Terms of Proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY ®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849 -5000 DETAILS OF THE BONDS The Bonds will be dated November 15, 2012, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2013. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Bonds will mature February 1 in the years and amounts* as follows: 2014 $ 70,000 2015 $220,000 2016 $230,000 * 2017 $225,000 2018 $230,000 2019 $230,000 2020 $160,000 2023 $170,000 2021 $160,000 2024 $170,400 2022 $165,000 The City reserves the right, afterf. roposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the maturity amounts offered for sale. Any such increase or reduction will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the Proposal Form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, • • • representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( "DTC "), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2021, and on any day thereafter, to prepay Bonds due on or after February 1, 2022. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties to secure a portion of the Bonds. The proceeds will be used to (i) finance road intersection improvements within the City; and (ii) refund the February 1, 2014 through February 1, 2019 maturities of the City's General Obligation Improvement and Refunding Bonds, Series 2003A, dated December 1, 2003. BIDDING PARAMETERS Proposals shall be for not less than $2,013,760 and accrued interest on the total principal amount of the Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5 /100 or 1/8 of 1 %. Rates are not required to be in level or ascending order; however, the rate for any maturity cannot be more than 1% lower than the highest rate of any of the preceding maturities. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. • • • GOOD FAITH DEPOSIT Proposals, regardless of method of submission, shall be accompanied by a Deposit in the amount of $20,300, in the form of a certified or cashier's check, a wire transfer, or Financial Surety Bond and delivered to Springsted Incorporated prior to the time proposals will be opened. Each bidder shall be solely responsible for the timely delivery of their Deposit whether by check, wire transfer or Financial Surety Bond. Neither the City nor Springsted Incorporated have any liability for delays in the transmission of the Deposit. Any Deposit made by certified or cashier's check should be made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101. Any Deposit sent via wire transfer should be sent to Springsted Incorporated as the City's agent according to the following instructions: Wells Fargo Bank, N.A., San Francisco, CA 94104 ABA #121000248 for credit to Springsted Incorporated, Account #635 - 5007954 Ref: Lino Lakes, MN Series 2012A Good Faith Deposit Contemporaneously with such wire transfer, the bidder shall send an e -mail to bond services(,springsted.com, including the following information; (i) indication that a wire transfer has been made, (ii) the amount of the wire transfer, (iii) the issue to which it applies, and (iv) the return wire instructions if such bidder is not awarded the Bonds. Any Deposit made by the successful bidder by check or wire transfer will be delivered to the City following the award of the Bonds. Any Deposit made by check or wire transfer by an unsuccessful bidder will be returned to such bidder following City action relative to an award of the Bonds. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota and pre - approved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that underwriter is required to submit its Deposit to the City in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement, will be deposited by the City and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non - substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, ar equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bands has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non - compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2- 12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information • • relative to the Bonds, and said Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2 -12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2 -12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 80 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated September 24, 2012 BY ORDER OF THE CITY COUNCIL City Clerk /s/ Julie Bartell • • 3. Springsted Incorporated is authorized and directed to negotiate the Bonds in accordance with the foregoing Terms of Proposal. The City Council will meet at 6:30 o'clock P.M. on Monday, October 22, 2012, to consider proposals on the Bonds and take any other appropriate action with respect to the Bonds. 