1. App Resol Defeasing Tx Bonds
CITY OF
CHANHASSEN
690 City Ctnt" Drive, PO Box 147
ChanhlJSJen, Minnesota 55317
Phon, 612.937.1900
Gm"aI Fax 612.937.5739
Enginttring Fax 612.937.9152
Publie Saftty Fax 612.934.2524
Wéb www.ci.chanhassen.mn.us
L
MEMORANDUM
TO: Mayor
City Council
FROM:
SPß
Scott A. Botcher, City Manager
DATE:
December IS, 1999
SUBJ:
Defeasance Issuance On Agenda
As mentioned at the last council meeting, before you this evening is a resolution
for your consideration authorizing defeasance of certain proceeds to be applied
toward specific principal and interest obligations for previously issued debt.
The agreements before you contemplate defeasing a single maturity of a specific
issue. As I mentioned Monday evening, staff is in the process of contemplating
fully the city's options in this regard and be aware that in all probability we will
come before you on Monday evening with some altered figures from what is
indicated in the documentation before you. This is done because it may be in
our best interests to defease more debt than indicated in the documentation.
However, before we make such a commitment, I want to make sure that we have
considered fully all the angles of the issue.
,
"
Ifwe are able to get this monetary recommendation out to you prior to the
weekend, we will make every effort to do so. We expect to make a full
presentation to the council Monday evening on this issue so that everyone is
onboard and comfortable with what is being contemplated. If you have any
questions before then about defeasance or anything specific to this issue, please
contact me directly. Thank you.
g:\user\scottb\defeasance.doc
Th, Cir¡ ofChanhasstll. A f/"Owin~ communir¡ with dtan lakes, aualir¡ sehooli, a eharmin~ downtown, thrivin~ businmes, and btautiful parks, A V'tat Place to liv" work, andpla~
Extract of Minutes of Regular Meeting
of the City Council of the City ofChßnhß!lsen,
Carver and Hennepin Counties, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota, was held on Monday, December 20, 1999,
commencing at 4:30 p.m.
The following members were present:
and the following were absent:
...
...
...
The following resolution was presented by Member
adoption:
who moved its
RESOLUTION NO._
RESOLUTION PROVIDING FOR THE
DEFEASANCE AND REDEMPTION OF CERTAIN
TAXABLE GENERAL OBLIGATION TAX
INCREMENT BONDS, SERIES 1993A
Be it resolved by the City Council of the City of Chanhassen, Carver and Hennepin
Counties, Minnesota (City) as follows:
Section I. Background: findinl!s
1.01. The City has heretofore issued and sold its $5,675,000 Taxable General Obligation
Tax Increment Bonds, Series 1993A, dated March I, 1993, of the City, of which $2,700,000 in
principal amount is outstanding and $1,475,000 of which principal amount is subject to
redemption and prepayment on February I, 2000.
1.02. The Council has investigated the facts and finds and determines that it is in the best
financial interests of the City that certain of the Bonds maturing in the year 200 I be prepaid and
redeemed on February I, 2000.
1.03. The Council further finds and determines that it is in the best financial interests of
the City that the funds necessary to redeem the 200 I maturities of the Bonds be deposited in
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escrow (Escrow Account) in the year 1999 and invested in authorized investments which
deposits and investments will produce adequate funds to pay the principal of and interest on
Bonds so redeemed and prepaid.
1.04. Ehlers and Associates, financial advisers to the city, have prepared or will prepare
a list of authorized investments to be purchased for the purpose of funding the Escrow Account.
A form of escrow agreement (Escrow Agreement) between the City and Firstar Bank, N.A. as
agent (Escrow Agent) has been reviewed by the Council and is on file with the City Manager.
1.05. The amount of funds necessary to fund the Escrow Account is irrevocably
appropriated to the Escrow Account.
Sec. 2. Authorizations: miscellaneous.
2.01. The form of the Escrow Agreement is approved. The Mayor and City Manager are
authorized and directed to execute and deliver the Escrow Agreement on behalf of the City prior
to December 31, 1999.
2.02. Ehlers and Associates are authorized and directed to purchase on behalf of the City
authorized investment securities for deposit in the Escrow Account in the amount necessary to
properly fund the Escrow Account.
2.03. The principal amount of$ of the Bonds maturing in the year 2001 are
called for redemption and prepayment on February 1,2000 in accordance with the terms of the
Escrow Agreement and the Bonds.
