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5. Discuss 1992 Bond sale Springsted Corp 1 SPRINGSTED R I N G ST E D 120 South Sixth Street ` Suite 2507 —�' ' Minneapolis, MN 55402 -1800 1 Home Office PUBLIC FINANCE ADVISORS (612) 333 - 9177 Fax: (612) 349 -5230 85 East Seventh Place 16655 West Bluemound Road Suite 100 Suite 290 I Saint Paul, MN 55101 -2143 Brookfield, WI 53005-5935 (612) 223 3000 (414) 782 -8222 Fax: (612) 223-3002 Fax: (414) 782 -2904 6800 College Boulevard I Suite 600 Overland Park, KS 66211 -1533 (913) 345 -8062 Fax: (913) 345 -1770 I 1800K Street NW Suite 831 Washington, DC 20006 -2200 (202) 466 -3344 I Fax: (202) 223 -1362 October 7, 1992 1 Mr. Donald Ashworth, City Manager I Chanhassen City Hall 690 Coulter Drive Chanhassen, MN 55317 -0147 1 Re: Confirming Recommendations for the Issuance of: $3,630,000 General Obligation Improvement Bonds, Series 1992A $1,350,000 General Obligation Tax Increment Bonds, Series 1992B I Dear Mr. Ashworth: I We have enclosed 12 copies of our recommendations confirming Council action for the above captioned issues for distribution to Council members and City staff. I If you should have any questions pertaining to these recommendations, or if you require additional copies, please do not hesitate to contact us. Sincerely, I( Th ( L I David N. MacGillivray Director, Project Management 1 sms Enclosures 1 Manager's Comment (10- 8 -92): Mr. MacGillivray will be present Monday evening to discuss I details associated with bonds proposed to be sold to finance projects carried out in 1992/93. The bond sale represents projects previously approved by the Council, i.e. Upper Bluff Creek Sanitary Sewer, West 86th Street Water, etc. At our last meeting, the Council acted to set October 26, I 1992, as the bond sale date. I am not aware of any specific action which is being requested for Monday evening. DWA (10 -8 -92) 1 1 1 Confirming Recommendations For City of Chanhassen, Minnesota $3,630,000 General Obligation Improvement Bonds, Series 1992A $1,350,000 General Obligation Tax Increment Bonds, Series 1992B 1 1 1 1 1 1 1 Stud y No. CO236L1 M1 1 SPRINGSTED Incorporated October 7, 1992 1 1 I ' s S P R II N GST E D 120 South Sixth Street Suite 2507 ;, PUBLIC FINANCE ADVISORS Minneapolis, MN 554021800 (612) 333 -9177 Fax: (612) 349 -5230 Home Office 85 East Seventh Place 16655 West Bluemound Road Suite 100 Suite 290 Saint Paul, MN 55101 -2143 Brookfield, WI 53005-5935 (612) 223 -3000 (414) 782 -8222 Fax: (612) 223-3002 Fax: (414) 782 -2904 I 6800 College Boulevard Suite 600 Overland Park, KS 66211 -1533 (913) 345 -8062 October 7, 1992 Fax: (913) 345 -1770 1 1800K Street NW Suite 831 Washington, DC 20006 -2200 1 Mayor Don Chmiel (202) 466 3344 Members, City Council Fax: (202) 223 -1362 Mr. Donald Ashworth, City Manager Chanhassen City Hall I 690 Coulter Drive Chanhassen, MN 55317 -0147 I Re: Confirming Recommendations for the Issuance of: $3,630,000 General Obligation Improvement Bonds, Series 1992A $1,350,000 General Obligation Tax Increment Bonds, Series 1992B I These recommendations will confirm the actions recently adopted by the City Council regarding the amount and timing of the sale of these bonds. The details of the offerings are set I forth in the attached "Terms of Proposals." Since the issuance of debt for improvement projects and tax increment projects is authorized by different statutory authorities, these recommendations will address each issue separately and then will discuss items common to I both issues. $3,630,000 General Obligation Improvement Bonds, Series 1992A 1 The City is undertaking two separate improvement projects which require financing at this time. These projects include Upper Bluff Circle and 86th Street Water Improvement Projects. It is I anticipated the City will incur direct costs of $3,156,000 for project expenses, to which we have added issuance costs, capitalized interest and underwriter's discount, to arrive at a total financing requirement of $3,630,000. A summary of the composition of this issue is as follows: I Upper Bluff Circle 86th Street Water Total Construction $2,352,580 $246,500 $2,599,080 Engineering 325,000 34,500 359,500 I ROW 75,000 10,000 85,000 Legal 50,000 5,000 55,000 Administrative 50,000 5,000 55,000 1 Subtotal $2,852,580 $301,000 $3,153,580 Capitalized Interest 390,995(a) 21,655(b) 412,650 Allowance for Discount 41,250 4,125 45,375 I Issuance Costs 22,980 3,520 26,500 Investment Earnings (7,805) (300) (8,105) Total lssue $3,300,0000) $330,000( $3,630,000 1 (Footnotes on the following page.) 1 City of Chanhassen, Minnesota October 7, 1992 , 1 (Footnotes from the preceding page) (a) Capitalized interest from November 1, 1992 to February 1, 1995. I (b) Capitalized interest from November 1, 1992 to February 1, 1994. (c) Assessments adopted September 1, 1994 in estimated amount of $3,196,565. (d) Assessments adopted September 1, 