1j Sale of GO BondsCITYOF
G~y Center D~qve, PO Box 147
5anhassen, Minnesota 55317
Phone 612.93Z 1900
5eneral t ax 612.93Z5739
gineering lax 612.937.9152
Olic SafeO, Fax 612.934.2524
fib www. ci. chanhassen, mn. us
MEMORANDUM
TO:
FROM:
DATE:
Mayor
City Council
Bruce M. DeJong, Finance Directo~('7~
October 20, 1999
SUBJECT: Resolution providing for the Competitive Negotiated Sale of
$4,255,000 General Obligation Bonds, Series 1999A
The city of Chanhassen needs to bonding for several projects that are being
completed this year. The total amount needed is $4,255,000 that is composed of
public improvements of $2,585,000 and water system improvements of
$1,670,000. Springsted, Inc will perform the bond sale and Briggs and Morgan
will be the bond counsel. Standard and Poor's will review the city's credit rating
prior to the sale. The bonds will be one series rather than two to save on issuance
costs. It is anticipated that selling the bonds this way will save $4,200. The
anticipated sale date is November 22, 1999. The City'Council will be asked to
accept the bids at the meeting that evening.
The public improvement projects included in this bonding proposal will be repaid
from special assessments. Those projects include Gateway West (97-1), Lake
Lucy Road (98-1), Stone Creek Drive (98-15), and Lake Drive West (98-16). The
respective costs that need to be bonded are shown in the recommendations from
Springsted.
The water system projects will be repaid from connection fees in the Sewer and
Water Expansion fund (710) and water revenues from the Sewer and Water Utility
fund (700). The water projects are comprised of the Gateway water tower on
Hwy. 41, and well and pump house #8 located on Hwy. 41. The costs that are
being bonded are shown in the recommendations from Springsted.
A sheet summarizing the issuance process is included with the packet, as well as
the resolution as prepared by Briggs and Morgan, and the recommendations from
Springsted.
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EXTRACT OF MINUTES OF A MEETING OF THE
CITY CODI~CIL OF
CITY OF CHANHASSEN, MINNESOTA
MELD: october 25, 1999
Pursuant to due call and notice thereof, a regular
meeting of the City'Council of the City of Chanhassen, Carver and
Mennepin Counties, Minnesota, was duly held at the City Mall in
said City on the 25th day of October, 1999, at o'clock ..M~
for the purpose in part of authorizing the competitive negotiated
sale of the $4,255,000 General Obligation Bonds, Series. !999A of.
The following members were present:
and the following were absent:
Member introduced the following
resolution-and moved its adoption:
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED
SALE OF $4,255,000
GENERAL OBLIGATION BONDS,
SERIES 1999A
A. WHEREAS, the City Council of the City of
Chanhassen, Minnesota (the "city"), has heretofore determined
that it is necessary and expedient to issue its $4,255,000
General Obligation Bonds, Series 1999A (the "Bonds") to finance
various street and water improvement projects within the City;
and
B. W~EREAS, the City has retained Springsted
Incorporated in Saint Paul, Minnesota ("Sprin~sted"), as its
independent financial advisor and is therefore authorized to sell..
these obligations by a competitive negotiated sale in accordance :
w~th Mznnesota Statutes, Sectzon 475.60, Subd~vms~on 2(9); an ~ ....
NOW, THEREFORE, BE IT RESOB~D by the City Council of . '..
the City of Chanhassen, Minnesota, as follows: .........
': '.~ ~. :~..~....
. ~
1. Authorization.
Springsted to solicit bids for
'the Bonds.
The City Council hereby authorizes
2. Meet.ina; Bid Ope~inq. This City Council shall
meet at the time and place specified in the Terms of Proposal
attached hereto as Exhibit A for the purpose of considering
sealed bids for, and awarding the sale of', uhe Bonds. The
Manager, or designee, shall open bids at the time and place
specified in such Terms of Proposal.
