2h. 1991 Equipment Certificates CITYOF
c2,
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: May 6, 1991
SUBJ: 1991 Certificate of Indebtedness, Authorize Indenture
' I had anticipated having this item presented by the City Auditors
during their presentation of the 1990 annual report. The State
Legislature has altered that schedule. Specifically, in an attempt
to ensure that cities would be frozen to last year's levy
authority, two out of the three state funding bills have provisions
not only limiting cities to their levy from last year, but also
' ensuring that cities could not levy for any debt incurred after May
20, 1991.
The benefits of authorizing the equipment certificate as prepared
by Holmes and Graven include:
- General Fund Balances: The belief that cities have large
' reserves and that state aid revisions should include
means to steal these continues to exist. The purchase of
the equipment certificate by the General Fund re-
' catagorizes a portion of the General Fund balance as debt
versus an unrestricted reserve. In this instance, the
unrestricted reserve would drop from approximately
$900,000 to $600,000. From a practical standpoint, no
' dollars have changed hands. Last year's levy included
dollars to fund the Motor Vehicle Depreciation Fund
(equipment purchases) . The city maintains the right to
' determine, through the course of 1991, whether any or all
of those purchases should be complete. PASSAGE OF THIS
EQUIPMENT CERTIFICATE DOES NOT BIND THE CITY TO PURCHASE
' ANY ONE PIECE OF EQUIPMENT. Again, the only change would
be that a portion of our overall reserve would be then
shown, at year end, as debt associated with whatever
purchase did occur instead of an unrestricted reserve;
' and
Levy Limit Authority: Starting with the Auditor
recommendations in the early 1980 's, the city issued
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Mayor and City Council
May 6, 1991
' Page 2
equipment certificates. The falacy of this procedure was
that the aggregate debt associated with each of these
1 issues was equal to what was seen as a normal purchasing
year. Through a successful debt refunding, the city was
able to eliminate multiple equipment certificates and to
' move into a one year levy for current needs versus,
again, five separate levies for the previous five years.
Whether done on a yearly basis (established by looking at
the next five year needs and dividing such by five) or
through five separate sales over the next five years, an
equipment certificate is exempt from the levy limit
regulations. Accordingly, continuing the practice of
I formally recognizing the amount spent for equipment
purchases as debt ensures that we will have some
flexibility in developing next year's operating budget.
' Again, through the adoption of the attached resolution,
we are not binding ourselves to a specific levy amount in
1992 . By contrast, if the city is forced to levy no more
than was levied in 1991, and in the Council' s
' deliberations a 6% increase appeared reasonable
recognizing a valuation increase of 10% (overall drop in
taxes of 4%) , the Council would have the ability to
' consider this option. Again, passage of the equipment
certificate only provides flexibility to the city.
' Points raised above have been reviewed with our Fiscal Consultant,
Bond Attorneys and Auditors. All are in agreement that the report
as presented herein is not only prudent, but helps to reduce the
possibility of the state from either taking dollars from our
' General Fund or depriving us of the ability to provide reasonable
service levels in 1992. Approval is recommended.
1 � ./1,..aj dire
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HOLIES & GRAVEN
CHARTERED
DAVID J. KENNEDY 470 Pillsbury Center,Minneapolis,Minnesota 55402
Attorney at Law (612)337-9300
Direct Dial(612)337-9232 RECEIVED
APR 251991
I�pril 24 , 1991 Cr! r yr Lrir,iy!"`/=l.SSEN
Mr. Don Ashworth
City Manager
City of Chanhassen
690 Coulter Drive
Chanhassen, Minnesota 55317
Re: 1991 Certificates of Indebtedness
Dear Don:
Enclosed find two copies of: '
1 . Certificate resolution;
2 . County Auditor' s Certificates (Hennepin and Carver) ; '
3 . Specimen Certificates;
and the Certificate itself. Please return one certified copy of
the resolution and the respective County Auditor ' s Certificates
to me.
The resolution can be adopted at any time. The Certificate may
be prepaid at any time. I have made principal and interest due
at maturity rather than the six month payment of interest you
suggested. The tax levy is at 105% of principal and interest
because of the statutory requirement for a 5% over levy.
If you have any questions please call.
Yo s very truly, ,
44//
David J. Kennedy
DJK: caw
Enclosures
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ge
UNITED STATES OF AMERICA
' STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
GENERAL OBLIGATION EQUIPMENT CERTIFICATE OF 1991
The City of Chanhassen, Minnesota, a duly organized and existin g municipal
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corporation in Carver and Hennepin Counties, Minnesota (City) , acknowledges
' itself to be indebted and for value received promises to pay to the City of
Chanhassen General Fund 101, $280,000 on December 31, 1992, with interest
thereon from the date hereof at the annual rate of 5.70% payable at maturity.
