1k. G.O. Improvement Refunding Bonds.1
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CITY OF Ik
CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
MEMORANDUM
TO: Mayor and City Council
FROM: Don Ashworth, City Manager
DATE: March 20, 1996
SUBJ: General Obligation Improvement Refunding Bonds, Series 1996A
The proposed refunding (Bonds of 1987) is the
1995. The anticipated savings of the proposed
MacGillivrary is in the process of running new
The drop in the stock market did have a ripple
T
neither Dave nor I anticipate a major change, re
a, issue that was considered at the end of
iding is approximately $200,000. Dave
bers as this memorandum is being written.
t into the municipal bond market; however,
iziniz the stabilization that has occurred in the
last week.
f
Recommendations
For
City of Chanhassen, Minnesota
$900,000
General Obligation Improvement Refunding Bonds,
Series 1996A
Presented to:
Mayor Donald J. Chmiel
Members, City Council
Mr. Donald W. Ashworth, City Manager
Ms. Pam Snell, Finance Director
City of Chanhassen
690 Coulter Drive
Chanhassen, MN 55317 -0147
Study No. CO236.A2
SPRINGSTED Incorporated
March 7, 1996
SPRINGSTED
PUBLIC FINANCE ADVISORS
r
J
I Re:
RECOMMENDATIONS
$900,000 General Obligation Improvement Refunding Bonds, Series 1996A
Proceeds of the issue will be used to refund the 1997 through 2003 maturities of the City's
General Obligation Improvement Bonds of 1987. The refunding is being done to provide
interest cost savings, which are expected to total approximately $208,807, with a present value
savings of approximately $70,355 which takes into consideration the loss of investment income
had the City not contributed $516,515 to reduce the amount of the refunding.
We recommend the following for the bonds:
Action Requested
0
3
4.
5
Sale Date and Time
Authority and Purpose for the Bond Issue
Principal Amount of Offering
To establish the date and time of receiving
bids and establish the terms and conditions
of the offering.
Monday, April 8, 1996, at 12:00 Noon, with
award by the City Council at 7:30 P.M. that
same day.
The bonds are being issued pursuant to
Minnesota Statutes, Chapters 429 and 475,
and will be used, along with approximately
$516,515 of prepaid assessments which
have accumulated in the debt service fund
for the 1987 Bonds, to refund the 1997
through 2003 maturities of the City's 1987
Bonds for interest cost savings.
The bonds are being issued in the principal
amount of $900,000, consisting of $873,800
of proceeds to finance the refunding,
approximately $19,000 to cover issuance
costs and $7,200 for the underwriter's
discount.
Repayment Term The first interest payment is due February 1,
1997. Principal is due February 1, 1997
through 2000. The term of this issue is three
years shorter than the term of the 1987
Bonds.
Source of Payments and Payment Cycle
This issue will be repaid from special
assessments currently pledged to the
repayment of the 1987 Bonds. First -half
collections of special assessments collected
in 1996 will be used to make the August 1,
1996 interest payment on the 1987 Bonds
as originally scheduled. Second -half
assessment collections, plus surplus first -
half collections, will be used to make the
February 1, 1997 principal and interest
payment on this issue. Thereafter, each
August 1 interest payment on this issue will
City of Chanhassen, Minnesota '
March 7, 1996
be made from first -half collections of special
assessments and each subsequent
February 1 principal and interest payment ,
will be made from second -half collections,
plus surplus first -half collections.
7. Prepayment Provisions Due to the short maturity structure of this '
issue, the bonds will be non - callable.
8. Credit Rating Comments We recommend the City apply to Standard & '
Poor's Ratings Services for a rating on this
issue. The City is currently rated "A-" by
Standard & Poor's. '
9. Bank Qualification The City does not expect to issue over
$10,000,000 of tax - exempt obligations in
1996, and this issue is therefore eligible for '
bank qualification. Issues which are bank -
qualified receive interest rates which are
lower than issues which are not bank- '
qualified.
