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Home My WebLink AboutItem 11 - 2-CC 6 9 15_Set Sale Plan 2015AFOR CITY OF LAKE ELMO,MINNESOTA $2,815,000 GENERAL OBLIGATION BONDS, SERIES 2015A 45 South 7th Street Suite 2000 Minneapolis, MN 55402 612-851-5900 800-851-2920 June 9, 2015 FINANCE PLAN SUMMARY Page 2 CCiittyy ooff LLaakkee EEllmmoo,,MMiinnnneessoottaa $$22,,881155,,000000 GGeenneerraall OObblliiggaattiioonn BBoonnddss,,SSeerriieess 22001155AA FINANCING OVERVIEW This Finance Plan Summary describes the recommended terms and process for the public issuance of $2,815,000 of General Obligation Bonds, Series 2015A through a competitive public sale process. PURPOSE Proceeds from the Bonds will be used to fund a portion of the City’s 2015 infrastructure projects and purchase of equipment including: 39th Street Project Inwood Booster Station Project Eagle Point Reconstruction Project Equipment Purchases The estimated financing required for project costs is $2,739,211 allocated to include $1,164,561 of utility system costs, $1,447,100 of improvement project costs, and $127,550 of equipment costs. The total borrowing required including financing costs is $2,815,000 and is detailed in Figure 1. FIGURE 1 Improvement Portion Utility Portion Equipment Issue Summary Sources Of Funds Par Amount of Bonds $1,490,000.00 $1,195,000.00 $130,000.00 $2,815,000.00 Total Sources $1,490,000.00 $1,195,000.00 $130,000.00 $2,815,000.00 Uses Of Funds Total Underwriter's Discount (1.250%)18,625.00 14,937.50 1,625.00 35,187.50 Costs of Issuance 20,881.17 16,746.98 1,821.85 39,450.00 Deposit to Project Construction Fund 1,447,100.00 1,164,561.00 127,550.00 2,739,211.00 Rounding Amount 3,393.83 (1,245.48)(996.85)1,151.50 Total Uses $1,490,000.00 $1,195,000.00 $130,000.00 $2,815,000.00 Page 3 STATUTORY AUTHORITY The Bonds will be issued pursuant to the authority of Minnesota Statutes Chapter 475, 429, 444, and 412.301. The City’s bond attorney from Dorsey & Whitney is assuring compliance with Minnesota and Federal laws. DEBT SERVICE STRUCTURE The total repayment generally reflects a level annual requirement over a term of ten years for the Improvement portion, and a term of fifteen years on the Utility portion and not to exceed seven years on the Equipment portion with an assumed average interest rate of 2.30% and an all inclusive cost of 2.69%. Individual repayment schedules for the improvement portion, utility portion, and equipment portion have been reviewed with City staff regarding projected revenues to repay the debt service and compliance with the City’s Debt Management Policies. The total estimated debt service is illustrated in Figure 2. Page 4 FIGURE 2 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2015 ----- 07/15/2016 --56,262.50 56,262.50 - 01/15/2017 200,000.00 1.050%28,131.25 228,131.25 284,393.75 07/15/2017 --27,081.25 27,081.25 - 01/15/2018 225,000.00 1.200%27,081.25 252,081.25 279,162.50 07/15/2018 --25,731.25 25,731.25 - 01/15/2019 240,000.00 1.400%25,731.25 265,731.25 291,462.50 07/15/2019 --24,051.25 24,051.25 - 01/15/2020 240,000.00 1.550%24,051.25 264,051.25 288,102.50 07/15/2020 --22,191.25 22,191.25 - 01/15/2021 245,000.00 1.750%22,191.25 267,191.25 289,382.50 07/15/2021 --20,047.50 20,047.50 - 01/15/2022 245,000.00 1.900%20,047.50 265,047.50 285,095.00 07/15/2022 --17,720.00 17,720.00 - 01/15/2023 