VII.2. Resolution Stating the Intention of the City to Issue Taxable General Obligation Housing Improvement Bonds
CITY OF HOPKINS
City Council Report 2025-123
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: July 15, 2025
Subject: Authorize Sale of $4,615,000 Taxable General Obligations Housing
Improvement Bonds for the Summit on 7 Housing Improvement Area
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO adopt Resolution 2025-045: Stating the Intention of the City to Issue
Taxable General Obligation Housing Improvement Bonds, Series 2025B, in the Original
Aggregate Principal Amount of Approximately $4,615,000; and Taking Other Actions
with Respect Thereto
OVERVIEW
The Series 2025B bonds will be used to finance improvements to the Summit on 7
building located at 1502 5th St. N. The bonds are general obligations of the City,
however they will be paid from Housing Improvement Area fees applied to each unit.
There is no tax levy required for the bonds. All costs are paid by the owners of Summit
on 7. This method of financing has been well-tested in the Twin Cities and has not had
negative impacts on bond ratings or resulted in any cash flow issues for bond
payments.
Adopting the resolution will allow City Staff to work with its municipal advisor Ehlers &
Associates to prepare an official statement for the bond sale. The City’s last bond rating
was AA+ with a stable outlook. Standard and Poor’s will update the rating before the
bonds are sold. City Council is scheduled to award the sale of bonds on August 19,
2025.
City Council previously approved the Summit on 7 Housing Improvement Area and set
the Housing Improvement Area fees. A detailed overview of the process is available as
part of City Council Report 2025-071: IV.8. Second Reading Ordinance Establishing
Summit on 7 Housing Improvement Area; Needham
Additional details on the Housing Improvement Area fess is included in City Council
Report 2025-072: V.1. Resolution Approving a Housing Improvement Fee for the
Summit on 7 Housing Improvement Area; Needham
SUPPORTING INFORMATION
• Resolution No. 2025-045
• Bond Pre-Sale Report
Finance Department
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2025-045
STATING THE INTENTION OF THE CITY TO ISSUE
TAXABLE GENERAL OBLIGATION HOUSING
IMPROVEMENT BONDS, SERIES 2025B, IN THE
ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF
APPROXIMATELY $4,615,000; AND TAKING OTHER
ACTIONS WITH RESPECT THERETO
BE IT RESOLVED by the City Council (“Council”) of the City of Hopkins, Minnesota
(the “City”), as follows:
1. Background. It is hereby determined that:
(a) The City has established the Summit on 7 Housing Improvement
Area (the “Housing Improvement Area”) in order to facilitate certain housing
improvements (the “Housing Improvements”) to a property known as the Summit
On 7 Condominiums, which is governed by the Summit Condominium Association
(the “Association”). The Council has imposed a housing improvement fee (the
“Housing Fees”) on housing units located in the Housing Improvement Area in
order to finance the Housing Improvements.
(b) Pursuant to Minnesota Statutes, Chapter 475, as amended (the
“Act”), and Minnesota Statutes, Sections 428A.11 through 428A.21, as amended
(the “Housing Act”), the City is authorized to issue general obligation bonds in the
amount necessary to defray the costs of the Housing Improvements, which costs
are payable primarily from the Housing Fees and may be further secured by the
pledge of the City’s full faith, credit and taxing power.
(c) The City finds it necessary and expedient to the sound financial
management of the City to issue its Taxable General Obligation Housing
Improvement Bonds, Series 2025B (the “Bonds”), in the original aggregate
principal amount of approximately $4,615,000, pursuant to the Act and the Housing
Act, in order to defray the costs of the Housing Improvements.
2. Sale of Bonds. The City has retained Ehlers and Associates, Inc. (the
“Municipal Advisor”), to serve as the City’s independent municipal advisor with respect to
the offer and sale of the Bonds and, therefore, is authorized by Section 475.60,
subdivision 2(9), of the Act to sell the Bonds other than pursuant to a competitive sale.
2
3. Authority of Municipal Advisor. The Municipal Advisor is authorized and
directed to assist the City in the preparation and dissemination of a Preliminary Official
Statement to be distributed to potential purchasers of the Bonds and to open, read, and
tabulate the proposals for the purchase of the Bonds for presentation to the Council. The
Municipal Advisor is further authorized and directed to assist the City in the award and
sale of the Bonds on behalf of the City after receipt of written proposals and to assist the
City in the preparation and dissemination of a final Official Statement with respect to the
Bonds.