10. Rebate Requirements This issue is subject to the federal arbitrage '
and rebate requirements because the City
issued over $5,000,000 of tax - exempt bonds
in the year in which the 1987 Bonds were
sold. '
11. Bona Fide Debt Service Fund The City must maintain a bona fide debt
service fund or be subject to yield restriction. '
The refunding has been structured around
the existing assessment collections on the
1987 Bonds, and assuming assessments '
are collected as scheduled, the City expects
to maintain a bona fide debt seniice fund.
12. Economic Life The aggregate average life of this issue and '
the 1987 Bonds cannot exceed 120% of the
economic life of the financed projects. Since
the average life of public improvements is
generally at least 20 years, and the
aggregate maturity of this issue is 11.08
years, this issue is in compliance with the '
economic life requirements.
13. Continuing Disclosure This issue is not subject to the new SEC
continuing disclosure rules because the '
issue size is less than $1,000,000. A
summary of the disclosure rules has been
provided to City staff, detailing the City's '
continuing disclosure responsibilities. The
City sold obligations in 1995 which are
subject to the SEC regulations.
Page 2 1
City of Chanhassen, Minnesota
March 7, 1996
14. Attachments Refunding Schedules
Cash Flow of Debt Service Fund
' Terms of Proposal
DISCUSSION
' This issue constitutes a "current" refunding since all the remaining maturities of the 1987 bonds
will be called within 90 days of settlement of this issue. Proceeds of this issue will be used to
redeem all of the outstanding maturities of the 1987 Bonds on August 1, 1996. The City will
' make the August 1, 1996 interest payment on the 1987 Bonds as originally scheduled.
Attached is the analytical summary of the refunding. Page 5 shows the debt service on the
1987 Bonds as it exists now. Page 6 shows the principal amount of the 1987 Bonds which will
' be called for redemption on August 1, 1996 and paid from the proceeds of this issue. Page 7
shows the August 1, 1996 interest payment on the 1987 Bonds which will be paid by the City as
originally scheduled. Page 8 shows the projected debt service on the new refunding issue, and
' Page 9 shows the projected annual savings (Column 6). Also included on Page 10 is the cash
flow for the debt service fund which shows the projected future special assessment collections
at 98% (Column 6) and factors in the City's cash contribution of $516,515.
' Respectfully submitted,
' SPRINGSTED Incorporated
' Provided to Staff:
sms
a) Summary of Arbitrage Rules
' b) Summary of Continuing Disclosure Requirements
C) Rebate Contract
I Page 3
03/20/96 12:49 V612 223 3000 SPRINGSTED
City of Chanhassen, Minnesota
G.O. Refunding Bonds, Series 1996
Current Refunding Summary
Partial Current Refunding of
G.Q. Improvement Bonds of 1987
Structured Around Special Assessments
Refunding Bond Rating: A-
:Refunding Delivery Date Sources! Uses
!Sources of Funds on:
05/07/96
Refunding Principal:
900,000.00
Accrued Interest.
616.89
Total Sources of Funds:
900,616.89
Uses of Funds on
05107/96
Discount @ S8.00
7,200.00
Acc. Int. & Unused Disc:
616.89
Refunding Expenses:
19,000.00
Investment to Call Date:
873,800.00
Total Uses of Funds:
900,616.89
Refunded / Refunding Bond Comparison
As of: Refunded
Refunding
05/01/96 Statistics
Statistics
Principal:
1,400,000
900,000
Interest:
327,700
85,134
Bond Yrs:
5,250
2,025
Avg. h1at:
1 3.750
2.250
NIC�
6.24%
4.56
Prepared: 03/20/96
By SPRINGSTED incorporated
Date of Bonds:
05/01/96
Delivery Date:
05/07/96
Refunded Call:
08101/96
1st Callable:
02101!97
Refunded Bond Call Date Sour Use
Sources of Funds on:
08101/96
Invest. Proceeds Mature:
873,800.00
Inv. Earnings @ 4.75 :
9,684.62
Funds from Issuer:
516,515.38
Total Sources of Funds:
1,400,000,00
Uses of Funds on:
08/01/96
Refunded Principal:
1,400,000.00
Refunded Call Premium:
,
Excess Proceeds:
21.814'0?
