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1d Sale of 2004 Bond IssuesCITYOF CHANHASSEN 7700 kaarkel Boulevard PO Box 147 Ci~anhassen, MN 55317 Administration Phone: 952 227.1100 Fax: 952227 1110 Phone: 952227.1180 Fax 952 2271190 Engineering Phone: 9522271160 Fax: 9522271170 Finance Park & Recreation Fax: 9522271110 Recreation Center 2310 Coulter Boulevard Phone: 9522271400 Fax: 9522271404 Planning & Natural Resources Phone: 952 2271130 Fax: 9522271110 Public Works 1591 Park Road Phone: 952 2271300 Fax: 9522271310 Senior Center Fax 952227.1110 Web Site wwwci.cl~anhassena?,n.us MEMORANDUM TO: FROM: DATE: Mayor City Council Bruce M. DeJong, Finance Director June 23, 2004 SUBJECT: Call for Sale for $2,115,000 General Obligation Improvement Bonds, and $7,500,000 General Obligation Water Revenue Bonds - Series 2004B, and $1,170,000 General Obligation Tax Increment Refunding Bonds - Series 2004C The purpose of this memo is to request the City Council to call for the sale of bonds on July 12 to finance special assessment road projects, equipment purchases, city hall improvements, water treatment and SCADA improvements for the water and sewer utility funds, and refund tax increment obligations. The City has many projects that were included in the 2004-2008 Capital Improvement Program that were scheduled to be financed by bonding. Staff is recommending that we proceed with a bond sale now while interest rates are still low. Background The bonds are being sold in three series. The first series is to cover the costs of all improvements that are being done for the city itself, the second series is to cover the enterprise debt, and the third is to refinance TIF notes. The improvement bonds cover three different types of projects. $640,000 funds the 04-01 Residential Street project which is financed for ten years. This is a special assessment project that finances fairly large balances for residential homeowners. Because of the high balances, this portion is extended out ten years, rather than the more typical eight years on assessment projects. The $370,000 04- 02 MSA Street project is paid off over eight years. The two other types of projects covered by these bonds are $766,000 for equipment and $293,000 for city hall remodeling. These projects can only have a five year life according to state statute. The remaining costs that total up to the $2,115,000 are for the broker discount and issuance costs. The City of Chanhassen A growing community 'with clean lakes, quality, schools a charminq do,^'nto,;vn thr vina businesses vN,'ind~ ~q trails and bead%i Barks A qreat [:,lace t,,)Ivo ,,~,'crk and [)lay Call for Sale 2004A, 2004B and 2004C Bond June 23, 2004 Page 2 The 2004B series funds the costs for a replacement SCADA system for the wells, pumps, lift stations, and water towers in our utility funds. This also finances a significant portion of the cost of a water treatment plant. Whether we need to finance more costs depends on the final sizing and siting of the treatment plant. The 2004C series buys out two developer obligations in our TID #4, our Entertainment TIF district. These obligations carry a 9% interest rate, so there will be significant savings over the remaining 18 years of the bonds. These bonds have a call provision that will allow us to pay them off after nine years depending on the additional increment that will be received from the Market Street Station development. Recommendation City staff recommends that the City Council call for the sale of bonds as outlined in the attached resolutions. Enclosures: Pre-Sale Reports Resolutions City of Chanhassen, Minnesota Pre-Sale Report June 28, 2004 Proposed Issue: $2,115,000 G.O. Improvement Bonds, Series 2004A Purpose: The bonds will finance four projects: 1) Residential street improvements (Project 04-01) 2) MSA street improvements (Project 04-02) 3) $766,000 of equipment 4) $293,000 for the renovating City Hall Term/Call Feature: 10.5 year bonds, callable in 2009 for maturities 2010 and after (5 years). Funding Sources: Special assessments, property tax levy, and cash from the sewer and water utility funds. Discussion Issues: The portion of the bonds to be repaid with special assessments (approximately $570,000) will have a 10.5 year term to match the term of the assessments. The remainder of the bonds will be repaid within six years. Schedule: Pre-Sale Review: Distribute Official Statement: Rating Agency Interview Bond Sale: Estimated Closing Date: June 28, 2004 Week of June 28, 2004 Week of July 5, 2004 July 12, 2004 August 10, 2004 Attachment: Resolution authorizing Ehlers to proceed with bond sale Ehlers Contacts: Financial Advisors: Bond Analysts: Bond Sale Coordinator: Mark Ruff (651)697-8505 Jessica Cook (651)697-8546 Diana Lockard (651) 697-8534 Debbie Holmes (651) 697-8536 Connie Kuck (651) 697-8527 The Official Statement for this financing will be mailed to the Council Members at their home address for review prior to the sale date. EHLERS & ASSOCIATES NC Council Member Resolution No. introduced the following resolution and moved its adoption: Resolution Providing for the Sale of $2,115,000 G.O. Improvement Bonds, Series 2004A Bo WHEREAS, the City Council of the City of Chanhassen, Minnesota, has heretofore determined that it is necessary and expedient to issue the City's $2,115,000 G.O. Improvement Bonds, Series 2004A (the "Bonds"), to finance public improvement projects 04-01 and 04-01, to purchase equipment, and finance improvements to City Hall; and; WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is therefore authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); NOW, THEREFORE, BE IT RESOLVED by the City Council of Chanhassen, Minnesota, as follows: 1. Authorization; Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale of the Bonds. 