HomeMy WebLinkAbout4.F.3. Approving the Issuance of Bond Refunding Series 2006A, 2006 E $3,260,000 and $1,225,000 Consent Business 4. F. 3.
SHAKOPE6
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Julie Linnihan, Finance Director/City Clerk
DATE: 11/19/2013
SUBJECT: Approving the Issuance of Bond Refunding Series 2006A and 2006E, $3,260,000 and
$1,225,000 respectively for Scott County Community Development Agency and River
City Centre (D)
Action Sought
Approve the Scott County Community Development Agency (CDA) with refunding bonds issued
for the River City Centre facility, and certain public improvements.
Background
These bonds were initially issued by the CDA and the City provided the general obligation back
for these bonds. The CDA is requesting that the City affirm continuance of its pledges in support
of this planned 2013 Debt Service bond refunding.
In 1997, the original general obligation bonds were issued for the River City Centre building and
nearby public improvements. The favorable market conditions have provided an environment for
the action of refunding the debt, to benefit from a lower interest rate. Provided for information
purposes are letters from William Jaffa, Executive Director of the Scott County CDA, the
requesting agency, as well as Kathy Aho, President of Springsted, Inc.
As stated in this information, the bond refunding will be issued under their original bond
indentures, which will provide for no change in terms.
The bond payments on this debt are paid from the rental income from the River City Centre, and
no City funds are pledged or used to satisfy the debt service from this refunding request.
Recommendation
Staff recommends the approval of Resolution No. 7384 and No. 7385,per the request of the Scott
County Community Development Agency (CDA).
Budget Impact
No budget impact
Relationship to Vision
This supports Goal D, "Maintain improve and create strong partnerships with other public and
private sector entities."
Requested Action
Staff is requesting Council to approve:
1. Resolution No. 7384, a Resolution acknowledging and approving the issuance by the Scott
County Community Development Agency (the "Issuer") of its Governmental Development
Refunding Bonds (City of Shakopee, Minnesota- General Obligation) Series 2013A (River City
Center Project) and the Agency's pledge of the full faith and credit of the City of Shakopee there
to
2. Resolution No. 7385, a Resolution authorizing the execution and delivery of a General
Obligation Tax Increment Guaranty Agreement, guarantying the payment of debt service on the
Scott County Community Development Agency's Governmental Tax Increment Development
Refunding Bods (City of Shakopee, Minnesota- General Obligation) Series 2013E (River City
Centre Project) and an amendment to a related tax increment pledge agreement.
Attachments: Snringsted Letter
CDA Letter
Res. No. 7384
Res. No. 7385
SP'mS=Y"d tr:cmp.:lated
'a0.73cksm:weal SOO1Z
Springsted �aa;, ssiE:.a7 s
Tti 611. 2211XQs '....
Fax 651.2412 iii'
.,ay,�€afi+,`i3:�..I"
i
I
November 14,2013
Ms. Julie Linnihan, Finance Director
City of Shakopee
129 South Holmes Street
Shakopee, MN 55379-1376
Re: Refunding of the $3,260,000 Housing Development Revenue Refunding Bonds, Series 2006A
(City of Shakopee,Minnesota,Unlimited Tax General Obligation),and
Refunding of the $1,225,000 Tax Increment Development Revenue Refunding Bonds, Series 2006E
(City of Shakopee,Minnesota,Unlimited Tax General Obligation)
Dear Ms. Cinnihan:
This letter is being provided as a supplement to a request made by the Scott County
Community Development Agency for the City's assistance in refunding the above referenced
bond transactions. Springsted Incorporated is serving as financial advisor to the Agency on the
transactions. As you know, we also work for the City.
