HomeMy WebLinkAbout#14 - 2019A BondingSTAFF REPORT
DATE: April 18, 2017
REGULAR
TO: Honorable Mayor and City Councilmembers
FROM: Sue Iverson – Finance Director
AGENDA ITEM: 2019A Bonding
BACKGROUND:
Last year, the City Council chose to defer bonding for 2018 and combine both 2018 and 2019 projects
identified for bonding in 2019. These include street improvement projects (South Tri Lakes – 2018 Street
Improvements and Old Village Phase 4), equipment purchase Tender 1 and SCBA replacements, and
utility projects which include Old Village Phase 4.
ISSUE BEFORE COUNCIL:
Should the Council authorize the issuance and sale of $4,060,000 general obligation bonds?
PROPOSAL DETAILS/ANALYSIS:
Tammy Omdahl from Northland Securities will be at the meeting to go over the finance plan, which is
included in your packet, and answer any questions you may have.
FISCAL IMPACT:
Beginning on page 4 of the finance plan, the portion of the bond proceeds are broken down.
The improvement portion of the bonds of approximately $2.16 million covers the street costs. The
equipment portion of the bonds of approximately $705,000 covers the Tender 1 and SCBA replacements.
These two items will be paid back through the general fund debt. Annual payment will be around $326,000
before reducing for special assessment revenue. Special assessment revenue should account for about a
third of the payment.
The sewer portion of the bonds of approximately $425,000 covers the Old Village Phase 4 project, and
annual payments will be around $35,000 will be paid from sewer revenues.
The water portion of the bonds of approximately $385,000 covers the Old Village Phase 4 project, and
annual payments will be around $30,000 will be paid from water revenues.
The storm water portion of the bonds of approximately $385,000 is for Old Village Phase 4. The annual
payment of around $30,000 will be paid from storm water revenues.
Attached is also a copy of the Bond Buyer’s Index Trends showing that interest rates are low at this time
and it is likely that in the current environment the bids received from the underwrites will include premiums.
When this happens the purchaser pay the City an amount in excess of the par amount in exchange for a
higher coupon or interest rate. (See page 15 of the finance plan for more information.) If this happens we
can:
1) Reduce the size of the issue by the amount of the premium
2) The premium can be deposited in the Construction Fund and used to pay additional project costs
3) The premium can be deposited in the Debt Service Fund and used to pay principal and interest.
Northland will work with staff prior to the sale to determine use of the premium if any.
OPTIONS:
1) Approve Resolution No. 2019-066
2) Amend and then Approve Resolution No 2019-066
3) Do not authorize the issuance of bonds
RECOMMENDATION:
Motion to approve Resolution No. 2019-066 A Resolution Authorizing Issuance and Sale of $4,060,000
General Obligation Bonds, Series 2019A
ATTACHMENTS:
• Finance Plan
• Resolution No 2019-066
• Municipal Advisory Services Agreement with Northland Securities, Inc.
• Bond Buyer’s Index Trends
Finance Plan
Lake Elmo, Minnesota
$4,060,000
General Obligation Bonds, Series 2019A
September 3, 2019
150 South 5th Street, Suite 3300
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
Northland Securities, Inc. Page 2
Contents
Executive Summary ................................................................................................................................................... 3
Issue Overview ............................................................................................................................................................ 4
Purpose ................................................................................................................................................................ 4
Authority ............................................................................................................................................................. 4
Structure .............................................................................................................................................................. 5
Security and Source of Repayment ........................................................................................................ 5
Plan Rationale ................................................................................................................................................... 5
Issuing Process ................................................................................................................................................. 5
Attachment 1 – Preliminary Debt Service Schedules .................................................................................... 7
Total Combined 2019A Bonds .................................................................................................................. 7
Improvement Portion .................................................................................................................................... 8
Equipment Portion ......................................................................................................................................... 9
Sewer Revenue Portion .............................................................................................................................. 10
Water Revenue Portion .............................................................................................................................. 11
Storm Water Revenue Portion ................................................................................................................ 12
Attachment 2 – Estimated Levy Schedules ..................................................................................................... 13
Improvement Portion .................................................................................................................................. 13
Equipment Portion ....................................................................................................................................... 13
Attachment 3 – Related Considerations .......................................................................................................... 14
Bank Qualification ................................................................................................................................ 14
Arbitrage Compliance ......................................................................................................................... 14
Continuing Disclosure ........................................................................................................................ 14
Premiums .................................................................................................................................................. 15
Rating .......................................................................................................................................................... 15
Attachment 4 – Calendar of Events ................................................................................................................... 16
Attachment 5 - Risk Factors.................................................................................................................................. 17
Northland Securities, Inc. Page 3
Executive Summary
The following is a summary of the recommended terms for the issuance of $4,060,000 General
Obligation Bonds, Series 2019A (the “Bonds”). Additional information on the proposed finance
plan and issuing process can be found after the Executive Summary, in the Issue Overview and
Attachment 3 – Related Considerations.
Purpose Proceeds from the Bonds will be used to finance improvement
projects, the purchase of equipment, a sewer project, a water
project and a stormwater project and to pay costs associated
with the issuance of the Bonds.
Security The Bonds will be a general obligation of the City. The City
will pledge special assessments collected from benefitted
properties for payment on the Improvement Portion of the
Bonds, property tax levies for payment on the Equipment
Portion of the Bonds, and sewer, water and storm sewer
revenues on the Water, Sewer and Storm Water Portions of the
Bonds.
Repayment Term The Bonds will mature annually each February 1 in the years
2021 through 2035. Interest on the Bonds will be payable on
August 1, 2020 and semiannually thereafter on each February 1
and August 1.
Estimated Interest Rate Average coupon: 1.92%
True interest cost (TIC): 2.07%
Prepayment Option Bonds maturing on and after February 1, 2029 will be subject to
redemption on February 1, 2028 and any day thereafter at a
price of par plus accrued interest.
Rating A rating will be requested from Moody’s. The City’s general
obligation debt is currently rated "Aa1”by Moody’s.
Tax Status The Bonds will be tax-exempt, bank qualified obligations.
Risk Factors There are certain risks associated with all debt. Risk factors
related to the Bonds are discussed in Attachment 5.
Type of Bond Sale Public Sale – Competitive Bids
Proposals Received Tuesday, October 1, 2019 @ 10:30 A.M.
Council Consideration Tuesday, October 1, 2019 @ 7:00 P.M.
Northland Securities, Inc. Page 4
Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the following projects (together, the “Projects”):
• improvement projects, which include South Tri Lakes (2018 street improvements) and
Old Village Phase 4 (the “Improvement Portion”),
• an equipment purchase of Tender 1 and SCBA replacements (the “Equipment Portion”),
and
• a sewer project, which includes Old Village Phase 4; a water project, which includes Old
Village Phase 4; and a stormwater project, which includes Old Village Phase 4 (together,
the “Revenue Portion”).
Proceeds will also be used to pay costs associated with issuing the Bonds. The Bonds have been
sized based on estimates provided by City Staff and the City engineer. The table below contains
the sources and uses of funds for the bond issue.
Authority
The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 429, 444,
and 475 and Section 412.301.
