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HomeMy WebLinkAbout13.F.1. Calling Bonds for Redemption-Res. No. 6990 /3. F. CITY OF SHAKOPEE Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director SUBJ: Calling Bonds for Redemption Resolution No. 6990 DATE: February 24,2010 Introduction & BackRround Council is requested to call certain bonds of the city for prepayment in order to save on interest cost, administrative expense and lower the outstanding debt. By adopting Resolution No. 6990, Council is calling the 2002A and 2002B GO Improvement bonds for payment on August 1, 2010 and the 2003A GO Improvement bond for payment on February 1, 2011. There are funds on hand to pay for the 2002A and 2002B bonds. The 2003A bonds have deferred assessments associated with them and are not expected to have available funds to pay for the bonds before or at scheduled maturity. Therefore, the Capital Improvement Fund (elF) will need to assist with funding until those deferred assessments are paid at which time the CIF would be replenished. The alternative to using CIF assistance would be to levy taxes to make up the shortage until the deferred assessments are paid. A separate issue is the remaining balance in the 2002 debt service funds when the bonds are paid, whether it is 2010 or at final maturity. The 2002B fund will have a significant balance left which comes primarily from state aid received for the project greater than what anticipated and placed in the debt service fund to be conservative. Council practice has been to put remaining funds in the elF, which has no other regular source of funding except interest income. Special assessments are adopted by Council based on the construction cost of the project. Over the life of the related bonds and assessments, various factors impact whether there is a positive or negative balance left in the debt service fund at the end of the bonds. When there is a negative expected balance, Council has not tried to assess the shortage and conversely jf there is a positive balance, it has not tried to refund assessments to the current or previous owners. Visionin~ Goal Financially strong. Action Offer Resolution No.6990 A RESOLUTION PROVIDING FOR THE PREPAYMENT AND REDEMPTION OF CERAIN OUTSTANDING GENERAL OBLIGATION BONDS OF THE CITY, and move its adoption. Gr~Xland Finance Director H:\Finance\cash\bonds RESOLUTION NO. 6990 RESOLUTION PROVIDING FOR THE PREPAYMENT AND REDEMPTION OF CERTAIN OUTSTANDING GENERAL OBLIGATION BONDS OF THE CITY BE IT RESOLVED By the City Council of the City of Shako pee, Minnesota (the "City"), as follows: Section 1. Redemption of Series 2002A Bonds. (a) The City has previously issued and sold"its General Obligation Improvement Bonds, Series 2002A, dated February 1, 2002 (the "Series 2002A Bonds"), in the aggregate principal amount of $1,185,000, of which $275,000 in principal amount is currently outstanding. Series 2002A Bonds maturing on or after February 1, 2011, are subject to call for prior redemption on February 1, 2010, or on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part, and if in part, at the option of the City and in such order as the City will determine and within a maturity selected by U.S. Bank National Association, S1. Paul, Minnesota, acting as the registrar for the Series 2002A Bonds (the "Series 2002A Bond Registrar"). Prepayments will be at a price of par plus accrued interest. (b) It is determined that it is in the best interests of the sound financial management of the City that Series 2002A Bonds maturing on or after February 1, 2011, be prepaid and redeemed on August 1, 2010, and those Series 2002A Bonds are hereby called for redemption on that date in the aggregate principal amount of$275,000. (c) The Series 2002A Bond Registrar is authorized and directed to mail notice of call for redemption for the Series 2002A Bonds in the form attached hereto as EXHIBIT A to the registered owners of each Series 2002A Bond to be redeemed at the address shown on the registration books kept by the Series 2002A Bond Registrar. Section 2. Redemption of Series 2002B Bonds. (a) The City has previously issued and sold its General Obligation Improvement Bonds, Series 2002B, dated July 1,2002 (the "Series 2002B Bonds"), in the aggregate principal amount of $3,750,000, of which $595,000 in principal amount is currently outstanding. Series 2002B Bonds maturing on or