When bonds were originally issued in 1997, the City agreed to use their general obligation
pledge to secure three series of bonds (1997 A, D, and E) and to pledge certain tax increment
to three series of bonds (1997 C, D, and E). One series, Series C, has been retired. With the
City's assistance, the remaining three issues (1997 A, D, and E)were each refunded in 2006 to
reduce debt service costs. That opportunity exists again, and the Agency is asking the City's
assistance in accomplishing additional savings by continuing its support of the proposed
refunding transactions through the continued use of the City's general obligation pledge and the
pledged tax increment. The general obligation pledge of the City is critical to the refunding in
that it allows the Agency to sell the bonds at the lowest available interest rates. Reducing debt
service costs reduces the debt service subject to the City's general obligation pledge.
Additionally, the bonds refunding the 2006E Issue will be one year shorter than the 2006E,
releasing both the tax increment and general obligation pledge one year earlier than expected.
(The 2006E refunding also reduced the term of the issue from its original 1997 term.)
Both issues are being issued under their original bond indentures which means that no
substantive business terms are being changed. The exception is that the debt service reserve
fund for the 2013A bonds is being reduced to 50% of maximum annual debt service to reduce
negative arbitrage costs. The bonds are paid primarily from rental income from the River City
Centre project. No City funds other than pledged tax increment have been used, or are
expected to be used,to satisfy debt service.
PiAAG Seater Adv±sors
Scott County Community Development Agency refundings
November 14,2013
Page 2
In each case, the proceeds of the refunding bonds will be used to redeem, or pay off, the
existing bonds on February 1, 2014, the first available call date. At that time, the 2006A and
2006E issues will cease to exist and the 2013A and 2013 E issues will take their places.
The savings exceed the guidelines suggested by the Government Finance Officers Association.
A summary of the savings has been attached for your reference. The actual savings will be
determined by the interest rates bid at the time of sale. Currently it is estimated that the
present value savings provided by the refundings will be close to$500,000.
1 know I speak for the Agency in expressing their appreciation of the City's partnership in this
and other projects. Please let me know if there is any other information that I can provide.
Sincerely,
Kathleen A.Aho, CIPFA
President
Cc: William Jaffa, Executive Director, Scott County Community Development Agency
Paul Steinman, Vice President, Springsted Incorporated
Page 3
$2,400,000 Scott County Community Development Agency, Minnesota
Governmental Housing Development Refunding Bonds, Series 2013.0
(City of Shakopee, Mnnesota-General Obligation)
Current Refunding of Series 2006A
Preliminary Feasibility Summary
Dated 1212612013 1 Delivered 1 212612 0 1 3
Sources Of Funds
ParAmounlof Bonds .....`... - .... . $2,400,000.00 j
Transfers from Prior Issue DSR Funds......... . . ......: ........, ... ... ...... ,. -258,100.13
Transfers from Prior Issue Debt Service Funds _ 125,6998.48
Total Sources. ,....... ......... .....................................:.. ............................ $$783,798,61
Uses Of Funds -
Deposit to Current Refunding Fund ........... .. ...... ......... - .......... 2,606,382.50
Deposit to Debt Service Reserve fund(OSRF)..................1-1—.. I.....::.. .. ...... .112,47335
Costs of Issuance ........:......... ....1... ......,.......... 36,000.00
Total Underw riter's Discount.(1,100%) 26,400. 0
Rounding Amount 2,542.1 36
Total Uses,.... ...._............. ........i ......... ......... . ....... $2,783,788.61_
I
ISSUES REFUNDED AND CALL INFORMATION
Prior Issue Can Price ..... .... ... . 100,000% - I
PriorIssue Can Date ........... ..... ... ........................................................................:....... . ......... 2101/2014 -
SAVINGS INFORMATION - _ -
Net Future Value Benefit ,........................................... .................. x$372.661.86
NetResent Value Benefit........ ........................................... ........ .......:. ......... ....... :$329,530.46
Net Rf Benefit 1$2,965,351.37 PV Refunded Debt Serviice.. .. ..;.... - 11,113%
Debt Service Comparison
Debt Service
Date Total P+I DSR Net'New dS .Old Net.01S Comparison
02/01/2014 - (27.32) '(27.32) 186,059.87 160,388.71
02/01/2015 224,654.79 - (281.18) 224,373 61 - 241,694.7417,22113
0210112016 224.555.0 (281.18) 224,273,82 - 245,857.24 ;21,583.42
02/01/2017 223;385.00 (281:18) 223,103.82 249,694,74 - 26,596,92
02/01f2018 221.765.00 (281,18) 221,483.62 - 243,029.74 21,545.92
02/01/2019 224,515.00 (281718) 224;233.82 246,364.74 --22,130.92 -
02/01/2020 221,647,50 (281.18). 221,366.32 249,104.74 27,738.42
02/01/2021 223225.00 (281,18) 222,943.82 _ 246,404.74 23460.92 -
02/CV2022 224,235.60 (281.18) 223,953.82 - 253,304.74 .29356.92 '.