4. The law firm of Kennedy & Graven, Chartered, as bond counsel for the City, is authorized to act as bond counsel and to assist in the preparation and review of necessary documents, certificates and instruments relating to the Bonds. The officers, employees and agents of the City are hereby authorized to assist Kennedy & Graven, Chartered in the preparation of such documents, certificates, and instruments. Adopted by the Council of the City of Lino Lakes this 24th day of September, 2012. The motion for the adoption of the foregoing resolution was introduced by Council Member O'Donnell and was duly seconded by Council Member Roeser and upon vote being taken thereon, the following voted in favor thereof: O'Donnell, Roeser, Rafferty, Stoesz, Reinert The following voted against same: none ATTEST: Juli e Bartell, City Clerk Jeff Reinertt, Mayor N ti 0 Q N City of Lino Lakes, Minnesota Recommendations for Issuance of Bonds $2,030,000 General Obligation Bonds, Series 2012A The Council has under consideration the issuance of bonds to (i) fund traffic signal improvements to various street and roads within the City (the "Signal Improvement Portion ") and (ii) refund an outstanding bond issue of the City (the "Refunding Portion "). 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. September 24, 2012 Week of October 15, 2012 October 22, 2012, 11:30 a.m. October 22, 2012, 6:30 p.m. Mid November, 2012 Council sets sale date and terms Rating conference is conducted Competitive proposals are received Council considers award of Bonds Proceeds are received RATING: An application will be made to Moody's Investors Service for a rating on the Bonds. The City's general obligation debt is currently rated "Aa2" by Moody's. THE MARKET: 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 20th year for general obligation bonds (the BBI 20 Bond Index) and the 30th year for revenue bonds (the BBI 25 Bond Index). The following chart illustrates these two indices over the past five years. BBI 25 -bond (Revenue) and 20 -bond (G.O.) Rates for 5 Years Ending 9113/2012 6.5% 6_0% 5.5% 5.0% co CG 4.5% 4.0% 3.5% 01 QO Ob O O 41,0 00 � O� O '3 - it i1 S en 040 040 0,"4 0,\0 0�0 4 ^'* ^ ti O O p O ....\N4t. ,� 1� ^� ,O � BBI 25 Bond ---- BBI 20 Bond Dates Prepared by Sprrngsted Incorporated 1 ;' 1;V % 917 3 /2012 25 bond: 4.42% 20 bond: 3 79% 1 a r.% 04i .00 ; �1 , r 1v "0 iI h I AM 1 1 Ie6 i iea.' wP� vas i rk i1 S en 040 040 0,"4 0,\0 0�0 4 ^'* ^ ti O O p O ....\N4t. ,� 1� ^� ,O � BBI 25 Bond ---- BBI 20 Bond Dates Prepared by Sprrngsted Incorporated • POST ISSUANCE COMPLIANCE: SCHEDULES ATTACHED: SALE TERMS AND MARKETING: RISKSISPECIAL CONSIDERATIONS: SUPPLEMENTAL INFORMATION AND BOND RECORD: Span The issuance of the Bonds will result in post- issuance compliance responsibilities. The responsibilities lie in two primary areas: i) compliance with federal arbitrage requirements and ii) compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as your issue has been structured. Post - issuance compliance responsibilities for your tax - exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and /or reserves. There is an exception to rebate for a municipality that issues $5 million or less of tax - exempt obligations in a calendar year. The City expects to qualify as a small issuer for 2012; therefore, the Bonds will be exempt from rebate. Yield restriction provisions will apply to the debt service fund and any project proceeds unspent after three years under certain conditions and the funds should be monitored throughout the life of the Bonds. Secondary disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. Springsted currently provides arbitrage and continuing disclosure compliance services to the City under separate contracts. Contract amendments adding the Bonds will be provided to the City. Schedules attached include a project summary, debt service schedules for the Bonds as a whole and by purpose, and a debt service comparison for the Refunding Portion. 