Mayor
ATTEST:
City Manager
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,~
The motion for the adoption of the foregoing resolution was dilly seconded by Member
. and upon vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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STATE OF MINNESOTA )
)
COUNTIES OF CARVER- )
AND HENNEPIN )
)
CITY OF CHANHASSEN )
I, the undersigned, being the duly qualified and acting City Manager of the City of
Chanhassen, Minnesota, hereby certify that I have carefully compared the attached and foregoing
extract of minutes of a regular meeting of the City Council of the City held on Monday,
December 20, 1999, with the original minutes on file in my office and the extract is a full, true
and correct copy of the minutes, insofar as they relate to the defeasance and redemption of
$5,675,000 Taxable General Obligation Tax Increment Bonds, Series 1993A of the City.
WITNESS My hand as City Manager and the corporate seal ~the City this _ day of
. 1999. ~~
~..
City~'
City ~fëhanhassen, Minnesota
(SEAL)
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.~
DRift
DEFEASANCE ESCROW AGREEMENT
Taxable General Obligation Tax Increment Bonds, Series 1993A
City of Chanhassen, Minnesota
THIS AGREEMENT is made and executed by and between the City of Chanhassen, Carver
and Hennepin Counties, Minnesota (City), and Firstar Bank N.A., St. Pau1, Minnesota, a banking
corporation whose deposits are insured by the Federal Deposit Insurance Corporation (Escrow
Agent):
WITNESSETH: That the parties hereto recite and, in consideration of the mutual covenants
contained herein, covenant and agree as follows:
1. The City in accordance with a resolution adopted by its governing body on
December 20, 1999 entitled "Resolution Providing For the Defeasance and Redemption of Certain
Taxable General Obligation Tax Increment Bonds, Series 1993A" (Resolution and Defeased
Bonds) a copy of which has been filed with the Escrow Agent, has authorized (i) the execution and
delivery of this Agreement, (ii) the purchase and deposit of certain securities with the Escrow
Agent, and (iii) the redemption prior to maturity of certain of the Defeased Bonds.
2. The City has also, in accordance with the Resolution, has invested available funds in
the amount of $ . in securities that are general obligations of the United States,
securities whose principal and interest payments are guaranteed by the United States, and securities
issued by agencies of the United States, as described in the schedu1e which is attached hereto,
marked Exhibit A and made a part hereof, and has irrevocably deposited all such funds and
securities with the Escrow Agent on the date of this Agreement. It is understood and agreed that
the dates and amounts of payments of principal and interest due on the securities so deposited are as
indicated in Exhibit A, and that the principal and interest payments due on such securities are such
as to provide the funds required to pay all principal and interest payable on the Defeased Bonds, on
and prior to their respective maturity dates, or to the date on which any of the Defeased Bonds have
been directed to be prepaid, as stated in the Resolutions. The Defeased Bonds are the following:
a) $5,675,000 Taxable General Obligation Tax Increment Bonds, Series
1993A, dated March I, 1993, of the City, of which $2,700,000 in principal amount is
outstanding and $1,475,000 of which principal amount is subject to redemption and
prepayment on February I, 2000.
3. The Escrow Agent acknowledges receipt of the federal securities described in
Exhibit A and agrees that it will hold such federal securities in a special escrow account (Escrow
Account) created by the Resolution in the name of the City, and will collect and receive on behalf
of the City all payments of principal and interest on such securities and will remit from the Escrow
Account to the paying agent (paying Agent) for the Defeased Bonds the funds required from time to
time for the payment of principal and interest on the Refunded Bonds to the date of redemption of
the Refunded Bonds which is February I, 2000 (Redemption Date). After provision for payment of
all remaining Refunded Bonds, with interest accrued thereon, the Escrow Agent will remit any
remaining funds in the Escrow Account to the City.
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4. (Left blank)
5. Escrow Agent expressly waives any lien upon or claim against the moneys and
investments in the Escrow Account.
6. If at any time it appears to the Escrow Agent that the money in the Escrow Account
allocable for such use hereunder will not be sufficient to make any payment due to the holders of
any of the Defeased Bonds, the Escrow Agent will immediately notify the City. The City thereupon
win forthwith deposit in Escrow Account from funds on hand and legally available to it such
additional funds as may be required to meet fully the amount to become due and payable. The City
acknowledges its obligation to levy ad valorem taxes on all taxable property in the City to the extent
reqnired to produce moneys necessary for this purpose. Attached hereto as Exhibit B is a statement
from Ehlers & Associates, financial advisers, dated . 1999, certifying that such
cash and securities are sufficient to comply with the purposes of this Agreement.