1993 in estimated amount of $266,885. Additional potential 1 assessment of $94,425 of Green Acres deferments. Included in the principal amount of the issue is a provision for capitalized interest in the amount I of $412,650. This item is necessary to cover interest on the bonds until such time as assessment income starts accruing to the City. A total of $390,995 of capitalized interest is applicable to the Upper Bluff Circle Project, with the remaining $21,655 attributable to the 86th Water Improvement Project. It is anticipated assessments for these projects will be spread over 10 years, requiring equal annual payments of principal with interest charged on the unpaid balance at a rate of 1 I above the average annual rate for the bond issue. For purposes of our projections herein, we are assuming an interest rate of 6.75% on the assessments. It is anticipated the Upper Bluff Circle Project will be assessed no later than September 1, 1994. I It is estimated a total of $3,196,565 will be assessed, which amount includes direct project costs, issuance costs and capitalized interest from the date of the bonds to the date of certification of assessments. 1 The 86th Street Water Project is expected to be assessed no later than September 1, 1993, and the total costs to be assessed are estimated to be $266,885. This amount also includes I capitalized interest from the date of the bonds through the date of adoption of the assessment roll. We note also that an additional $94,425 of project costs will also be assessed against benefited property; however, these assessments will be deferred indefinitely as far as collection is concerned due to Green Acres deferments. I Based on the assumptions noted herein above, a projection of assessment income is set forth in Appendix I. The projections of assessment income do not take into consideration any I prepayments, other deferments or delinquencies. We assume the assessments will be paid over their normal term of filing. I Based on the projections of assessment income, we have developed the recommended financing schedule set forth in Appendix II. Columns 1 through 6 show the years and amounts of principal and estimated interest on the obligations. Column 7 shows the capitalized interest which is necessary to pay interest on the bonds prior to the receipt of assessment income. I Column 8 shows the net levy required to pay 100% of debt service, with Column 9 showing the 5% overlevy requirement as set forth by State Statute. The overlevy is a protection to the City and to the bondholders in the event 100% of the expected revenues are not received. I Column 10 is the projection of assessment income as developed in Appendix I. Column 11 shows the total net requirement which is the estimated tax levy for this issue and represents the City's share of the 86th Street Water Project. To the extent the City does receive assessment I income from the Green Acres deferment, this tax levy may be reduced and /or cancelled. The bonds will be dated November 1, 1992 and mature each February 1 from 1995 through 2005. The first payment on these obligations will be an interest payment due August 1, 1993 in I the estimated amount of $137,110. This payment, as well as the interest payment due February 1, 1994, will be payable from the interest capitalized in the bond issue. Capitalized interest will also be available to meet the August 1, 1994 interest payment; and the February 1, I 1995 principal and interest payment will be made from a combination of capitalized interest and assessment income. After the February 1, 1995 payment, the interest payments due each 1 Page 2 1 City of Chanhassen, Minnesota October 7, 1992 1 August 1 will be payable from the first -half collections of assessment income and the principal and interest payments due the following February 1 will be payable from the second -half collections of income, together with the surplus of first -half collections. I $1,350,000 General Obligation Tax Increment Bonds, Series 1992B 1 The City is currently incurring costs along South Highway 101 and Trunk Highway 5, which costs are attributable to eligible expenditures within the City's Tax Increment District. The composition of this issue is set forth as follows: I South Highway 101 - City's Share $ 771,000 Trunk Highway 5 - City's Share 542,375 I Issuance Costs 19,750 Allowance for Discount 16,875 I Total Issue $1,350,000 We note the costs attributable to the Trunk Highway 5 project amount to a portion of the costs the City will incur for this project. The amount was determined based on a total combined I offering of the two issues not to exceed $5,000,000 in order to provide the City with an exemption from certain federal arbitrage requirements. Thus, the City will finance only $542,375 of project costs for Trunk Highway 5 at this time. The remaining project costs may be 1 recovered with future