4. Acceptance of Proposal. The Council shall meet at the time specified in the
Preliminary Official Statement or at such other time designated by the Council to receive
and consider proposals for the purchase of the Bonds and take any other appropriate
action with respect to the Bonds.
5. Authority of Bond Counsel. The law firm of Kennedy & Graven, Chartered,
is authorized to act as bond counsel for the City (“Bond Counsel”), and to assist in the
preparation and review of necessary documents, certificates, and instruments related to
the Bonds. The officers, employees, and agents of the City are hereby authorized to
assist Bond Counsel in the preparation of such documents, certificates, and instruments.
Adopted by the City Council of the City of Hopkins this 15th day of July, 2025.
By:___________________________
Patrick Hanlon, Mayor
ATTEST:
_______________________________
Amy Domeier, City Clerk
3
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN ) ss.
)
CITY OF HOPKINS )
I, the undersigned, being the duly qualified City Clerk of City of Hopkins, Hennepin
County, Minnesota (the “City”), do 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
July 15, 2025, 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 they relate to authorizing the issuance
of the City’s Taxable General Obligation Housing Improvement Bonds, Series 2025B, in the
original aggregate principal amount of approximately $4,615,000.
WITNESS My hand officially as such City Clerk this _____ day of July, 2025.
Amy Domeier, City Clerk
City of Hopkins, Hennepin County, Minnesota
July 15, 2025
PRE-SALE REPORT FOR
City of Hopkins, Minnesota
$4,615,000 Taxable General Obligation
Housing Improvement Bonds, Series 2025B
Prepared by:
Ehlers
3001 Broadway Street, Suite 320
Minneapolis, MN 55413
Advisors:
Stacie Kvilvang, Senior Municipal Advisor
Jason Aarsvold, Senior Municipal Advisor
Schane Rudlang Associate Municipal Advisor
BUILDING COMMUNITIES. IT’S WHAT WE DO.
Presale Report
City of Hopkins, Minnesota
July 15, 2025
Page 1
Proposed Issue:
$4,615,000 Taxable General Obligation Housing Improvement Bonds, Series 2025B
Purposes:
The proposed issue includes financing for the housing improvements for the Summit on 7
Condominium Association. Debt service will be paid from housing improvement area fees
levied against the units.
The majority of the owners (75%) of the 62-unit Summit on 7 Condominium Association have
petitioned the City to create a housing improvement area and to issue Bonds to fund
approximately $4,260,000 of improvements to the exteriors of the units and common areas
(inclusive of soft costs and contingency). The Bond amount is subject to change based upon
prepaid assessments received prior to issuing the Bonds. The Bonds will carry taxable
interest rates because the improvements are on private property rather than the typical
public improvements.
It is the intent of the City to levy a housing improvement area fee on each unit to support
105% of the debt service beginning with taxes payable in 2026 at a rate of 2% over the TIC on
the Bonds (but not to exceed 7.2% per the public hearing notice). The fees are very similar
to special assessments for public improvements; however they cannot be pre-paid in whole
or in part at any time during the term of the Bonds.
Authority:
The Bonds are being issued pursuant to Minnesota Statutes, Chapters:
428A.11 through 428A.21
475
The Bonds will be general obligations of the City for which its full faith, credit and taxing
powers are pledged.
Term/Call Feature:
The Bonds are being issued for a term of 21 years. Principal on the Bonds will be due on
February 1 in the years 2027 through 2046. Interest will be due every six months beginning
August 1, 2026.
The Bonds will be subject to prepayment at the discretion of the City on February 1, 2035, or
any date thereafter.
EXECUTIVE SUMMARY OF PROPOSED DEBT
Presale Report
City of Hopkins, Minnesota
July 15, 2025
Page 2
Bank Qualification:
Because the Bonds are taxable obligations they will not be designated as “bank qualified”
obligations.
Rating:
The City’s most recent bond issues were rated by S&P Global Ratings. The current rating on
those bonds is “AA+”/Stable outlook. The City will request a new rating for the Bonds.
If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue
may be higher than the City's bond rating in the event that the bond rating of the insurer is
higher than that of the City.
Basis for Recommendation:
Based on your objectives, financial situation and need, risk tolerance, liquidity needs,
experience with the issuance of Bonds and long-term financial capacity, as well as the tax
status considerations related to the Bonds and the structure, timing and other similar matters
related to the Bonds, we are recommending the issuance of Bonds as a suitable option.