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: Bonds maturing on or after February 1, 2022 may be prepaid at a price of par plus accrued interest on or after February 1, 2021. Bank Qualification: The City does not expect to issue more than $10 million in tax - exempt obligations that counts against the $10 million limit for this calendar year; therefore, the Bonds are designated as bank qualified. 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. 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. sted Page 2 • $1,595,000 Signal Improvement Portion • Description of Purpose PURPOSE: AUTHORITY: Proceeds of the Signal Improvement Portion plus a contribution from the Trunk Utility Fund in the amount of $32,000 will be used to finance the construction of traffic signals and related improvements to (i) the intersection of Main Street and Lake Drive and (ii) the intersection of Birch Street and Ware Road. The Signal Improvement Portion of the Bonds is being issued pursuant to Minnesota Statutes Chapter 475 and a referendum approved on November 2, 2010. SECURITY AND The Signal Improvement Portion will be a general obligation of the City for which the City SOURCE OF pledges its full faith and credit and power to levy general ad valorem taxes. The Signal PAYMENT: Improvement Portion will be repaid with ad valorem tax levies. The City will make their first levy for the Signal Improvement Portion in 2013 for collection in 2014. Interest due through and including February 1, 2014 will be paid with capitalized interest included in the par amount of the Signal Improvement Portion of the Bonds. Beginning with the August 1, 2014 interest payment, tax collections 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. STRUCTURING The Signal Improvement Portion of the Bonds has been structured over a term of eleven SUMMARY: years (10 years of principal) with level annual payments of principal and interest. $435,000 Refunding Portion Description of Purpose PURPOSE: AUTHORITY: Proceeds of the Refunding Portion are being used to refund the February 1, 2014 through 2019 maturities of the City's General Obligation Improvement and Refunding Bonds, Series 2003A (the "Series 2003A Bonds "). The aggregate principal amount of the maturities to be refunded is $425,000. The purpose of the refunding is to achieve interest cost savings. The Series 2003A Bond proceeds were used to (i) finance various street and utility improvement projects within the City and (ii) to refund the February 1, 2005 through 2007 maturities of the City's General Obligation Improvement Bonds, Series 1996A. The Refunding Portion of the Bonds is being issued pursuant to Minnesota Statutes, Chapters 429 and 475. SECURITY AND The Refunding Portion will be a general obligation of the City for which the City pledges its SOURCE OF full faith and credit and power to levy general ad valorem taxes. The Refunding Portion will PAYMENT: be repaid with assessments filed against benefited properties. The City does not expect to have to levy to pay any portion of the debt service on the Refunding Portion. Sprjngsted Page 3 • STRUCTURING The Refunding Portion has been structured with the same term as the Series 2003A Bonds SUMMARY: to result in approximately even annual savings. On February 1, 2013, the call date, the City will (i) make the February 1, 2013 principal and interest payment on the Series 2003A Bonds as scheduled with assessments collected in 2012 and (ii) use the proceeds of the Refunding Portion to redeem the February 1, 2014 through 2019 maturities on the Series 2003A Bonds. Beginning with the August 1, 2013 interest payment, the City will begin to make debt service payments on the