2. Award of Bids, 1990 Refunding Bonds CITYOF _
CHANHASSEN
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690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
' (612) 937-1900 • FAX(612) 937-5739
' MEMORANDUM
TO: Mayor and City Council
' FROM: Don Ashworth, City Manager
DATE: March 5, 1990
SUBJ: Refunding Bonds of 1990
Note: Timing associated with considering this issue has been
' difficult. Market conditions were the driving force, but
establishing meeting times while consummating actions
during a 3-4 week "window" has put us into a position of
' finalizing a sale on the same date that we are analyzing
the merits of such.
' This proposed bond sale could better be labeled "Keep options
open bonds of 1990". This statement is made in light of:
- Existing Property Values: Recognizing the two year delay
' that exists from the time construction is started until
first taxes are paid, the City can reasonably anticipate
overall values of the community increasing in 1991 and 1992
' as a result of 1989 and 1990 construction. This should pro-
vide a reasonable hedge against any inflationary increases
1991/92; and
' - Soft BRA Balances, 1990-92: The Council has asked staff to
continue to explore means by which property taxes could be
reduced. As noted above, new properties coming on-line
' should give us a means by which to continue to increase ser-
vices without creating tax increases. Generally, those
valuation increases have also been sufficient to cover cost
' of living increases. To see property tax decreases, during
time frames of growth is almost impossible. The only way
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Mayor and City Council .
March 5, 1990
Page 2
that such could be accomplished is through the infusion of a
new revenue source. As cities cannot create new types of
taxes and licenses/permits are not to be money generators,
the only reasonable source of new revenues would be through
wealth sharing - a passage of valuation (deletion of speci-
fic parcels within the tax increment district) , or other
direct means of sharing balances (declaration of a surplus
in any one year) .
The proposed refunding was designed to build upon the themes pre-
sented above, i.e. recognizing soft balances in 1991 and 1992,
how can the city best position itself so as to leave its options
open for the time frame of 1993 through 2000. Three computer
models have been prepared to help in this analysis:
- Exhibit 1: This exhibit represents existing conditions.
Using the current projections from the HRA Debt Analysis
Report, Springsted/staff generated potential dollar amounts
which could be released from the district. The first analy-
sis makes the assumption that the release would occur via
eliminating parcels from the district which would have taxes
approximating the amounts shown. The analysis is presented
only for comparative purposes of the various means by which
tax sharing could occur. Good fiscal management would
preclude this alternative from being a true alternative. In
addition, this method, releasing specific parcels represent
a "forever" option and provides no method of escape if an
error is made. For example, if Representative Schreiber
would be effective in eliminating Chanhassen's special tax
treatment (he has attempted to do such in the past) in 1997,
the city would end that year with a $1,600,000 deficit
balance versus the projected $17,000 positive balance.
Worse yet would be the recognition that there is no way out.
Multi-million dollar deficits will continue to occur until
all debts are paid.
The analysis reflects that the city would be in a position
of releasing approximately $28 million to city/county/schools
during the time frame of 1993 through 2003. Only $14
million of this would be seen as 37% of the revenues would
be placed into the fiscal disparities pool. The city would
also lose its current distribution as we would turn from an
industrially starved community to an industrially wealthy
community. Accordingly, the net amount available for city/
county/schools would be $13.738 million.
- Exhibit 2: This exhibit makes the assumption that the
City/HRA do not use surplus balances but in effect put those
into a piggy bank. By the end of 1996, the piggy bank will
be large enough to pay off all existing debt/obligations for
the years 1997 through maturity. Accordingly, no balances
are shown in the years 1997 through 2000. As all debt i
Mayor and City Council
March 5, 1990
' Page 3
would have been paid, the full amount of increment would be
' available for redistribution to the county/school/city. The
aggregate amount of such would be $29 million with the
amount actually received being approximately $15 million.
This is the option which has existed as a goal for many
' years. The option is very conservative, but has the detri-
ment of not producing tax relief for nearly another ten
years.