2. Meeting; Proposal Opening. The City Council shall meet at City Hall on July 12, 2004, for the purpose of considering sealed proposals for and awarding the sale of the Bonds. o Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers 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 resolution was duly seconded by Council Member and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereofi and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. Dated this __ day of , __ City Clerk Prepared by Ehlers & Associates, Inc. City of Chanhassen, Minnesota Pre-Sale Report June 28, 2004 Proposed Issue: Purpose: Term/Call Feature: Funding Sources: Discussion Issues: $7,500,000 G.O. Water Revenue Bonds, Series 2004B The bonds will finance a new water treatment plant. 20 year bonds, callable in 2013 for maturities 2014 and after (9 years). Water revenues (user fees and connection fees). The City will issue less than $10 million of tax-exempt debt during 2004. This will make the water revenue bonds and the improvement bonds "bank qualified" and achieve the most competitive interest rates. Schedule: Pre-Sale Review: Distribute Official Statement: Rating Agency Interview Bond Sale: Estimated Closing Date: June 28, 2004 Week of June 28, 2004 Week of July 5, 2004 July 12, 2004 August 10, 2004 Attachment: Resolution authorizing Ehlers to proceed with bond sale Ehlers Contacts: Financial Advisors: Bond Analysts: Bond Sale Coordinator: Mark Ruff (651)697-8505 Jessica Cook (651)697-8546 Diana Lockard (651) 697-8534 Debbie Holmes (651) 697-8536 Connie Kuck (651) 697-8527 The Official Statement for this financing will be mailed to the Council Members at their home address for review prior to the sale date. EHLERS & ASSOCIATES INC Council Member Resolution No. introduced the following resolution and moved its adoption: Resolution Providing for the Sale of $7,500,000 G.O. Water Revenue Bonds, Series 2004B mo Bo WHEREAS, the City Council of the City of Chanhassen, Minnesota, has heretofore determined that it is necessary and expedient to issue the City's $7,500,000 G.O. Water Revenue Bonds, Series 2004B (the "Bonds"), to finance a water treatment plant; and; WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is therefore authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); NOW, THEREFORE, BE IT RESOLVED by the City Council of Chanhassen, Minnesota, as follows: 1. Authorization; Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale of the Bonds. 2. Meeting; Proposal Opening. The City Council shall meet at City Hall on July 12, 2004, for the purpose of considering sealed proposals for and awarding the sale of the Bonds. Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers 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 resolution was duly seconded by Council Member and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. Dated this __ day of ., __ City Clerk Prepared by Ehlers & Associates, Inc. City of Chanhassen, Minnesota Pre-Sale Report June 28, 2004 Proposed Issue: $1,170,000 Taxable G.O. Tax Increment Refunding Bonds, Series 2004C Purpose: The bonds will refinance two tax increment notes. One note is held by Chanhassen Properties at a 9% interest rate. The second note is a held by Frontier, also at a 9% rate. Term/Call Feature: 18 year bonds, callable in 2013 for maturities 2014 and after (9 years). Funding Sources: Tax increment revenues from The Entertainment District. Discussion Issues: In 1996 the City agreed to use tax increment to assist with the movie theater renovation and exterior improvements to the Frontier Building. The developers of those projects hold notes that bear an interest rate of 9%. The City has the opportunity to prepay the notes and issue taxable bonds in their place. The new bonds will have an estimated average coupon of 6%. The net present value of the interest savings over the next 18 years is expected to be $215,000. Schedule: Pre-Sale Review: Distribute Official Statement: Rating Agency Interview Bond Sale: Estimated Closing Date: June 28, 2004 Week of June 28, 2004 Week of July 5, 2004 July 12, 2004 August 10, 2004 Attachment: Debt Service Comparison Resolution authorizing Ehlers to proceed with bond sale Ehlers Contacts: Financial Advisors: Bond Analysts: Bond Sale Coordinator: Mark Ruff (651)697-8505 Jessica Cook (651)697-8546 Diana Lockard (651) 697-8534 Debbie Holmes (651) 697-8536 Connie Kuck (651) 697-8527 The Official Statement for this financing will be mailed to the Council Members at their home address for review prior to the sale date. EHLERS & ASSOCIATES INC Council Member Resolution No. introduced the following resolution and moved its adoption: Resolution Providing for the Sale of $1,170,000 Taxable G.O. Tax Increment Refunding Bonds, Series 2004C WHEREAS, the City Council of the City of Chanhassen, Minnesota, has heretofore determined that it is necessary and expedient to issue the City's $1,170,000 Taxable G.O. Tax Increment Refunding Bonds, Series 2004C (the "Bonds"), to refinance the $540,000 Taxable Chanhassen Properties Note, Series 8/1/1996 and the $360,000 Taxable Frontier Note, Series 8/1/1996 of the City; and; WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is therefore authorized to solicit proposals in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); NOW, THEREFORE, BE IT RESOLVED by the City Council of Chanhassen, Minnesota, as follows: 1. Authorization; Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale of the Bonds. 2. Meeting; Proposal Opening. The City Council shall meet at City Hall on July 12, 2004, for the purpose of considering sealed proposals for and awarding the sale of the Bonds. Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers 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 resolution was duly seconded by Council Member and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. Dated this __ day of , __ City Clerk Prepared by Ehlers & Associates, Inc.