Refunding Portion of the Bonds, realizing the interest cost savings. Based on current interest rate estimates, this refunding transaction is projected to result in the City realizing average annual cash flow savings of approximately $6,125 per year. This results in an aggregate future value savings of approximately $34,160 with a net present value benefit to the City of approximately $32,340. These estimates are net of all costs associated with the refunding. • • Sprinsted Page4 1 $2,030,000 City of Lino Lakes, Minnesota General Obligation Bonds, Series 2012A Project Summary Dated 11/15/2012 Delivered 11/15/2012 Signal Issue Improvements Ref 2003A Summary Sources Of Funds Par Amount of Bonds $1,595,000.00 $435,000.00 $2,030,000.00 Trunk Utility Fund Contribution 32,000.00 32,000.00 Total Sources $1,627,000.00 $435,000.00 $2,062,000.00 Uses Of Funds Deposit to Project Construction Fund 1,551,000.00 1,551,000.00 Deposit to Current Refunding Fund 425,000.00 425,000.00 Costs of Issuance 32,105.36 9,119.64 41,225.00 Deposit to Capitalized hterest (CF) Fund 27,286.33 - 27,286.33 Total Underw riter's Discount (0.800 %) 12,760.00 3,480.00 16,240.00 Rounding Amount 3,848.31 (2,599.64) 1,248.67 Total Uses $1,627,000.00 $435,000.00 $2,062,000.00 Flow of Funds Detail Primary Purpose Fund Solution Method Net Funded Gross Funded Gross Funded Total Cost of hvestments $1,551,000.00 $425,000.00 $1,976,000.00 Total Draws $1,551,000.00 $425,000.00 $1,976,000.00 Capitalized hterest Fund Solution Method Net Funded Net Funded Net Funded Original Bond Roceeds 27,286.33 27,286.33 Accrued hterest Total Draw s $27,286.33 $27,286.33 PV Analysis Summary (Net to Net) Net IN Cashflow Savings 34,937.70 Contingency or Rounding Amount (2,599.64) Net Resent Value Benefit $32,338.06 Net IN Benefit / - Refunded Principal 7.609% Net P✓ Benefit / - Refunding Principal 7.434% Bond Statistics Average Life 6.822 Years 3.751 Years 6.164 Years Average Coupon 1.6085352% 1.0406749% 1.5344832% Net hterest Cost (NIC) 1.7257960% 1.2539320% 1.6642625% Bond Yield for Arbitrage Purposes 1.5253735% 1.5253735% 1.5253735% True hterest Cost (TIC) 1.7254668% 1.2581240% 1.6631891% All Inclusive Cost (A IC) 2.0468060% 1.8451530% 2.0198265% 2012A GO New Money and Re 1 issue Summary 1 9/10/2012 1 11.35 AM Springsted Page 5 • • • $2,030,000 City of Lino Lakes, Minnesota General Obligation New Money and Refunding Bonds, Series 2012A NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I Capitalized Net New D/S 105% Fiscal Total Interest Overlevy 02/01/2013 - 08/01/2013 - 02/01/2014 70,000.00 08/01/2014 02/01/2015 220,000.00 08/01/2015 - 02/01/2016 230,000.00 08/01/2016 02/01/2017 225,000.00 08/01/2017 02/01/2018 230,000.00 08/01/2018 - 02/01/2019 230,000.00 08/01/2019 02/01/2020 160,000.00 08/01/2020 02/01/2021 160,000.00 08/01/2021 02/01/2022 165,000.00 08/01/2022 02/01/2023 170,000.00 08/01/2023 02/01/2024 170,000.00 18,874.66 0.600% 13,271.25 13,061.25 0.700% 13,061.25 12,291.25 0.750% 12,291.25 11,428.75 0.950% 11,428.75 10,360.00 1.150% 10,360.00 9,037.50 1.350% 9,037.50 7,485.00 1.550% 7,485.00 6,245.00 1.700% 6,245.00 4,885.00 1.800% 4,885.00 3,400.00 1.950% 3,400.00 1,742.50 2.050% 1,742.50 18,874.66 83,271.25 13,061.25 233,061.25 12,291.25 242,291.25 11,428.75 236,428.75 10,360.00 240,360.00 9,037.50 239,037.50 7,485.00 167,485.00 6,245.00 166,245.00 4,885.00 169,885.00 3,400.00 173,400.00 1,742.50 171,742.50 (16,021.33) (11,265.00) 2,853.33 72,006.25 13,061.25 233,061.25 12,291.25 242,291.25 11,428.75 236,428.75 10,360.00 240,360.00 9,037.50 239,037.50 7,485.00 167,485.00 6,245.00 166,245.00 4,885.00 169,885.00 3,400.00 173,400.00 1,742.50 171,742.50 2,996.00 75,606.56 13,714.31 244,714.31 12,905.81 254,405.81 12,000.19 248,250.19 10,878.00 252,378.00 9,489.38 250,989.38 7,859.25 175,859.25 6,557.25 174,557.25 5,129.25 178,379.25 3,570.00 182,070.00 1,829.63 180,329.63 78,602.56 258,428.63 267,311.63 260,250.38 263,256.00 260,478.75 183,718.50 181,114.50 183,508.50 185,640.00 182,159.25 Total $2,030,000.00 - $192,018.41 $2,222,018.41 (27,286.33) $2,194,732.08 $2,304,468.68 SIGNIFICANT DATES Dated Date Delivery Date First Coupon Date Yield