3. Terms of Proposal. The terms and conditions of
the Bonds and the negotiation thereof are fully set forth in the'
"Terms of Proposal" attached hereto as Exhibit A and hereby
4. Offi~ial_S~at~ment. In connection with said
competitive negotiated sale, the Manager and other officers or
employees of the City are hereby authorized to cooperate with
Springsted 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 resoluti0n..'!
was duly seconded by member and, a~ter full
'discussion thereof and upon a 9ore being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and
adopted.
109g4ff2, l
STATE OF MINNESOT~
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHAN-~ASSEN
I, the undersigned, being the duly qualified and acting
Manager of zhe City of Chanhassen, Minnosota, DO HEREBY CERTIFY.
· that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and
the same is a full, true and complete transcript of the minutes
of a meeting of the City Council of said City, duly called and
held on the date therein indicated, insofar as such minutes
relate to the City's $4,255,000 General Obligation Bonds, Series'
1999A.
WITNESS my hand this 2~tk d~y of October, 1999.
~4anager
! 09~402. !
Recommendations
For
City of Chanhassen, Minnesota
$4,255,000
General Obligation Bonds, Series 1999A
Presented to:
Mayor Nancy Mancino
Members, City Council
Mr. Scott A. Botcher, City Manager
Mr. Bruce M. DeJong, Finance Director
Ms. Anita Benson, City Engineer
City of Chanhassen
690 Coulter Drive
Chanhassen, MN 55317-0147
Study No.: C0236Q2
SPRINGSTED Incorporated
October 21, 1999
SPRINGSTED
P~blic _Finame Advisors
RECOMMENDATIONS
Re:
Recommendations for the Issuance of $4,255,000 General Obligation Bonds,
Series 1999A (the "Bonds")
Proceeds of the Bonds will be used to finance various street and water improvement projects
within the City. The street improvement and water improvement portions of the Bond issue
have been structured independently and then combined into this single issue. Since the street
improvement and water improvement portions of the Bond issue will be repaid from different
revenue sources (special assessments and net revenues of the City's sewer and water utility)
the City will need to establish a system to track each portion of the Bonds separately. The
sources and uses statement for the Bonds is shown on page 5 and the total debt service
schedule is shown on page 6.
We recommend the following for the Bonds:
Action Requested
To establish the date and time of receiving
bids and establish the terms and conditions
of the offerings.
Sale Date and Time
Monday, November 22, 1999 at 12:00 Noon,
with award by the City Council at 6:30 P.M.
the same day.
Authority for the Bond Issues
The Bonds are being issued pursuant to
Minnesota Statutes, Chapter 475. In
addition, the street improvement portion of
the Bonds is being issued pursuant to
Minnesota Statutes, Chapter 429 and the
water improvement portion is being issued
pursuant to Minnesota Statutes, Chapter
444.
4. Repayment Term
The first interest payment on the Bonds is
due August 1, 2000. Principal on the Bonds
is due February 1, 2001 through 2010.
Specifically, the improvement portion of the
Bonds will mature on February 1, 2008 and
the water improvement portion will mature
February 1, 2010.
o
Source of Payment
The street improvement portion of the Bonds
will be repaid from special assessments filed
against benefited property and ad valorem
taxes. The water improvement portion of the
Bonds will be repaid from net revenues of
the City's Sewer and Water Utility and Sewer
and Water Expansion Fund.
Prepayment Provisions
The City may elect on February 1, 2008, and
on any day thereafter, to prepay Bonds due
on or after February 1, 2009 at a price of par
plus accrued interest.
City of Chanhassen, Minnesota
October 21, 1999
Credit Rating Comments
Federal Treasury Regulations Concerning
Tax-Exempt Obligations
(a) Bank Qualification
(b) Rebate Requirements
(c) Bona Fide Debt Service Fund
(d) Economic Life
We recommend the City apply to Standard &
Poor's Ratings Services for a rating on the
Bonds. The City is currently rated "A-" by
S&P.
A representative of S&P will visit
Chanhassen on the afternoon of
November 4, 1999 for a tour of the City.