Total Uses of Funds:
1,400,000.00
Total Net Savings /Present V alue Savi
Future Savings:
720,265.62
Less Funds From Issuer:
516,515.38
Plus Accr. Int. to D/S Fund:
616.89
'
Plus Exe. Proc. to D/S Fund:
,Total N et Savings:
204,367.13
Present Value Sav @ 4.19
_
_ 59,503.39 1
,
,As 4 o f P.V. Refundedint.:
21.814'0?
t
03/20/96 12:50 V612 223 3000 SPRINGSTED U003/003
City of Chanhassen, Minnesota
985,134.38
44,600.00
1, 029,734e38 ] 7r
�G,000.OU
G.O. Refundillu Bonds, Series 1996
Prepared:
03/20/196
An =lual Savings Analysis
Fresent
PresenC
BlY SPRINGSTED
Incorporated
Funds from Issuer.....
Schedule E
rs % of
P.V, Ref. 111 t:
Date
Refunding Not Refunded
Debt Service Deht Service
Total J�Jew
DebL
Sa7rings
(1)
(2) {3)
Service
204,367.13
Deht�Service
or (Loss)
(4)
(
(6)
08/01/96
02/01/97
05 /01/97
2 52,759.38 44,600.00
297,359.38
289,200.OU
(8,159.38)
02 /01/ / 98
08/01/9$
253,350,00
253,350.00
276,200_QO
22,850,D0
02/01/99
08/01/99
244,237.50
244,237.50
263,000.00
18,762.50
02/0:/2000
08/01;2000
234,787.50
234,787.50
49,600.00
14,812.50
02/01/2001
08;01/2C01
236,000.00
236,000.00
02;01/2002
O8/01%20U2
224,000.00
24,000.00
02/0 1 / 2003
212,000.00
212,000.00
TotaIS
985,134.38
44,600.00
1, 029,734e38 ] 7r
�G,000.OU
720,265.62
Fresent
PresenC
Value Rate...:
Value Savir. s:
q
?.194U%
rq
Funds from Issuer.....
(516,515.38;
rs % of
P.V, Ref. 111 t:
o
59,503.39
21.810
ACC. Int. to D c
S Fund:
616.39
Total Net Savings.....
204,367.13
City of Chanhassen, Minnesota Prepared: 03/06/1
G.O. Improvement Bonds of 1987 By SPRINGSTED Incorporated
Refunded Principal and any Call Premium '
Schedule B
Date
08/01/96
02/01/97
Principal
1,400,000.00
Premium
Totals 1,400,000.00
Call Date.. .... ... —.: 08/01/96
First Date Called.....: 02/01/97
Call Premium.,........:
Semi - Annual Annul
1,400,000.00
1,400,000.0
1
1
1,400,000.00 1,400,000.00
This portion will be paid with proceeds'
Page 6 I
r.
ity of Chanhassen, Minnesota
.O. Improvement Bonds of 1987
Non - Refunded Debt Service
' Schedule C
' Date Principal Rate Interest
' 08/01/96
02/01/97
1
kotals
t his portion Will be paid by the issuer
the entire existing debt service.
HU .EMMI
Prepared: 03/06/96
By SPRINGSTED Incorporated
Semi - Annual
•U .NN KI
CZl�:Yii4 •
Annual
M. .MM Ie
44,600.00
The first payment includes interest on
Page 7
City of Chanhassen, Minnesota
G.O. Refunding Bonds, Series 1996
Refunding Debt Service
Date
02/01/97
08/01/97
02/01/98
08/01/98
02/01/99
08/01/99
02/01/2000
Totals
Bond Date.:
Avg. Mat...