02/0112023 224,647.50 (281.18) 224,566,32 254,529.74 29,963.42 -
0210112024 220,047,50 (281.18) 219,766:32 250,304.74 30,538.42 - -
02/01/2025 224,947.50 (281.18) 224,666.32 255,854.74 -:31,188.42
02/07/2026 224,277.50 (281.18) 223,996.32 250,729.74 26,733,42
02/01027 108,160.00. -(112,754.93) (4,604.93) (2,720.39) `1,864:54 :.
Total $2,790,262.29 - '(116,158:41) - $2,674,095.88 --'$3,170,113.86 '$370,319.50
iF
Page 4
$1,270,000 Scott County Housing and Redevelopment:Authority
ovemmental Tax Increment Development Refunding Bonds, Series 20131
(City of Shakopee, Mnnesota-;General Obligation)
Current Refunding of Series 2006E
Preliminary Feasibility Summary f
Dated 12J26120131 Delivered 1 212 6/201 3
Sources Of Funds - -
Per Amount oLBonds ...:...:: $1.270,000.00
Transfers from Prior Issue DSR Funds ....... ........ ...... . ......... ,
Total Sources .I.....: - $1,392,50000
Uses Of Funds
Deposit to Current Refunding Fund .I..". - .... .... -1:225.000.00
Deposit to Debt Service Reserve Fund(OSRF) ......... .....................
Costs of Issuance . . 35,Oo0.0o
Total Undem rhees Discount (1.000%)....:.: .......... ......... ..:.....: 12.700.00
Rounding Amount _. - 4.685.00
Total uses........................................................ .......; ........ . ....... .$1;392,500.00
i
ISSUES REFUNDED AND CALL INFORMATION -
Prior Issue Call Price ........i .........: ....,.... .:,..... ......... 100.000%
Prior issue Call Date .......... ....,.... ......... ............................................... 210112014 F
i
i
SAVINGS INFORMATION
Net Future Value WWII _ - ...... .............. ..... ... ....... .... $183,22920
Net Present Value Benefit...................... ......... ... ......... $160.860.54
Net PV Benefit!$1,430,842.54 PV Refunded Debt Service..... ......... ` 11242%
I
;
Debt Service Comparison
Date Total Ptl DSR Bdsting Net New D/S Old Net D/S Savings _
D/S
0201/2014 ---(27.97) 28,255.00 28,257.03 28,131.87 < (125.16) -
02//012015 51,048.06 (287.78) 50,760.28 58.263 74 5,503.46
0210112016 48,640.00 (287.76) 48,352.22 56;263.74 7,911.52
02!0112017 48,477.50 (287.78) - 48,189.72 56,263.74 8,074.02
02/0112018 168,252.50 (287.78) 167,964.72 176,26174 .8,299.02
02/012019 221,440.00 ;(287.78) - 221,152.22 235,863.74 . 14,711.52
02/01/2020 218,340.00 --(287.78) - 218,052.22 232,536.74 14,486.52
02/01/2021 224,640.00 (287,78) - 224,352.22 238,798 74 14,446.52
02101!2022 230,230.00 (287.78) - 229,942.22 239;368.74 9,426,52
02/0112023 225,280.00 (115,402.78) 109,877.22 234;263.74 124,366.52
02/01/2024 _ - (28,576.26) (28,57636) !