Under Section 412.301, Capital Equipment includes, but is not limited to, road construction and
maintenance equipment, public safety equipment and computer hardware and software, which
must have a useful life at least as long as the term of the debt issued to finance the equipment.
The term of the Bonds cannot exceed 10 years from the date of issuance.
If the amount of the Equipment Portion of the Bonds exceeds 0.25% of the estimated market
value of the taxable property in the City, a reverse referendum provision applies. The City’s
estimated market value for taxes payable in 2019 is $1,723,100,200 ($1,723,100,200 x 0.0025 =
$4,307,751). Since the Equipment Portion of the Bonds does not exceed $4,307,751, the reverse
referendum provision does not apply.
Under Chapter 429, an Improvement means any type of improvement made under authority
granted by section 429.021, which includes, but is not limited to, improvements to streets and
sidewalks, storm and sanitary sewer systems, and street lighting systems.
Before issuing bonds under Chapter 429, the City must hold a public hearing on the
Improvements and the proposed bonds, and must then pass a resolution ordering the
improvements by at least a 4/5 majority. Public hearings have been held for the Improvement
Portion and all corresponding resolutions have passed with a 4/5 majority.
Improvements Equipment Sewer Water Stormwater
Issue
Summary
Sources Of Funds
Par Amount of Bonds $2,160,000.00 $705,000.00 $425,000.00 $385,000.00 $385,000.00 $4,060,000.00
Total Sources $2,160,000.00 $705,000.00 $425,000.00 $385,000.00 $385,000.00 $4,060,000.00 Uses Of Funds
Deposit to Project Construction Fund 2,108,497.00 685,000.00 418,500.00 372,500.00 379,000.00 3,963,497.00
Costs of Issuance 29,372.81 9,586.96 5,779.37 5,235.43 5,235.43 55,210.00
Total Underwriter's Discount (1.000%)21,600.00 7,050.00 4,250.00 3,850.00 3,850.00 40,600.00
Rounding Amount 530.19 3,363.04 (3,529.37)3,414.57 (3,085.43)693.00
Total Uses $2,160,000.00 $705,000.00 $425,000.00 $385,000.00 $385,000.00 $4,060,000.00
Northland Securities, Inc. Page 5
Structure
The Improvement Portion has been structured over 10 years, with relatively level annual debt
service payments. The Equipment Portion has been structured over 9 years with relatively level
annual debt service payments and based on the maximum term allowed, will have a final
maturity payment within ten years from the date of the Bonds. The Revenue Portions have been
structured over 15 years, with relatively level annual debt service payments for each portion.
The proposed structure for the bond issue and preliminary debt service projections are
illustrated in Attachment 1 and the estimated levies are illustrated in Attachment 2.
Security and Source of Repayment
The Bonds will be general obligations of the City. The finance plan relies on the following
assumptions for the revenues used to pay debt service, as provided by City staff:
• Special Assessments. The City is expected to collect special assessments levied against
benefited properties in the amount of $698,752 (32% of the Improvement Portion of the
Bonds) for the Improvement Portion of the Bonds. The assessments will be payable over
15 years per the Assessment Policy adopted November 20, 2018, with an interest rate of
1.00% over the average coupon on the Improvement Portion of the Bonds (currently
estimated to be 3.00%) and structured for level annual payments of principal and interest.
Assessments are scheduled to be collected for five years after the final maturity of the
Bonds. The plan assumes that the assessments will be levied in 2019 for initial payment in
2020.
• Utility Revenues. Net revenues of the City’s sewer, water and storm water utilities will be
pledged for payment of the Revenue Portion of the Bonds. The City will covenant to
adopt sewer, water and storm water rates and charges that are sufficient to produce net
revenues equal to at least 105% of the debt service requirements on the Revenue Portion
of the Bonds. In the event there is a deficiency in the amount of net revenues available for
payment of debt service, the City may levy taxes to cover the insufficiency, but only on a
temporary basis until rates are adjusted.
• Property Taxes. The remaining revenues needed to pay debt service on the Bonds are
expected to come from property tax levies. The initial projections show an annual tax
levy, averaging $282,410, is needed to produce the statutory requirement of 105% of debt
service, after accounting for assessments and utility revenues. The levy may be adjusted
annually based on actual special assessment collections and additional monies in the debt
service fund. The initial tax levy will be made in 2019 for taxes payable in 2020.
Plan Rationale
The Finance Plan recommended in this report is based on a variety of factors and information
provided by the City related to the financed project and City objectives, Northland’s knowledge
of the City and our experience in working with similar cities and projects. The issuance of
General Obligation Bonds provides the best means of achieving the City’s objectives and cost
effective financing. The City has successfully issued and managed this type of debt for previous
projects.
Issuing Process
Northland will receive bids from underwriters to purchase the Bonds on Tuesday, October 1,
2019 at 10:30 AM. Market conditions and the marketability of the Bonds support issuance
through a competitive sale. This process has been chosen as it is intended to produce the lowest
Northland Securities, Inc. Page 6
combination of interest expense and underwriting expense on the date and time set to receive
bids. The calendar of events for the issuing process can be found in Attachment 4.
Municipal Advisor: Northland Securities, Inc., Minneapolis, Minnesota
Bond Counsel: Kennedy and Graven Chartered, Minneapolis, Minnesota
Paying Agent: Northland Trust Services, Inc. Minneapolis, Minnesota
Northland Securities, Inc. Page 7
Attachment 1 – Preliminary Debt Service Schedules
Total Combined 2019A Bonds
*Estimated “Aa1” Rates as of August 2, 2019, plus 0.25%.
