4b. Public Works Facility Sale of CIP GO Bonds
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952,227,1190
Engineering
Phone: 952.227.1160
Fax: 952,227.1170
Finance
Phone: 952.227.1140
Fax: 952,227,1110
Park & Recreation
Phone: 952.227.1120
Fax: 952,227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952,227,1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952,227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227,1110
Web Site
www.ci.chanhassen.mn.us
'-II,
MEMORANDUM
TO:
Mayor
City Council Members
FROM:
Greg Sticha, Finance Direct~u /? .
September 8, 2008 ~'7'
DA TE:
SUBJ:
Consider Approval of Resolution Providing for the Sale
of $7,550,000 Capital Improvement Program General
Obligation Bonds
PROPOSED MOTION
Staff recommends the City Council adopt the following motion:
"The City Council adopts a resolution providing for the sale of $7,550,000
General Obligation Capital Improvement Bonds."
Approval of this item requires a simple majority vote of those City Council
members present.
BACKGROUND
The second part of the process this evening will be to adopt a resolution
providing for the sale of $7,550,000 General Obligation Capital Improvement
Bonds for the construction of the new public works facility.
After the reverse referendum window ends and if a petition is not submitted for
a reverse referendum, staff will be preparing documents for the sale of the
bonds. The bonds will then be sold and awarded at the October 27, 2008
meeting, with proceeds being received in late November.
RECOMMENDA TION
Staff recommends that City Council adopt a resolution providing for the sale of
$7,550,000 General Obligation Capital Improvement Bonds for the new public
works facility.
ATTACHMENTS
1. Resolution
2. Pre-Sale Report
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Resolution No.
Council Member
adoption:
introduced the following resolution and moved its
Resolution Providing for the Sale of $7,550,000 General Obligation Capital
Improvement Plan Bonds, Series 2008A
A. WHEREAS, the City Council of the City of Chanhassen, Minnesota, has heretofore
determined that it is necessary and expedient to issue the City's $7,550,000 General
Obligation Capital Improvement Plan Bonds Series 2008C (the "Bonds"), to finance the
construction of a public works facility;
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 Chanhasen,
Minnesota:
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 27,
2008, or subsequent date as determined by City staff, 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 Council Member
and, after full discussion thereof and upon a vote being taken
thereon, the following Council Members voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
Dated this _ day of
,2008.
City Clerk
.
..
\
~
STATE OF MINNESOTA
COUNTY OF
CITY OF
I, the undersigned, being duly qualified and acting Clerk of the City of
, Minnesota, DO HEREBY CERTIFY that I have carefully compared
the attached and foregoing extract of minutes with the original minutes of a meeting of
the City Council of said City, duly called and held on the date therein indicated, which
are on file and of record in my office, and the same is a full, true and complete transcript
there from insofar as the same relates to a resolution giving preliminary approval for the
issuance ofthe City's general obligation street reconstruction plan bonds and adopting
the City's street reconstruction plan therefor.
WITNESS my hand this
day of
,20_.
City Clerk
,
City of Chanhassen, Minnesota
Pre-Sale Report
September 8,2008
Proposed Issue: $7,550,000 General Obligation Capital Improvement Plan Bonds,
Series 2008A
Purpose: The 2008A Bonds will finance the construction of a new public works facility for
the City of Chanhassen, at an estimated project cost of $7 million. The Bonds
will also fund the first two interest payments (due August 1, 2009 and February
1,2010) and standard costs of issuance.
Authority & Rating: The Bonds are being issued in accordance with Minnesota Statutes, Chapter 475,
pursuant to a capital improvement plan to be considered by the City Council
following a public hearing on September 8, 2008. The Bonds will count against
the City's legal debt limit of 3% of market value. Factoring in this issue, the
City's remaining legal debt capacity is in excess of $50 million.
The City's existing debt currently carries a Standard & Poor's rating of AA-. It
is expected that this rating will be affirmed following a discussion with S&P'
analysts in October 2008.
Term/Call Feature: The 2008A Bonds will mature in 20 years, with annual principal payments each
February 1st from 2011 through 2030. Because interest payments through
February 1, 2010 will be capitalized (see Purpose above), the first interest due
from City levies will be payable August 1,2010. The Bonds will be callable in
ten years, meaning that Bonds maturing on 2/1/20 and after may be called on
2/1/2019 or any date thereafter.
Funding Sources: Debt schedule is expected to be paid with property scheduled tax levies
beginning in Pay 2010. These tax levies are scheduled in order to meet the state
requirement that total sources of revenue are equal to 105% of the principal and
interest due annually.
Discussion Issues: The 2008A Bonds will be sold by competitive bids. Because the City plans to
issue less than $10 million of tax-exempt debt during 2008, the 2008A Bonds
will be "bank qualified" and achieve the most competitive interest rates.
As part of our services, Ehlers & Associates monitors the City's outstanding debt
to determine if there is an opportunity to refund or refinance any outstanding debt
to save on interest costs. As of now, there are no bond issues that we recommend
for refinancing.
" . .."
Arbitrage:
With increasing short-term investment rates, IRS rules regarding the
amount of interest that the City may earn on bond proceeds are more
relevant than in the recent past. If the City spends the 2008A Bond
proceeds within 24 months according to specific percentages each six
months, interest earned on the proceeds above the bond interest rate does
not need to be rebated (excess interest earnings are known as arbitrage).
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.
Schedule:
CIP Hearing and Pre-Sale Review:
Reverse Referendum Period Ends:
September 8, 2008
October 8, 2008
Week of October 13,2008
Week of October 20, 2008
October 27,2008
November 20, 2008
Distribute Official Statement:
Rating Agency Interview:
Bond Sale:
Estimated Closing Date:
Attachment:
Resolution authorizing Ehlers to proceed with bond sale
Ehlers Contacts:
Financial Advisors:
Bruce Kimmel (651) 697-8572
Dave Callister (651) 697-8553
Mark Ruff (651) 697-8505
Bond Analysts:
Diana Lockard (651) 697-8534
Debbie Holmes (651) 697-8536
Bond Sale Coordinator:
Connie Kuck (651) 697-8527
The Official Statement for this financing will be mailed to the Council Members at their home address for review
prior to the sale date.