Under Federal Tax Law, financial institutions
cannot deduct from income for federal
income tax purposes, income expense that
is allocable to carrying and acquiring tax-
exempt bonds. There is an exemption to
this for "bank qualified" bonds, which can be
so designated if the issuer does not issue
more than $10 million of tax exempt bonds
in a calendar year. Issues that are bank
qualified receive slightly lower interest rates
than issues that are not bank qualified. This
issue is designated as bank qualified.
All tax-exempt issues are subject to the
federal arbitrage and rebate requirements,
which require all excess earnings created by
the financing to be rebated to the U.S.
Treasury. The requirements generally cover
two categories: bond proceeds and debt
service funds. However, since the City
expects to issue less than $5,000,000 of tax
exempt obligations in 1999, the City will be
exempt from rebating excess earnings on
the bond proceeds to the federal
government.
The City must maintain a bona fide debt
service fund for the bonds or be subject to
yield restriction. This requires restricting the
investments held in the debt service fund to
the yield on the bonds and/or paying back
excess investment earnings in the debt
service fund to the federal government. A
bona fide debt service fund is a fund for
which there is an equal matching of revenue
to debt service expense, with carry over
permitted equal to the greater of the
investment earning in the fund during that
year or 1/12 the debt service of that year.
The average life of the Bonds cannot
exceed 120% of the economic life of the
projects to be financed. The economic life
of street improvements is 20 years and the
Page 2
City of Chanhassen, Minnesota
October 21, 1999
(e) Federal Reimbursement
Regulations
9. Continuing Disclosure
10. Attachments
economic life of water improvements is 50
years. The average life of the Bonds is
5.049 years; therefore the issue is within the
economic life requirements.
Federal reimbursement regulations require
the City to make a declaration, within
60 days of the actual payment, of its intent
to reimburse itself from expenses paid prior
to the receipt of bond proceeds. It is our
understanding the City has taken whatever
actions are necessary to comply with the
federal reimbursement regulations in
regards to the Bonds.
This issue is subject to the continuing
disclosure requirements. The SEC rules
require the City to undertake an annual
update of its Official Statement information
and report any material events to the
national repositories. The City will need to
ensure that action is taken to comply with
the SEC continuing disclosure requirements.
· Sources and Uses of Funds
· Debt Service Schedule on the Issue
· Composition of the Improvement Portion
· Assessment Income Schedule
· Net Debt Service Schedule on the
Improvement Portion
· Composition of the Water Portion
· Debt Service Schedule on the Water
Portion
· Coverage Ratio of Water Portion
· Terms of Proposal
DISCUSSION
The Street Improvement Portion
The listing of projects and the composition of the street improvement portion of the Bonds are
shown on page 7. Please note that in 1998 the City financed $1,300,000 of project costs for
Project 97-1. In addition, the City has MSA funds totaling $518,478 that are available in cash to
reduce the borrowing amount for Projects 97-1 and 98-1.
The detail of special assessments that have been, or will be, filed is shown at the bottom of
page 7. Assessments totaling $2,041,881 were filed in 1998 for Project 97-1. Since a portion
of Project 97-1 was financed in 1998, assessment income from Project 97-1 will pay for debt
service on both the City's General Obligation Improvement Bonds, Series 1998B and a portion
of the street improvement portion of this issue. See pages 8 and 9 for a summary of the
proportionate share of the assessments for Project 97-1 that are attributable to the 1998 bonds
and this issue.
Page 3
City of Chanhassen, Minnesota
October 21, 1999
All of the four projects listed on page 7 have or will be 100% assessed. However, $503,100 of
assessments on Project 98-16 will be deferred under Minnesota Statutes, Section 273.111,
which permits the deferment of assessments on unimproved (unplatted or agricultural) property
until such time as the property is developed ("green acres"). After discussions with City staff, it
has been determined that no projections can be made as to when the property subject to
"green acres" might be developed. As a result, the City will be required to make available other
City revenues, which may include a tax levy, for a portion of the debt service on this Bond issue
until such time as the property subject to "green acres" is developed. State law requires that
the portion of debt service payments not covered by special assessment income be certified as
a tax levy.