Method of Sale/Placement:
We are recommending the Bonds be issued as municipal securities and offered through a
competitive underwriting process. You will solicit competitive bids, which we will compile on
your behalf, for the purchase of the Bonds from underwriters and banks.
An allowance for discount bidding will be incorporated in the terms of the issue. The discount
is treated as an interest item and provides the underwriter with all or a portion of their
compensation in the transaction.
If the Bonds are purchased at a price greater than the minimum bid amount (maximum
discount), the unused allowance may be used to reduce your borrowing amount.
Premium Pricing:
In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium
is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds
the yield to the investor, resulting in a price paid that is greater than the face value of the
bonds. The sum of the amounts paid in excess of face value is considered “reoffering
premium.” The amount of the premium varies, but it is not uncommon to see premiums for
new issues in the range of 2.00% to 10.00% of the face amount of the issue. This means that
an issuer with a $2,000,000 offering may receive bids that result in proceeds of $2,040,000
to $2,200,000.
For this issue of Bonds, we have been directed to use the net premium to reduce the size of
the issue. The resulting adjustments may slightly change the true interest cost of the issue,
either up or down.
Presale Report
City of Hopkins, Minnesota
July 15, 2025
Page 3
The amount of premium can be restricted in the bid specifications. Restrictions on premium
may result in fewer bids but may also eliminate large adjustments on the day of sale and
unintended impacts with respect to debt service payment. Ehlers will identify appropriate
premium restrictions for the Bonds intended to achieve the City’s objectives for this financing.
Review of Existing Debt:
We have reviewed all outstanding indebtedness for the City and find that there are no
refunding opportunities at this time.
We will continue to monitor the market and the call dates for the City’s outstanding debt and
will alert you to any future refunding opportunities.
Continuing Disclosure:
Because the City has more than $10,000,000 in outstanding debt subject to a continuing
disclosure undertaking (including this issue) and this issue does not meet an available
exemption from continuing disclosure, the City will be agreeing to provide certain updated
Annual Financial Information and its Audited Financial Statement annually, as well as
providing notices of the occurrence of certain reportable events to the Municipal Securities
Rulemaking Board (the “MSRB”), as required by rules of the Securities and Exchange
Commission (SEC). The City is already obligated to provide such reports for its existing
bonds, and has contracted with Ehlers to prepare and file the reports.
Arbitrage Monitoring:
The City has limited responsibilities for arbitrage as it relates to the Bonds, however, the Bonds
are not exempt from all arbitrage rules. An Ehlers arbitrage expert will contact the City within
30 days after the sale date to review the City’s specific responsibilities for the Bonds. The City
is currently receiving arbitrage services from Ehlers in relation to the Bonds.
Investment of Bond Proceeds:
Ehlers can assist the City in developing a strategy to invest your Bond proceeds until the
funds are needed to pay project costs.
Risk Factors:
The average fee per unit for the 62-unit owners that have not prepaid the assessment is
expected to be approximately $74,435 (range from $50,000 to $94,157). This amount of fee
may result in delinquency of fees, or ultimately a potential property tax foreclosure. The
requirement to levy 105% of the debt service, along with the requirement of the interest rate
charged of 2% above the TIC on the Bonds will assist in mitigating making Bond payments
due to delays in payments from unit owners and/or delinquencies.
In addition, pursuant to the Development Agreement with the Association, if funds in the debt
service fund are inadequate to make a scheduled payment, the Association is required to
provide the funds to the City.
Presale Report
City of Hopkins, Minnesota
July 15, 2025
Page 4
Other Service Providers:
This debt issuance will require the engagement of other public finance service providers. This
section identifies those other service providers, so Ehlers can coordinate their engagement
on your behalf. Where you have previously used a particular firm to provide a service, we have
assumed that you will continue that relationship. For services you have not previously
required, we have identified a service provider. Fees charged by these service providers will
be paid from proceeds of the obligation, unless you notify us that you wish to pay them from
other sources. Our pre-sale bond sizing includes a good faith estimate of these fees, but the
final fees may vary. If you have any questions pertaining to the identified service providers or
their role, or if you would like to use a different service provider for any of the listed services
please contact us.