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --55,192.23 55,192.23 -
02/01/2021 325,000.00 1.450%35,865.00 360,865.00 416,057.23
08/01/2021 --33,508.75 33,508.75 -
02/01/2022 355,000.00 1.500%33,508.75 388,508.75 422,017.50
08/01/2022 --30,846.25 30,846.25 -
02/01/2023 360,000.00 1.500%30,846.25 390,846.25 421,692.50
08/01/2023 --28,146.25 28,146.25 -
02/01/2024 360,000.00 1.550%28,146.25 388,146.25 416,292.50
08/01/2024 --25,356.25 25,356.25 -
02/01/2025 370,000.00 1.550%25,356.25 395,356.25 420,712.50
08/01/2025 --22,488.75 22,488.75 -
02/01/2026 375,000.00 1.650%22,488.75 397,488.75 419,977.50
08/01/2026 --19,395.00 19,395.00 -
02/01/2027 380,000.00 1.750%19,395.00 399,395.00 418,790.00
08/01/2027 --16,070.00 16,070.00 -
02/01/2028 390,000.00 1.850%16,070.00 406,070.00 422,140.00
08/01/2028 --12,462.50 12,462.50 -
02/01/2029 395,000.00 2.050%12,462.50 407,462.50 419,925.00
08/01/2029 --8,413.75 8,413.75 -
02/01/2030 315,000.00 2.100%8,413.75 323,413.75 331,827.50
08/01/2030 --5,106.25 5,106.25 -
02/01/2031 80,000.00 2.200%5,106.25 85,106.25 90,212.50
08/01/2031 --4,226.25 4,226.25 -
02/01/2032 80,000.00 2.250%4,226.25 84,226.25 88,452.50
08/01/2032 --3,326.25 3,326.25 -
02/01/2033 90,000.00 2.300%3,326.25 93,326.25 96,652.50
08/01/2033 --2,291.25 2,291.25 -
02/01/2034 90,000.00 2.400%2,291.25 92,291.25 94,582.50
08/01/2034 --1,211.25 1,211.25 -
02/01/2035 95,000.00 2.550%1,211.25 96,211.25 97,422.50
Total $4,060,000.00 -$516,754.73 $4,576,754.73 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $26,928.94
Average Life 6.633 Years
Average Coupon 1.9189565%
Net Interest Cost (NIC)2.0697236%
True Interest Cost (TIC)2.0731119%
All Inclusive Cost (AIC)2.3003501%
Northland Securities, Inc. Page 8
Improvement Portion
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --28,361.72 28,361.72 -
02/01/2021 190,000.00 1.450%18,430.00 208,430.00 236,791.72
08/01/2021 --17,052.50 17,052.50 -
02/01/2022 205,000.00 1.500%17,052.50 222,052.50 239,105.00
08/01/2022 --15,515.00 15,515.00 -
02/01/2023 210,000.00 1.500%15,515.00 225,515.00 241,030.00
08/01/2023 --13,940.00 13,940.00 -
02/01/2024 210,000.00 1.550%13,940.00 223,940.00 237,880.00
08/01/2024 --12,312.50 12,312.50 -
02/01/2025 215,000.00 1.550%12,312.50 227,312.50 239,625.00
08/01/2025 --10,646.25 10,646.25 -
02/01/2026 220,000.00 1.650%10,646.25 230,646.25 241,292.50
08/01/2026 --8,831.25 8,831.25 -
02/01/2027 220,000.00 1.750%8,831.25 228,831.25 237,662.50
08/01/2027 --6,906.25 6,906.25 -
02/01/2028 225,000.00 1.850%6,906.25 231,906.25 238,812.50
08/01/2028 --4,825.00 4,825.00 -
02/01/2029 230,000.00 2.050%4,825.00 234,825.00 239,650.00
08/01/2029 --2,467.50 2,467.50 -
02/01/2030 235,000.00 2.100%2,467.50 237,467.50 239,935.00
Total $2,160,000.00 -$231,784.22 $2,391,784.22 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $12,807.00
Average Life 5.929 Years
Average Coupon 1.8098245%
Net Interest Cost (NIC)1.9784822%
True Interest Cost (TIC)1.9860077%
All Inclusive Cost (AIC)2.2367670%
Northland Securities, Inc. Page 9
Equipment Portion
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --9,004.42 9,004.42 -
02/01/2021 70,000.00 1.450%5,851.25 75,851.25 84,855.67
08/01/2021 --5,343.75 5,343.75 -
02/01/2022 75,000.00 1.500%5,343.75 80,343.75 85,687.50
08/01/2022 --4,781.25 4,781.25 -
02/01/2023 75,000.00 1.500%4,781.25 79,781.25 84,562.50
08/01/2023 --4,218.75 4,218.75 -
02/01/2024 75,000.00 1.550%4,218.75 79,218.75 83,437.50
08/01/2024 --3,637.50 3,637.50 -
02/01/2025 80,000.00 1.550%3,637.50 83,637.50 87,275.00
08/01/2025 --3,017.50 3,017.50 -
02/01/2026 80,000.00 1.650%3,017.50 83,017.50 86,035.00
08/01/2026 --2,357.50 2,357.50 -
02/01/2027 80,000.00 1.750%2,357.50 82,357.50 84,715.00
08/01/2027 --1,657.50 1,657.50 -
02/01/2028 85,000.00 1.850%1,657.50 86,657.50 88,315.00
08/01/2028 --871.25 871.25 -
02/01/2029 85,000.00 2.050%871.25 85,871.25 86,742.50
Total $705,000.00 -$66,625.67 $771,625.67 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $3,819.96
Average Life 5.418 Years
Average Coupon 1.7441465%
Net Interest Cost (NIC)1.9287035%
True Interest Cost (TIC)1.9371573%
All Inclusive Cost (AIC)2.2095023%
Northland Securities, Inc. Page 10
Sewer Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --6,357.53 6,357.53 -
02/01/2021 25,000.00 1.450%4,131.25 29,131.25 35,488.78
08/01/2021 --3,950.00 3,950.00 -
02/01/2022 25,000.00 1.500%3,950.00 28,950.00 32,900.00
08/01/2022 --3,762.50 3,762.50 -
02/01/2023 25,000.00 1.500%3,762.50 28,762.50 32,525.00
08/01/2023 --3,575.00 3,575.00 -
02/01/2024 25,000.00 1.550%3,575.00 28,575.00 32,150.00
08/01/2024 --3,381.25 3,381.25 -
02/01/2025 25,000.00 1.550%3,381.25 28,381.25 31,762.50
08/01/2025 --3,187.50 3,187.50 -
02/01/2026 25,000.00 1.650%3,187.50 28,187.50 31,375.00
08/01/2026 --2,981.25 2,981.25 -
02/01/2027 30,000.00 1.750%2,981.25 32,981.25 35,962.50
08/01/2027 --2,718.75 2,718.75 -
02/01/2028 30,000.00 1.850%2,718.75 32,718.75 35,437.50
08/01/2028 --2,441.25 2,441.25 -
02/01/2029 30,000.00 2.050%2,441.25 32,441.25 34,882.50
08/01/2029 --2,133.75 2,133.75 -
02/01/2030 30,000.00 2.100%2,133.75 32,133.75 34,267.50
08/01/2030 --1,818.75 1,818.75 -
02/01/2031 30,000.00 2.200%1,818.75 31,818.75 33,637.50
08/01/2031 --1,488.75 1,488.75 -
02/01/2032 30,000.00 2.250%1,488.75 31,488.75 32,977.50
08/01/2032 --1,151.25 1,151.25 -
02/01/2033 30,000.00 2.300%1,151.25 31,151.25 32,302.50
08/01/2033 --806.25 806.25 -
02/01/2034 30,000.00 2.400%806.25 30,806.25 31,612.50
08/01/2034 --446.25 446.25 -
02/01/2035 35,000.00 2.550%446.25 35,446.25 35,892.50
Total $425,000.00 -$78,173.78 $503,173.78 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $3,684.51
Average Life 8.669 Years
Average Coupon 2.1216850%
Net Interest Cost (NIC)2.2370327%
True Interest Cost (TIC)2.2390523%
All Inclusive Cost (AIC)2.4182559%