The projection of assessment income for the street improvement portion is shown on page 10.
Assessments on Projects 97-1 and 98-1 were filed on December 6, 1998 at a rate of 7.5%.
Assessments on Projects 98-16 and 98-15 are expected to be filed no later than November 15,
1999 at a rate of 8.0%. All assessments have or will be filed over a term of 8 years with even
annual principal payments. The $156,706.73 of assessment income collected in 1999 will be
used to make a portion of the first principal payment attributable to the improvement portion of
the Bonds.
The net debt service schedule for the street improvement portion is shown on page 11. The
City did not include in its 2000 Budget a levy for this issue. Therefore, the principal repayment
on the street improvement portion of the Bonds has been structured such that no tax levy will
be required in 1999 for collection in 2000. The revenue column represents the projected
assessment income from page 11. The amount of assessment income shown for the February
1, 2001 payment includes 1999 and 2000 assessment collections. The final column on page 11
is the annual tax levy requirement due to the "green acres" described above. The annual tax
levy is estimated to be $69,700 in levy years 2000 through 2006.
The Water Portion
The composition of the water portion of the Bonds is shown on page 12. Portions .of projects
97-1B-1 and 97-4 were financed in 1998.
The debt service schedule for the water portion of the Bonds is shown on page 13. The water
portion is structured with even annual debt service payments over a term of 10 years;
consistent with the City's Capital Improvement Plan prepared with the assistance of Springsted.
Page 14 shows the debt service coverage, including the water portion of this issue and the
City's two outstanding general obligation water revenue bonds, to the City's 1997 sewer and
water connection fees deposited' into the City's Sewer and Water Expansion Fund. 1997
connection fees were used for coverage purposes because the 1997 collections were the
lowest over the past five years. Additionally, we have used connection fees to demonstrate
coverage because the City has historically paid all water bonds from the City's Sewer and
Water Expansion Fund. The primary source of revenues in the Sewer and Water Expansion
Fund is connection fees. However, we would point out that connection fees are a volatile
revenue source, as demonstrated in the City's audited financial statements over the past five
years (connection fees varied by as much as $344,194 between 1996 and 1997). In contrast,
the statutory authority for the issuance of the water portion of this issue requires the City to
annually review and set user fees in an amount to support the operation and maintenance of
the utility and to cover debt service payments. Springsted has discussed with City staff reasons
why the City may want to consider restructuring its Sewer and Water Expansion Fund and the
Sewer and Water Utility Fund.
We have enjoyed being of service to the City of Chanhassen.
Respectfully submitted,
SPRINGSTED Incorporated
Page 4
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
Dated 12/01/1999
TOTAL ISSUE SOURCES AND USES
Delivered 12/01/1999
Improvements Water Issue Summary
SOURCES OF FUNDS
Par Amount of Bonds .............................................. $2,585,000.00 $1,670,000.00 $4,255,000.00
1998 Bond Proceeds ............................................... 1,300,000.00 800,000.00 2,100,000.00
MSA Funds .............................................................. 518,478.00 - 518,478.00
TOTAL SOURCES .................................................. $4,403,478.00 $2,470,000.00 $6,873,478.00
USES OF FUNDS
Total Underwriter's Discount (1.000%) ................... 25,850.00
Costs of Issuance .................................................... 18,833.13
Deposit to Project Construction Fund ...................... 4,362,119.00