Bond Counsel: Kennedy & Graven, Chartered
Paying Agent: Bond Trust Services Corporation
Rating Agency: S&P Global Ratings (S&P)
Summary:
The decisions to be made by the City Council are as follows:
Accept or modify the finance assumptions described in this report
Adopt the resolution attached to this report.
Presale Report
City of Hopkins, Minnesota
July 15, 2025
Page 5
Pre-Sale Review by City Council: July 15, 2025
Conference with Rating Agency and Due Diligence Call to
Review Official Statement: Week of August 11, 2025
Distribute Official Statement: Week of August 4, 2025
City Council Meeting to Award Sale of the Bonds: August 19, 2025
Estimated Closing Date: September 10, 2025
Attachments
Estimated Sources and Uses of Funds
Estimated Proposed Debt Service Schedule
Resolution Authorizing Ehlers to Proceed with Bond Sale
EHLERS’ CONTACTS
Stacie Kvilvang, Senior Municipal Advisor (651) 697-8506
Jason Aarsvold, Senior Municipal Advisor (651) 697-8512
Schane Rudlang, Associate Municipal Advisor (651) 697-8527
Silvia Johnson, Lead Public Finance Analyst (651) 697-8580
Alicia Gage, Senior Financial Analyst (651) 697-8551
PROPOSED DEBT ISSUANCE SCHEDULE
EHLERS’ CONTACTS
City of Hopkins, Minnesota
$4,615,000 Taxable General Obligation HIA Bonds, Series 2025B
Assumes Current Market Taxable AA+ Rates plus 50bps
Sources & Uses
Dated 08/26/2025 | Delivered 08/26/2025
Sources Of Funds
Par Amount of Bonds $4,615,000.00
Total Sources $4,615,000.00
Uses Of Funds
Total Underwriter's Discount (1.200%)55,380.00
Costs of Issuance 74,000.00
City Adminitrative Fee (1%)46,150.00
Deposit to Capitalized Interest (CIF) Fund 118,779.60
Deposit to Project Fund 4,260,000.00
Soft Costs 57,800.00
Rounding Amount 2,890.40
Total Uses $4,615,000.00
HopkinsSeries 2025B Taxab | SINGLE PURPOSE | 6/26/2025 | 3:17 PM
City of Hopkins, Minnesota
$4,615,000 Taxable General Obligation HIA Bonds, Series 2025B
Assumes Current Market Taxable AA+ Rates plus 50bps
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
08/26/2025 -----
08/01/2026 --237,559.20 237,559.20 -
02/01/2027 35,000.00 4.500%127,643.75 162,643.75 400,202.95
08/01/2027 --126,856.25 126,856.25 -
02/01/2028 150,000.00 4.500%126,856.25 276,856.25 403,712.50
08/01/2028 --123,481.25 123,481.25 -
02/01/2029 155,000.00 4.500%123,481.25 278,481.25 401,962.50
08/01/2029 --119,993.75 119,993.75 -
02/01/2030 160,000.00 4.600%119,993.75 279,993.75 399,987.50
08/01/2030 --116,313.75 116,313.75 -
02/01/2031 170,000.00 4.700%116,313.75 286,313.75 402,627.50
08/01/2031 --112,318.75 112,318.75 -
02/01/2032 180,000.00 4.900%112,318.75 292,318.75 404,637.50
08/01/2032 --107,908.75 107,908.75 -
02/01/2033 185,000.00 5.050%107,908.75 292,908.75 400,817.50
08/01/2033 --103,237.50 103,237.50 -
02/01/2034 195,000.00 5.200%103,237.50 298,237.50 401,475.00
08/01/2034 --98,167.50 98,167.50 -
02/01/2035 205,000.00 5.300%98,167.50 303,167.50 401,335.00
08/01/2035 --92,735.00 92,735.00 -
02/01/2036 215,000.00 5.350%92,735.00 307,735.00 400,470.00
08/01/2036 --86,983.75 86,983.75 -
02/01/2037 230,000.00 5.450%86,983.75 316,983.75 403,967.50
08/01/2037 --80,716.25 80,716.25 -
02/01/2038 240,000.00 5.550%80,716.25 320,716.25 401,432.50
08/01/2038 --74,056.25 74,056.25 -