Northland Securities, Inc. Page 11
Water Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --5,734.28 5,734.28 -
02/01/2021 20,000.00 1.450%3,726.25 23,726.25 29,460.53
08/01/2021 --3,581.25 3,581.25 -
02/01/2022 25,000.00 1.500%3,581.25 28,581.25 32,162.50
08/01/2022 --3,393.75 3,393.75 -
02/01/2023 25,000.00 1.500%3,393.75 28,393.75 31,787.50
08/01/2023 --3,206.25 3,206.25 -
02/01/2024 25,000.00 1.550%3,206.25 28,206.25 31,412.50
08/01/2024 --3,012.50 3,012.50 -
02/01/2025 25,000.00 1.550%3,012.50 28,012.50 31,025.00
08/01/2025 --2,818.75 2,818.75 -
02/01/2026 25,000.00 1.650%2,818.75 27,818.75 30,637.50
08/01/2026 --2,612.50 2,612.50 -
02/01/2027 25,000.00 1.750%2,612.50 27,612.50 30,225.00
08/01/2027 --2,393.75 2,393.75 -
02/01/2028 25,000.00 1.850%2,393.75 27,393.75 29,787.50
08/01/2028 --2,162.50 2,162.50 -
02/01/2029 25,000.00 2.050%2,162.50 27,162.50 29,325.00
08/01/2029 --1,906.25 1,906.25 -
02/01/2030 25,000.00 2.100%1,906.25 26,906.25 28,812.50
08/01/2030 --1,643.75 1,643.75 -
02/01/2031 25,000.00 2.200%1,643.75 26,643.75 28,287.50
08/01/2031 --1,368.75 1,368.75 -
02/01/2032 25,000.00 2.250%1,368.75 26,368.75 27,737.50
08/01/2032 --1,087.50 1,087.50 -
02/01/2033 30,000.00 2.300%1,087.50 31,087.50 32,175.00
08/01/2033 --742.50 742.50 -
02/01/2034 30,000.00 2.400%742.50 30,742.50 31,485.00
08/01/2034 --382.50 382.50 -
02/01/2035 30,000.00 2.550%382.50 30,382.50 30,765.00
Total $385,000.00 -$70,085.53 $455,085.53 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $3,308.74
Average Life 8.594 Years
Average Coupon 2.1181964%
Net Interest Cost (NIC)2.2345551%
True Interest Cost (TIC)2.2361748%
All Inclusive Cost (AIC)2.4168556%
Northland Securities, Inc. Page 12
Stormwater Revenue Portion
Date Principal Coupon Interest Total P+I Fiscal Total
10/24/2019 -----
08/01/2020 --5,734.28 5,734.28 -
02/01/2021 20,000.00 1.450%3,726.25 23,726.25 29,460.53
08/01/2021 --3,581.25 3,581.25 -
02/01/2022 25,000.00 1.500%3,581.25 28,581.25 32,162.50
08/01/2022 --3,393.75 3,393.75 -
02/01/2023 25,000.00 1.500%3,393.75 28,393.75 31,787.50
08/01/2023 --3,206.25 3,206.25 -
02/01/2024 25,000.00 1.550%3,206.25 28,206.25 31,412.50
08/01/2024 --3,012.50 3,012.50 -
02/01/2025 25,000.00 1.550%3,012.50 28,012.50 31,025.00
08/01/2025 --2,818.75 2,818.75 -
02/01/2026 25,000.00 1.650%2,818.75 27,818.75 30,637.50
08/01/2026 --2,612.50 2,612.50 -
02/01/2027 25,000.00 1.750%2,612.50 27,612.50 30,225.00
08/01/2027 --2,393.75 2,393.75 -
02/01/2028 25,000.00 1.850%2,393.75 27,393.75 29,787.50
08/01/2028 --2,162.50 2,162.50 -
02/01/2029 25,000.00 2.050%2,162.50 27,162.50 29,325.00
08/01/2029 --1,906.25 1,906.25 -
02/01/2030 25,000.00 2.100%1,906.25 26,906.25 28,812.50
08/01/2030 --1,643.75 1,643.75 -
02/01/2031 25,000.00 2.200%1,643.75 26,643.75 28,287.50
08/01/2031 --1,368.75 1,368.75 -
02/01/2032 25,000.00 2.250%1,368.75 26,368.75 27,737.50
08/01/2032 --1,087.50 1,087.50 -
02/01/2033 30,000.00 2.300%1,087.50 31,087.50 32,175.00
08/01/2033 --742.50 742.50 -
02/01/2034 30,000.00 2.400%742.50 30,742.50 31,485.00
08/01/2034 --382.50 382.50 -
02/01/2035 30,000.00 2.550%382.50 30,382.50 30,765.00
Total $385,000.00 -$70,085.53 $455,085.53 -
Date And Term Structure
Dated 10/24/2019
Delivery Date 10/24/2019
First available call date 2/01/2028
Call Price 100.000% Yield Statistics
Bond Year Dollars $3,308.74
Average Life 8.594 Years
Average Coupon 2.1181964%
Net Interest Cost (NIC)2.2345551%
True Interest Cost (TIC)2.2361748%
All Inclusive Cost (AIC)2.4168556%
Northland Securities, Inc. Page 13
Attachment 2 – Estimated Levy Schedules
Improvement Portion
Equipment Portion
Date Total P+I 105% Levy
Less:
Special
Assessment
Revenue*Net Levy Levy Year
Collection
Year
02/01/2020 ----
02/01/2021 236,791.72 248,631.31 58,749.90 189,881.41 2019 2020
02/01/2022 239,105.00 251,060.25 58,749.91 192,310.34 2020 2021
02/01/2023 241,030.00 253,081.50 58,749.90 194,331.60 2021 2022
02/01/2024 237,880.00 249,774.00 58,749.90 191,024.10 2022 2023
02/01/2025 239,625.00 251,606.25 58,749.90 192,856.35 2023 2024
02/01/2026 241,292.50 253,357.13 58,749.91 194,607.22 2024 2025
02/01/2027 237,662.50 249,545.63 58,749.91 190,795.72 2025 2026
02/01/2028 238,812.50 250,753.13 58,749.90 192,003.23 2026 2027
02/01/2029 239,650.00 251,632.50 58,749.91 192,882.59 2027 2028
02/01/2030 239,935.00 251,931.75 58,749.90 193,181.85 2028 2029
02/01/2031 --58,749.90 -2029 2030
02/01/2032 --58,749.91 -2030 2031
02/01/2033 --58,749.90 -2031 2032
02/01/2034 --58,749.90 -2032 2033
02/01/2035 --58,749.90 -2033 2034
Total $2,391,784.22 $2,511,373.43 $881,248.55 $1,923,874.39
*Special assessment revenue is based on assesments totaling $698,752 assessed at a rate of 3.00% (1% over the
average coupon), with equal annual payments over 15 years.
Date Total P+I 105% Levy Levy Year
Collection
Year
02/01/2020 --
02/01/2021 84,855.67 89,098.45 2019 2020
02/01/2022 85,687.50 89,971.88 2020 2021
02/01/2023 84,562.50 88,790.63 2021 2022
02/01/2024 83,437.50 87,609.38 2022 2023
02/01/2025 87,275.00 91,638.75 2023 2024
02/01/2026 86,035.00 90,336.75 2024 2025
02/01/2027 84,715.00 88,950.75 2025 2026
02/01/2028 88,315.00 92,730.75 2026 2027
02/01/2029 86,742.50 91,079.63 2027 2028
Total $771,625.67 $810,206.95
Northland Securities, Inc. Page 14
Attachment 3 – Related Considerations
Bank Qualification
We understand the City (in combination with any subordinate taxing jurisdictions or debt
issued in the City’s name by 501(c)3 corporations) anticipates issuing $10,000,000 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 Compliance
Project/Construction Fund. All tax-exempt bond issues are subject to federal rebate
requirements which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate
exemption the City expects to qualify for is the “18 month spending exemption.”
