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HomeMy WebLinkAbout5.F.8. Providing for the Issuance of $2,170,000 G.O. Improvement Bonds-Res. No. 6789 S. F ~ ~" CONSENT CITY OF SHAKOPEE Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director SUBJ: Setting Improvement Bond Sale Res. No. 6789 DATE: June 25, 2008 Introduction Council action is needed for setting the sale of improvement bonds for the 2008 Recon, Overlay and Beckrich projects. Background Attached is a resolution prepared by bond counsel that sets the sale of improvement bonds. This is a routine event. The bonds to be sold are in the amount of $2,170,000. The financed projects are 2008 Recon, Overlay and Beckrich projects. The bond sale schedule is set to adopt this resolution on July 1st, sell the bonds on August 5th with settlement in about 30 days. Action Offer Resolution No. 6789 A Resolution Providing For The Issuance and Sale of $2,170,000 General Obligation Improvement Bonds, Series 2008A, and move its adoption. Gr~OXland Finance Director h\finance\cash\bonds\08Bbonds ,- Extract of Minutes of Meeting of the City Council of the City of Shako pee, Scott County, Minnesota Pursuant to due call and notice thereof a regular meeting of the City Council of the City of Shakopee, Scott County, Minnesota, was held at the City Hall in the City on Tuesday, July 1, 2008, commencing at 7:00 P.M. The following members of the Council were present: and the following were absent: *** *** *** The following resolution was presented by Councilmember who moved its adoption: RESOLUTION NO. 6789 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF APPROXlMATEL Y $2,170,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A BE IT RESOLVED By the City Council of the City of Shakopee, Scott County, Minnesota (the "City") as follows: 1. It is hereby determined that: (a) certain assessable public improvements including the 2008 Reconstruction Project, the 2008 Overlay Project, and the Beckrich Project (the "Improvements") have been made, duly ordered or contracts let for the construction thereof, by the City pursuant to the provisions of Minnesota Statutes, Chapter 429 (the "Act"). The City estimates the costs of such Improvement will include the following: Proiect Designation & Description: Total Proiect Cost Project Construction Fund $2,123,580.00 Costs ofIssuance 27,975.00 Underwriter's Discount 18.445.00 Total $2,170,000.00 (b) It is necessary and expedient to the sound financial management of the affairs of the City to issue approximately $2,170,000 General Obligation hnprovement Bonds, Series 2008A (the "Bonds") pursuant to the Act to provide financing for the Improvements. 2. In order to provide financing for the Project, the City will therefore issue and sell Bonds in the amount of $2,151,555. To provide in part for the additional interest required to market the Bonds at this time, additional Bonds will be issued in the amount of $18,445. The excess of the purchase price of the Bonds over the sum of $2,151,555 will be credited to the debt service fund for the Bonds for the purpose of paying interest first coming due on the additional Bonds, unless otherwise provided in the resolution awarding sale of the Bonds. The amOunts cited above are subject to adjustment in accordance with the Terms of Proposal. The Bonds will be issued, sold and delivered in accordance with the terms of the following Terms of Proposal: (The remainder of this page is intentionally left blank.) 2 THE CITY HAS AUTHORIZED SPRlNGSTEDINCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $2,170,0001 CITY OF SHAKOPEE, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A (BOOK ENTRY ONL Y) Proposals for the Bonds will be received on Tuesday, August 5, 2008, until 10:30 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted. (a) Sealed Biddim!. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the submitted Proposal. OR (b) Electronic Biddim!. Notice is hereby given that electronic proposals will be received via P ARITY@. For purposes of the electronic bidding process, the time as maintained by P ARITY@ shall constitute the official time with respect to all Bids submitted to P ARITY@. Each bidder shall be solely responsible for making necessary arrangements to access P ARI~ for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the City, its agents nor P ARITY@ shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor P ARITY@ shall be responsible for a bidder's failure to register to bid or for any failure in the 1 Preliminary; subject to change. 3 proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of P ARITY@. The City is using the services of P ARITY@ solely as a communication mechanism to conduct the electronic bidding for the Bonds, and P ARITY@ is not an agent of the City. If any provisions of this Terms of Proposal conflict with information provided by PARITY@, this Terms of Proposal shall control. Further information about P ARITY@, including any fee charged, may be obtained from: PARlTY@, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 DETAILS OF THE BONDS The Bonds will be dated September 1,2008, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1,2009. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts* as follows: 2010 $365,000 2013 $195,000 2016 $200,000 2018 $210,000 2011 $190,000 2014 $195,000 2017 $210,000 2019 $215,000 2012 $190,000 2015 $200,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds offered for sale. Any such increase or reduction will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced; any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at" a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the Proposal Form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of 4 DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar, which shall be subject to applicable SEC regulations. The City will pay for the services ofthe registrar. OPTIONAL REDEMPTION The Bonds will not be subject to payment in advance oftheir respective stated maturity dates. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties. The proceeds will be used to finance various improvement projects within the City. TYPE OF PROPOSALS Proposals shall be for not less than $2,151,555 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $21,700, payable to the order of the City. If a check is used, it must accompany the proposal. If a Financial Surety Bond is used, it must be from aninsurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement, will be deposited by the City and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/1 00 or 1/8 of 1 %. Rates are not required to be in level or ascending order; however, the rate for any maturity cannot be more than 1% lower than the highest rate of any of the preceding 5 maturities. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City detennines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility ofthe purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. 6 Unless compliance with the terms of payment for the Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 85 copies of the Official Statement and the addendum or addenda described above.'. ..... The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter ofthe Final Official Statement. Dated July 1, 2008 BY ORDER OF THE CITY COUNCIL /s/ Judy Cox City Clerk 7 3. Springsted Incorporated is authorized and directed to negotiate the Bonds in accordance with the foregoing Terms of Proposal. The City Council will meet at 7:00 P.M. on Tuesday, August 5, 2008, to consider proposals on the Bonds and take any other appropriate action with respect to the Bonds. 4. The law firm of Kennedy & Graven, Chartered, as bond counsel for the City, is authorized to act as bond counsel and to assist in the preparation and review of necessary documents, certificates and instruments relating to the Bonds. The officers, employees and agents of the City are hereby authorized to assist Kennedy & Graven, Chartered in the preparation of such documents, certificates, and instruments. Adopted in session of the City Council of the City of Shakopee, held this I st day of July, 2008. Mayor of the City of Shakopee ATTEST: City Clerk (The remainder of this page is intentionally left blank.) .. 8 S-F g- o N -rt4- f3J.. e., RECOMMENDA liONS Re: Recommendations for the Issuance of $2,170,000* General Obligation Improvement Bonds, Series 2008A (the "Bonds" or "Issue") We respectfully request your consideration of our recommendations for the above-named Issue. Bond proceeds will be used to finance three improvement projects within the City; (i) the 2008 Reconstruction project, (Ii) the 2008 Overlay project, and (Hi) the Beckrich project. We recommend the following for the Bonds: 1. Action Requested To establish the date and time of receiving bids and establish the terms and conditions of the offering. 2. Sale Date and Time Wednesday, August 6,2008 at 10:30 A.M., with consideration for award by the City Council at 7:00 P.M. that same day. 3. Method of Sale The Bonds will be sold using a competitive bidding process. In the interest of obtaining as many bids as possible, we have included a provision in the attached Terms of Proposal for underwriters to submit their bid electronically through the electronic bidding platform of PARITY@. In addition, physical bids (by phone or fax) wiU be accepted at the offices of Springsted. PARITY@currently is subject to an injunction that may affect the City's ability to utilize their services on day of sale. See Discussion section for further explanation. 4. Authority for the Bonds The Bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 429. 5. Principal Amount of the Bonds $2,170,000* * Included in the Terms of Proposal for the Bonds is a provision that permits the City to increase or reduce the principal amount of the Bonds in any of the maturities. This allows for any necessary adjustments required based on final interest rates. 6. Repayment Term The Bonds will mature annually February 1, 2010 through 2019. Interest on the Bonds will be payable semi-annually each February 1 and August 1, commencing on August 1, 2009. 'Preliminary; subject to change City of Shakopee, Minnesota July 1, 2008 7. Security, Source of Payment and Payment Cycle (a) Security The Bonds will be general obligations of the City, secured by its full faith and credit and taxing power. (b) Source of Payment and Payment Cycle The Bonds will be repaid from a combination of general ad valorem tax levies and special assessments filed against benefited properties. The City will file assessments on or about October 17,2008 for first collection in 2009. The City will file its first levy in 2008 for collection in 2009. Each year's collection of assessments and taxes will be used to pay the August 1 interest payment in the collection year and the February 1 principal and interest payment in the following year. 8. Prepayment Provisions Due to their short duration, the Bonds will not be callable prior to their stated maturity dates. 9. Credit Rating Comments An application will be made to Moody's Investors Service for a rating on the Bonds. The City's general obligation debt is currently rated "Aa3". 10. Term Bonds We have included a provision that permits the underwriters to combine multiple maturity years into a term bond, subject to mandatory redemption on the same maturity schedule provided in the Terms of Proposal. The advantage to the underwriter is that it provides large blocks of bonds, which are more attractive to bond funds, and certain pension funds. This in turn is a benefit to the City since selling larger blocks of bonds reduces the risk to the underwriter, allowing them to lower their costs and the interest coupons. Since the Bonds are being offered on a competitive bid basis and awarded on the lowest true interest cost, the City will award the Bonds to the best bid regardless of whether term bonds are chosen or not. 11. Federal Treasury Regulations Concerning Tax- Exempt Obligations (a) Bank Qualification Under Federal Tax Law, financial institutions cannot deduct from income for federal income tax purposes, expense that is allocable to carrying and acquiring tax- exempt bonds. There is an exemption to this for "bank qualified" bonds, which can be so designated if the issuer Page 2