' The interest hereon and, upon presentation and surrender hereof, the principal
hereof are payable in lawful money of the United States of America by check or
draft by the City Manager, Chanhassen, Minnesota, as Certificate Registrar. For
the prompt and full payment of such principal and interest as the same
' respectively become due, the full faith and credit and taxing powers of the City
have been and are hereby irrevocably pledged.
' The City may elect to prepay this Certificate in whole or in part on any
day.
This Certificate is issued pursuant to a resolution adopted by the City
Council on , 1991 (the Resolution) , for the purpose of providing
money to defray expenses incurred or to be incurred in purchasing various items
of capital equipment, pursuant to and in full conformity with the Constitution
' and laws of the State of Minnesota, including Minnesota Statutes, Section
412.301 and the principal hereof and interest hereon are payable primarily from
ad valorem taxes, as set forth in the Resolution to which reference is made for
a full statement of rights and powers thereby conferred. The full faith and
credit of the City are irrevocably pledged for payment of this Certificate, and
the City Council has obligated itself to levy additional ad valorem taxes on all
' taxable property in the City in the event of any deficiency, which taxes may be
levied without limitation as to rate or amount.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
' conditions and things required by the Constitution and laws of the State of
Minnesota to be done, to exist, to happen and to be performed preliminary to and
in the issuance of this Certificate in order to make it a valid and binding
' general obligation of the City in accordance with its terms, have been done, do
exist, have happened and have been performed as so required, and that the
issuance of this Certificate does not cause the indebtedness of the City to
exceed any constitutional or statutory limitation of indebtedness.
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IN WITNESS WHEREOF, the City of Chanhassen, Carver and Hennepin Counties, II Minnesota, by its City Council, has caused this Certificate to be executed on
its behalf by the facsimile signatures of the Mayor and City Manager and has
caused this Certificate to be dated as of the date set forth below.
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Dated:
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CITY OF CHANHASSEN, MINNESOTA I
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City Manager Mayor
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STATE OF MINNESOTA COUNTY AUDITOR'S
CERTIFICATE AS TO
' COUNTY OF CARVER TAX LEVY AND
REGISTRATION
I, the undersigned County Auditor of Carver County, Minnesota, hereby
' certify that a certified copy of a resolution adopted by the governing body of
Chanhassen, Minnesota, on , 1991, levying taxes for the
1 payment of $280,000 Equipment Certificates of Indebtedness of 1991, of said
municipality dated , 1991, has been filed in my office and
' said bonds have been entered on the register of obligations in my office and
' that such tax has been levied as required by law.
WITNESS My hand and official seal this day of
1991.
' County Auditor
Carver County, Minnesota
(SEAL)
By
Deputy
CH135-17.
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STATE OF MINNESOTA DIRECTOR OF PROPERTY
TAXATION'S CERTIFICATE AS II COUNTY OF HENNEPIN TO TAX LEVY AND
REGISTRATION
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I, the undersigned Director of Property Taxation of Hennepin County,
Minnesota, hereby certify that a certified copy of a resolution adopted by the
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governing body of Chanhassen, Minnesota, on , 1991, levying II taxes for the payment of $280,000 Equipment Certificates of Indebtedness of
1991, of said municipality dated , 1991, has been filed in
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my office and said bonds have been entered on the register of obligations in my
office and that such tax has been levied as required by law. I
WITNESS My hand and official seal this day of ,
1991. II
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Director of Property Taxation I
Hennepin County, Minnesota
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(SEAL)
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By
Deputy
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CH135-17.
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RESOLUTION NO.
' RESOLUTION AUTHORIZING THE
ISSUANCE AND SALE OF $280,000
EQUIPMENT CERTIFICATES OF INDEBTEDNESS
BE IT RESOLVED By the City Council of the City of Chanhassen, Carver and
Hennepin Counties, Minnesota (City) , as follows:
' Section 1. Background: Findings.
' 1.01. The City is authorized by Minnesota Statutes, Section 412.301 (Act)
to issue and sell its general obligation equipment certificates of indebtedness
(Certificates) to provide funds for the purchase of items of capital equipment
having a useful life at least as long as the term of the Certificates. The Act
' permits the City Council to sell the Certificates on such terms and conditions
as found desirable by the City Council.
' 1.02. It is found and determined that the following items of capital
equipment (Equipment) have been or will be purchased by the City in the fiscal
year 1991.
' Estimated 1991 Expenditures •
Dump Truck, Plow & Sander $ 70,000
' (Replace #101)
3/4 Ton 4 x 4 Pickup 17,000
(Replace #305) _
3/4 Ton Pickup 14,000
' (Replace #204)
Brush Chipper 16,000
60 HP Mowing Tractor $25,000
' (Replace Allis: Trade
in Tractor, Mower &
Snowblower) - 6,000 19,000
' Side Mount Flail Mower 8,500
Toro Mower 50,000
Replace Engineer's Sedan 17,000
' Replace Administrator's 19,000
Station Wagon
Reserve - Large Rescue 45,000
Radios 4,500
' Total $280,000
' 1.03. It is found and determined that it is in the best financial inter-
ests of the City that the purchase of the Equipment be financed by the issuance
and sale of Certificates as provided by the Act.