borrowings. Attached as Appendix III is the amortization schedule for this issue. This schedule is based on I staff recommendations with regard to anticipated increment income to be available for this project area and we have not made an independent verification of the availability of such funds at this point in time. We assume internal projections of increment income show adequate coverage of tax increment requirements. To the extent such increment income is not available 1 to meet debt service payments as they become due, a tax levy may be required. These bonds will be dated November 1, 1992 and mature each February 1 from 1994 through I 2000. The first payment will be an interest payment due August 1, 1993 in the estimated amount of $46,145. This payment will be made from the first -half 1993 collections of increment income. The next payment will be a principal and interest payment due February 1, 1994 in a I combined total of $80,760. This payment will be made from the second -half 1993 collections of increment income, together with the surplus revenues from the first -half collections. This payment sequence will continue throughout the life of the issue. 1 Common to Both Issues I Included in the principal amount of both issues is a provision for issuance costs including a rating fee from Moody's Investors Service of New York. The City currently has a "Baal" rating from Moody's, and we do not anticipate this rating will be impaired with the sale of these issues. As usual, we will make the rating application to Moody's on your behalf and provide I them with the necessary data upon which they will make their rating analysis. Also included in the principal amount of the issue is a provision for discount bidding. This I discount, representing $12.50 per $1,000 of bonds issued, provides the underwriters with all or part of the profit and /or working capital for purchasing the issues and permits them to reoffer the bonds at or close to a par scale. The City has used this successful marketing tool in the I past and we recommend its continued use herein. 1 Page 3 City of Chanhassen, Minnesota October 7, 1992 These issues are subject to the Tax Reform Act of 1986 and 1989 amendments which modify the rebate arbitrage requirements to the U.S. Treasury. Generally speaking, all arbitrage profits (the yield difference between the earnings on investments and the yields on the bonds) must • be rebated to the U.S. Treasury. However, since the City will be issuing less than $5,000,000 of general obligation bonds during 1992, the City may claim the "small issuer" exemption and therefore the rebate provisions will not apply to these issues. Also, since the City will be issuing less than $10,000,000 of tax - exempt bonds during this calendar year, it may designate these bonds as "qualified bonds" under the Act, making these bonds attractive to some banks who may wish to trade or invest in the bonds. 1 These obligations will also be subject to reimbursement regulations adopted by the U.S. Treasury for bonds issued after March 2, 1993. We have discussed these reimbursement requirements with City staff, and we assume appropriate resolutions of intent to recover funds 1 pursuant to the reimbursement regulations have been adopted for these projects. These obligations will be offered for sale on Monday, October 26, 1992, with bid proposals received at the offices of Springsted Incorporated at 1:00 P.M. A tabulation of those proposals will be made and presented to the City Council at 7:30 P.M. for consideration of award. A representative of Springsted will attend the Council meeting on October 26 to provide recommendations as to the acceptability of the proposals received. Respectfully submitted, SPRINGSTED Incorporated sms 1 1 1 1 1 1 1 1 Page 4 1 IIII 1 E 1 1 1 1 1 1 1 1 all 1 1 1 1 I; 1' CITY OF CHANHASSEN, MINNESOTA Prepared October 5, 1992 $3,630,000 GENERAL OBLIGATION By SPRINGSTED Incorporated IMPROVEMENT BONDS, SERIES 1992A PROJECTED ASSESSMENT INCOME Upper Bluff Circle 86th Street Water - - - - T 0 T A L Filing Date: 9/ 1/1994 Filing Date: 9/ 1/1993 Filing Collect Interest Interest Year Year Principal @ 6.750% Total Principal @ 6.750% Total Principal Interest Total 1993 1994 19,546 24,036a 43,582 19,546 24,036 43,582 1994 1995 319,657 287,888b 607,545 20,865 16,695 37,560 340,522 304,583 645,105 1995 1996 319,657 194,191 513,848 22,273 15,287 37,560 341,930 209,478 551,408 1996 1997 319,657 172,614 492,271 23,776 13,784 37,560 343,433 186,398 529,831 1997 1998 319,657 151,038 470,695 25,381 12,179 37,560 345,038 163,217 508,255 1998 1999 319,657 129,461 449,118 27,095 10,465 37,560 346,752 139,926 486,678 1999 2000 319,657 107,884 427,541 28,923 8,637 37,560 348,580 116,521 465,101 2000 2001 319,657 86,307 405,964 30,876 6,684 37,560 350,533 92,991 443,524 2001 2002 319,657 64,730 384,387 32,960 4,600 37,560 352,617 69,330 421,947 2002 2003 