1l Sale of Library Bonds~i ~ ' POBoxt47
BOND SALE REPORT
$6,O95,000
General Obligation
Library Bonds, Series 2002A
City of Chanhassen, Minnesota
January 28, 2002
Ehlers & Associates, Inc.
O~
PI
'E RVI EW
Fhis report describes the proposed plan for the City of Chanhassen to issue $6,095,000
Seneral Obligation Library Bonds, Series 2002A. This report has been prepared by Ehlers
~nd Associates, in consultation with City Staff and bond counsel. This report deals with:
Purpose and components of bond issue.
Structure.
Other considerations in issuing bonds.
Market conditions.
Issuing process.
~POSE
['he $6,095,000 General Obligation Library Bonds, Series 2002A are being issued pursuant to
vlinnesota Statutes, Section 475.58 and Chapter 475, for the purpose of financing the
:onstruction and equipping of a library in the City. Voters approved the issuance of the Bonds
tt an election held in September, 2000.
:inancing these projects requires a bond issue in the amount of $6,095,000. The proposed
~nance plan consists of the following sources and uses of funds:
;ources
Par Amount of Bonds
Total Sources
$6,095,000
$6,095,000
Jses
Total Project Costs
Discount Allowance
Contingency
Finance Related Expenses
Total Uses
$5,951,703
97,520
2,777
43,000
$6,095,000
STRUCTURE AND REPAYMENT
The Bonds are general obligations of the City of Chanhassen and as such are secured by a pledge
of the City's full faith, credit, and taxing powers. Ad valorem taxes will be levied in an amount
sufficient to provide not less than 105% of principal and interest on the Bonds as required by
Minnesota law.
The Bonds would be sold February 25, 2002 and be dated March 1, 2002. The first interest
payment on the Bonds will be August 1, 2002, and semiannually thereafter on February 1 and
August 1. Principal on the Bonds will be due on February 1 in the years 2003 through 2022. We
recommend that Bonds maturing February 1,2013 and thereafter be subject to prepayment at the
discretion of the City on August 1, 2012.
The projected debt service and flow of funds can be found in Exhibit 1. The original tax impacts
presented to the voters in 2000 assumed a slightly longer term of bonds and higher interest rates.
The Bonds of this issue will have lower debt service requirements than the original ballot
estimates.
OTHER CONSIDERATIONS
Following is a summary of key factors in the £mance plan:
We anticipate that the City (in combination with any subordinate taxing jurisdictions or debt
issued in the City's name by 501(c)3 corporations) will not issue more than a total of
$10,000,000 in tax-exempt debt during this calendar year. This will allow the Bonds to be
designated as bank qualified. Bank qualified status broadens the market and achieves lower
interest rates.
The amount of the Bonds exceeds the $5,000,000 issuance limitation for the current calendar
year, which would have allowed the issue to be exempt from arbitrage rebate as a small issuer.
However, the City can avoid arbitrage rebate on the Bonds by meeting the Two-Year
Expenditure Test. Under this provision, a given percentage of net proceeds must be
expended at specific time periods.
10% ...................... 6 months
45% ..................... 12 months
75 °,5 ..................... 18 months
100% .................... 24 months
The Bonds will be global book entry with a bank designated as the paying agent. As
"paperless" bonds, you will avoid the costs of bond printing and annual registrar charges. The
Paying Agent will invoice you for the interest semi-annually and on an annual basis for the
principal coming due. You will be charged only for paying agent/transfer agent services
provided by the bank.
Page 2
Bidders on this issue may submit a bid which contains a maturity schedule providing for any
combination of serial bonds and term bonds, subject to mandatory redemption. If the
purchaser of the Bonds designates certain of the maturities as Term Bonds, subject to a
mandatory call, the City will be responsible for providing a Notice of Call to holders of the
Bonds at least 45 days prior to the call date. Allowing potential purchasers the term bond
option results in increased bidder interest in this issue and possible lower interest rates.