after February 1,2011, are subject to call for prior redemption on February 1, 2010, or on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part, and if in part, at the option of the City and in such order as the City will determine and within a maturity selected by U.S. Bank National Association, St. Paul, Minnesota, acting as the registrar for the Series 2002B Bonds (the "Series 2002B Bond Registrar"). Prepayments will be at a price of par plus accrued interest. (b) It is determined that it is in the best interests of the sound fmancial management of the City that Series 2002B Bonds maturing on or after February 1, 2011, be prepaid and redeemed on August 1,2010, and those Series 2002B Bonds are hereby called for redemption on that date in the aggregate principal amount of $595,000. (c) The Series 2002B Bond Registrar is. authorized and directed to mail notice of call for redemption for the Series 2002B Bonds in the form attached hereto as EXHIBIT B to the registered owners of each Series 2002B Bond to be redeemed at the address shown on the registration books kept by the Series 2 2002B Bond Registrar. Section 3. Redemption of Series 2003A Bonds. (a) The City has previously issued and sold its General Obligation hnprovement Bonds, Series 2003A, dated June 1,2003 (the "Series 2003A Bonds"), in the aggregate principal amount of $2,215,000, of which $665,000 in principal amount is currently outstanding. Series 2003A Bonds maturing on or after February 1, 2012, in the aggregate principal amount of $495,000, are subject to call for prior redemption on February 1, 2011, or on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part, and if in part, at the option of the City and in such order as the City will determine and within a maturity selected by U.S. Bank National Association,. St. Paul, Minnesota, acting as the registrar for the Series 2003A Bonds (the "Series 2003A Bond Registrar"). Prepayments will be at a price of par plus accrued interest. (b) It is determined that it is in the best interests of the sound fmancial management of the City that Series 2003A Bonds maturing on or after February 1, 2012, comprising all of the Series 2003A Bonds subject to prior redemption, be prepaid and redeemed on February 1,2011, and those Series 2003A Bonds are hereby called for redemption on that date in the aggregate principal amount of $495,000. (c) The Series 2003A Bond Registrar is authorized and directed to mail notice of call for redemption for the Series 2003A Bonds in the form attached hereto as EXHIBIT C to the registered owners of each Series 2003A Bond to be redeemed at the address shown on the registration books kept by the Series 2003A Bond Registrar. (The remainder of this page is intentionally left blank.) 3 EXHIBIT A NOTICE OF CALL FOR REDEMPTION OF SERIES 2002A BONDS $1,185,000 CITY OF SHAKOPEE, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2002A NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Shakopee, Minnesota (the "City"), there have been called for redemption and prepayment on August 1, 2010 all outstanding bonds of the City designated as the General Obligation Improvement Bonds, Series 2002A, dated February 1, 2002, having stated maturity dates of February 1 in the years 2011 through 2012, both inclusive, totaling $275,000 in principal amount, and with the following CUSlP numbers: Year of Maturity Amount CUSlP 2011 $135,000 819156 YD6 2012 140,000 819156 YE4 The bonds are being called at a price of par plus accrued interest to August 1, 2010, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the main office ofD.S. Bank National Association, in the City of S1. Paul, Minnesota, on or before August 1, 2010. If by mail: If bv hand: U.S. Bank National Association U.S. Bank National Association Corporate Trust Operations 60 Livingston Avenue 60 Livingston Avenue 3rd Floor - Bond Drop Window EP-MN-WS3C S1. Paul, MN 55107 St. Paul, MN 55107 In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2003, the City is required to withhold a specified percentage of the principal amount of the redemption price payable to the holder of any Bonds subject to redemption and prepayment on the Redemption Date, unless the City is provided with the Social Security Number or Federal Employer Identification Number of the holder, properly certified. Submission of a fully executed Request for Taxpayer Identification Number and