NIC ....... :
Principal
225,000.00
225,000.00
225,000.00
225,000.00
900,000.00
05/01/96
2.250
4.3390
Schedule D
Rate Interest
3.650%
3.8500
4.000%
4.1000
26,325.00
13,443.75
13,443.75
9,112.50
9,112.50
4,612.50
4,612.50
80,662.50
Prepared:
03/06/91
By SPRINGSTED
Incorporated
Semi - Annual
Annual
251,325.00
251,325.O1
13,443.75
238,443.75
251,887.5
9,112.50
234,112.50
243,225.0
4,612.50
229,612.50
234,225.01
980,662.50
980,662.50
Delivery..:
05/07/9611
Discount.-'6:
0.800000
Bond Yield:
3.97442%
Page 8 11
�ity of Chanhassen, Minnesota
Prepared:
03/06/96
G.O. Refunding Bonds, Series 1996
Totals
By SPRINGSTED
Incorporated
Savings Analysis
724,737.50
,Present
Value Rate...:
�nnual
Schedule
E
(516,515.38)
present
Refunding Non - Refunded
Total New
Existing
Savings
' Date Debt Service Debt Service
Debt Service
Debt Service
or (Loss)
(1) (2) (3)
(4)
(5)
(6)
' 08/01/96
02/01/97 251,325.00 44,600.00
295,925.00
289,200.00
(6,725.00)
08/01/97
02/01/98 251,887.50
251,887.50
276,200.00
24,312.50
' 08/01/98
02/01/99 243,225.00
243,225.00
263,000.00
19,775.00
08/01/99
02/01/2000 234,225.00
234,225.00
249,600.00
15,375.00
08/01/2000
02/01/2001
236,000.00
236,000.00
8/01/2001
2/01/2002
224,000.00
224,000.00
8/01/2002
02/01/2003
212,000.00
212,000.00
I I
I �
1
Totals
980,662.50
44,600.00
1,025,262.50 1,750,000.00
724,737.50
,Present
Value Rate...:
3.97446
Funds from Issuer....:
(516,515.38)
present
Value Savings:
70,354.53
Acc. Int. to D/S Fund:
585.01
As 6 of
1
P.V. Ref. Int:
25.646
Total Net Savings....:
208,807.13
Page 9
City of Chanhassen, Minnesota
G.O. Improvement Bonds of 1987
Existing Cash Flow Before Advance Refunding
Totals 1,800,000.00
Invest.
'
Prepared 03/06/96
Earnings
By SPRfNGSTED Incorporated
Special
Date
'
Rate
98.00% 4.75%
Service
Totals 1,800,000.00
Invest.
98.00%
Earnings
Debt
Special
Date
Principal
Rate
Interest
Service
Assess.
(1)
(2)
(3)
(4)
(5)
(6)
Beginning Balance:
744,541.94
Assess.
16,565.02
650,406.96
02/01/96
400,000.00
6.40%
57,400.00
457,400.00
635,934.62
08/01/96
16,223.54
730,258.16
44,600.00
44,600.00
151,900.00
02/01/97
200,000.00
6.50%
44,600.00
244,600.00
151,900.00
08/01/97
15,487.27
697,939.15
38,100.00
38,100.00
127,400.00
02/01/98
200,000.00
6.60%
38,100.00
238,100.00
127,400.00
08/01/98
561,115.38
31,500.00
31,500.00
107,800.00
02/01/99
200,000.00
6.70%
31,500.00
231,500.00
107,800.00
08/01/99
3,600.27
103,677.79'
24,800.00
24,800.00
102,900.00
02/01/2000
200,000.00
6.80%
24,800.00
224,800.00
102,900.00
08/01/2000
02/01/98
225,000.00
18,000.00
18,000.00
93,100.00
02/01/2001
200,000.00
6.00%
18,000.00
218,000.00
93,100.00
08/01/2001
9,112.50
9,112.50
12,000.00
12,000.00
88,200.00
02/01/2002
200,000.00
6.00%
12,000.00
212,000.00
88,200.00
08/01/2002
3,699.26
94,451.86'
6,000.00
6,000.00
02/01/2003
200,000.00
6.00%
6,000.00
206,000.00
196,190.74
Totals 1,800,000.00
Invest.
98.00%
Earnings
Balance
(7)
(8)i
'
1,050,000.00
Special
15,532.89
592,600.00
715,432.89
'
16,081.69
638,814.58
Rate
16,427.36
744,541.94
Assess.