Debt Service Fund. The City must maintain a bona fide debt service fund for the Bonds or be
subject to yield restriction in the debt service fund. A bona fide debt service fund involves an
equal matching of revenues to debt service expense with a balance forward permitted equal to
the greater of the investment earnings in the fund during that year or 1/12 of the debt service of
that year.
The City should become familiar with the various Arbitrage Compliance requirements for this
bond issue. The Resolution for the Bonds prepared by Bond Counsel explains the requirements
in greater detail.
Continuing Disclosure
Type: Full
Dissemination Agent: Northland Securities
The requirements for continuing disclosure are governed by SEC Rule 15c2-12. The primary
requirements of Rule 15c2-12 actually fall on underwriters. The Rule sets forth due diligence
needed prior to the underwriter’s purchase of municipal securities. Part of this requirement is
obtaining commitment from the issuer to provide continuing disclosure. The document
describing the continuing disclosure commitments (the “Undertaking”) is contained in the
Official Statement that will be prepared to offer the Bonds to investors.
The City has more than $10,000,000 of outstanding debt and is required to undertake “full”
continuing disclosure. Full disclosure requires annual posting of the audit and a separate
continuing disclosure report, as well as the reporting of certain “material events.” Material
events set forth in the Rule, including, but not limited to, bond rating changes, call notices, and
issuance of “financial obligations” (such as PFA loans or bank placements) must be reported
within ten business days of occurrence. The report contains annual financial information and
operating data that “mirrors” material information presented in the Official Statement. The
specific contents of the annual report will be described in the Undertaking that appears in the
appendix of the Official Statement. Northland currently serves as dissemination agent for the
City, assisting with the annual reporting. The information for the Bonds will be incorporated
into our reporting.
Northland Securities, Inc. Page 15
Premiums
In the current market environment, it is likely that bids received from underwriters will include
premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the
par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums
reflects the bidder’s view on future market conditions, tax considerations for investors and
other factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid,
regardless of premium.
A premium bid produces additional funds that can be used in several ways:
• The premium means that the City needs less bond proceeds and can reduce the size of
the issue by the amount of the premium.
• The premium can be deposited in the Construction Fund and used to pay additional
project costs, rather than used to reduce the size of the issue.
• The premium can be deposited in the Debt Service Fund and used to pay principal and
interest.
Northland will work with City staff prior to the sale day to determine use of premium (if any).
A consideration for use of premium is the bank qualification of the Bonds.
Rating
A rating will be requested from Moody’s. The City’s general obligation debt is currently rated
"Aa1" by Moody’s. The rating process will include a conference call with the rating analyst.
Northland will assist City staff in preparing for and conducting the rating call.
Northland Securities, Inc. Page 16
Attachment 4 – Calendar of Events
The following checklist of items denotes each milestone activity as well as the members of the
finance team who will have the responsibility to complete it. Please note this proposed timetable
assumes regularly scheduled City Council meetings.
Date Action Responsible Party
August 20, 2019 City confirms project costs to be financed and source of
payment.
Northland, City Staff
August 27, 2019 Set Sale Resolution Sent to City for Council Packets
Finance Plan Sent to the City
Northland, Bond
Counsel
September 3, 2019 Set Sale Resolution for Bonds Adopted – 7:00 p.m. City Council Action,
Northland, Bond
Counsel
September 4, 2019 Preliminary Official Statement Sent to City for Sign Off
and to Rating Agency (Moody’s)
Northland, City
Week of September
9 or September 16,
2019
Rating Conference Call Northland, City,
Rating Agency
September 23, 2019 Rating Received Rating Agency, City,
Northland
October 1, 2019 Bond Sale – 10:30 a.m.
Authorizing Resolution Adopted – 7:00 p.m.
City Council Action,
Northland, Bond
Counsel
October 24, 2019 Closing on the Bonds (Proceeds available) Northland, City Staff,
Bond Counsel
July 2019 August 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 1 2 3
7 8 9 10 11 12 13 4 5 6 7 8 9 10
14 15 16 17 18 19 20 11 12 13 14 15 16 17
21 22 23 24 25 26 27 18 19 20 21 22 23 24
28 29 30 31 25 26 27 28 29 30 31
September 2019 October 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7 1 2 3 4 5
8 9 10 11 12 13 14 6 7 8 9 10 11 12
15 16 17 18 19 20 21 13 14 15 16 17 18 19
22 23 24 25 26 27 28 20 21 22 23 24 25 26
29 30 27 28 29 30 31
Northland Securities, Inc. Page 17
Attachment 5 - Risk Factors
Property Taxes: Property tax levies shown in this Finance Plan are based on projected debt
service and other revenues. Final levies will be set based on the results of sale. Levies should be
reviewed annually and adjusted as needed. The debt service levy must be included in the
preliminary levy for annual Truth in Taxation hearings. Future Legislative changes in the
property tax system, including the imposition of levy limits and changes in calculation of
property values, would affect plans for payment of debt service. Delinquent payment of
property taxes would reduce revenues available to pay debt service.
Special Assessments: Special assessments for the financed projects have not been levied at this
time. This Finance Plan is based on the assumptions listed earlier in this report. Changes in the
terms and timing for the actual assessments will alter the projected flow of funds for payment of
debt service on the Bonds. Also, special assessments may be prepaid. It is likely that the income
earned on the investment of prepaid assessments will be less than the interest paid if the
assessments remained outstanding. Delinquencies in assessment collections would reduce
revenues needed to pay debt service. The collection of deferred assessments, if any, has not
been included in the revenue projections. Projected assessment income should be reviewed
annually and adjusted as needed.
Utility Revenues: The City pledges the net revenues of the sewer, water and storm sewer
utilities to the payment of principal and interest on the Bonds. The failure to adjust rates and
charges as needed and the loss of significant customers will affect available net revenues. If the
net revenues are insufficient, the City is required to levy property taxes or use other revenues to
cover the deficiency. Property taxes can only be used on a temporary basis and may not be an
ongoing source of revenue to pay debt service.
General: In addition to the risks described above, there are certain general risks associated with
the issuance of bonds. These risks include, but are not limited to:
• Failure to comply with covenants in bond resolution.
• Failure to comply with Undertaking for continuing disclosure.
• Failure to comply with IRS regulations, including regulations related to use of the proceeds
and arbitrage/rebate. The IRS regulations govern the ability of the City to issue its bonds as
tax-exempt securities and failure to comply with the IRS regulations may lead to loss of tax-
exemption.
609742v1LA515-54
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE
CITY OF LAKE ELMO, MINNESOTA
HELD: September 3, 2019
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of
Lake Elmo, Washington County, Minnesota, was duly held at the City Hall in said City on the 3rd
day of September, 2019, at 7:00 o’clock P.M. for the purpose in part of authorizing the competitive
negotiated sale of the $4,060,000 General Obligation Bonds, Series 2019A of said City.
