HomeMy WebLinkAboutFinance Plan Improvement Bonds 2010 FINANCE PLAN SUMMARY
City of Lake Elmo, Minnesota
$710,000
General Obligation Improvement Bonds, Series 2010A
Prepared by:
NORTHLAND SECURITIES
45 South 7th Street
Suite 2000
Minneapolis,MN 55402
612-851-5900 800-851-2920
September 7, 2010
City of Lake Elmo, Minnesota
$710,000
General Obligation Improvement Bonds, Series 2010A
Financing Overview
Proceeds from this bond issue will be used to fund the City's 2010 Street Improvement Projects.
The estimated project cost total of$680,000 plus financing costs result in a financing requirement
of$710,000. A detailed illustration of the sources and uses of funds is as follows:
Sources & Uses
Dated 11/0112010 1 Delivered 11/01/2010
Sources Of Funds
Par Amount of Bonds $710,000.00
Total Sources $710,000.00
Uses Of Funds
Total Underwriter's D_iscount (1.960°!a) _ 13,916.00
Costs of Issuance 12,895.00
Deposit to Project Construction Fund 680,000.00
Rounding Amount - ---- — -- -----_-- 3,189.00
Total Uses $710,000.00
The estimated principal and interest is illustrated as Exhibit A. The debt is scheduled to be
repaid through the years 2012—2021. The interest estimate is based on an assumed average rate
of 1.79%. The principal payment structure is based on the City's expectations of special
assessment revenues and property tax collections to be received over the term of the Bonds.
The special assessment revenue stream assumes the City will file $174,000 of assessments in
2010 for first collection in 2011 over a term of ten years at a rate of 5,00%. The estimated average
annual tax levy for the project will be approximately $58,564 at the 105% requirement. The
summary cash flow analysis detailing the revenues and tax levy component is illustrated in
Exhibit B.
NORTHLAND 0
SECURITIES
Page 2
Related Considerations
• Bank Qualified - We understand the City (in combination with any subordinate taxing
jurisdictions or debt issued in the City's name by 501c3 corporations) does not
anticipate issuing more than a total of $30,000,000 in tax-exempt debt during this
calendar year. Therefore the bonds will be designated as "bank qualified" obligations
pursuant to Federal Tax Law if the Bonds are sold as Tax Exempt securities.
• Arbitrage and Rebate —We understand the City anticipates issuing$5,000,000 or less in
tax-exempt bonds in calendar year 2010 and therefore any arbitrage earnings in the
construction fund will be exempt from rebate.
This exemption from rebate does not eliminate the need to comply with other arbitrage
regulations governing the investment of bond proceeds and debt service funds. In
particular, the City should become familiar with the requirements for maintaining a
"bona fide" debt service fund. These requirements will be explained in the bond
transcript following closing.
• The Bonds will be global book entry with a bank designated as the paying agent. As
"paperless" bonds, you will avoid the cots of bond printing and annual registrar
charges. The Paying Agent will invoice you for the interest semiannually and on an
annual basis for the principal coming due. You will be charged only for paying
agent/transfer agent services provided by the bank. This cost of services has been
capitalized into the bond issue.
• Because the City's outstanding debt is more than $10.OM it is subject to full disclosure
requirements of the Securities and Exchange Commission. Northland can assist the
City in complying with these requirements.
NORTHLAND 10
SECURITIES
Page 3
Summary of Recommended Terms
1. Type of Bond Sale Negotiated
2. Bond Pricing Wednesday,October 13,2010
3. Council Consideration Tuesday,October 18, 2010 at 7:00 p.m.
4. Statutory Authority The Bonds are being issued pursuant to Minnesota
Statutes 429 and 475.
4. Repayment Term The Bonds will mature annually each February 1,
2012-2021. Interest on the Bonds will be payable
on August 1,2011 and semiannually thereafter on
each February 1 and August 1.
5. Security General obligation pledge of the City. The City
expects to fund debt service from a combination of
special assessments and property tax collections as
previously discussed.
6. Prepayment Feature The Bonds maturing February 1,2018—2021 will
be subject to prepayment on February 1,2017 at a
price of par plus accrued interest.
7. Tax Status Dorsey&Whitney, LLP
8. Credit Rating The City's general obligation debt is currently
rated "AA" by Standard & Poor's rating service.
We believe a credit rating will be cost effective for
this issue and we will pursue a rating with S&P for
the Bonds.