Rounding Amount ....................................................(3,324.13)
16,700.00 42,550.00
12,166.87 31,000.00
2,439,844.00 6,801,963.00
1,289.13 (2,035.00)
TOTAL USES .......................................................... $4,403,478.00 $2,470,000.00 $6,873,478.00
Springsted Incorporated
Public Finance Advisors
File = Assess 1.sf- 1999A
10/20/1999 9:04 AM
Page 5
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
DEBT SERVICE SCHEDULE
Date Principal Coupon Interest Total P+I
2/01/2000
2/01/2001 535,000.00 4.300% 236,355.00 771,355.00
2/01/2002 475,000.00 4.400% 179,585.00 654,585.00
2/01/2003 480,000.00 4.550% 158, 685.00 638,685.00
2/01/2004 485,000.00 4.700% 136,845.00 621,845.00
2/01/2005 485,000.00 4.800% 114,050.00 599,050.00
2/01/2006 490,000.00 4.900% 90,770.00 580,770.00
2/01/2007 495,000.00 5.000% 66,760.00 561,760.00
2/01/2008 410,000.00 5.100% 42,010.00 452,010.00
2/01/2009 200,000.00 5.200% 21,100.00 221,100.00
2/01/2010 200,000.00 5.350% 10,700.00 210,700.00
Total 4,255,000.00 1,056,860.00 5,311,860.00
YIELD STATISTICS
Bond Year Dollars ................................................................................................. $21,484.17
Average Life .......................................................................................................... 5.049 Years
Average Coupon ................................................................................................... 4.9192506%
Net Interest Cost (NIC) .......................................................................................... 5.1173034%
True Interest Cost (TIC) ........................................................................................ 5.1354302%
.Bond Yield for Arbitrage Purposes ........................................................................ 4.9017438%
All Inclusive Cost (AIC) ......................................................................................... 5.3078628%
IRS FORM 8O38
Net Interest Cost ................................................................................................... 4.9192506%
Weighted Average Maturity ................................................................................... 5.049 Years
Springsted Incorporated
Public Finance Advisors
File = Assess 1.sf- 1999A
10/20/1999 9:21 AM
Page 6
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
(Improvement Bond Portion)
Composition of Issue
Project
97-1 (97-1a, 97-1b-2, 97-1D)
Gateway West (Phase I)
98-1 (Lake Lucy Road)
98-16 (Lake Drive West)
98-15 ( Stone Creek Drive)
Subtotal
Less: Investment Earnings
Total Bond Issue
Total Project
Costs
2,435,000
145,244
1,463,175
318,700
4,362,119
Composition of Bond Issue
Plus:
AIIownace for Less: Amount
Plus: Costs of Discount Borrowed in
Issuance Bidding 1998
10,513 14,430 (1,300,000)
627 860
6,317 8,671
1,376 1,889
18,833 25,850 (1,300,000)
Less: MSA Bonding
Funds Amount
(420,000) 739,943
(98,478) 48,253
1,478,163
321,965
(518,478) 2,588,324
(3,324)
2,585,000
Projects
Costs
Project Assessed
97-1 (97-1a, 97-1b-2, 97-1D)
Gateway West (Phase I) 2,041,881
98-1 (Lake Lucy Road) 46,766
98-16 (Lake Drive West) 1,463,175
98-15 ( Stone Creek Drive) 318,700
Total 3,870,522
Assessments
Less:
Assessments
Attributable to Less: Green
1998B Bonds Acres
(1,325,OOO)
(503,100)
(1,325,000) (503,100)
Plus: Cost of Net
Issuance and Assessments
Discount to be Assessments
Portion Collected Filed
14,988
3,'265
18,253
716,881 12/6/98
46,766 1 2/6/98
975,063 11/15/99
321,965 11/15/99
2,060,675
Term
(Years)
Rate
8 7.50%
8 7.50%
8 8.00%
8 8.00%
Prepared by SPRINGSTED Incorporated 10/15/99 Page 7
CITY OF CHANHASSEN, MINNESOTA
Project 97-1 Gateway West
Assessment Income Schedule
TOTAL PROJECTED ASSESSEMENT INCOME FOR PROJECT 97-1
DATE Project 97-1 Project 97-1 TOTAL
1998 Bond Issue 1999 Bond Issue
12/31/1999 271,901.04 147,109.96 419,011.00
12/31/2000 252,578.12 136,655.45 389,233.57