319,657 43,153 362,810 35,190 2,375 37,565 354,847 45,528 400,375 2003 2004 319,652 21,577 341,229 319,652 21,577 341,229 TOTALS 3,196,565 1,258,843 4,455,408 266,885 114,742 381,627 3,463,450 1,373,585 4,837,035 b) Includes interest from filing a) Includes interest from filing date to 12/31/1995. date to 12/31/1994. m 2 u 0 m Q 01 _ 1 1- 1 1 1- 1 I r I- 1 1 1 r r- :MIS .. CITY OF CHANHASSEN, MINNESOTA Prepared October 5, 1992 $3,630,000 GENERAL OBLIGATION By SPRINGSTED Incorporated IMPROVEMENT BONDS, SERIES 1992A Dated: 11- 1 -1992 Mature: 2- 1 First Interest: 8- 1 -1993 Total Capital- Net Projected Total Year of Year of Principal ized Levy 105% Assessment Net Levy Mat. Principal Rates Interest & Interest Interest Required of Total Income Requirement (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) 1992 1994 0 0.00% 228,513 228,513 228,500 13 14 0 14 1993 1995 40,000 3.80% 182,810 222,810 173,775 49,035 51,487 43,582 7,905 1994 1996 440,000 4.10% 181,290 621,290 0 621,290 652,355 645,105 7,250 1995 1997 365,000 4.40% 163,250 528,250 0 528,250 554,663 551,408 3,255 1996 1998 360,000 4.60% 147,190 507,190 0 507,190 532,550 529,831 2,719 1997 1999 360,000 4.80% 130,630 490,630 0 490,630 515,162 508,255 6,907 1998 2000 355,000 5.00% 113,350 468,350 0 468,350 491,768 486,678 5,090 1999 2001 350,000 5.20% 95,600 445,600 0 445,600 467,880 465,101 2,779 2000 2002 350,000 5.40% 77,400 427,400 0 427,400 448,770 443,524 5,246 2001 2003 350,000 5.60% 58,500 408,500 0 408,500 428,925 421,947 6,978 2002 2004 350,000 5.80% 38,900 388,900 0 388,900 408,345 400,375 7,970 2003 2005 310,000 6.00% 18,600 328,600 0 328,600 345,030 341,229 3,801 TOTALS: 3,630,000 1,436,033 5,066,033 402,275 4,663,758 4,896,949 4,837,035 59,914 Bond Years: 27,232.50 Annual Interest: 1,436,033 Avg. Maturity: 7.50 Plus Discount: 45,375 Avg. Annual Rate: 5.273% Net Interest: 1,481,408 T.I.C. Rate: 5.441% N.I.C. Rate: 5.440% Interest rates are estimates; changes may cause significant alterations of this schedule. The actual underwriter's discount bid may also vary. b 'v m Z a 0 co R co 1 APPENDIX III II CITY OF CHANHASSEN, MINNESOTA Prepared October 5, 1992 1 $1,350,000 GENERAL OBLIGATION By SPRINGSTED Incorporated TAX INCREMENT BONDS, SERIES 1992B 1 Dated: 11- 1 -1992 Mature: 2- 1 First Interest: 8- 1 -1993 II Total Year of Year of Principal 105% Levy Mat. Principal Rates Interest & Interest of Total (1) (2) (3) (4) (5) (6) (7) 1 1992 1994 50,000 3.75% 76,906 126,906 133,251 1993 1995 100,000 3.80% 59,650 159,650 167,633 1 1994 1996 150,000 4.10% 55,850 205,850 216,143 1995 1997 200,000 4.40% 49,700 249,700 262,185 1996 1998 250,000 4.60% 40,900 290,900 305,445 1 1997 1999 300,000 4.80% 29,400 329,400 345,870 1998 2000 300,000 5.00% 15,000 315,000 330,750 TOTALS: 1,350,000 327,406 1,677,406 1,761,277 II II Bond Years: 6,987.50 Annual Interest: 327,406 Avg. Maturity: 5.18 Plus Discount: 16,875 Avg. Annual Rate: 4.686% Net Interest: 344,281 1 T.I.C. Rate: 4.950% N.I.C. Rate: 4.927% Interest rates are estimates; changes may cause significant alterations of this schedule. II The actual underwriter's discount bid may also vary. 1 1 1 1 1 1 1 Page 7 I THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: 1 TERMS OF PROPOSAL I $3,630,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, 1 SERIES 1992A I Proposals for the Bonds will be received by the City Manager or designee on Monday, October 26, 1992, until 1:00 P.M., 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 1 tabulated. Consideration for award of the Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. DETAILS OF THE BONDS 1 The Bonds will be dated November 1, 1992, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 1993. Interest will I be computed on the basis of a 360 -day year of twelve 30 -day months. The Bonds will be issued in the denomination of $5,000 each, or in integral multiples thereof, as requested by the purchaser, and fully registered as to principal and interest. Principal will be payable at the main I corporate office of the registrar and interest on each Bond will be payable by check or draft of the registrar mailed to the registered holder thereof at the holder's address as it appears on the books of the registrar as of the close of business on the 15th day of the immediately preceding month. 1 The Bonds will mature February 1 in the years and amounts as follows: I 1995 $ 40,000 1999 $360,000 2003 $350,000 1996 $440,000 2000 $355,000 2004 $350,000 1997 $365,000 2001 $350,000 2005 $310,000 1998 $360,000 2002 $350,000 1 OPTIONAL REDEMPTION I The City may elect on February 1, 2002, and on any day thereafter, to prepay Bonds due on or after February 1, 2003. Redemption may be in whole or in part and if in part at the option of the City and in such order as the City shall determine and within a maturity by lot as selected by the registrar. All prepayments shall be at a price of par plus accrued interest. I SECURITY AND PURPOSE I 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 assessment against benefited property. The proceeds will be used to finance the I construction of various improvements in the City. 1 1 Page 8 TYPE OF PROPOSALS Proposals shall be for not less than $3,584,625 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 $36,300, 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. ' 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. 