250,000.00 2.050%17,720.00 267,720.00 285,440.00 07/15/2023 --15,157.50 15,157.50 - 01/15/2024 235,000.00 2.200%15,157.50 250,157.50 265,315.00 07/15/2024 --12,572.50 12,572.50 - 01/15/2025 240,000.00 2.350%12,572.50 252,572.50 265,145.00 07/15/2025 --9,752.50 9,752.50 - 01/15/2026 250,000.00 2.500%9,752.50 259,752.50 269,505.00 07/15/2026 --6,627.50 6,627.50 - 01/15/2027 85,000.00 2.650%6,627.50 91,627.50 98,255.00 07/15/2027 --5,501.25 5,501.25 - 01/15/2028 85,000.00 2.800%5,501.25 90,501.25 96,002.50 07/15/2028 --4,311.25 4,311.25 - 01/15/2029 90,000.00 3.000%4,311.25 94,311.25 98,622.50 07/15/2029 --2,961.25 2,961.25 - 01/15/2030 90,000.00 3.150%2,961.25 92,964.40 95,922.50 07/15/2030 --1,543.75 1,543.75 - 01/15/2031 95,000.00 3.250%1,543.75 96,543.75 98,087.50 Total $2,815,000.00 - $474,893.75 $3,289,893.75 - Page 5 SECURITY & SOURCE OF REPAYMENT The Bonds will be a general obligation of the City of Lake Elmo. In addition, the City will pledge special assessments of approximately $1,460,120 on the Improvement portion, $1,471,163 to the Utility portion for the repayment of the debt service on the Bonds. The assessment revenue assumes first collection in 2015 over a term of 10 years for the Improvement portion and an interest rate of 4.05% (2% over the average coupon on the Bonds). We have assumed the remaining Utility debt service portions of the bond issue will be supported from the enterprise funds and have therefore pledged those sources accordingly. The Equipment portion of the financing is 100% tax levy. An illustration of the projected debt service fund cash flow for the Improvement portion is shown in Figure 3, Figure 4 shows the 105% Levy required for the Equipment portion, and Figure 5 shows the Utility Portion. FIGURE 3 Note: Negative amounts shown for City net levy above will result in no levy to be certified. FIGURE 4 Revenue vs D/S - Improvement Portion Less: Equals: Date Scheduled P+I 105%Levy Assessment Revenues CityNet Levy LevyYear Collection Year 01/15/2016 ---- 01/15/2017 165,826.25 174,117.56 181,365.98 (7,248.42)2015 2016 01/15/2018 165,905.00 174,200.25 181,365.52 (7,165.27)2016 2017 01/15/2019 169,225.00 177,686.25 181,365.09 (3,678.83)2017 2018 01/15/2020 167,195.00 175,554.75 181,365.56 (5,810.81)2018 2019 01/15/2021 169,947.50 178,444.88 181,365.48 (2,920.60)2019 2020 01/15/2022 167,322.50 175,688.63 181,365.10 (5,676.47)2020 2021 01/15/2023 169,472.50 177,946.13 181,365.30 (3,419.18)2021 2022 01/15/2024 166,295.00 174,609.75 181,365.57 (6,755.82)2022 2023 01/15/2025 167,885.00 176,279.25 181,366.03 (5,086.78)2023 2024 01/15/2026 169,125.00 177,581.25 181,365.39 (3,784.14)2024 2025 Total $1,678,198.75 $1,762,108.69 $1,813,655.03 - 105%Levy - Equipment Portion Date Scheduled P+I 105%Levy Levy Year Collection Year 01/15/2017 18,101.25 19,006.31 2015 2016 01/15/2018 16,910.00 17,755.50 2016 2017 01/15/2019 21,730.00 22,816.50 2017 2018 01/15/2020 21,450.00 22,522.50 2018 2019 01/15/2021 21,140.00 22,197.00 2019 2020 01/15/2022 20,790.00 21,829.50 2020 2021 01/15/2023 20,410.00 21,430.50 2021 2022 Total $140,531.25 $147,557.81 Page 6 FIGURE 5 Debt Service Schedule - Utility Portion Date Principal Coupon Interest Total P+I Fiscal Total 07/15/2015 ----- 07/15/2016 --26,977.50 26,977.50 - 01/15/2017 60,000.00 1.050%13,488.75 73,488.75 100,466.25 07/15/2017 --13,173.75 13,173.75 - 01/15/2018 