12/31/2001 240,156.26 129,934.69 370,090.95
12/31/2002 227,734.38 123,213.93 350,948.31
12/31/2003 215,312.50 116,493.16 331,805.66
12/31/2004 202,890.62 109,772.40 312,663.02
1 2/31/2005 190,468.76 103,051.64 293,520.40
12/31/2006 178,046.88 96,330.88 274,377.76
Total 1,779,088.56 962,562.11 2,741,650.67
PAR AMOUNTS OF SELECTED ISSUES
Project 97-1 -1998 Bond Issue .............................................................................. 1,325,000.00
Project 97-1 -1999 Bond Issue .............................................................................. 716,881.00
TOTAL ................................................................................................................... 2,041,881.00
Springsted Incorporated
Public Finance Advisors
File -= Assess 1. sfiAggregate
10/20/1999 1:59 PM
Page 8
CITY OF CHANHASSEN, MINNESOTA
Project 97-1 Gateway West
Assessment Income Schedule
TOTAL PRINCIPAL ASSESSMENT PAYMENTS FOR PROJECT 97-1
DATE Project 97-1
1998 Bond Issue
12/31/1999 165,625.00
12/31/2000 165,625.00
12/31/2001 165,625.00
1 2/31/2002 165,625.00
1 2/31/2003 165,625.00
12/31/2004 165,625.00
12/31/2005 165,625.00
12/31/2006 165,625.00
Total 1,325,000.00
Project 97-1
1999 Bond Issue
89 610.13
89 610.13
89 610.13
89 610.13
89 610.12
89 610.12
89 610.12
89 610.12
716,881.00
TOTAL
255,235.13
255,235.13
255,235.13
255,235.13
255,235.12
255,235.12
255,235.12
255,235.12
2,041,881.00
PAR AMOUNTS OF SELECTED ISSUES
Project 97-1 -1998 Bond Issue .............................................................................. 1,325,000.00
Project 97-1 -1999 Bond Issue .............................................................................. 716,881.00
TOTAL ................................................................................................................... 2,041,881.00
Springsted Incorporated
Public Finance Advisors
File = Assess 1. s f-Aggrega te
10/20/1999 2:00 PM
Page 9
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
Improvement Portion
Assessment Income Schedule
DATE Assess Assess Assess
Project 97-1 Proiect 98-1 Proiect 98-16
12/31/1999 147,109.96 9,596.77
12/31/2000 136,655.45 8,914.77 209,855.23
12/31/2001 129,934.69 8,476.33 190,137.28
12/31/2002 123,213.93 8,037.91 180,386.66
12/31/2003 116,493.16 7,599.47 170,636.02
12/31/2004 109,772.40 7,161.05 160,885.39
12/31/2005 103,051.64 6,722.61 151,134.75
12/31/2006 96,330.88 6,284.19 141,384.13
12/31/2007 t31,633.49
Assess TOTAL
Project 98-15
69 294.03
62 783.17
59 563.53
56 343.87
53 124.22
49 904.56
46 684.92
43 465.26
156,706.73
424,719.48
391,331.47
371,202.03
351,072.52
330,943.06
310,813.56
290,684.12
175,098.75
Total 962,562.11 62,793.10 1,336,052.95 441,163.56 2,802,571.72
PAR AMOUNTS OF SELECTED ISSUES
Assess -Project 97-1 ............................................................................................. 716,881.00
Assess -Project 98-1 ............................................................................................. 46,766.00
Assess -Project 98-16 ........................................................................................... 975,063.00
Assess -Project 98-15 ........................................................................................... 321,965.00
TOTAL ................................................................................................................... 2,060,675.00
Spfingsted Incorporated
Public Finance Advisors
File = ASSESS 1. SF-Aggregate
10/15/1999 10:08 AM
Page 10
Date
2/01/2000
2/01/2001
2/01/2002
2/01/2003
2/01/2004
2/01/2005
2/01/2006
2/0 t/2007
2/01/2008
Total
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
Improvement Bond Portion
NET DEBT SERVICE SCHEDULE
Principal Coupon Interest Total P+I 105% of Total Revenue
410 000.00
335 000.00
330 000.00
330 000.00
325 000.00
320 000.00
315 000.00
220 000.00
Levy Required
4.300% 141,335.83 551,335.83 578,902.62 581,426.21 (2,523.59)