7. The City will not repeal or amend the Resolution that calls the Defeased Bonds for
redemption on the redemption date. The Escrow Agent will cause the Notice of Call for
redemption attached hereto as Exhibit C to be published in accordance with law not more than 90
days IlOr less than 45 days before the Redemption Date and give mailed notice not less than 30 days
prior to the Redemption Date to the registered owners of the Defeased Bonds to be redeemed, at
their addresses appearing on the bond register and also to the bank at which the principal and
interest on the Defeased Bonds are then payable, but failure to give such notice shall not affect the
validity of the call for redemption.
8. (Left blank)
9. It is recognized and agreed that title to the federal securities held in the Escrow
Account from time to time will remain vested in the City but subject always to the prior charge and
lien thereon of this Agreement and the use thereof required to be made by this Agreement. The
Escrow Agent will hold all such money and obligations in a special trust fund and account separate
and wholly segregated from all other funds and securities of the Escrow Agent, and will never
commingle such money or securities with other money or securities; provided, however, that
nothing herein contained is to be construed to require the Escrow Agent to keep the identical
monies, or any part thereof, received for the Account on hand, but moneys of an equal amount
(except to the extent such are represented by investments permitted under this Agreement) must
always be maintained on hand as funds held by the Escrow Agent as trustee, belonging to the City,
and a special account will at all times be maintained on the books of the Escrow Agent, together
with such investments. In the event of the Escrow Agent's failure to account for any money or
obligations held by it in the Escrow Account, such money and obligations will be and remain the
property of the City, and if for any reason such money or obligations cannot be identified, all other
assets of the Escrow Agent will be impressed with a trust for the amount thereof, and the City will
be entitled to a preferred claim upon such assets. It is understood and agreed that the responsibility
of the Escrow Agent under this Agreement is limited to the (i) safekeeping and segregation of the
funds and securities deposited with it in the Escrow Account, and the collection of and accounting
for the principal and interest payable with respect thereto, and (ii) the giving of the notices required
by paragraph 7.
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10. This Agreement is made by the City for the benefit of the holders of the Defeased
Bonds, and is not revocable by the City, and the investments and other funds deposited in the
Escrow Account and all income therefrom have been irrevocably appropriated for the payment of
the Defeased Bonds and interest thereon in accordance with this Agreement.
11. This Agreement is binding upon and inures to the benefit of the City and the Escrow
Agent and their respective successors and assigns. In addition, this Agreement constitutes a third
party beneficiary contract for the benefit of the holders of the Defeased Bonds aild those third party
beneficiaries may enforce performance and observance by the City and the Escrow Agent of the
respective agreements and covenants herein contained as fully and completely as if the third party
beneficiaries were parties hereto. Any bank into which the Escrow Agent may be merged or with
which it may be consolidated or any bank resu1ting from any merger or consolidation to which it
may be a party or any bank to which it may sell or transfer all or substantially all of its corporate
trust business will, if the City approves, be the successor agent without the execution of any
document or the performance of any further act.
12. The Escrow Agent may at any time resign and be discharged of its obligations
hereunder by giving to the City Manager of the City written notice of such resignation not less than
60 days before the date when the same is to take effect, and by publication of a copy of such notice
in a daily or weekly Minnesota newspaper published in a Minnesota City of the fIrst class, or its
metropolitan area, which circulates throughout the state and furnishes financial news as part of its
service, not less than 30 days prior to such date; provided that the Escrow Agent must return to the
City the pro rata portion of its fee which is allocable to the period of time commencing on the
effective date of such resignation. The resignation takes effect upon the date specified in the notice,
or upon the appointment and qualifIcation of a successor prior to that date. In the event of a
resignation, a successor must promptly be appointed by the City, and the City Manager of the City
will immediately give written notice thereof to the predecessor Escrow Agent and publish the same
in the manner described in this paragraph 12. If, in a proper case, no appointment of a successor
Escrow Agent is made within 45 days after the receipt by the City of notice of such resignation, the
Escrow Agent or the holder of any Refunded Bond may apply to any court of competent
jurisdiction to appoint a successor Escrow Agent, which appointment may be made by the Court
afteI- such notice, if any, as the Court may prescribe. Any successor Escrow Agent appointed
hereunder must execute, acknowledge and deliver to its predecessor agent and to the City a written
acceptance of such appointment, and shall thereupon without any further act, deed or conveyance
become fully vested with all moneys, properties, duties and obligations of its predecessor, but the
predecessor shall nevertheless pay over, transfer, assign and deliver all moneys, securities or other
property held by it to the successor Escrow Agent, must execute, acknowledge and deliver such
instruments of conveyance and do such other things as may reasonably be required to vest and
confirm more fully and certainly in the successor Escrow Agent all right, title and interest in and to
any property held by it hereunder. Any bank into which the Escrow Agent may be merged or with
which it may be consolidated or any bank resulting from any merger or consolidation to which it is
a party or any bank to which it may sell or transfer all or substantially all of its corporate trust
business will, if the City approves, be the successor Escrow Agent without the execution of any
document or the performance of any further act.