' - Exhibit 3 : Both Springsted and this office believe that
techniques presented in Exhibit 3 represent a blend of the
objectives desired by the City while still providing the
' greatest number of options. It also maintains a relatively
conservative financial position. The exhibit incorporates
two basic premises - restructuring existing debt so as to
provide greater flexibility in early years together with the
"declaration of surplus" authority currently contained
in state law. As can be seen under the "taxes released"
' row, we are able to consistently increase the level of
surplus while still approximating the total savings pre-
sented in Exhibit 1. The primary benefit is that the amount
available to the city/school/county significantly increases
' to approximately $22 million versus the first models $14
million level. Although debt is being pushed into the 2002
and 2003 time frame (adds cost) , the significant cost
savings of refunding 9% bonds at 6 1/2% allows this factor
to be minor in comparison to the overall $22 million gain to
our citizens.
' Dave MacGillivray will be present Monday evening to present
both the tax impact analysis work as well as bids received. As
noted at the beginning of this memorandum, we have been working
' under two opposing forces - the inability to find a special
meeting date convenient for Council members as well as
federal/state laws which require that this, if approved, has to
' close prior to April 1st (it takes approximately 3 weeks to print
bonds) . Springsted has known from the beginning that if the sale
does not occur, their cost will not be reimbursed.
' I cannot help but make one last observation as it deals with the
city's general tax policies during the past years. Our ability
to release $22 million of new tax dollars during the next ten
' year period of time is very realistic. The amounts shown do not
include or recognize that the Hennepin County Tax Increment
District and McGlynn Tax Increment District will also cease
' during this time frame. Conservatively, $30 million is a more
logical number available to our city/county/schools. These num-
bers are not new with the only difference being that we are now
approaching the time to make them a reality. I think many cities
' (including some very close to us) have seen similar types of
balances and made determinations to use those solely for local
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Mayor and City Council '
March 5, 1990
Page 4
purposes. I cannot speak to their decisions. However, I do
believe that the tax policies that we are developing have the
potential of being both altruistic as well as preserving the
city's ability to directly benefit our people. Specifically,
during the past 3 years I have shared with both the school
district and the County Board generalized information regarding
our tax increment district. Although they have not reviewed the
specific figures as presented here, they are fully knowledgeable
of the fact of the effects of fiscal disparities and other
Minnesota tax policies. To the extent that they would be able to
receive all or a slightly higher portion of the amounts that they
would have received through typical distribution policy, i.e. the
$14 million dollar amount, they are more than supportive of
seeing Chanhassen develop fiscal policies which would also allow
our community to benefit from our creativeness. I do not know if
that means purchasing the land for a new middle school, a com-
munity center now or in the future, etc. ; but I do believe we have
established the financial ability to be able to carry a heavy
load of the school/county's future building programs while still
preserving options for our community. I believe that both the
current and previous Council/HRA's should be congratulated for
getting us to this point in time.
°-414)1A*41
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TAX IMPACT ANALYSIS
Tax Collect. @ 95 X RELEASE OF PARCELS EARLY Appr'd: 28-Feb-90 .
Int Earnings @ 7 X ASSUMING NO ADDL'T DEBT & W/0 REFUNDING Preprd: 11:13 PM
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Total
BEG. BALANCE m 2, 193 1,495 667 452 260 17 203 208 32 34 37
REVENUE Ref
Tax Incrmt 1&2 2,869 2,955 3,751 3,826 3,903 3,983 4, 102 4,226 4,352 4,483 4,617
Del. Taxes 129 76 39 25 10 8 14 8 2 2 3
Interest
Rent Income
Sale of Prop.
TOT. REV. m 2,998 3,031 3,790 3,851 3,913 3,991 4, 116 4,234 4,354 4,485 4,620
EXPENDITURES
HRA Admin. 5 157 162 167 172 177 182 187 193
Cap. Exp's &
Dew. Incent. 4 284 266 184 166 134 127 119 111
Bond Pmyt's 6 1,955 2,051 2,154 2, 131 2, 194 1,596 1,345 1,206 200
Loan Program
TOTAL EXP. m 2,396 2,479 2,505 2,468 2,505 1,904 1,652 1,510 200
OTHER ADJUST'S
Taxes Released 1,300 1,380 1,500 1,575 1,650 1,900 2,460 2,900 4,152 4,483 4,617 27,917
Prop Refunding
ENDING BAL. m 1,495 667 452 260 17 203 208 32 34 37 39
KKK*TAX IMPACTmmmm
Taxes Avail to Sch,
City & County 469 519 595 642 690 847 1,200 1,477 2,266 2,474 2,559 13,738
m AMTS SHOWN ARE IN MILLIONS
6x4; ;71 dz.