The following members were present:
and the following were absent:
Member ____________ introduced the following resolution and moved its adoption:
RESOLUTION 2019-066 PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $4,060,000
GENERAL OBLIGATION BONDS,
SERIES 2019A
WHEREAS, the City Council of the City of Lake Elmo, Minnesota, (the “City”) has
heretofore determined that it is necessary and expedient to issue its $4,060,000 General Obligation
Bonds, Series 2019A (the “Bonds”) to finance the (i) street improvement projects within the City;
(ii) acquisition of capital equipment; (iii) sewer, water and storm water system improvements; (iv)
the costs of issuing the Bonds; and
WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis, Minnesota
(“Northland”), as its independent municipal advisor and is therefore authorized to sell these
obligations by a competitive negotiated sale in accordance with Minnesota Statutes, Section
475.60, Subdivision 2(9); and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lake Elmo,
Minnesota, as follows:
1. Authorization; Findings. The City Council hereby authorizes Northland to solicit
bids for the competitive negotiated sale of the Bonds.
2. Meeting; Bid Opening. This City Council shall meet at the time and place specified
in the “Notice of Sale” attached hereto as Exhibit A for the purpose of considering sealed bids for,
and awarding the sale of, the Bonds. The Finance Director, or designee, shall open bids at the time
and place specified in such Notice of Sale.
2
609742v1LA515-54
3. Notice of Sale. The terms and conditions of the Bonds and the negotiation thereof
are fully set forth in the “Notice of Sale” attached hereto as Exhibit A and hereby approved and
made a part hereof.
4. Official Statement. In connection with said competitive negotiated sale, the Finance
Director and other officers or employees of the City are hereby authorized to cooperate with
Northland and participate in the preparation of an official statement for the Bonds, and to execute
and deliver it on behalf of the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by member
_____________ and, after full discussion thereof and upon a 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.
3
609742v1LA515-54
STATE OF MINNESOTA
COUNTY OF WASHINGTON
CITY OF LAKE ELMO
I, the undersigned, being the duly qualified and acting City Clerk of the City of Lake Elmo,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and complete
transcript of the minutes of a meeting of the City Council of said City, duly called and held on the
date therein indicated, insofar as such minutes relate to the City’s $4,060,000 General Obligation
Bonds, Series 2019A.
WITNESS my hand this _____ day of September, 2019.
City Clerk
EXHIBIT A
NOTICE OF SALE
$4,060,000*
GENERAL OBLIGATION BONDS, SERIES 2019A
CITY OF LAKE ELMO, MINNESOTA
(Book-Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals will be opened by the City’s Administrator, or designee, on Tuesday, October 1, 2019, at 10:30 A.M.,
CT, at the offices of Northland Securities, Inc., 150 South 5th Street, Suite 3300, Minneapolis, Minnesota 55402.
Consideration of the Proposals for award of the sale will be by the City Council at its meeting at the City Offices
beginning Tuesday, October 1, 2019, at 7:00 P.M., CT.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.,
b) faxed to Northland Securities, Inc. at 612-851-5918,
c) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to Northland
Securities, Inc. by telephone at 612-851-5900 or 612-851-4945, or
d) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the manner
described below, until 10:30 A.M., CT, on Tuesday, October 1, 2019. Proposals may be submitted electronically
via PARITY™ or its successor, pursuant to this Notice until 10:30 A.M., CT, but no Proposal will be received after
the time for receiving Proposals specified above. To the extent any instructions or directions set forth in PARITY™,
or its successor, conflict with this Notice, the terms of this Notice shall control. For further information about
PARITY™, or its successor, potential bidders may contact Northland Securities, Inc. or i-Deal at 1359 Broadway,
2nd floor, New York, NY 10018, telephone 212-849-5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY™ or its
successor. 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.
BOOK-ENTRY SYSTEM
The Bonds will be issued by means of a book-entry system with no physical distribution of bond certificates made
to the public. The Bonds will be issued in fully registered form and one bond certificate, representing the aggregate
principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of
Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Bonds.
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be
made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be
adjusted to maintain the same gross spread.
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 City through Northland Trust Services, Inc. Minneapolis, Minnesota (the “Paying
Agent/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 successful bidder, as a condition of delivery of the Bonds, will be required to deposit the bond
certificates with DTC. The City will pay reasonable and customary charges for the services of the Paying
Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
Date of Delivery (Estimated to be October 24, 2019)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444 and 475 and Section 412.301.
Proceeds will be used to finance street improvement projects, an equipment purchase, a water project, a sewer
project, a stormwater project, and to pay the costs associated with the issuance of the Bonds. The Bonds are payable
from special assessments against benefited property, sewer, water and storm sewer revenues, and additionally
secured by ad valorem taxes on all taxable property within the City. The full faith and credit of the City is pledged
to their payment and the City has validly obligated itself to levy ad valorem taxes in the event of any deficiency in
the debt service account established for this issue.
INTEREST PAYMENTS
Interest is due semiannually on each February 1 and August 1, commencing August 1, 2020, to registered owners
of the Bonds appearing of record in the Bond Register as of the close of business on the fifteenth day (whether or
not a business day) of the calendar month preceding such interest payment date.
MATURITIES
Principal is due annually on February 1, inclusive, in each of the years and amounts as follows:
Year Amount Year Amount Year Amount
2021 $325,000 2026 $375,000 2031 $80,000
2022 355,000 2027 380,000 2032 80,000
2023 360,000 2028 390,000 2033 90,000
2024 360,000 2029 395,000 2034 90,000
2025 370,000 2030 315,000 2035 95,000
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term
bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory
redemption in each year conforms to the maturity schedule set forth above.
INTEREST RATES
All rates must be in integral multiples of 1/20th or 1/8th of 1%. The rate for any maturity may not be more than
1.00% less than the rate for any preceding maturity. All Bonds of the same maturity must bear a single uniform
rate from date of issue to maturity.
ESTABLISHMENT OF ISSUE PRICE
(HOLD-THE-OFFERING-PRICE RULE MAY APPLY – BIDS NOT CANCELLABLE)
The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to
the City at closing an “issue price” or similar certificate setting forth the reasonably expected initial offering price
to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent
communications, substantially in the form attached hereto as Exhibit A, with such modifications as may be
appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. All actions
to be taken by the City under this Notice of Sale to establish the issue price of the Bonds may be taken on behalf of
the City by the City’s Municipal Advisor and any notice or report to be provided to the City may be provided to the
City’s Municipal Advisor.
The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining “competitive sale”
for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the “competitive
sale requirements”) because:
(1) the City shall disseminate this Notice of Sale to potential underwriters in a manner that is reasonably
designed to reach potential underwriters;
(2) all bidders shall have an equal opportunity to bid;
(3) the City may receive bids from at least three underwriters of municipal bonds who have established industry
reputations for underwriting new issuances of municipal bonds; and
(4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the
Bonds at the highest price (or lowest cost), as set forth in this Notice of Sale.
Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase of the
Bonds, as specified in the bid.
In the event that the competitive sale requirements are not satisfied, the City shall promptly so advise the winning
bidder. The City may then determine to treat the initial offering price to the public as of the award date of the Bonds
as the issue price of each maturity by imposing on the winning bidder the Hold-the-Offering-Price Rule as described
in the following paragraph (the “Hold-the-Offering-Price Rule”). Bids will not be subject to cancellation in the
event that the City determines to apply the Hold-the-Offering-Price Rule to the Bonds. Bidders should prepare
their bids on the assumption that the Bonds will be subject to the Hold-the-Offering-Price Rule in order to
establish the issue price of the Bonds.