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13. The Escrow Agent acknowledges receipt of the sum of $
compensation for its services under this Agreement.
as its sole
14. The duties and obligations of the Escrow Agent are as prescribed by the provisions of
this Agreement and the Escrow Agent will not be liable hereunder except for failure to perform its
duties and obligations as specifically set forth herein or to act in good faith in the performance
thereof and no implied duties or obligations will be incurred by the Agent other than those specified
herein.
15. Any notice, authorization, request or demand required or permitted to be given in
accordance with the terms of this Agreement must be in writing and sent by registered or certified
mail addressed:
If to the City:
City ofChanhassen
690 City Center Drive
Chanhassen, Minnesota 55317
Attn: City Manager
If to the Escrow Agent:
Firstar Bank, N.A.
1555 North RiverCenter Drive
Suite 301
Maiwaukee, Wisconsin 53212,
Attn: Corporate Trust Department
16. The exhibits which are part of this Agreement are as follows:
Exhibit A
Exhibit B
Exhibit C
Federal Securities
Statement of Ehlers & Associates, Inc.
Notice of Call for Redemption
IN WITNESS WHEREOF the parties hereto have caused this instrument to be duly
executed by their duly authorized officers, in counterparts, each of which is deemed to be an
original agreement, on this _ day of December, 1999.
cnyOFCHANHA~rTA
By ~
Its Mayor '.
(SEAL)
Attest:
\,~'\ \'..
. .~", .\;,W,·' \.\
~,' ~5'
By
Its City Manager
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FIRSTAR BANK, N.A.
(SEAL)
By
Its Corporate Trust Officer
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EXHffiIT A
LIST OF SECURITIES PURCHASED
FOR ESCROW ACCOUNT
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EXHIBIT C
NOTICE OF CALL FOR REDEMPTION
$5,675,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 199A
CITY OF CHANHASSEN
CARVER AND HENNEPIN CO(JNTffiS, MINNESOTA
NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Chanhassen,
Carver and Hennepin Counties, Minnesota, there have been called for redemption and prepayment
on
February I, 2000
certain outstanding bonds of the City designated as Taxable General Obligation Tax Increment
Bonds, Series 1993A, dated March I, 1993, having stated maturity dates of February I in the year
200I,totalling $ in principal amount, and with the following CUSIP numbers:
Rate
Such bonds will be redeemed at a price of 100% of their principal amount plus accrued
interest to the date of redemption. Holder of such bonds should present them for payment to Firstar
Bank, N.A., Milwaukee, Wisconsin, as agent for Firstar Bank, N.A., St. Paul, Minnesota, successor
to American Bank National Association, St. Paul, Minnesota, at the address below, on or before
said date, when they will cease to bear interest.
It is recommended that you mail your bonds registered or certified mail to guard against
loss.
Firstar Bank, N.A.
1555 North RiverCenter Drive
Suite 30 I
Milwaukee, Wisconsin 53212
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In compliance with the Interest and Dividend Compliance Act of 1983 and Broker
Reporting Requirements, the redeeming institution is required to withhold a specified percentage of
the principal amount of your holdings redeemed unless they are provided with your social security
number or federal employer identification number, properly certified. This Compliance should be
fulfilled through the submitting of a W -9 Form which may be obtained at a Bank or other Financial
Institution.
The Registrar shall not be responsible for the selection or use of the CUSIP number, nor is
any representation made as to the correctness indicated in the Redemption Notice or on any Bond.
It is included solely for convenience of the Holders.
Dated: December 20, 1999.
BY ORDER OF THE ~~OUNCIL
~~
By
City Manager
City of Chanhassen, Minnesota
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