TAX IMPACT ANALYSIS
Tax Collect. @ 95 X RELEASE OF PARCELS EARLY Appr'd: 28-Feb-90
Int Earnings @ 7 X ASSUMING NO ADDL'T DEBT & Wf0 REFUNDING Preprd: 11:13 PM
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Total
BEG. BALANCE x 2, 193 2,842 3,542 5,090
REVENUE Ref
Tax Incrmt 1&2 2,869 2,955 3,751 3,826 3,903 3,983 4, 102 4,226 4,352 4,483 4,617
Del. Taxes 176 223 302 178
Interest
Rent Income
Sale of Prop.
TOT. REV. x 3,045 3,179 4,053 4,004 3,903 3,983 4, 102 4,226 4,352 4,483 4,617
EXPENDITURES
HRA Admin. 5 157 162 167 172 177 182 187 193
Cap. Exp's &
Dev. Incent. 4 284 266 184 166 134 127 119 111
Bond Pmyt's 6 1,955 2,051 2, 154 2, 131 2, 194 1,596 1,345 1,206 200
Loan Program
TOTAL EXP. x 2,396 2,479 2,505 2,468 2,505 1,904 1,652 1,510 200
OTHER ADJUST'S
Taxes Released 3,903 3,983 4, 102 4,226 4,352 4,483 4,617 29,666
Prop Refunding
ENDING BAL. x 2,842 3,542 5,090
xx xTRX IMPACTxxxx
Taxes Avail to 5ch,
City & County 2, 109 2,159 2,234 2,312 2,392 2,474 2,559 14,840
x AMTS SHOWN ARE IN MILLIONS
1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 E M 1111 1111 1111
- 1 I 1 1 1 1 1 1 1 1 11111 1 1 1 1 1 1 -
, xh:,b ;f -/ 3
TAX IMPACT ANALYSIS Appr'd:
Tax Collect. @ 95 % RELEASE OF SURPLUS BALANCES Preprd: 28-Feb-90
Int Earnings @ 7 X ASSUMING NO ADDL'T DEBT & W/REFUNDING 11:13 PM
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Total
BEG. BALANCE x 2,193 1,443 398 60 339 406 909 761 229 940 536
REVENUE Ref
Tax Incrmt 1&2 2,869 2,869 3,751 3,826 3,903 3,983 4, 102 4,226 4,352 4,483 4,617
Del. Taxes 127 64 16 14 26 46 58 35 41 52 20
Interest
Rent Income
Sale of Prop.
TOT. REV. x 2,996 2,933 3,767 3,840 3,929 4,029 4, 160 4,261 4,393 4,535 4,637
EXPENDITURES
HRA Admin. 5 157 162 167 172 177 182 187 193
Cap. Exp's &
Dew. Incent. 4 284 266 184 166 134 127 119 111
Bond Pmyt's 6 1,955 2,051 2, 154 2,131 2, 194 1,596 1,345 1,206 200
Loan Program
TOTAL EXP. x 2,396 2,479 2,505 2,468 2,505 1,904 1,652 1,510 200
OTHER ADJUST'S
Taxes Released 1,350 1,500 1,600 1,800 2, 100 2,400 2,800 3,100 3,300 3,500 3,700 27,150
Prop Refunding -708 -743 -778 -143 182 182 1438 1437
ENDING BAL. x 1,443 398 60 339 406 909 761 229 940 536 36
xxxxTAX IMPACTxxxx
Taxes Avail to Sch,
City & County 1,350 1,500 1,600 1,800 2, 100 2,400 2,800 3, 100 1,729 1,855 1,981 22,215
x AMTS SHOWN ARE IN MILLIONS
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I Recommendations
IFor
I City of Chanhassen, Minnesota
$2,690,000
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General Obligation Tax Increment Refunding Bonds,
I Series 1989A
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I Study No. 3617
SPRINGSTED Incorporated
February 20, 1990
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'"" SPRINGSTED
trAl PUBLIC FINANCE ADVISORS
85 East Seventh Place, Suite 100
' Saint Paul, MN 55101-2143
(612)223-3000
Fax:612-223-3002
' February 20, 1990
' Mayor Donald Chmiel
Members, City Council
' Mr. Donald Ashworth, Manager
Chanhassen City Hall
690 Coulter Drive
Chanhassen, MN 55317
Re: Recommendations for the Issuance of $2,690,000 General Obligation Tax Increment
Refunding Bonds, Series 1990A
We respectfully request your consideration of our recommendations for the issuance of
' these bonds. Proceeds of the bond issue will be used to refund the August 1, 1995 through
August 1, 1999 principal outstanding on the City's General Obligation Refunding Tax
Increment Bonds of 1983. Those bonds were issued on July 20, 1983 at a true interest cost
' of 9.32%. The callable bonds being refunded at this time carry interest rates of 9.75-10%.
