Res 2011- 85 GO Imprv Refunding Bonds 2011ADebt Issuance Services
Resolution No. 2011 -85
Councilmember Duggan introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$2,975,000 G.O. Improvement and Refunding Bonds, Series, 2011A
A. WHEREAS, the City Council of the City of Mendota Heights, Minnesota, has heretofore determined
that it is necessary and expedient to issue the City's $2,975,000 G.O. Improvement Bonds, Series,
2011A (the "Bonds "), to finance the 2011 street reconstruction and rehabilitation projects in the City
and a current refunding of the 2003, 2004A and 2005A G.O. Improvement Bonds; and
B. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ( "Ehlers "), as its
independent financial advisor for the Bonds and is therefore authorized to solicit proposals in
accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9);
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mendota Heights,
Minnesota, as follows:
1. Authorization; Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale
of the Bonds.
2. Meeting; Proposal Opening. The City Council shall meet at 7:00 p.m. on October 18, 2011, for the
purpose of considering sealed proposals for and awarding the sale of the Bonds.
3. Official Statement. In connection with said sale, the officers or employees of the City are hereby
authorized to cooperate with Ehlers 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 Councilmember Povolny
and, after full discussion thereof and upon a vote being taken thereon, the following Councilmember
voted in favor thereof. Mayor Krebsbach, Councilmember Petschel and Councilmember Vitelli
Whereupon said resolution was declared duly passed and adopted.
Dated this twentieth day of September 2011. , 1-12
Mayor
Attest:
Sandie Thone
City Clerk
Krebsbach
EHLERS
LEADERS IN PUBLIC FINANCE
Debt Issuance Services
September 20, 2011
Pre-Sale Report for
$2,975,000 General Obligation Improvement
and Refunding Bonds, Series 201 1A
117,101'" lliwzqrip� 11
n7a
www.ehlers-inc.com
Minnesota phone 651-697-8500 3060 Centre Pointe Drive
Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122
Debt Issuance Services
Details of Proposed Debt
Proposed Issue: $2,975,000 General Obligation Improvement and Refunding Bonds, Series
2011A
Purpose: There are two main purposes to the Bonds:
1. To fund a portion of the City's 2011 road reconstruction and
rehabilitation projects including Knollwood and Wagon Wheel.
2. To refinance to a lower interest rate and partially prepay three
outstanding improvement bonds issued in 2003, 2004, and 2005.
Combining the refunding and the street projects to one larger bond issue
helps reduce costs of issuance and reduce interest rates because national
purchasers of municipal bonds are more likely to bid on a +/- $3,000,000
issue than a $1,000,000 issue.
The information related to the up -front sources of funds for the 2011 street
projects in found in the attachments to this report.
The refunding portions of the Bonds are projected to result in a present
value savings costs of approximately $115,000. Specifically, each bond
issue will include the following changes:
The $535,000 G.O. Improvement Bonds of 2003 include
principal that can be called on December 1, 2011, in the amount
of $350,000 at an average rate of 4.26 %. New interest rates are
expected to be under 2.75 %. The present value savings for the
remaining term of this portion of the refunding is expected to
be $26,000 after all fees are paid.
The $1,290,000 G.O. Improvement Bonds of 2004A include
principal that can be called on February 1, 2012, in the amount
of $955,000 at an average rate of 4.1 %. The City has $250,000
in cash in the debt service funds to pre -pay a portion of the
principal on February 1, 2012. New interest rates are expected
to be under 2.9 %. The present value savings attributable to the
remaining debt service of this portion of the refunding is
expected to be $65,000 after all fees are paid.
- The $790,000 G.O. Improvement Bonds of 2005A include
principal that can be called on February 1, 2012, in the amount
of $555,000 at an average rate of 3.73 %. The City has
0 Presale Report Sept. 20, 2011
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Debt Issuance Services
$228,500 in cash in the debt service funds to pre -pay a portion
of the principal on February 1, 2012. New interest rates are
expected to be under 2.50 %. The present value savings of this
portion of the refunding is expected to be $26,000 after all fees
are paid.
Authority: The Bonds are being issued pursuant to Minnesota Statues, Chapter 475
and 429.
Funding Sources: The Bonds are general obligations of the City and as such are secured by a
pledge of the City's full faith, credit and taxing powers.
For the Knollwood street project, it is the intent of the City to levy the
special assessments in the amount of approximately $123,000 for the road
rehabilitation portion of the project to benefiting property owners in 2011
for collection in years 2012 through 2021 at a rate of 6% (10 years). The
City anticipates receiving approximately $36,900 in prepayments on the
special assessments from the project this fall. The tax levy portion of the
project is expected to be approximately $30,000 per year from taxes
payable in 2013 through 2021.
For the Wagon Wheel street projects, it is the intent of the City to levy the
special assessments in the amount of approximately $105,000 for the road
rehabilitation portion of the project to benefiting property owners in 2011
for collection in years 2012 through 2021 at a rate of 6% (10 years). The
City anticipates receiving approximately $31,690, in prepayments on the
special assessments from this portion of the project. For the reconstruction
portion of the project, the assessments will be payable over 19 years in the
amount of $348,500, less anticipated prepayment of special assessments in
the amount of $87,125 received this fall. The tax levy portion of the
project is expected to be $70,000 per year from taxes payable in 2013
through 2030.
The issue size has been reduced by the aforementioned prepayment
amounts. In addition, the City anticipates utilizing approximately
$390,000 from its utility funds and $442,800 in MSA funds for the
projects. If significant amounts of prepayments of special assessments are
received (above what has been anticipated), the levy may need to be
increased in future years because the City's investment earnings on
additional prepayments will likely be less than 6 %.
Arbitrage Monitoring: IRS rules regarding the amount of interest that the City may earn on bond
proceeds are more of a concern. Because the City is issuing less than
$5,000,000 in this calendar year, the proceeds can earn interest without
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Debt Issuance Services
restriction for three years. The City will also need to keep its debt service
funds within IRS parameters to avoid penalties on carrying too high of a
balance during the life of the issue.
Rating: It is anticipated that Moody's Investors Service will rate the Bonds an
"Aal," which is the City's current bond rating.
Bank Qualification: Because the City is issuing less than $10,000,000 in the calendar year, the
City will be able to designate the Bonds as "bank qualified" obligations.
Bank qualified status broadens the market for the Bonds, which can result
in lower interest rates.
Term /Call Feature: The Bonds are being issued for a 19 year period. The refunding portion of
the debt will mature earlier than 19 years, in accordance with the original
debt service schedules. Interest is payable each six months. Principal on
the Bonds will be due on February 1 in the years 2014 through 2031. The
Bonds maturing February 1, 2021, and thereafter will be subject to
prepayment at the discretion of the City on February 1, 2020 (9 year call
date).
Presale Report Sept. 20, 2011
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Debt Issuance Services
Proposed Debt Issuance Schedule
Pre-Sale Review by Council: September 20, 2011
Distribute Official Statement: Week of October 5th
Conference with Rating Agency: Week of October 12t"
City Council Meeting to Award Sale of the Bonds: October 18, 2011
Estimated Closing Date: November 15, 2011
Attachments
Sources and Uses of Funds
Proposed Debt Service Schedule
Resolution Authorizing Ehlers to Proceed With Bond Sale
Ehlers Contacts:
Financial Advisors: Stacie Kvilvang (651) 697-8506
Mark Ruff (651) 697-8505
Bond Analysts: Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Bond Sale Coordinator: Alicia Aulwes (651) 697-8523
The Official Statement for this financing will be mailed to the Council Members at their home address for
review prior to the sale date.
Presale Report Sept. 20, 2011
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