16,565.02
650,406.96
'
16,549.76
743,256.72'
(3)
16,377.90
635,934.62
(6)
16,223.54
730,258.16
16,087.10
624,445.26
15,911.33
715,456.59 j
15,595.29
606,251.88'
15,487.27
697,939.15
'
15,287.47
589,426.62
14, 095.01
597, 521.63
11,886.04
403,407.67
'
407,400.00 2,207,400.00 1,342,600.00 218,207.67
Projected Cash Flow After Advance Refunding
98.00%
4.75%
Debt
Special
Invest.
'
Date
Principal
Rate
Interest
Service
Assess.
Earnings
Balance'I
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)'I
02/01/96
592,600.00
05/07/96
(585.01)
593,185.01
08/01/96
561,115.38
151,900.00
15,532.89
199,502.52
02/01/97
225,000.00
3.65%
26,325.00
251,325.00
151,900.00
3,600.27
103,677.79'
08/01/97
13,443.75
13,443.75
127,400.00
3,861.43
221,495.47
'
02/01/98
225,000.00
3.85%
13,443.75
238,443.75
127,400.00
3,989.25
114,440.97
08/01 /98
9,112.50
9,112.50
107,800.00
3,936.63
217,065.10
02/01/99
225,000.00
4.00%
9,112.50
234,112.50
107,800.00
3,699.26
94,451.86'
08/01/99
4,612.50
4,612.50
102,900.00
3,451.38
196,190.74
02/01/2000
225.000.00
4.10%
4,612.50
229,612.50
102,900.00
3,192.73
72,670.97
08/01/2000
0.00
0.00
93,100.00
2,865.53
168,636.501
,
02/01/2001
0.00
4.20%
0.00
0.00
93,100.00
5,172.10
266,908.60
08/01/2001
0.00
0.00
88,200.00
7,475.22
362,583.82'
02/01/2002
0.00
4.35%
0.00
0.00
88,200.00
9,774.82
460,558.641
08/01 /2002
0.00
0.00
0.00
11,069.72
471,628.36',
,
02/01 /2003
0.00
0.00
0.00
11
482,964.15'.
'
Totals
900,000.00
80 662.50
1,541,192.87
1 342 600.00
88 957.02
Page 10 1
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS
ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
I TERMS OF PROPOSAL
$900,000
CITY OF CHANHASSEN, MINNESOTA
' GENERAL OBLIGATION IMPROVEMENT REFUNDING BONDS,
SERIES 1996A
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Monday, April 8, 1996, until 12:00 Noon, Central
Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, 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 7:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612) 223 -3002 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 (612) 223 -3000 or fax (612) 223 -3002 for inclusion in the
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be filed electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal,
within a one -hour period prior to the time of sale established above, but no Proposals will be
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
' information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, Bellevue, Washington 98004, telephone (206) 635 -3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. 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 of the Proposal submitted.
DETAILS OF THE BONDS
The Bonds will be dated May 1, 1996, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing February 1, 1997. 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:
' 1997 $225,000 1999 $225,000
1998 $225,000 2000 $225,000
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
I Page 11
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 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 of the registrar.
OPTIONAL REDEMPTION
The Bonds will not be subject to payment in advance of their 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 property. The proceeds will be used along with excess City
debt service funds to refund the 1997 through 2003 maturities of the City's $4,685,000 General
Obligation Improvement Bonds of 1987, dated July 1, 1987,
TYPE OF PROPOSALS
Proposals shall be for not less than $892,800 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 $9,000, payable to
the order of the City. If a check is used, it must accompany each proposal. If a Financial
Surety Bond is used, it must be from an insurance 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 City will deposit the check of the purchaser, the amount of which will be deducted at
settlement 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 5/100 or
1/8 of 1 %. Rates must be in ascending order, 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.
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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 which the City determines 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 of the 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 at a place mutually satisfactory to the City and the purchaser. 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 which shall be received at the offices of the City or its designee not later than
12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall
have 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
Participating underwriters need not comply with the continuing disclosure requirements of
Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "Rule "), because the offering is in a principal amount less than
$1,000,000. Consequently, the City will not enter into any undertaking to provide continuing
disclosure of any kind with respect to 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,
85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223 -3000.
Page 13
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 35 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 of the Final Official Statement.