70,000.00 1.200%13,173.75 83,173.75 96,347.50 07/15/2018 --12,753.75 12,753.75 - 01/15/2019 75,000.00 1.400%12,753.75 87,753.75 100,507.50 07/15/2019 --12,228.75 12,228.75 - 01/15/2020 75,000.00 1.550%12,228.75 87,228.75 99,457.50 07/15/2020 --11,647.50 11,647.50 - 01/15/2021 75,000.00 1.750%11,647.50 86,647.50 98,295.00 07/15/2021 --10,991.25 10,991.25 - 01/15/2022 75,000.00 1.900%10,991.25 85,991.25 96,982.50 07/15/2022 --10,278.75 10,278.75 - 01/15/2023 75,000.00 2.050%10,278.75 85,278.75 95,557.50 07/15/2023 --9,510.00 9,510.00 - 01/15/2024 80,000.00 2.200%9,510.00 89,510.00 99,020.00 07/15/2024 --8,630.00 8,630.00 - 01/15/2025 80,000.00 2.350%8,630.00 88,630.00 97,260.00 07/15/2025 --7,690.00 7,690.00 - 01/15/2026 85,000.00 2.500%7,690.00 92,690.00 100,380.00 07/15/2026 --6,627.50 6,627.50 - 01/15/2027 85,000.00 2.650%6,627.50 91,627.50 98,255.00 07/15/2027 --5,501.25 5,501.25 - 01/15/2028 85,000.00 2.800%5,501.25 90,501.25 96,002.50 07/15/2028 --4,311.25 4,311.25 - 01/15/2029 90,000.00 3.000%4,311.25 94,311.25 98,622.50 07/15/2029 --2,961.25 2,961.25 - 01/15/2030 90,000.00 3.150%2,961.25 92,961.25 95,922.50 07/15/2030 --1,543.75 1,543.75 - 01/15/2031 95,000.00 3.250%1,543.75 96,543.75 98,087.50 Total $1,195,000.00 - $276,163.75 $1,471,163.75 - Page 7 RELATED CONSIDERATIONS Bank Qualification - We understand the City (in combination with any subordinate taxing jurisdictions or debt issued in the City’s name by 501c3 corporations) anticipates issuing $10.0M or less in tax-exempt debt during this calendar year. Therefore the bonds will be designated as “bank qualified” obligations pursuant to Federal Tax Law. Arbitrage and Rebate – All tax exempt issues are subject to federal rebate requirements which require all arbitrage earned to be rebated to the U.S. Treasury. However, bond proceeds may be exempt from rebate if certain expenditure requirements are met. Since the City will issue less than $5 million in tax exempt bonds in 2015, we recommend the City elect the Small Issuer Exemption for this issue. Continuing Disclosure - Because this issue is greater than $1,000,000, and the City’s outstanding debt exceeds $10.0M, it is subject to the Securities and Exchange Commission’s continuing disclosure requirements. Northland Securities is prepared to assist the City in this capacity. Page 8 SUMMARY OF RECOMMENDED TERMS 1.Type of Bond Sale Public Offering – Sealed Bids 2.Proposals Received Tuesday, July 7, 2015 @ 10:30 A.M. 3.Council Consideration Tuesday, July 7, 2015 @ 7:00 P.M. 4.Statutory Authority The Bonds are being issued pursuant to Minnesota Statutes 475, 429, 444 and 412.301. 5.Repayment Term The Bonds will mature annually each January 15, 2016 – 2031. Interest on the Bonds will be payable on July 15, 2016 and semiannually thereafter on each January 15 and July 15. 6.Security General Obligation of the City. In addition, the City will pledge special assessment revenues collected from benefitted properties, utility revenues and tax levies. 7.Prepayment Option The Bonds maturing January 15, 2024– 2031 will be subject to prepayment on January 15, 2023 at a price of par plus accrued interest. 8.Tax Status Dorsey and Whitney, LLP Minneapolis, Minnesota, 9.Credit Enhancement We believe a credit rating will be cost beneficial. The City’s general obligation debt is currently rated Aa2 by Moody’s Investors Service.