Standard & Poor's Credit Market Services will be asked to rate this issue. The City currently
has an "A-" rating on its outstanding general obligation bonds.
Current regulations of the Securities and Exchange Commission on the continuing disclosure
of municipal securities apply to long-term securities with an aggregate principal amount of
$1,000,000 or more.
Because the aggregate amount of this issue is over $1,000,000 and the City has more than
$10,000,000 in total municipal obligations outstanding, you will be obligated to comply with
Full Continuing Disclosure requirements as required by paragraph (b)(5) of Rule 15c2-12
promulgated by the Securities and Exchange Commission under the Securities Exchange Act
of 1934. You will be required to provide certain financial information and operating data
relating to the City annually and to provide notices of the occurrence of certain material
events. The specific nature of the Undertaking, as well as the information t°be contained in
the notices of material events will be set forth in the Continuing Disclosure Undertaking that
you will enter into at the time of closing for this issue.
You are responsible for reporting any of the material events listed below and in the
Undertaking.
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit of liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the
securities;
7. Modification to rights of holders of the Securities;
8. Securities calls;
9. Defeasances;
10. Release, substitution or sale of property securing repayment of the
Securities;
11. Rating changes;
12. Failure to provide annual financial information as required; and
13. Other material events.
Page 3
REFUNDING OPPORTUNITIES
We have reviewed all outstanding indebtedness for the City and find that there are no immediate
refunding opportunities for the City at this time. We will continue to monitor the market and the
call dates for the City and alert you to any future opportunities.
MARKET CONDITIONS
The Bond Buyer's 20-year G.O. Index (BBI) currently stands at 5.16%. The following graph
shows the trends in the Bond Buyer's 20-Year G.O. Index (BBI) since 1993.
TEN-YEAR BOND BUYER INDEX
9
8.5
8
7.5
7
(5.5
6
5.5
5
4.5
4
93
94 95
96 97 98 99 O0
1993 - 2002
I [] January 2002 Bond Buyer Index
1
01 O2
Page 4
LJING PROCESS
Following is a tentative schedule for the steps in the issuing process.
January 28, 2002
Week of February 11, 2002
Week of February 11, 2002
Week of February 18, 2002
February 25, 2002
Week of March 18, 2002
City Council adopts resolution calling for the sale of the
Bonds
Submit dram Official Statement and rating materials to
Standard & Poor's Credit Market Services for credit
rating
Distribute Official Statement
Receive credit rating
Bond sale
Bond closing
~sota\Chanhassen~BISUN~.002A$6095m.march (G.O. Library)LPreSale.wpd
Page 5
EXHIBIT 1
Chanhasscn, MN
$(;.~ ~,9~,0~ ~ ~ r ' ~ ~. I./l,:.~O' l;~ ~M.v, ,q'y'/~'.v -Y~ )O'~IA
1 )};BT SERVICE SCI I};I.)[ ,II,t;
1 ).it,' I'L'lnClp.d {.'Oki tX'Il Inlets'si Total I'-'[ }'IY, CAI. TOTAI.