The interest rates of the new refunding bonds are estimated to be approximately 6.8%.
The purpose of this refunding is not specifically to reduce the interest cost on the
' outstanding bonds. The outstanding bonds are repaid from tax increment income from the
City's pre-1979 tax increment district of the HRA. In 1988, the Legislature put certain
restrictions on pre-1979 tax increment districts, requiring that except for debt service on
' bonds issued prior to April 1, 1990, no increment could be received after April 1, 2001.
The purpose of this bond issue is to refund the existing debt service payments on the
callable bonds from February 1, 1996 through August 1, 1999, reducing the debt service
' payments in these years, and then extending the bond issue two more years in order to
collect increment income in 2001 and 2002. This refunding will extend the life of the district
one additional year, as the City has other bond issues with terms extending to 2001. The
refunding results in approximately $2,000,000 additional available incremental income during
years 1996 through 2000. The extension of debt increases the overall interest cost by
approximately$870,000.
' It is our understanding the City's intent with this refunding is to declare the additional
available increment as surplus, asking the County Auditor to redistribute the surplus to the
other taxing jurisdictions for direct property tax reductions. This results in surpluses for
redistribution of approximately $700,000-800,000 per year in calendar years 1996 through
1998. This is shown in Appendix I. This is a more efficient method of generating property
tax reductions than to wait until the existing bonds mature or sufficient revenues are available
' to call the bonds, then closing the district. As long as the district is open a fiscal disparities
contribution from the commercial/industrial development is not required since it is a pre-1979
HRA district. Once the district closes, all of those properties subject to fiscal disparities
' Indiana Office: Kansas Office: Wisconsin Office:
135 North Pennsylvania Street 6800 College Boulevard 500 Elm Grove Road
Suite 2015 Suite 600 Suite 101
Indianapolis, IN 46204-2498 Overland Park, KS 66211-1533 Elm Grove,WI 53122-0037
' (317)684-6000 (913)345-8062 (414) 782-8222
Fax: 317-684-6004 Fax: (913)345-1770 Fax:414-782-2904
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City of Chanhassen, Minnesota
February 20, 1990
would begin making their contribution to the fiscal disparities pool. This could amount to
' approximately a 30%loss of taxable value of the district going to the fiscal disparities pool as
opposed to directly to the taxing jurisdictions.
This loss of value (tax base) will occur at the termination of the district, which is delayed with
this refunding. Without the refunding, the current district would expire on April 1, 2001 with
the last captured increments coming from calendar year 2000. With the refunding, the final
' increment will be received in calendar year 2002 in amounts sufficient to pay the existing
debt service. After April 1, 2001, a portion of the district will be eliminated and only enough
increment to meet those remaining debt service payments will be available to the City.
We also recommend the City attempt to get the bond issue insured and we have contacted
two different insurance companies for reviewing the issue. Insurance will enhance the
marketability of the bonds and result in a more marketable and efficient issue. The insurance
' premium is included in the bond issue sizing.
We are recommending the use of crossover',
refunding bonds as the method for refunding
the 1983 issue. The reason is that we are refunding only the callable bonds since there is no
' present value benefit in refunding non-callable bonds, and it reduces or eliminates any
financial contribution to be made by the City toward the refunding. This refunding method
permits the City to retain the cash balance of the district. The refunding process and
assumptions are shown in Appendix II of these recommendations.
We are recommending a process referred to as competitive negotiation be used by the City
' in order to expedite the sale and eliminate certain publication requirements. We anticipate
receiving the same competitive bids as one would get with a regular published notice of sale.
We recommend that bonds be offered for sale on Monday, March 5 with bids to be received
in the offices of Springsted Incorporated at 11:00 A.M. The Council would act upon the
' award that same evening. Bonds would be delivered and the entire transaction completed
prior to April 1, 1990 in order to assure compliance with the 1988 Legislative act.