Statistics Bond Year Dollars Average Life Average Coupon Net hterest Cost (NIC) True hterest Cost (TIC) Bond Yield for Arbitrage Purposes All hclusive Cost (AC) IRS Form 8038 Net hterest Cost Weighted Average Maturity 2012A GO New Money and Re 1 Bsue Summary 1 9/11/2012 1 8:29 AM 11/15/2012 11/15/2012 8/01/2013 $12513.56 6.164 Years 1.5344832% 1.6642625% 1.6631891% 1.5253735% 2.0198265% 1.5344832% 6.164 Years Sprint sfied Page6 • • • $1,595,000 City of Lino Lakes, Minnesota General Obligation Refunding Bonds, Series 2012A Signal Improvements NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I Capitalized Net New D/S 105% Fiscal Total Interest Overlevy 11/15/2012 - 08/01/2013 16,021.33 16,021.33 (16,021.33) 02/01/2014 11,265.00 11,265.00 (11,265.00) - 08/01/2014 11,265.00 11,265.00 11,265.00 11,828.25 02/01/2015 150,000.00 0.700% 11,265.00 161,265.00 161,265.00 169,328.25 181,156.50 08/01/2015 - 10,740.00 10,740.00 - 10,740.00 11,277.00 - 02/01/2016 155,000.00 0.750% 10,740.00 165,740.00 165,740.00 174,027.00 185,304.00 08/01/2016 10,158.75 10,158.75 10,158.75 10,666.69 02/01/2017 155,000.00 0.950% 10,158.75 165,158.75 165,158.75 173,416.69 184,083.38 08/01/2017 9,422.50 9,422.50 9,422.50 9,893.63 02/01/2018 155,000.00 1.150% 9,422.50 164,422.50 164,422.50 172,643.63 182,537.25 08/01/2018 - 8,531.25 8,531.25 8,531.25 8,957.81 02/01/2019 155,000.00 1.350% 8,531.25 163,531.25 163,531.25 171,707.81 180,665.63 08/01/2019 - - 7,485.00 7,485.00 7,485.00 7,859.25 02/01/2020 160,000.00 1.550% 7,485.00 167,485.00 167,485.00 175,859.25 183,718.50 08/01/2020 6,245.00 6,245.00 - 6,245.00 6,557.25 02/01/2021 160,000.00 1.700% 6,245.00 166,245.00 166,245.00 174,557.25 181,114.50 08/01/2021 - 4,885.00 4,885.00 4,885.00 5,129.25 02/01/2022 165,000.00 1.800% 4,885.00 169,885.00 169,885.00 178,379.25 183,508.50 08/01/2022 - 3,400.00 3,400.00 3,400.00 3,570.00 02/01/2023 170,000.00 1.950% 3,400.00 173,400.00 173,400.00 182,070.00 185,640.00 08/01 /2023 - 1,742.50 1,742.50 1,742.50 1,829.63 02/01/2024 170,000.00 2.050% 1,742.50 171,742.50 171,742.50 180,329.63 182,159.25 Total $1,595,000.00 - $175,036.33 $1,770,036.33 (27,286.33) $1,742,750.00 $1,829,887.50 SIGNIFICANT DATES Dated Date 11/15/2012 Delivery Date 11/15/2012 First Coupon Date 8/01/2013 Yield Statistics Bond Year Dollars $10,881.72 Average Life 6.822 Years Average Coupon 1.6085352% Net hterest Cost (MC) 1.7257960% True hterest Cost (TIC) 1.7254668% Bond Yield for Arbitrage Purposes 1.5253735% All Inclusive Cost (AIC) 2.0468060% IRS Form 8038 Net hterest Cost 1.6085352% Weighted Average Maturity 6.822 Years 2012A GO New Money and Re 1 2012A GO Bonds - 10YR 1 9/11/2012 1 8.-29 AM Springsted Page 7 • • • $435,000 City of Lino Lakes, Minnesota General Obligation Refunding Bonds, Series 2012A Refunding Portion - Current Refunding of Series 2003A NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I 105% Overlevy Fiscal Total 02/01/2013 - - 08/01/2013 - 2,853.33 2,853.33 2,996.00 02/01/2014 70,000.00 0.600% 2,006.25 72,006.25 75,606.56 78,602.56 08/01 /2014 - 1,796.25 1,796.25 1,886.06 02/01/2015 70,000.00 0.700% 1,796.25 71,79625 75,386.06 77,272.13 08/01/2015 1,551.25 1,551.25 1,628.81 - 02/01/2016 75,000.00 0.750% 1,551.25 76,55125 80,378.81 82,007.63 08/01/2016 - 1,270.00 1,270.00 1,333.50 - 02/01/2017 70,000.00 0.950% 1,270.00 71,270.00 74,833.50 76,167.00 08/01/2017 - 937.50 937.50 984.38 - 02/01/2018 75,000.00 1.150% 937.50 75,937.50 79,734.38 80,718.75 08/01/2018 506.25 506.25 531.56 02/01/2019 75,000.00 1.350% 506.25 75,506.25 79,281.56 79,813.13 Total $435,000.00 $16,982.08 $451,982.08 $474,581.18 SIGNIFICANT DATES Dated Date 11/15/2012 Delivery Date 11/15/2012 First Coupon Date 8/01/2013 Yield Statistics Bond Year Dollars $1,631.83 Average Life 3.751 Years Average Coupon 1.0406749% Net hterest Cost (NC) 1.2539320% True hterest Cost (TIC) 1.2581240% Bond Yield for Arbitrage Purposes 1.5253735% All hclusive Cost (AIC) 1.8451530% IRS Form 8038 Net hterest Cost 1.0406749% Weighted Average Maturity 3.751 Years 2012A GGNew Money and Re 1 Ref2003A 1 9/11/2012 ( 8:29 AM Springsted Page 8 • • • $435,000 City of Lino Lakes, Minnesota General