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1.04. The City will, therefore, issue and sell Certificates in the total
principal amount of $280,000 to finance the Equipment costs.
1.05. It is found and determined that there exists within General Fund 101
(Fund) adequate sums to purchase the Certificates hereby authorized. The City
is authorized by Minnesota Statutes, Sections 471.56 and 475.66 to sell the
Certificates to the Fund and the City is authorized by those sections to pur-
chase the Certificates as an investment of the Fund.
1.06. It is found and determined that the principal amount of the Certif- '
icates to be issued and sold pursuant to the resolution does not exceed 0.25% of
the market value of taxable property in the City.
Sec. 2. Issuance and Sale of Certificates.
2.01. The Certificates will be issued by the City and purchased by the 1
Fund. The Certificates will be in the form of a single typewritten Certificate
and will mature, bear interest and be subject to redemption and prepayment as
provided in the following form of Certificate:
(Form of Certificate
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
GENERAL OBLIGATION EQUIPMENT CERTIFICATE OF 1991
The City of Chanhassen, Minnesota, a duly organized and existing municipal
corporation in Carver and Hennepin Counties, Minnesota (City) , acknowledges
itself to be indebted and for value received promises to pay to the City of
Chanhassen General Fund 101, $280,000 on December 31, 1992, with interest
thereon from the date hereof •at the annual rate of 5.70% payable at maturity.
The interest hereon and, upon presentation and surrender hereof, the principal
hereof are payable in lawful money of the United States of America by check or
draft by the City Manager, Chanhassen, Minnesota, as Certificate Registrar. For
the prompt and full payment of such principal and interest as the same
respectively become due, the full faith and credit and taxing powers of the City
have been and are hereby irrevocably pledged.
The City may elect to prepay this Certificate in whole or in part on any
day.
This Certificate is issued pursuant to a resolution adopted by the City
Council on , 1991 (the Resolution) , for the purpose of providing
money to defray expenses incurred or to be incurred in purchasing various items
of capital equipment, pursuant to and in full conformity with the Constitution ,
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and laws of the State of Minnesota, including Minnesota Statutes, Section
412.301 and the principal hereof and interest hereon are payable primarily from
ad valorem taxes, as set forth in the Resolution to which reference is made for
a full statement of rights and powers thereby conferred. The full faith and
credit of the City are irrevocably pledged for payment of this Certificate, and
' the City Council has obligated itself to levy additional ad valorem taxes on all
taxable property in the City in the event of any deficiency, which taxes may be
levied without limitation as to rate or amount.
' IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of
Minnesota to be done, to exist, to happen and to be performed preliminary to and
' in the issuance of this Certificate in order to make it a valid and binding
general obligation of the City in accordance with its terms, have been done, do
exist, have happened and have been performed as so required, and that the
' issuance of this Certificate does not cause the indebtedness of the City to
exceed any constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF, the City of Chanhassen, Carver and Hennepin Counties,
' Minnesota, by its City Council, has caused this Certificate to be executed on
its behalf by the facsimile signatures of the Mayor and City Manager and has
caused this Certificate to be dated as of the date set forth below.
' Dated:
CITY OF CHANHASSEN, MINNESOTA
City Manager Mayor
' 2.02. In order to pay the principal of and interest on the Certificate as
the same respectively become due, it is found and determined that the City
Council has heretofore levied a direct irrepealable ad valorem tax (Taxes) in
' the amount of $310,758 on all of the taxable property in the City and that the
Taxes will provide at least 5% in excess of the amount needed to pay such
principal and interest at maturity. The Taxes are pledged to the payment of the
' Certificate and are to be deposited to a special Certificate of 1991 Fund hereby
created for that purpose and no other.
2.03. The proceeds of the Certificate are to be deposited in Equipment
Replacement Fund 209.
Sec. 3. Miscellaneous.
3.01. The Certificate is to be executed on behalf of the City by the Mayor
and City Manager. The Treasurer is authorized and directed to maintain the
Certificate as an investment of the Fund and to apply the purchase price to
Equipment Replacement Fund 209 to pay the cost of the Equipment.
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3.02. The Treasurer is authorized and directed to file a certified copy of
this Resolution to the Carver County Auditor and the Director of Property
Taxation of Hennepin County, and to obtain the certificates required by Minne-
sota Statutes, section 475.63.
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Mayor
Attest: I
City Manager I
CH135-17. I
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