Certification, Form W -9 (Rev. October 2007), will satisfy the requirements of this paragraph. A-I Additional information may be obtained from: U.S. Bank National Association Corporate Trust Division Bondholder Relations (800) 934-6802 Dated: ,2010. BY ORDER OF THE CITY COUNCIL By /s/ Mark McNeill City Administrator City of Shakopee, Minnesota A-2 EXIDBIT B NOTICE OF CALL FOR REDEMPTION OF SERIES 2002B BONDS $3,750,000 CITY OF SHAKOPEE, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2002B NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Shakopee, Minnesota (the "City"), there have been called for redemption and prepayment on August 1, 2010 all outstanding bonds of the City designated as the General Obligation Improvement Bonds, Series 2002B, dated July 1, 2002, having stated maturity dates of February 1 in the years 2011 through 2013, both inclusive, totaling $595,000 in principal amount, and with the following CUSIP numbers: Year of Maturity Amount CUSIP 2011 $200,000 819156 YN4 2012 200,000 819156 YP9 2013 195,000 819156 YQ7 The bonds are being called at a price of par plus accrued interest to August 1, 2010, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the main office of U.S. Bank National Association, in the City of St. Paul, Minnesota, on or before August 1, 2010. Ifby mail: If bv hand: U.S. Bank National Association U.S. Bank National Association Corporate Trust Operations 60 Livingston Avenue 60 Livingston Avenue 3rd Floor - Bond Drop Window EP-MN-WS3C St. Paul, MN 55107 St. Paul, MN 55107 In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2003, the City is required to withhold a specified percentage of the principal amount of the redemption price payable to the holder of any Bonds subject to redemption and prepayment on the Redemption Date, unless the City is provided with the Social Security Number or Federal Employer Identification Number of the holder, properly certified. Submission of a fully executed Request for Taxpayer Identification Number and Certification, Form W -9 (Rev. October 2007), will satisfy the requirements of this paragraph. B-1 Additional information may be obtained from: U.S. Bank National Association Corporate Trust Division Bondholder Relations (800) 934-6802 Dated: ,2010. BY ORDER OF THE CITY COUNCIL By /s/ Mark McNeill City Administrator City of Shakopee, Minnesota B-2 EXHIBIT C NOTICE OF CALL FOR REDEMPTION OF SERIES 2003A BONDS $2,215,000 CITY OF SHAKOPEE, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2003A NOTICE IS HEREBY GWEN that, by order of the City Council of the City of Shakopee, Minnesota (the "City"), there have been called for redemption and prepayment on February 1, 2011 all outstanding bonds of the City designated as the General Obligation Improvement Bonds, Series 2003A, dated June 1, 2003, having stated maturity dates of February 1 in the years 2012 through 2014, both inclusive, totaling $495,000 in principal amount, and with the following CUSIP numbers: Year of Maturity Amount CUSIP 2012 $165,000 819156 YYO 2013 165;000 819156 YZ7 2014 165,000 819156 ZAl The bonds are being called at a price of par plus accrued interest to February 1, 2011, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the main office of U.s. Bank National Association, in the City of St. Paul, Minnesota, on or before February 1, 2011. Ifbv mail: If by hand: U.S. Bank National Association U.S. Bank National Association Corporate Trust Operations 60 Livingston Avenue 60 Livingston Avenue 3rd Floor - Bond Drop Window EP-MN-WS3C St. Paul, MN 55107 St. Paul, MN 55107 In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2003, the City is required to withhold a specified percentage of the principal amount of the redemption price payable to the holder of any Bonds subject to redemption and prepayment on the Redemption Date, unless the City is provided with the Social Security Number or Federal Employer Identification Number of the holder, properly certified. Submission of a fully executed Request for Taxpayer Identification Number and Certification, Form W -9 (Rev. October 2007), will satisfy the requirements of this paragraph. C-l Additional information may be obtained from: U.S. Bank National Association Corporate Trust Division Bondholder Relations (800) 934-6802 Dated: ,20_. BY ORDER OF THE CITY COUNCIL By /s/ Mark McNeill City Administrator City of Shakopee, Minnesota SH155-227 (JAB) 363753vl C-2