Total $1.436,348.06 (117,732.99) - $28,285.00 - $1,346,90107 $1,525,444.27 $178,544.20
l
Scott County
Community Development Agency j
323 South Naumkeag Street
Shakopee,MN 55379-1652
C D A phone:952.402.9022
F=952,496.2852
I
I
November 7,2013
I
I
Ms.Julie Linnihan, Finance Director
City of Shakopee
129 South Holmes Street
Shakopee, Minnesota 55379
I
Re: Refunding of the$3,260,000 Housing Development Revenue Refunding Bonds,Series 2006A
(City of Shakopee,Minnesota,Unlimited Tax General Obligation),and
Refunding of the$1,225,000 Tax Increment Development Revenue Refunding Bonds,Series 2006E
(City of Shakopee,Minnesota,Unlimited Tax General Obligation)
i
Dear Ms. Linnehan:
The Scott County Community Development Agency issued the above referenced bonds in 2006 to refund bonds
issued in 1994 to finance construction of the River City Centre senior rental building(2006A)and certain public
i
improvements(2006E). Due to favorable market conditions,the Agency is able to refund the bonds and realize j
additional savings. The City provided a general obligation backing for the original 1997 bonds and,in 2006,affirmed
the application of the general obligation to the refunding bonds and the pledge of certain tax increment to the Series
2006E Bonds. The Agency is asking that the City affirm continuance its pledges in support of the 2013 refunding
bonds.
Both refundings are being done as a"current refunding,"which means that within 90 days the old bonds will be called
in their entirety and only the new bonds will exist. At the time of closing,the SCCDA will provide the trustee with
funds adequate to pay all interest then due and principal outstanding on February 1,2014,whereby the 2006 bonds
will be defeased. The refunding bonds are each being sold under its original 1997 indenture of trust and will continue
to be subject to the same provisions that are currently in place, including a debt service reserve fund for each
issue. (The 2006E are parity bonds with the Series 2006D and have a common reserve. The Series 2006D is not
being refunded at this time. The 2006A reserve fund will be reduced to 50%of maximum annual debt service to
i
Equal Housing Opportunity/Affirmative Action Employer
City of Shakopee, Minnesota
November 7,2013
Page 2
reduce negative arbitrage and reflect the historical performance of the project.) No change is expected in the tern of
the 2006A bonds. The 2006E bonds are expected to be shortened by one year.
Bond Counsel has been asked to prepare a resolution for consideration by the City on November 19. Please let us
know if you would like a representative of the Agency at the meeting.
We appreciate the City of Shakopee's continued support of this project and thank you for your assistance.
Sincerely,
William I.Jaffa,Executive Director
Cc: Mark McNeill,City Administrator
CITY OF SHAKOPEE,MINNESOTA
RESOLUTION NO.7384
Acknowledging and approving the issuance by the Scott County Community
Development Agency (the "Issuer") of its Governmental Development Refunding
Bonds (City of Shakopee,Minnesota-General Obligation)Series 2013A(River City
Centre Project) and the Agency's pledge of the full faith and credit of the City of
Shakopee thereto.