Dated March 11, 1996
BY ORDER OF THE CITY COUNCIL
/s/ Don Ashworth
City Manager
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1 March 7, 1996
Mr. Don Ashworth
' City Manager
City of Chanhassen
690 Coulter Drive
Chanhassen, Minnesota 55317
' Re: $900,000 General Obligation Improvement Refunding Bonds, Series 1996A
City of Chanhassen, Minnesota
Dear Mr. Ashworth:
Enclosed is a copy of the extract of minutes authorizing the issuance and sale of the
above bonds for your meeting on Monday, March 11, 1996.
Yours truly, x
Cheryl A. Willey
' Legal Assistant to
David J. Kennedy
' caw
Enclosure
' cc: Nancy Langness, Springsted Incorporated
RECOVE
MAR 0 8 1996
' CITY OF CHANHn8SB
KENNEDY & GRAVEN'
Attorneys at Law
CHARTERED
CORRINE H. THOMSON
470 Pillsbury Center, Minneapolis, Minnesota 55402
JAMES J. THOMSON
ROBERT A. ALSOP
(612) 337.9300
LARRY M. WERTHEIM
'
BRUCE M. BATTERSON
RONALD H. BATTY
Facsimile (612) 337.9310
BONNIE L. WILKINS
JOE Y. YANG
STEPHEN J. BUBUL
_
JOHN B. DEAN
DAVID L. GRAVEN (1929.1991)
DANIEL J. GREENSWEIG
DAVID J. KENNEDY
OF COUNSEL
CHARLES L. LEFEVERE
ROBERT C. CARLSON
JOHN M. LEFEVRE, JR.
WRITER'S DIRECT DIAL
ROBERT L. DAVIDSON
ROBERT J. LINDALL
WELLINGTON H. LAW
'
ROBERT C. LONG
JAMES M. STROMMEN
CURTIS A. PEARSON
T. JAY SALMEN
1 March 7, 1996
Mr. Don Ashworth
' City Manager
City of Chanhassen
690 Coulter Drive
Chanhassen, Minnesota 55317
' Re: $900,000 General Obligation Improvement Refunding Bonds, Series 1996A
City of Chanhassen, Minnesota
Dear Mr. Ashworth:
Enclosed is a copy of the extract of minutes authorizing the issuance and sale of the
above bonds for your meeting on Monday, March 11, 1996.
Yours truly, x
Cheryl A. Willey
' Legal Assistant to
David J. Kennedy
' caw
Enclosure
' cc: Nancy Langness, Springsted Incorporated
RECOVE
MAR 0 8 1996
' CITY OF CHANHn8SB
Extract of Minutes of Meeting
of the City Council of the City
of Chanhassen, Carver and Hennepin Counties, Minnesota
Pursuant to due call and notice thereof a regular meeting of the City Council
of the City of Chanhassen, Carver and Hennepin Counties, Minnesota, was held at
the City Hall in the City on Monday, March 11, 1996, commencing at 7:30 o'clock
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The following members of the Council were present:
and the following were absent:
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The following resolution was presented by Councilmember
moved its adoption:
who
RESOLUTION NO.
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF $900,000 GENERAL OBLIGATION
IMPROVEMENT REFUNDING BONDS, SERIES 1996A
BE IT RESOLVED By the City Council of the City of Chanhassen, Carver and
Hennepin Counties, Minnesota (City) as follows:
1. It is hereby determined that:
(a) the City is authorized by Minnesota Statutes, Chapter 475 (Act)
and Section 475.67, Subdivision 3, of the Act to issue and sell its general
obligation bonds to refund obligations and the interest thereon before the due
date of the obligations, if consistent with covenants made with the holders
thereof, when determined by the City Council to be necessary or desirable for
the reduction of debt service cost to the City or for the extension or
DJIC101441
CE135 -32
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' adjustment of maturities in relation to the resources available for their
payment;
(b) Section 475.67, subdivision 4 of the Act permits the sale of
refunding obligations during the six month period prior to the date on which
the obligations to be refunded may be called for redemption;
(c) it is necessary and desirable to reduce debt service costs that the
City issue $900,000 General Obligation Improvement Refunding Bonds, Series
1996A ( Bonds) to refund certain outstanding general obligations of the City;
' (d) the outstanding bonds to be refunded (Refunded Bonds) consist
of the $4,685,000 General Obligation Improvement Bonds of 1987, dated July
1, 1987, of which $1,400,000 in principal amount is currently outstanding and
is callable on August 1, 1996.