By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds
to the public on or before the date of award at the offering price or prices (the “Initial Offering Price”), or at the
corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the
underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds
of any maturity to which the Hold-the-Offering Price Rule shall apply to any person at a price that is higher than
the Initial Offering Price to the public during the period starting on the award date for the Bonds and ending on the
earlier of the following:
(1) the close of the fifth (5th) business day after the award date; or
(2) the date on which the underwriters have sold at least 10% of a maturity of the Bonds to the public at a price
that is no higher than the Initial Offering Price to the public (the “10% Test”), at which time only that
particular maturity will no longer be subject to the Hold-the-Offering-Price Rule.
The City acknowledges that, in making the representations set forth above, the winning bidder will rely on (i) the
agreement of each underwriter to comply with the requirements for establishing issue price of the Bonds, including,
but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable to the Bonds, as set
forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been
created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member
of the selling group to comply with the requirements for establishing issue price of the Bonds, including but not
limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable to the Bonds, as set forth
in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter or dealer who
is a member of the selling group is a party to a third-party distribution agreement that was employed in connection
with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement
to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement
to comply with the Hold-the-Offering-Price Rule, if applicable to the Bonds, as set forth in the third-party
distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be
solely liable for its failure to comply with its agreement regarding the requirements for establishing issue price of
the Bonds, including but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable
to the Bonds, and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who
is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement to
comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds,
including, but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule if applicable to the
Bonds.
By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement
and each third-party distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds
to the public, together with the related pricing wires, contains or will contain language obligating each underwriter,
each dealer who is a member of the selling group, and each broker-dealer that is a party to such third-party
distribution agreement, as applicable, (A) to comply with the Hold-the-Offering-Price Rule, if applicable if and for
so long as directed by the winning bidder and as set forth in the related pricing wires, (B) to promptly notify the
winning bidder of any sales of Bonds that to its knowledge, are made to a purchaser who is a related party to an
underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below),
and (C) to acknowledge that, unless otherwise advised by the underwriter, dealer or broker-dealer, the winning
bidder shall assume that each order submitted by the underwriter, dealer or broker-dealer is a sale to the public, and
(ii) any agreement among underwriters or selling group agreement relating to the initial sale of the Bonds to the
public, together with the related pricing wires, contains or will contain language obligating each underwriter or
dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the
Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to comply with
the Hold-the-Offering-Price Rule, if applicable, in each case if and for so long as directed by the winning bidder or
the underwriter and as set forth in the related pricing wires.
Notes: Sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of
the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for
purposes of this Notice of Sale. Further, for purposes of this Notice of Sale:
(1) “public” means any person other than an underwriter or a related party,
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the
lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the
public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a
selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds
to the public).
(3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser
are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total
value of their stock, if both entities are corporations (including direct ownership by one corporation or
another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities
are partnerships (including direct ownership by one partnership of another), or (C) more than 50%
common ownership of the value of the outstanding stock of the corporation or the capital interests or profit
interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership
(including direct ownership of the applicable stock or interests by one entity of the other), and
(4) “sale date” means the date that the Bonds are awarded by the City to the winning bidder.
ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER PROPOSALS
The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease
will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase
price will also be adjusted to maintain the same gross spread. Such adjustments shall be made promptly after the
sale and prior to the award of Proposals by the City and shall be at the sole discretion of the City. The successful
bidder may not withdraw or modify its Proposal once submitted to the City for any reason, including post-sale
adjustment. Any adjustment shall be conclusive and shall be binding upon the successful bidder.
OPTIONAL REDEMPTION
Bonds maturing on February 1, 2029 through 2035 are subject to redemption and prepayment at the option of the
City on February 1, 2028 and any date thereafter, at a price of par plus accrued interest. Redemption may be in
whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and principal amounts
within each maturity to be redeemed shall be determined by the City and if only part of the Bonds having a common
maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond
Registrar.
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 shall constitute cause for a failure or
refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with terms of the
purchase contract. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be
paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within forty days after award, subject to an approving legal opinion by Kennedy &
Graven, Chartered, Bond Counsel. The legal opinion will be paid by the City and delivery will be anywhere in the
continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $4,019,400 (99.00%) and accrued interest on the principal sum of $4,060,000 must be
filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to legality. Proposals
for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
Kristina Handt, City Administrator
Lake Elmo City Hall
3800 Laverne Ave. N.
Lake Elmo, Minnesota 55042
A good faith deposit (the “Deposit”) in the amount of $81,200 in the form of a federal wire transfer (payable to the
order of the City) is only required from the apparent winning bidder, and must be received within two hours after
the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of the wire
instructions from the Municipal Advisor promptly after the sale. If the Deposit is not received from the apparent
winning bidder in the time allotted, the City may choose to reject their Proposal and then proceed to offer the Bonds
to the next lowest bidder based on the terms of their original proposal, so long as said bidder wires funds for the
Deposit amount within two hours of said offer.
The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement and
no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with the accepted
Proposal, said amount will be retained by the City. No Proposal can be withdrawn 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.
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. In the event of a tie, the sale of the Bonds will be awarded by lot. 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 which the City determines to have
failed to comply with the terms herein.
INFORMATION FROM SUCCESSFUL BIDDER
The successful bidder will be required to provide, in a timely manner, certain information relating to the initial
offering price of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal
Revenue Code of 1986, as amended.
OFFICIAL STATEMENT
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 to the senior managing
underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an electronic format
as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds to provide, or cause to be provided, annual
financial information, including audited financial statements of the City, and notices of certain material events, as
required by SEC Rule 15c2-12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER’S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option
of the successful bidder, the purchase of any such insurance policy or the issuance of any such commitment shall
be at the sole option and expense of the successful bidder of the Bonds. Any increase in the costs of issuance of the
Bonds resulting from such purchase of insurance shall be paid by the successful bidder, 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 successful bidder. Failure of the municipal bond insurer to issue the
policy after the Bonds have been awarded to the successful bidder shall not constitute cause for failure or refusal
by the successful bidder to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
Dated: September 3, 2019 BY ORDER OF THE LAKE ELMO CITY COUNCIL
/s/ Kristina Handt
City Administrator
Additional information may be obtained from:
Northland Securities, Inc.
150 South 5th Street, Suite 3300
Minneapolis, Minnesota 55402
Telephone No.: 612-851-5900
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609742v1LA515-54
EXHIBIT A
(ISSUE PRICE CERTIFICATE – COMPETITIVE SALE SATISFIED)
The undersigned, for and on behalf of [NAME OF PURCHASER/REPRESENTATIVE] (the
[“Purchaser”] [“Representative,” on behalf of itself and other underwriters listed below (collectively, the
“Underwriting Group”)], with respect to the sale and issuance of the General Obligation Bonds, Series 2019A
(the “Bonds”), issued by the City of Lake Elmo, Minnesota (the “Issuer”), in the original aggregate principal
amount of $4,060,000, certifies as follows:
1. Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public
by the [Purchaser] [Underwriting Group] are the prices listed in EXHIBIT A attached hereto (the “Expected
Offering Prices”). The Expected Offering Prices are the prices of the Maturities of the Bonds used by the
[Purchaser] [Underwriting Group] in formulating its bid to purchase the Bonds. Attached hereto as EXHIBIT
B is a true and correct copy of the bid provided by the [Purchaser] [Underwriting Group] to purchase the Bonds.