WHEREAS, on July 27, 2006, the Agency (previously known as the Scott County Housing and
Redevelopment Authority) issued its $3,495,000 Housing Development Revenue Refunding Bonds (City
of Shakopee, Minnesota, Unlimited Tax General Obligation —River City Centre Project), Series 2006A
(the"Prior Bonds");
WHEREAS,the Prior Bonds were issued to refund the Agency's Housing Development Revenue
Bonds (City of Shakopee, Minnesota—Unlimited Tax General Obligation— River City Centre Project),
Series 1997A, the proceeds of which were used to finance the housing element of a mixed use housing
development known as the River City Centre Project, located in the City and owned and operated by the
Agency;
WHEREAS,the Agency now proposes to issue its Governmental Development Refunding Bonds
(City of Shakopee, Minnesota - General Obligation) Series 2013A (River City Centre Project), in an
aggregate principal amount not exceeding$2,500,000(the"Bonds");
WHEREAS, the purpose for issuing the Bonds and refunding the Prior Bonds is to achieve debt
service savings,expected to be$320,000 on a present-value basis;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Shakopee,
Minnesota,as follows:
1. That the City hereby acknowledges and approves the issuance by the Issuer of the Bonds and the
pledge by the Issuer to the Bonds of the full faith and credit of the City;and
2. That officers and staff of the City are authorized to execute and deliver on behalf of the City any
certificates or documents which may be necessary or convenient in connection with the Issuer's
issuance of the Bonds.
Adopted on this_day of November,2013.
Brad Tabke,Mayor
Attest:
City Clerk
102492620
CITY OF SHAKOPEE,MINNESOTA
RESOLUTION NO.7385
Authorizing the execution and delivery of a General Obligation Tax Increment
Guaranty Agreement, guarantying the payment of debt service on the Scott
County Community Development Agency's Governmental Tax Increment
Development Refunding Bonds (City of Shakopee, Minnesota - General
Obligation) Series 2013E (River City Centre Project) and an amendment to a
related tax increment pledge agreement
BE IT RESOLVED by the City Council of the City of Shakopee,Minnesota(the"City"), as
follows:
WHEREAS, on July 27, 2006, the Scott County Community Development Agency
(formerly known as Scott County Housing and Redevelopment Authority) (the"Issuer") issued its
$1,225,000 Tax Increment Development Revenue Refunding Bonds (City of Shakopee, Minnesota,
General Obligation—River City Centre Project) Series 2006E(the"Prior Bonds");and
WHEREAS,the Prior Bonds were issued to refund the Issuer's Tax Increment Development
Revenue Bonds (City of Shakopee, Minnesota, General Obligation - River City Centre Project),
Series 1997 (the "Original Bonds"), the proceeds of which were used to finance the public
improvements to the project known as River City Centre(the"Project"); and
WHEREAS, the Issuer now proposes to issue its Governmental Tax Increment
Development Refunding Bonds (City of Shakopee, Minnesota - General Obligation) Series 2013E
(River City Centre Project) (the `Bonds") in an aggregate principal amount not exceeding
$1,370,000 to refund the outstanding principal amount of the Prior Bonds in order to achieve debt
service savings; and
WHEREAS, pursuant to Resolution No. 4747 of the City, adopted on October 7, 1997, the
Original Bonds were secured by that certain City of Shakopee General Obligation Tax Increment
Guaranty Agreement and by a pledge of tax increment pursuant to that certain Tax Increment
Pledge Agreement(the"Pledge Agreement")by and between the City,the Economic Development
Authority for the City of Shakopee,Minnesota(the"EDA")and the Issuer; and
WHEREAS, pursuant to Resolution 6441 of the City, adopted on June 20, 2006, the Prior
Bonds were secured by that certain that certain City of Shakopee General Obligation Tax Increment
Guaranty Agreement and by the Pledge Agreement, as amended in connection with the issuance of
the Prior Bonds;
102532530
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota
as follows:
1. In connection with the issuance by the Issuer of the Bonds,the City hereby approves
execution and delivery on behalf of the City (a) a General Obligation Tax Increment Guaranty
Agreement (the "Guaranty") in substantially the form on file with the City Clerk on the date
hereof, pledging the full faith and credit and taxing power of the City to guaranty the payment of
debt service on the Bonds, (b) an Amendment to Tax Increment Pledge Agreement in substantially
the form on file with the City Clerk on the date hereof.