' Respectfully submitted,
' SP-INGST D Incorporated
' mmr
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1 .' APPENDIX I
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IICity of Chanhassen, Minnesota
G.O. Tax Increment Refunding Bonds, Series 1990A
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II Existing
g
Debt Debt Reduction
IIService Service In Additional
Calendar Without With Debt Available
Year Refunding Refunding Service Increment
1 (1) (2) (3) (4) (5)
1990 339, 383 339,383 0 0
I 1991 714,565 714,565 0 0
1992 734,725 734,725 0 0
1993 778, 125 778, 125 0 0
1994 825,000 825,000 0 0
1 1995 850,000 850,000 0 0
1996 890,000 182,270 707,730 707,730
1997 925,000 182,270 742,730 742,730
I 1998 960,000 182,270 777,730
142,730 777,730
1999 325,000 182,270 142,730
2000 182,270 (182,270) (182,270)
II 2001 182,270 (182,270) (182,270)
2002 1,438,395 (1,438,395) 0
2003 1,437,260 (1,437,260) 0
IITotals 7,341,798 8,211,073 (869,275)
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I Note: The additional available income in column (5) is the annual benefit
received by the refunding.
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APPENDIX II
ICITY OF CHANHASSEN, MINNESOTA
I Full Crossover Advance Refunding Of General Obligation
Tax Increment Refunding Bonds Of 1983
Preliminary Notes and Assumptions
1. This refunding feasibility represents a full "crossover advance refunding. A crossover
I refunding works only with the callable outstanding bonds resulting in a smaller
refunding issue and eliminates the necessity of any significant contribution of available
City funds toward the refunding.
I2. The proceeds from the sale of crossover refunding bonds are placed in an escrow
account invested at interest rates not exceeding the interest rate on the refunding
bonds. Those investment earnings are applied to the interest expense of the refunding
I issue (and since they are at approximately the same yield will be approximately self-
supporting) and is also used to pay the principal on the called refunded bonds at the
call date of the refunded bonds. The City will continue to be responsible for the debt
I service payments on the refunded bonds until the call date at which time it crosses over
and begins making debt service payments on the refunding bonds.
3. The purpose of the refunding is to extend the life of a pre-1979 tax increment district
I beyond the 2001 termination date. By extending the debt beyond that point the City
can free up approximately $2.4 million of existing debt service payments between
February 1, 1996 and August 1, 1999. This requires that the refunding issue extends
I beyond the refunded bonds through February 1, 2003. The removal of that$2.4 million
of debt service payments permits the City to recapture the tax increment revenues
which would have been used to pay that debt service by now permitting them to be
Iused for other valid purposes.
4. The following assumptions were used in the analysis:
Ia. The refunding bonds must settle by March 29, 1990.
b. The bonds will be insured and the City will pay the estimated $17,000 premium
Iout of bond proceeds.
c. Neither the original issue nor the refunding issue are private activity bonds.
I d. Since the original issue exceeded $5,000,000 there is no materially higher yield
permitted on the escrow investments.
I 5. The City owns a $200,000 portion of the August 1, 1995 principal payment on the
refunded bonds. Since those bonds are not callable they are not included in the
refunding and the City will continue to own them.
I6. Refunding bonds are structured in nearly equal annual principal and interest
installments in 2002 and 2003.
I 7. We have used serial bonds in the refundings as opposed to capital appreciation bonds
since it provides for a more efficient and productive escrow account. If CAB's were
used, the earnings in the escrow account would accumulate without being applied to
.I any debt service repayment resulting in substantially large cash balances. There are
limitations on the ability to reinvest those funds.
I 11-1
CITY OF CHANHASSEN, MINNESOTA
' Full Crossover Advance Refunding Of General Obligation
Tax Increment Refunding Bonds Of 1983
Preliminary Notes and Assumptions
(Part 2)
•
' 1. Funds from the City are not required since the debt service funds directly attributable to
this issue are minimal and may be required for making debt service payments between
now and the call date since the debt service in that period will not be changed.
' 2. Dave Kennedy at Holmes and Graven has initially ruled that placing the accreted value
of the callable bonds in the escrow account on the call date is not in violation of federal
laws which prohibits the escrow from paying interest on the refunding bonds in a
' crossover.