4.400% 103,515.00 438,515.00 460,440.75 391,331.47 69,109.28
4.550% 88,775.00 418,775.00 439,713.75 371,202.03 68,511.72
4.700% 73,760.00 403,760.00 423,948.00 351,072.52 72,875.48
4.800% 58,250.00 383,250.00 402,412.50 330,943.06 71,469.44
4.900% 42,650.00 362,650.00 380,782.50 310,813.56 69,968.94
5.000% 26,970.00 341,970.00 359,068.50 290,684.12 68,384.38
5.100% 11,220.00 231,220.00 242,781.00 175,098.75 67,682.25
2,585,000.00 546,475.83 3,131,475.83 3,288,049.62 2,802,571.72
485,477.90
Dated ............................................................................................. 12/01/1999
Oelivew Date ................................................................................. 12/0t/1999
First Coupon Date .......................................................................... 8/01/2000
YIELD STATISTICS
Bond Year Dollars .......................................................................... $11,330.83
Average Life ................................................................................... 4.383 Years
Average Coupon ............................................................................ 4.8229094%
Net Interest Cost (NIC) .................................................................. 5.0510480%
True Interest Cost (TIC) ................................................................. 5.0727806%
Bond Yield for Arbitrage Purposes ................................................ 4.9017438%
All Inclusive Cost (AIC) .................................................................. 5.2671730%
IRS FORM 8038
Net Interest Cost ............................................................................ 4.8229094%
Weighted Average Maturity ........................................................... 4.383 Years
Springsted Incorporated
Public Finance Advisors
File = Assess l.sf- 1999A
10/20/1999 12:32 PM
Page 11
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999
(Water Portion)
Composition of Issue
Project
97-1B-1 (Water Tower)
97-4 (Well #8)
97-4A (Pump House for Well #8)
Subtotal
Plus: Estimated Costs of Issuance
Plus: Allowance for Discount Bidding
Rounding
Total Project
Costs
1,46O,OOO
680,000
299,844
2,439,844
Less: Amount
Borrowed in
1998
(200,000)
(600,000)
(800,000)
Total Bond Issue
Bonding
Amount
1,260,000
80,000
299,844
1,639,844
12,167
16,700
1,289
1,670,000
Prepared by SPRINGSTED Incorporated 10/15/99 Page 12
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
Water Revenue Portion
Date
2/01/2000
2/01/2001 125
2/01/2002 140
2/01/2003 150
2/01/2004 155
2/01/2005 160
2/01/2006 17O
2/01/2007 180
2/01/2008 19O
2/01/2009 200
2/01/2010 200
Total
DEBT SERVICE SCHEDULE
Principal Coupon Interest Total P+I
000.00 4.300% 95,019.17 220,019.17
000.00 4.400% 76,070.00 216,070.00
000.00 4.550% 69,910.00 219,910.00
000.00 4.700% 63,085.00 218,085.00
000.00 4.800% 55,800.00 215,800.00
000.00 4.900% 48,120.00 218,120.00
000.00 5.000% 39,790.00 219,790.00
000.00 5.100% 30,790.00 220,790.00
000.00 5.200% 21,100.00 221,100.00
000.00 5.350% t 0,700.00 210,700.00
1,670,000.00 510,384.17 2,180,384.17
Dated ..................................................................................................................... 12/01/1999
Delivery Date ......................................................................................................... 12/01/1999
First Coupon Date ................................................................................................. 8/01/2000
First Serial Maturity Date ....................................................................................... 2/01/2001
Final Serial Maturity Date ...................................................................................... 2/01/2010
Term Bond 1 Maturity Date ...................................................................................
Term Bond 2 Maturity Date ...................................................................................