2. To provide monies to refund the Refunded Bonds, the City will issue
' and sell Bonds in the amount of $892,800. To provide in part the additional interest
required to market the Bonds at this time, additional Bonds will be issued in the
amount of $7,200. The excess of the purchase price of the Bonds over the sum of
$892,800 will be credited to the debt service fund for the Bonds for the purpose of
paying interest first coming due on the additional Bonds. The Bonds will be issued,
sold and delivered in accordance with the terms of the following Terms of Proposal:
DJK101441
CH135 -32
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOYIATE THIS
ISSUE ON ITS BEHALF, PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: '
TERMS OF PROPOSAL
'
$900,000
CITY OF CHANHASSEN, MINNESOTA
'
GENERAL OBLIGATION IMPROVEMENT REFUNDING BONDS,
'
SERIES 1996A
'
(BOOK ENTRY ONLY)
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Proposals for the Bonds will be received on Monday, April 9, 1996, until 12:00 Noon, Central
'
Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, 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 7:30 P.M., Central Time, of the same day.
'
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (612) 223 -3002 to Springsted.
t
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 (612) 223 -3000 or fax (612) 223 -3002 for inclusion in the
'
submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach
Springsted prior to the time of sale specified above. Proposals may also be flied electronically
via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal,
within a one -hour period prior to the time of sale established above, but no Proposals will be
,
received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules
of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be
obtained from PARITY and such fee shall be the responsibility of the bidder. For further
'
information about PARITY, potential bidders may contact PARITY at 100 116th Avenue SE,
Suite 100, Bellevue, Washington 98004, telephone (206) 635 -3545. Neither the City nor
Springsted Incorporated assumes any liability if there is a malfunction of PARITY. 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 of the Proposal submitted.
DETAILS OF THE BONDS
'
The Bonds will be dated May 1, 1996, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing February 1, 1997. Interest will
be computed on the basis of a 36May year of twelve 30 -day months.
'
The Bonds will mature February 1 in the years and amounts as follows:
1997 $225,000 1999 $225,000
'
1998 $225,000 2000 $225,000
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 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 of the registrar.
' OPTIONAL REDEMPTION
The Bonds will not be subject to payment in advance of their 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 property. The proceeds will be used along with excess City
debt service funds to refund the 1997 through 2003 maturities of the City's $4,685,000 General
' Obligation Improvement Bonds of 1987, dated July 1, 1987.
TYPE OF PROPOSALS
Proposals shall be for not less than $892,800 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 $9,000, payable to
' the order of the City. if a check is used, it must accompany each proposal. If a Financial
Surety Bond is used, it must be from an insurance 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 City will deposit the check of the purchaser, the amount of which will be deducted at
settlement 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 5/100 or
1/8 of 1 %. Rates must be in ascending order. 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.
I - ii
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 which the City determines 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 of the 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 at a place mutually satisfactory to the City and the purchaser. 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 which shall be received at the offices of the City or its designee not later than
'
12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall
have 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
Participating underwriters need not comply with the continuing disclosure requirements of ,
Rule 15c2 -12 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "Rule "), because the offering is in a principal amount less than
$1,000,000. Consequently, the City will not enter into any undertaking to provide: continuing '
disclosure of any kind with respect to the Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of an Official Statement containing pertinent r
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,
85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (512) 2:23 -3000.
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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 urxlerwriting 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 35 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 of the Final Official Statement.
' Dated March 11, 1996 BY ORDER OF THE CITY COUNCIL
/s/ Don Ashworth
City Manager
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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
7:30 o'clock P.M. on Monday, April 8, 1996, to consider proposals on the Bonds and
take any other appropriate action with respect to the Bonds.
The motion for the adoption of the foregoing resolution was duly seconded by
Councilmember , and upon vote being taken thereon the following
members voted in favor of the motion:
and the following voted against:
whereupon the resolution was declared duly passed and adopted.
