CR 01-166 Authorize Sale of G.O. Refunding Bonds, Series 2001
October 2,2001
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Council.Report 2001-166
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AUTHORIZE SALE OF G.O. REFUNDING BONDS, SERIES 2001
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution No. 2001-70 authorizing the
sale of General Obligation Refunding Bonds for refunding G.O. bonds series 1992, 1993B and 1993D.
Adoption of this motion will result in the bonds being offered for sale on November 7,2001, dated
November 21, 2001.
Overview
The City of Hopkins has the authority to issue refunding bonds to pay for the refunding or early retirement
of current debt. The city has the opportunity to refund three bonds that are callable in February 2002, with
a rate lower than the rate on the bonds, yielding a present value savings of approximately $113,000. The
bonds being issued will pay for callable G.O. Special Assessment Bonds Series 1992, G.O. Storm Sewer
Refunding Bonds Series 1993B and G.O. Park & Rec Facility Refunding Bonds Series 1993D. The
anticipated amount of the new bond issue is $3,755,000.
Primary Issues to Consider
We would not be able to call these bonds early without having new bonds issued because funds are not
available. The costs associated with issuing this refunding bond are $12,000 for financial advise, $5,000
for bond counsel, $9,000 for rating agency fee and $3,000 in miscellaneous charges. Another cost
associated with the issuance is the underwriter's discount of $22,530. This bond is structured to mature
within 10 years. After taking the costs into consideration, the approximate savings by issuing a new bond
with a lower interest rate is $113,000.
Staff Recommendation
Finance recommends, along with the City's financial advisor, that we ask for a rating from Moody's and
Standard and Poors for the refunding issue. The cost of the ratings will be paid for with project revenue.
Supportin2 Information
Resolution No. 2001-70
Refunding Summary
~'i
Lon Yager Y
Finance Director
Financial Impact: $3.755.000 in bond proceeds
Related Documents: Refunding Summary
Budgeted: No Source: Bond Proceeds
Notes:
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2001-70
RESOLUTION PROVIDING FOR THE SALE OF
$3,755,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 200i
WHEREAS, the City Council of the City of Hopkins, Minnesota has determined that it is
necessary and desirable to issue the City's $3,755,000 General Obligation Refunding Bonds,
Series 2001 (the "Bonds"), to finance the refunding of G.O. Special Assessment Bonds 1992,
G.O. Storm Sewer Refunding Bonds 1993B and G.O. Park & Recreation Facility Bonds, 1993D;
and
WHEREAS, the City has designated Evensen Dodge, in Minneapolis, Minnesota as its
independent financial advisor and is therefore authorized to solicit proposals in accordance with
Minnesota Statutes, Section 475.60, Suddivision 2(9);
NOW, THEREFORE, BE IT RESOLVED by the City Council of Hopkins, Minnesota, as
follows:
1. Authorization; Findings. The City Council hereby authorizes Evensen Dodge to solicit
proposals for the sale of the Bonds.
2. Meeting; Proposal Opening. The City Council shall meet at the time and place specified
in the Terms of Proposal for the purpose of considering sealed proposals for, and
awarding the sale of the Bonds. The City Clerk, or designee, shall open proposals at the
time and place specified in such Terms of Proposal.
3. Terms of Proposal. The terms and conditions of the Bonds andthe sale thereof are fully
set forth in the Bond Sale Report and are hereby approved and made a part hereof..
4. Official Statement. In connection with said sale, the officers or employees of the City are
hereby authorized to cooperate with Evensen Dodge 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.
Adopted by the City Council of the City of Hopkins held this 2nd day of October, 2001.
Eugene Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk
Preliminary
City of Hopkins, Minnesota
G.O. Refunding Bonds of 2001
REFUNDING SUMMARY
Dated 12/01/2001
Delivered 12/04/2001
SOURCES OF FUNDS
Par Amount of Bonds....... .............. ............. ........ ........................................ $3.755.000.00
Accrued Interest from 12/0112001 to 12/04/2001...................................... 1.046.63
TOTAL SOURCES................... ................................................................... $3.756.046.63
USES OF FUNDS
Deposit to Current Refunding Fund..............................................................
Costs of Issuance................... .................. .................................................
Total Underwriter's Discount (0.600%).......... .......... ................ ...... .............
Deposit to Debt Service Fund... .................... ....... ............... .......... ...............
3.703.312.69
29,157.31
22,530.00
1,046.63
TOTAL USES........................................... ..;.... .......................................... $ 3,756,046.63
FLOW OF FUNDS DETAIL
State and local Government Series (SlGS) rates for.....................................
9/24/2001
PRIMARY PURPOSE FUND SOLUTION METHOD........................................... Net Funded
Total Cost of Investments....... ....... ......... ................. .................... .............. $3,703,312.69
Interest Earnings @ 2.000%....................................................................... 11,687.31
TOTAL DRAWS.............. .............................. .......................... .... .............. .$3,715,000.00
ISSUES REFUNDED AND CALL DATES
920Id................................................... ........ ................................. ............