Obligation Bonds, Series 2012A Refunding Portion - Current Refunding of Series 2003A Debt Service Comparison Date Total P +I Existing Net New D/S Old Net D/S Savings 02/01/2013 02/01/2014 74,859.58 02/01/2015 73,592.50 02/01/2016 78,102.50 02/01/2017 72,540.00 02/01/2018 76,875.00 02/01/2019 76,012.50 69,743.75 69,743.75 69,743.75 - 74,859.58 82,387.50 7,527.92 73,592.50 79,787.50 6,195.00 78,102.50 82,187.50 4,085.00 72,540.00 79,387.50 6,847.50 76,875.00 81,587.50 4,712.50 76,012.50 83,400.00 7,387.50 Total $ 451, 982.08 $ 69,743.75 $521,725.83 $558,481.25 $36,755.42 PV Analysis Summary (Net to Net) Net FV Cashflow Savings 36,755.42 Gross IN Debt Service Savings 34,937.70 Net IN Cashflow Savings © 1.525 %(Bond Yield) 34,937.70 Contingency or Rounding Amount (2,599.64) Net Future Value Benefit $34,155.78 Net Resent Value Benefit $32,338.06 Net PV Benefit / $61,194.23 PV Refunded hterest 52.845% Net IN Benefit 1$462,273.17 IN Refunded Debt Service 6.995% Net Pi Benefit / $425,000 Refunded Rincipal 7.609% Net IN Benefit / $435,000 Refunding Rincipal 7.434% Refunding Bond Information Refunding Dated Date 11/15/2012 Refunding Delivery Date 11/15/2012 2012A GONew Moneyond Re 1 Ref 2003A 1 9/10/2012 1 11.d5AM Springsted Page 9 CITY COUNCIL AGENDA ITEM 2A • STAFF ORIGINATOR Al Rolek MEETING DATE September 24, 2012 TOPIC Consideration of Resolution 12 -99 Providing for the Issuance and Sale of Approximately $2,030,000 General Obligation Bonds, Series 2012A VOTE REQUIRED Simple Majority INTRODUCTION • The City has awarded a bid to construct traffic signals and related improvements at the intersections of Lake Drive and Main Street and Birch Street and Ware Road. These projects require debt financing to fund the construction of the improvements. In addition, market conditions are favorable to refinance a currently outstanding debt issue to achieve a better interest rate for this debt, thereby lowering the city's financing cost. BACKGROUND On November 2, 2010, the voters of the City passed a referendum approving the issuance and sale by the City of up to $1,840,000 general obligation bonds to construct traffic signals and related improvements at the intersections of Lake Drive/Main Street and Birch Street /Ware Road. The City Engineer has prepared plans and specifications for these improvements and the City Council awarded a bid for the construction of these improvements. Because Anoka County is participating financially in these projects, the City's cost for the improvements is budgeted at $1,551,000. Including the cost of issuance and capitalized interest, the necessary bonding to finance the City's portion of the improvement is $1,595,000. In addition, staff continually monitors the market for opportunities to refinance existing debt issues at lower interest rates, thereby saving the city money on financing costs. By refinancing the outstanding balance of our G.O. Improvement Bonds 2003A, it is estimated that the city can achieve net present value savings of approximately $32,340 over the term of the issue, a 7.609% savings. Minnesota Statutes Section 475.67, subdivision 3 authorizes the issuance and sale of refunding obligations during the six month period prior to the date on which the obligations to be refunded may be called for redemption. Our financial advisor, Springsted, Inc. has issued their recommendation for the issuance of $2,03-0,000 General Obligation Bonds Series 2012A. This issue will finance the signal construction projects and will refinance the outstanding portion of G.O. Improvement Bonds, Series 2003A bond. If approved, the bids for this issue would be received on October 22, 2012, with consideration for award of sale by the City Council at its meeting the same day. The Series 2012A issue will be repaid over 10 years through the use of a tax levy and the refunding portion will be repaid through previously adopted special assessments. RECOMMENDATION Staff recommendation is for the City Council to approve Resolution 12 -99 providing for the issuance of $2,030,000 General Obligation Bonds Series 2012A. ATTACHMENTS Recommendations for the Issuance of Bonds Resolution 12 -99.