(b) The [Purchaser] [Underwriting Group] was not given the opportunity to review other bids prior
to submitting its bid.
(c) The bid submitted by the [Purchaser] [Underwriting Group] constituted a firm offer to purchase
the Bonds.
(d) Capitalized terms that are used herein that are otherwise not defined shall have the meanings
assigned to such terms in Section 5 hereof.
2. Purchase Price. The [Purchaser] [Representative] acknowledges that it is purchasing the Bonds
for an aggregate purchase price of $_______________ (par amount of Bonds of $4,060,000, plus original issue
premium of $_______, less original issue discount of $________, less [a Purchaser’s] [an underwriter’s] discount
of $________), plus accrued interest in the amount of $____________.
3. Receipt of Bonds. The undersigned hereby acknowledges receipt of $4,060,000 in original
aggregate principal amount of the Bonds from the Issuer, fully executed and authenticated. [The [Purchaser]
[Representative] has paid to [NAME OF INSURER] the sum of $______________ as a premium for an
insurance policy for the Bonds.]
4. Representations. The representations set forth in this Certificate of Purchaser (the
“Certificate”) are limited to factual matters only. Nothing in this Certificate represents the interpretation by the
[Purchaser] [Representative] of any laws, including specifically Sections 103 and 148 of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. The undersigned understands
that the foregoing information will be relied upon by: (i) the Issuer with respect to certain of the representations
set forth in a tax certificate of the Issuer executed on the date hereof with respect to compliance with the federal
income tax rules affecting the Bonds; and (ii) Kennedy & Graven, Chartered, in connection with rendering its
opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the
preparation of Information Return for Tax-Exempt Governmental Obligations, Form 8038-G, and other federal
income tax advice that it may give to the Issuer from time to time relating to the Bonds.
5. Defined Terms.
(a) “Maturity” means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate
Maturities.
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609742v1LA515-54
(b) “Public” means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related
party” for purposes hereof generally means any two or more persons who have greater than fifty percent (50%)
common ownership, directly or indirectly.
(c) “Sale Date” means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is October 1, 2019.
(d) “Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer
(or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds
to the Public).
IN WITNESS WHEREOF, the undersigned officer has executed this Certificate of Purchaser as of the date
and year first written above.
[PURCHASER] [REPRESENTATIVE]
By
Name
Its
[Account Members:]
(ISSUE PRICE CERTIFICATE – HOLD-THE-OFFERING-PRICE RULE APPLIES)
The undersigned, for and on behalf of [NAME OF PURCHASER/REPRESENTATIVE] (the [“Purchaser”]
[“Representative,” on behalf of itself and other underwriters listed below (collectively, the “Underwriting
Group”)], with respect to the sale and issuance of the General Obligation Bonds, Series 2019A (the “Bonds”),
issued by the City of Lake Elmo, Minnesota (the “Issuer”), in the original aggregate principal amount of
$4,060,000, certifies as follows:
1. Initial Offering Price for the Bonds.
(a) The [Purchaser] [Underwriting Group] offered each Maturity of the Bonds to the Public for
purchase at the respective initial offering prices listed in EXHIBIT A attached hereto (the “Initial Offering
Prices”). A copy of the pricing wire or equivalent communication for the Bonds is attached hereto as EXHIBIT
A. Capitalized terms used herein that are otherwise not defined shall have the meanings assigned to such terms
in Section 5 hereof.
(b) As set forth in the [Notice of Sale] [Terms of Proposal] and the bid award, the [Purchaser has]
[members of the Underwriting Group have] agreed in writing that, (i) for each Maturity of the Bonds, [it] [they]
would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the
Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “Hold-the-Offering-
Price Rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member
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609742v1LA515-54
of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who
is a party to the retail distribution agreement, to comply with the Hold-the-Offering-Price Rule. Pursuant to such
agreement, no Underwriter has offered or sold any Maturity of the Bonds at a price that is higher than the
respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
2. Purchase Price. The [Purchaser] [Representative] acknowledges that it is purchasing the Bonds
for an aggregate purchase price of $_______________ (par amount of Bonds of $4,060,000, plus original issue
premium of $_______, less original issue discount of $________, less [a Purchaser’s] [an underwriter’s] discount
of $________), plus accrued interest in the amount of $____________.
3. Receipt of Bonds. The undersigned hereby acknowledges receipt of $4,060,000 in original
aggregate principal amount of the Bonds from the Issuer, fully executed and authenticated. [The [Purchaser]
[Representative] has paid to [NAME OF INSURER] the sum of $______________ as a premium for an
insurance policy for the Bonds.]
4. Representations. The representations set forth in this Certificate of Purchaser (the
“Certificate”) are limited to factual matters only. Nothing in this Certificate represents the interpretation by the
[Purchaser] [Representative] of any laws, including specifically Sections 103 and 148 of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. The undersigned understands
that the foregoing information will be relied upon by: (i) the Issuer with respect to certain of the representations
set forth in a tax certificate of the Issuer executed on the date hereof with respect to compliance with the federal
income tax rules affecting the Bonds; and (ii) Kennedy & Graven, Chartered, in connection with rendering its
opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the
preparation of Information Return for Tax-Exempt Governmental Obligations, Form 8038-G, and other federal
income tax advice that it may give to the Issuer from time to time relating to the Bonds.
5. Defined Terms.
(a) “Holding Period” means, with respect to each Maturity of the Bonds, the period starting on the
Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date
on which the [Purchaser has] [Underwriters have] sold at least ten percent (10%) of such Maturity to the Public
at prices that are no higher than the Initial Offering Price for such Maturity.
(b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate
Maturities.
(c) “Public” means any person (including an individual trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related
party” for purposes of this Certificate generally means any two or more persons who have greater than fifty
percent (50%) common ownership, directly or indirectly.
(d) “Sale Date” means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is October 1, 2019.
(e) “Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer
(or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds
to the Public).
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609742v1LA515-54
IN WITNESS WHEREOF, the undersigned officer has executed this Certificate of Purchaser as of the date
and year first written above.
[PURCHASER] [REPRESENTATIVE]
By
Name
Its
[Account Members:]
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
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A
-Ra
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e
d
Bond Buyer's Index Trends
2019
2018
2017
2016
2015
Source: Data compiled by Northland Securities from published Bond Buyer's Index
Chart for illustration only. This is not an offer to buy or sell securities .
Based on sources believed to be reliable, but not warranted or guaranteed by Northland Securities, Inc. (RC 19-14A/Muni 19-_10A)
150 South 5th Street, Suite 3300, Minneapolis, MN 55402 Main 612-851-5900 / www.northlandsecurities.comMember FINRA and SIPC, Registered with SEC and MSRB