93bold............................................................ .........................................;
93dold............... .......................................................................................
2/01/2002
2/01/2002
2/01/2002
PRESENT V ALUE ANALYSIS SUMMARY (NET TO NET)
Net PV Cashflow Savings @ 3.581%(Bond yield)........................................ 112,541.59
Accrued Interest Credit to Debt Service Fund............................................... 1,046.63
NET PRESENT VALUE BENEFIT..................... ........ ................................ ...... $113,588.22
NET PV BENEFIT / $3,715.000 REFUNDED PRINCIPAl................................
NET PV BENEFIT / $3.755.000 REFUNDING PRINCIPAl...............................
3.058%
3.025%
BOND STATISTICS
Average life................. ................................... ..... ..................................... 4.619 Years
Average Coupon................................ ~....................................................... 3.5973768%
Net Interest Cost (NIC)... ....... ....... ......... ... ...... .............. ... ..... ...................... 3.7272639%
Bond Yield for Arbitrage Purposes............................................................... 3.5810328%
True Interest Cost (TiC)......... .................... ........................ ......................... 3.7260751 %
All Inclusive Cost (AIC).............................. .............................. ................... 3.9156369%
Prepared by Evensen Dodge, Inc.
File = Hopkins.sf-ref-Issue Summary
9/25/2001 7:06 AM
Page 1
Preliminary
City of Hopkins, Minnesota
G.O. Refunding Bonds of 2001
DEBT SERVICE COMPARISON
Date Total P+I Existing DIS Net New DIS Old Net DIS Savings
2/01/2002 - 549,102.50 548,055.87 549,102.50 1,046.63
2/01/2003 616,527.49 - 616,527.49 631,965.00 15,437.51
2/01/2004 603,845.00 - 603,845.00 620,360.00 16,515.00
2/01/2005 590,125.00 - 590,125.00 603,160.00 13,035.00
2/01/2006 570,180.00 - 570,180.00 585,595.00 15,415.00
2/01/2007 559,175.00 - 559,175.00 572,665.00 13,490.00
2/01/2008 546,780.00 - 546,780.00 559,140.00 12,360.00
2/01/2009 388,217.50 - 388,217.50 405,020.00 16,802.50
2/01/2010 384,372.50 - 384,372.50 398,230.00 13,857.50
2/01/2011 119,772.50 - 119,772.50 135,980.00 16,207.50
Total . 4,378,994.99 549,102.50 4,927,050.86 5,061,217.50 134,166.64
PRESENT V ALUEANAL YSIS SUMMARY (NET TO NET)
Gross PV Debt Service Savings.......~.. ............. ........... .... ....... ....... ................. .............. .....
112,541.59
Net PV Cashflow Savings @ 3.581%(Bond yield)..............................................................
112,541.59
Accrued Interest Credit to Debt Service Fund.....................................................................
NET PRESENT VALUE BENEFIT.... ...................... ................... ................. ....... .... ...............
1,046.63
$113,588.22
NET PV BENEFIT I $711,809.93 PV REFUNDED INTEREST.................................................
NET PV BENEFIT I $3,868,588.22 PV REFUNDED DEBT SERViCE.......................................
NET PV BENEFIT I $3,715,000 REFUNDED PRINCIPAL......................................................
NET PV BENEFIT I $3,755,000 REFUNDING PRINCIPAL.....................................................
15.958%
2.936%
3.058%
3.025%
_,_________,.__._,.,___......__......_____",~.,,._,,.,~nwvN..'_,.,.,
Prepared by Evensen Dodge, Inc.
File = Hopkins. sf-ref-Issue Summary
9/25/2001 7:06 AM
Page 2
HOPKINS, MINNESOTA
PROPOSED. FINANCING TIMETABLE
REFUNDING BONDS OF 2001
(revised 9/25/01)
+
Date
Action
October 2, 2001
Obtain notice from Hopkins' staff to proceed with sale
October 2
Gatherinformation and begin work on Official Statement
October 2
Obtain consent from City Council to move forward with
Refunding
October 10
First draft of Official Statement distributed
October 10 - 20
Feedback received on Official Statement
Official Statement completed
Meetings with rating agenci,es
Official Statements mailed to national list of investment bankers
Ratings applied for
Notify wire services of Bond sale
October 20 - November 6
Marketing period - additional contact with rating agencies,
potential bidders, insurance agencies and other interested parties
November 7
Sale of Bonds: City Council confirmation
November 7 - 21
Work with Bond counsel on details concerning arrangements for
closing and delivery of the Bonds
November 21
Approximate closing date - receipt of funds by the City
December
Mail Notice of Call on refunded bonds
February 1, 2002
Redeem refunded bonds
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EVENSEN DODGE INC
0198