NORTHLAND SECURITIES
Page 4
EXHIBIT A
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
1 1/01/2010 - - -
08/01/2011 - - 7,741.88 7,741.88 -
02/01/2012 65,000.00 0.500% 5,161.25 70,161.25 77,903.13
08/01/2012 - - 4,998.75 4,998.75 -
02/01/2013 70,000.00 0.500% 4,998.75 74,998.75 79,997.50
08/01/2013 - - 4,823.75 4,823.75 -
02/01/2014 70,000.00 0.700% 4,823.75 74,823.75 79,647.50
08/01/2014 - - 4,578.75 4,578.75 -
02/01/2015 70,000.00 1.000% 4,578.75 74,578.75 79,157.50
08/01/2015 - - 4,228.75 4,228.75 -
02/01/2016 70,000.00 1.350% 4,228.75 74,228.75 78,457.50
08/01/2016 - - 3,756.25 3,756.25 -
02/01/2017 70,000.00 1.650% 3,756.25 73,756.25 77,512.50
08/01/2017 - - 3,178.75 3,178.75 -
02/01/2018 70,000.00 1.850% 3,178.75 73,178.75 76,357.50
08/01/2018 - - 2,531.25 2,53125 -
02/01/2019 75,000.00 2.050% 2,531.25 77,53125 80,062.50
08/01/2019 - - 1,762.50 1,762.50 -
02/01/2020 75,000.00 2.250% 1,762.50 76,762.50 78,525.00
08/01/2020 - - 918.75 918.75 -
02/01/2021 75,000,00 2,450% 918.75 75,918.75 76,837.50
Total $710,000.00 - $74,458.13 $784,458.13 -
Date And Tenn Structure
Dam 11/01/2010
Delivery Date 11/01/2010
First Coupon Date _ 8/01/2011
Average Life _ 5.856 Years
Average Coupon 1.7909351%
Net Interest Cost(NIC) - 2.1256554%
True Interest Cost(TICS __ 2.1381724%
NORTHLAND SECURITIES
Page 5
EXHIBIT B
Revenue vs D/S
Levy Collection Cycle
Less: Equals:
Scheduled Assessment Debt Levy Debt Levy @
Date P+I Revenue Required 105% Certified Collected
02/01/2011 - - - - -
02/01/2012 77,903.13 22,670.67 55,232.46 57,994.08 2010 2011
02/01/2013 79,997.50 22,671.04 57,326.46 60,192.78 2011 2012
02/01/2014 79,647.50 22,671.34 56,976.16 59,824.97 2012 2013
02/01/2015 79,157.50 22,671.10 56,486.40 59,310.72 2013 2014
02/01/2016 78,457.50 22,670.50 55,787.00 58,576,35 2014 2015
02/01/2017 77,512.50 22,670.64 54,841.86 57,583.95 2015 2016
02/01/2018 76,357.50 22,671.50 53,686.00 56,370.30 2016 2017
02/01/2019 80,062.50 22,670.90 57,391.60 60,261.18 2017 2018
02101/2020 78,525.00 22,670.70 55,854.30 58,647.02 2018 2019
02/01/2021 76,837.50 22,670.62 54,166.88 56,875.22 2019 2020
Total $784,458.13 $226,709.01 $557,749.12 $585,636.58
'Assumes assessments of$174,000 for a term of 10 years at a rate of 5.00%.
NORTHLAND SECURITIES
Page 6 ��""
EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL OF THE CITY OF LAKE ELMO, STATE OF MINNESOTA
HELD: Tuesday, September 7, 2010
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Lake Elmo, State of Minnesota, was duly held on Tuesday, September 7, 2010 at 7:00 o'clock
p.m.
Member introduced the following resolution and moved its
adoption:
RESOLUTION APPROVING THE ISSUANCE OF
GENERAL OBLIGATION IMPROVEMENT BONDS; SERIES 2010A
BE IT RESOLVED by the City Council of the City of Lake Elmo, State of Minnesota
(herein, the "City"), as follows:
1. The City Council hereby finds and declares that it is necessary and expedient for the
District to sell and issue its fully registered general obligation improvement bonds in the
total aggregate principal amount of not to exceed $710,000 (herein, the "Bonds"). The
proceeds of the Bonds will be used to fund various street improvement projects within the
City and to fund the costs of issuing the Bonds.
2. The City Council desires to proceed with the sale of the Bonds by direct negotiation to
Northland Securities, Inc. (herein, "NSI").
3. The City Finance Director and City Administrator are hereby authorized to approve the
sale of the Bonds in an aggregate principal amount of not to exceed $710,000 and to
execute a bond purchase agreement for the purchase of the Bonds with NSI, provided that
the true interest cost does not exceed 3.50%.
4. Upon approval of the sale of the Bonds by the City Finance Director and the City
Administrator the City Council will take action at its next regularly scheduled meeting
thereafter to adopt the necessary approving resolutions as prepared by the City's bond
counsel.
5. NSI is authorized to prepare an official statement related to the sale of the Bonds.
6. If the City Finance Director and City Administrator have not approved the sale of the
bonds to NSI and executed the related bond purchase agreement by December 31, 2010,
this resolution shall expire.
The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon vote being taken thereon,the following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
STATE OF MINNESOTA
COUNTY OF
CITY OF
FINANCE DIRECTOR CERTIFICATION REGARDING IMPROVEMENT
PROCEEDINGS
I, the undersigned, being the duly qualified and acting FINANCE DIRECTOR of the City
of , Minnesota (the "City"), DO HEREBY CERTIFY that the resolutions and
other documents furnished to Dorsey and Whitney, LLP, in connection with the 429
Improvement Proceedings for the issuance of the General Obligation Improvement Bonds, Series
2010A are true and correct copies of the original documents of which are on file and of record in
the office of the City.
WITNESS my hand officially and the official seal of the City of
Minnesota this day of 12010
Finance Director
SEAL