3. No rating fee has been assumed since it is assumed that the issue will be insured by
MBIA. Also, MBIA cannot break out the rating fee portion of their fee so the full
insurance fee is include in the yield calculation.
4. Dave Kennedy at Holmes and Graven has initially agreed that there will be no
' transferred proceeds since this is a crossover and the original escrow expires prior to
the crossover date. Also, since this is a crossover, no savings or average maturity test
is required.
' 5. It is assumed that the bonds will be dated March 1, 1990, sold on March 5, 1990, and
will settle on March 29, 1990 and the issue will be negotiated.
' 6. The issue size will be left variable in any maturity by a total amount not to exceed
$50,000.
' 7. The calculations will be based on our accreted value calculations on the refunding
bonds and not by the original documents since the difference is only a few dollars and
since we need to use accreted values which the original documents do not disclose on
each date. The escrow balance will be left slightly larger to avoid any payment
problems as a result of the slight discrepancy.
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' THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE
ON THEIR BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
$2,690,000*
CITY OF CHANHASSEN, MINNESOTA
' GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1990A
' Proposals for the Bonds will be received by SPRINGSTED Incorporated on behalf of the City on
Monday, March 5, 1990, until 11:00 A.M., Central Time, at the offices of SPRINGSTED
Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, MN 55101-2143. 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
The Bonds will be dated March 1, 1990, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing February 1, 1991. Interest will
be computed on the basis of a 360-day year of twelve 30-day months and will be rounded
' pursuant to rules of the MSRB. 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.
' The Bonds will mature February 1 in the years and amounts as follows:
2002 $1,300,000 2003 $1,390,000
* The City reserves the right, after proposals are opened and prior to award, to increase or
reduce the principal amount of the Bonds offered for sale. Any such increase or reduction
' will be in a total amount not to exceed $50,000 and will be made in multiples of$5,D00 in
any of the maturities. In the event the principal amount of the Bonds is increased or
reduced, any premium offered or any discount taken will be increased or reduced by a
percentage equal to the percentage by which the principal amount of the Bonds is
increased or reduced.
OPTIONAL REDEMPTION
' The City may elect on February 1, 2001, and on any day thereafter, to prepay Bonds due on or
after February 1, 2002. Redemption may be in whole or in part and if in part, in inverse order of
' maturity and within a maturity by lot as selected by the registrar. All prepayments shall be at a
price of par and accrued interest.
SECURITY AND PURPOSE
The Bonds will be general Bonds 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 tax
increment income from the City's Tax Increment Financing District No. 1. The proceeds will be
used to refund in advance of their stated maturity at their accreted values as of August 1, 1995
all of the capital appreciation bonds maturing from February 1, 1996 through August 1, 1999 of
the City's General Obligation Refunding Tax Increment Bonds of 1983, dated August 1, 1983.
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TYPE OF PROPOSALS
Proposals shall be for not less than $2,655,030 and accrued interest on the total principal
amount of the Bonds. A certified or cashier's check in the amount of $26,900, payable to the
order of the City, shall, within 24 hours after award, be delivered to SPRINGSTED Incorporated,
the City's Financial Advisor. 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 after the time set for receiving proposals unless the
' meeting of the City scheduled for award of the proposals 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 to the proposal providing 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.
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
Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers
shall be paid by the purchaser.
SETTLEMENT
' Within 40 days following the date of their award, the Bonds will be delivered without cost to the
purchaser at a place mutually satisfactory to the City and the purchaser. Delivery will be
subject to receipt by the purchaser of an approving legal opinion of 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
the City by reasons of the purchaser's non-compliance with said terms for payment.
' 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 as required by Rule 15c2-12 of the Securities and Exchange Commission. For
copies of the Official Statement and the Official Bid Form 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.
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The Official Statement,when further supplemented by an addendum or addenda specifying the
' maturity dates, principal amounts and interest rates of the Bonds, together with any other
information required by law, shall constitute a "Final Official Statement" of the City with respect
to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any
underwriter or underwriting syndicate submitting an Official Bid Form 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
110 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 executing and delivering an Official Bid Form with
respect to the Bonds agrees thereby that if its bid is accepted by the City (i) it shall accept such
' designation and (ii) it shall enter into a c-^tractual relationship with all Participating
Underwriters of the Bonds for purposes of assuring the receipt by each such Participating
Underwriter of the Final Official Statement.
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