SIO '_'002
2/0
~/01 "2005
2/01 ' ~00~;
S/O ] /
2/01
8/01 .' 2tX) 7
2/O1/2L~S
8/01/2008
2/01 Y 2009
S/O ) .' !O09
2/0t '2010
8/01/2010
2/01/2OI 1
g/01/2011
2/01/2012
8/01/2012
2/01/2013
8/01/g013
2/01/2014
2/01/2015
8/01/2015
2/01/2016
g/Ol/201(;
2/01/2017
8 '131 / 2(,17
2/01.'201S
8/01/2018
2/01/2019
S/O I / 2019
2/01/2020
8/01/2020
2/01/20~1
fi/O 1 ," 202 I
2/01 / 2022
3 50("%
3.5(¥'%
3 750%
3 950%
4 I50%
4.35t%3
4 550%
4
4.800~
4
5.100%
5 2~
5.2.50%
5 350%
5.4CX~
5.450%
5.50('~,
5.550%
124,370.87~ 124,?~ 70.83
149,245.0.,.', 284,245.00
1467,,'q2.50 146,882.50
t .16,$82,fi0 351,882.50
143,2}15.00 143,295.00
143,295.t'C 3fiS.29fi.O0
139,263.75 139,263.75
139,263.75 359,263.75
134,918.75 134,918.75
134,918.75 364,918.75
130,146.25 130,146.25
130,146.25 370,146.25
124,926.25 124,926.25
124,926.25 374,926.25
I 1~,301.25 119,301.25
119,301.25 379,301.9_5
I 13,386.25 113,386.25
113,386.25 388,386.25
106,992.50 106,992.50
106,992.:50 391,992.50
100,152.50 100, I 52.$0
I c%~,152.50 4cX),152.50
92,802.50 92,802.50
92,802.50 407,802.50
84,927.50 84,927.50
84,927.50 414,927.50
76,519_..50 76,512.5x3
76,512.~ 421,512.50
67,542.50 67,542.50
67,542.N.'~ 432,542.50
57,961.25 57,961.25
57,961.25 437,961.25
47,796.25 47,796.25
47,796.25 452,796.25
36.861.25 36,861 25
36,861.25 461,861.25
25,280.c¥ 25,280.00
25,280.00 4 70,~80.00
13.042.50 13,042.50
13,042.50 483,042.50
408,615.83
498,765AX'}
501
498,527.50
499,837.50
5~.X~,zg2.50
499,852.50
498,602.50
501,772.50
498,985.CX~
5c'K~,3.05.00
500,605.00
499,855.00
498.O25.O0
50,0,085,00
495,922.50
5(K'~,592.50
498,722.50
495,560.C0
496,085.c%'~
Total 6,095,O,:_X~.OO 3,797,598.33 9,892,598.33
YIEI.D STATISTICS
lkmd Year L%ltars ...................................................... 573,452.08
A;'erage Life ................................................................ 12.051 Year's
Average t,.'oulx',~ .................................................... 5 1701710%
Ncl Irdctrst Cosl (NIC) .................................................5.3029379%
True Inlcpest Cosl (Tit'} ............................................. 5.3173637%
N. md Yx'ht for Arbth'a,q,c Purposes .............................. 5.1275[35%
A!I [~;clusive Cost (Al(') ................................................. 5.4025':'66%
IRS FOI~M 8058
Xcl InlctYsl Cost ............................................. 5.] 701710%
\Vctghh',t Average .M.dut-iIv .......................... I 2.051 Yearn
A.
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NC
.
.
.
foil
and
Resolution No.
Member
introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$6,095,000 General Obligation Library Bonds, Series 2002A
~, the City Council of the City of Chanhassen, Minnesota, has heretofore determined that it is
and expedient to issue the City's $6,095,000 General Obligation Library Bonds, Series 2002A
"Bonds"), to finance the construction and equipping of a library in the City; and
the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its
financial advisor for the Bonds and is therefore authorized to solicit proposals in accordance
Minnesota Statutes, Section 475.60, Subdivision 2(9);
THEREFORE, BE IT RESOLVED by the City Council of City of Chanhassen, Minnesota, as follows:
The City Council hereby authorizes Ehlers to solicit proposals for the sale of the
The City Council shall meet at the time and place specified in the Terms of
~osal for the purpose of considering sealed proposals for, and awarding the sale of the Bonds. The City
or designee, shall open proposals at the time and place specified in such Terms of Proposal.
of Proposal. The terms and conditions of the Bonds and the sale thereof are fully set forth in the
Sale Report and are hereby approved and made a part hereof.
Statement. In connection with said sale, the officers or employees of the City are hereby
to cooperate with Ehlers and participate in the preparation of an official statement for the Bonds
to execute and deliver it on behalf of the City upon its completion.
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
Council Members voted in favor thereof:
following voted against the same:
said resolution was declared duly passed and adopted.
d this __ day of ., 2002.
City Manager