DJK101441
CH135 -32
STATE OF MINNESOTA )
COUNTIES OF CARVER )
AND HENNEPIN )
CITY OF CHANHASSEN )
I, the undersigned, being the duly qualified and acting City Manager of the
City of Chanhassen, Minnesota, hereby certify that I have carefully compared the
attached and foregoing extract of minutes of a regular meeting of the City Council
of the City held on Monday, March 11, 1996, with the original minutes on file in my
office and the extract is a full, true and correct copy of the minutes, insofar as they
relate to the issuance and sale of $900, 000 General Obligation Improvement Refunding
Bonds, Series 1996A of the City.
WITNESS My hand as City Manager and the corporate seal of the City this
day of , 1996.
City Manager
City of Chanhassen, Minnesota
(SEAL)
DJK101441
CH135 -3z
MEMORANDUM
CITY OF:
CHANHASOrN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
TO: Mayor and City Council
FROM: Don Ashworth, City Manager
DATE: December 20, 1995
SUBJ: Special Meeting, Refunding Bonds of 1987
I am in hopes that we will be able to establish a special meeting date before the end of the year to
consider refunding the improvement bonds of 1987. ` The drop in interest rates yesterday has
propelled this issue as a potential refunding candidate. The urgency arises as the call date on
these bonds is February 1, 1996. The "callable" feature, however, has a 30 day notification
requirement. To effectuate the refunding, the city council would be required to review and
officially accept a negotiated new bond sale as well as officially authorize repayment of the
existing bonds. The details of the refunding include:
• Changes in Existing Debt: The existing issue has a principal balance of approximately $2
million at interest rates ranging from 6.7% to 7.2 %. We would propose paying this existing
debt through a combination of existing cash plus the proceeds of the new issue (S 1 million).
The overall effect of the transaction would be to reduce the city's existing debt by
approximately $1 "million; and
• New Debt: The new debt of approximately $1 million would carry a coupon ranging from
4% to 4.5 %. It is anticipated that the negotiated rates for the new issue will occur via
offering the issue to the 4 -5 lowest bidders on our last bond sale (approximately 30 days ago)
and reducing those bids by the indexed change in net interest rates that occurred between the
end of November and today. New debt maturities would be shortened from those currently in
the bonds of 1987 so as to more closely parallel special assessment income; and
• Savings ($100,000): This savings is not nearly as impressive as occurred in January 1994
($700,000), but money is money. In reality, the savings is actually achieved in each of the
years between now and 2003. However, by statute, no monies can be taken out of a sinking
fund until all principal associated with the debt in that fund had been paid even if a projected
surplus is foreseen. A more realistic way of looking at savings would be to use the analogy
of having your existing home mortgage reduced from $100,000 to $90,000 and that the
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Mayor and City Council
Y h'
' December 20, 1995
Page 2
' $10,000 in savings occurred through not having to make house payments for the final five
years of your current mortgage; and
• Other Factors: The $5 million refunded in early 1994 affected our ability to bond for other
issues in that year. In an effort to ensure that the city did not go over the $10 million bank
qualification limitation, ripple effects of those refundings followed us through 1994 and
1995. As the new issue substantially reduces outstanding debt, the new issue will not impair
the city's $10 million limitation for either 1995 or 1996. Similarly, the new issue will not
trigger arbitration liabilities /requirements.
I may have just written and you may have just read garbily goop that cannot be achieved. The
obstacle that needs to be hurdled is a final decision that the previous "official transcript" can be
' used for this refunding. Our interpretation is that it can be, but time will tell. In light of the
amount of work that needs to be completed if the proposed refunding is to occur, I cannot suggest
a special meeting date. A best guess might be December 27. Karen, Pam or I will be contacting
' you early next week to see if a 4:00 p.m., 5 minute meeting can be established sometime towards
the end of that week.
If I don't have an opportunity to talk with you before Christmas, I would hope that you and your
family have the best of holidays. I know that I will in that my two daughters, Stacy's husband,
and my son will be home for the holidays. Again, wishing you the best.
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