YIELD STATISTICS
Bond Year Dollars ................................................................................................. $10,153.33
Average Life .......................................................................................................... 6.080 Years
Average Coupon ................................................................................................... 5.0267646%
Net Interest Cost (NIC) .......................................................................................... 5.1912426%
True Interest Cost (TIC) ........................................................................................ 5.2084130%
All Inclusive Cost (AIC) ......................................................................................... 5.3553194%
Springsted Incorporated
Public Finance Advisors
File = Assess1.sfi1999A
10/20/1999 9:21 AM
Page 13
CITY OF CHANHASSEN, MINNESOTA
General Obligation Bonds, Series 1999A
Water Revenue Portion
COVERAGE RATIO
1997
Connection
Date Fees
2/01/2000
2/01/2001 439,084. O0
2/01/2002 439,084.00
2/01/2003 439,084. O0
2/01/2004 439,084.00
2/01/2005 439,084.00
2/01/2006 439,084. O0
2/01/2007 439,084.00
2/01/2008 439,084. O0
2/01/2009 439,084. O0
2/01/2010 439,084.00
Total 4,390,840.00
Total D/S
Includingthis
Issue and
Outstanding
Bonds
208 926.25
479546.67
490 802.50
333 567.50
328 215.00
327360.00
325.810.00
328520.00
335.292.50
33Q877.50
210,700.00
3,699,617.92
Coverage
to 1997
Connection
Fees
0.9156231x
0.8946246x
1.3163273x
1.3377938x
1.3412879x
1.3476689x
1.3365518x
1.3095551x
1.3270289x
2.0839298x
Springsted Incorporated
Pubfic Finance Advisors
File = Assess l.sfi 1999A
10/20/1999 2:09 PM
Note: Please be advised that the City has historically paid afl water bonds from the City's
Sewer and Water Expansion Fund. The primary source of revenues of the Sewer and Water
Expansion Fund is connection funds, which are a volatile revenue source. In contrast, the
statutory authority for the issuance of general obligation debt to fund utility improvements
(such as the water improvements in this issue) requires issuers to annually review and set
user fees in an amount sufficient to support the operation and maintenance of the utility and
to cover debt service payments. The above coverage ratio is based on 1997 connection
fees, which represent the lowest annual collection of connection fees in the past five years.
Springsted has discussed with City staff reasons why the City may want to consider
restructuring of the City's Sewer and Water Expansion Fund and Sewer and Water Utility
Fund.
Page 14
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE
ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$4,255,000
CITY OF CHANHASSEN, MINNESOTA
GENERAL OBLIGATION BONDS, SERIES '1999A
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Monday, November 22, 1999, 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 6:30 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Proposals may be submitted in a sealed envelope or by fax (651)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 (651)223-3000 or fax (651)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. 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 December 1, 1999, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 2000. 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:
2001 $535,000 2005 $485,000 2009 $200,000
2002 $475,000 2006 $490,000 2010 $200,000
2003 $480,000 2007 $495,000
2004 $485,000 2008 $410,000
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.
Page 15
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 City may elect on February 1, 2008, and on any day thereafter, to prepay Bonds due on or
after February 1, 2009. Redemption may be in whole or in part and if in part at the option of the
City and in such manner as the City shall determine. If less than all Bonds of a maturity are
called for redemption, the City will notify DTC of the particular amount of such maturity to be
prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to
be redeemed and each participant will then select by lot the beneficial ownership interests in
such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest.
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 benefitted property and net revenues of the City's Sewer and Water Utility
and Sewer and Water Expansion Fund. The proceeds will be used to finance various street
and water improvement projects within the City.
TYPE OF PROPOSALS
Proposals shall be for not less than $4,212,450 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 $42,550,
payable to the order of the City. If a check is used, it must accompany the 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 level or 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.
Page 16
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 a.ny 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 through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of
Saint Paul and 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
On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a
Continuing Disclosure Undertaking (the "Undertaking") whereunder the City will covenant for
the benefit of the owners of the Bonds to provide certain financial and other information about
the City and notices of certain occurrences to information repositories as specified in and
required by SEC Rule 15c2-12(b)(5).
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 (651) 223-3000.
Page 17
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 170 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 October 25, 1999
BY ORDER OF THE CITY COUNCIL
10/20/99 2:30 PM
~si Scott A. Botcher
City Manager
Page 18