1 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. 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 ' Page 9 Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT 1 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 Holmes & Graven, Chartered of Minneapolis, Minnesota, which opinion will be printed on the Bonds, 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 1 the City by reason of the purchaser's non - compliance with said terms for payment. OFFICIAL STATEMENT 1 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. 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 150 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. 1 Dated September 28, 1992 BY ORDER OF THE CITY COUNCIL 1 /s/ Donald W. Ashworth City Manager 1 1 1 1 Page 10 THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: 1 TERMS OF PROPOSAL $1,350,000 CITY OF CHANHASSEN, MINNESOTA GENERAL OBLIGATION TAX INCREMENT BONDS, 1 SERIES 1992B Proposals for the Bonds will be received by the City Manager or designee on Monday, October 26, 1992, until 1:00 P.M., 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 1 tabulated. Consideration for award of the Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. DETAILS OF THE BONDS 1 The Bonds will be dated November 1, 1992, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 1993. Interest will ' be computed on the basis of a 360 -day year of twelve 30 -day months. The Bonds will be issued in the denomination of $5,000 each, or in integral multiples thereof, as requested by the purchaser, and fully registered as to principal and interest. Principal will be payable at the main ' corporate office of the registrar and interest on each Bond will be payable by check or draft of the registrar mailed to the registered holder thereof at the holder's address as it appears on the books of the registrar as of the close of business on the 15th day of the immediately preceding month. 1 The Bonds will mature February 1 in the years and amounts as follows: ' 1994 $ 50,000 1997 $200,000 1999 $300,000 1995 $100,000 1998 $250,000 2000 $300,000 1996 $150,000 1 OPTIONAL REDEMPTION The Bonds will not be subject to payment in advance of their respective stated maturity dates. 1 SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and 1 credit and power to levy direct general ad valorem taxes. In addition the City will pledge tax increment income. The proceeds will be used to finance eligible expenditures in the City's tax increment project area. 1 TYPE OF PROPOSALS ' Proposals shall be for not Tess than $1,333,125 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 $13,500, payable to the order of the City. If a check is used, it must accompany each proposal. If a 1 Financial Surety Bond is used, it must be from an insurance company licensed to issue such a 1 Page 11 r bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to 1 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 I 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 I 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 1 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 I 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. 1 AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true I interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. I 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 I 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 I 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. I 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. 1 REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City I will pay for the services of the registrar. CUSIP NUMBERS 1 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 I Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. I SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the 1 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 Holmes & Graven, 1 Page 12 i Chartered of Minneapolis, Minnesota, which opinion will be printed on the Bonds, and of 1 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 Toss suffered by the City by reason of the purchaser's non - compliance with said terms for payment. 1 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. ' 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 55 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 September 28, 1992 BY ORDER OF THE CITY COUNCIL /s/ Donald W. Ashworth City Manager 1 1 1 1 1 1 i Page 13