2. The Bonds and the Guaranty together comprise an "obligation" pursuant to
Minnesota Statutes, Section 475.5 1, Subd 2, issued by the Issuer and the City pursuant to Minnesota
Statutes, Sections 471.59 and 469.178, in that they are a promise to pay stated amounts at a fixed
future dates, made for the purpose of incurring debt. The Bonds are expected to be paid from Tax
Increment and from certain net revenues to be generated by the Project (the "Pledged Revenues"),
but if necessary for the payment thereof, pursuant to the Guaranty, the City will levy ad valorem
property taxes upon all property within its jurisdiction without limitation as to rate or amount. It is
anticipated that the Tax Increment and the Pledged Revenues will equal not less than 105%of debt
service on the Bonds in each year. The Bonds and the Guaranty, together with the Scott County
Community Development Agency Governmental Development Refunding Bonds (City of
Shakopee, Minnesota-General Obligation) Series 2013A (River City Centre Project)will meet the
debt service scheduling requirements of Minnesota Statutes,Chapter 475.
3. The Bonds will be issued as additional bonds under that certain Indenture of Trust,
dated as of October 1, 1997, by and between the Issuer, the City and U.S. Bank National
Association(formerly First Trust National Association),as previously amended,and as amended by
a supplemental indenture expressly providing for the terms of the Bonds(the"Indenture").
4. All acts, conditions and things which are required by the Constitution and laws of
the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the
valid execution and delivery of the Guaranty,having been done, now existing,having happened and
having been performed, the City Council hereby authorizes and directs the Mayor, the City
Administrator and the City Clerk to execute and deliver the Guaranty in connection with the
issuance of the Bonds. The final terms of the Bonds, including particularly the aggregate principal
amounts thereof, the maturity dates and the interest rates therefore, shall be determined by a Pricing
Committee, which shall be comprised of the Chair and Executive Director of the Issuer, acting on
advice of Springsted, Incorporated, provided that the aggregate principal amount shall not exceed
$1,370,000, the final maturity shall not be later than February 1, 2024, and the true interest cost
shall not exceed 3.0%per annum.
5. If the balance in the Tax Increment Account of the Bond Fund created under the
Indenture is at any time insufficient to pay all payments then due on the Bonds,the payment shall be
made from any fund of the City which is available for that purpose, subject to reimbursement from
moneys disbursed from the Surplus Fund when the balance therein is sufficient, and the City
2
=125M
Council covenants and agrees that it will each year levy a sufficient amount of ad valorem taxes to
fund any accumulated or anticipated deficiency, which levy is not subject to any constitutional or
statutory limitation as to rate or amount.
6. For the prompt and full payment of the City's obligation under the Guaranty to pay
principal of and interest on the Bonds as the same respectively become due,the full faith, credit and
unlimited taxing powers of the City shall be and are hereby irrevocably pledged.
7. The Administrator is hereby authorized and directed to file a certified copy of this
Resolution with the County Auditor of Scott County, together with such additional information as
the Auditor may require, and to obtain from the Auditor a certificate that the Bonds and the
Guaranty have been duly entered upon the Auditor's bond register.
8. The officers of the City are hereby authorized and directed to prepare and famish to
the purchaser of the Bonds and to Leonard, Street and Deinard, Professional Association, Bond
Counsel, certified copies of all proceedings and records relating to the Guaranty and such other
affidavits, certificates and information as may be required to show the facts relating to the legality
and marketability of the Bonds, as the same appear from the books and records in their custody and
control or as otherwise known to them, and all such certified copies, affidavits and certificates,
including any heretofore furnished, shall be deemed representations of the City as to the correctness
of all statements contained therein. The officers of the City are further authorized to execute and
deliver related documents and agreements necessary or convenient in connection with the
transaction described in this resolution.
9. The Official Statement relating to the Bonds,prepared and delivered on behalf of the
Issuer and the City by Springsted Incorporated, is hereby approved, and the officers of the City are
hereby authorized and directed to execute such certificates as may be appropriate concerning the
accuracy,completeness and sufficiency thereof.
Adopted this_day of November, 2013.
Brad Tabke,Mayor
Attest:
City Clerk
3
�amxs�.3