02/01/2039 255,000.00 5.650%74,056.25 329,056.25 403,112.50
08/01/2039 --66,852.50 66,852.50 -
02/01/2040 270,000.00 5.700%66,852.50 336,852.50 403,705.00
08/01/2040 --59,157.50 59,157.50 -
02/01/2041 285,000.00 5.800%59,157.50 344,157.50 403,315.00
08/01/2041 --50,892.50 50,892.50 -
02/01/2042 300,000.00 5.850%50,892.50 350,892.50 401,785.00
08/01/2042 --42,117.50 42,117.50 -
02/01/2043 315,000.00 5.950%42,117.50 357,117.50 399,235.00
08/01/2043 --32,746.25 32,746.25 -
02/01/2044 335,000.00 6.000%32,746.25 367,746.25 400,492.50
08/01/2044 --22,696.25 22,696.25 -
02/01/2045 355,000.00 6.150%22,696.25 377,696.25 400,392.50
08/01/2045 --11,780.00 11,780.00 -
02/01/2046 380,000.00 6.200%11,780.00 391,780.00 403,560.00
Total $4,615,000.00 -$3,423,225.45 $8,038,225.45 -
Yield Statistics
Bond Year Dollars $59,517.01
Average Life 12.896 Years
Average Coupon 5.7516754%
Net Interest Cost (NIC)5.8447244%
True Interest Cost (TIC)5.8367456%
Bond Yield for Arbitrage Purposes 5.6976859%
All Inclusive Cost (AIC)6.1470852%
IRS Form 8038
Net Interest Cost 5.7516754%
Weighted Average Maturity 12.896 Years
HopkinsSeries 2025B Taxab | SINGLE PURPOSE | 6/26/2025 | 3:17 PM
City of Hopkins, Minnesota
$4,615,000 Taxable General Obligation HIA Bonds, Series 2025B
Assumes Current Market Taxable AA+ Rates plus 50bps
Debt Service Schedule
Date Principal Coupon Interest Total P+I CIF Net New D/S
105% of
Total
02/01/2026 -------
02/01/2027 35,000.00 4.500%365,202.95 400,202.95 (118,779.60)281,423.35 295,494.52
02/01/2028 150,000.00 4.500%253,712.50 403,712.50 -403,712.50 423,898.13
02/01/2029 155,000.00 4.500%246,962.50 401,962.50 -401,962.50 422,060.63
02/01/2030 160,000.00 4.600%239,987.50 399,987.50 -399,987.50 419,986.88
02/01/2031 170,000.00 4.700%232,627.50 402,627.50 -402,627.50 422,758.88
02/01/2032 180,000.00 4.900%224,637.50 404,637.50 -404,637.50 424,869.38
02/01/2033 185,000.00 5.050%215,817.50 400,817.50 -400,817.50 420,858.38
02/01/2034 195,000.00 5.200%206,475.00 401,475.00 -401,475.00 421,548.75
02/01/2035 205,000.00 5.300%196,335.00 401,335.00 -401,335.00 421,401.75
02/01/2036 215,000.00 5.350%185,470.00 400,470.00 -400,470.00 420,493.50
02/01/2037 230,000.00 5.450%173,967.50 403,967.50 -403,967.50 424,165.88
02/01/2038 240,000.00 5.550%161,432.50 401,432.50 -401,432.50 421,504.13
02/01/2039 255,000.00 5.650%148,112.50 403,112.50 -403,112.50 423,268.13
02/01/2040 270,000.00 5.700%133,705.00 403,705.00 -403,705.00 423,890.25
02/01/2041 285,000.00 5.800%118,315.00 403,315.00 -403,315.00 423,480.75
02/01/2042 300,000.00 5.850%101,785.00 401,785.00 -401,785.00 421,874.25
02/01/2043 315,000.00 5.950%84,235.00 399,235.00 -399,235.00 419,196.75
02/01/2044 335,000.00 6.000%65,492.50 400,492.50 -400,492.50 420,517.13
02/01/2045 355,000.00 6.150%45,392.50 400,392.50 -400,392.50 420,412.13
02/01/2046 380,000.00 6.200%23,560.00 403,560.00 -403,560.00 423,738.00
Total $4,615,000.00 -$3,423,225.45 $8,038,225.45 (118,779.60)$7,919,445.85 $8,315,418.14
Significant Dates
Dated 8/26/2025
First Coupon Date 8/01/2026
Yield Statistics
Bond Year Dollars $59,517.01
Average Life 12.896 Years
Average Coupon 5.7516754%
Net Interest Cost (NIC)5.8447244%
True Interest Cost (TIC)5.8367456%
Bond Yield for Arbitrage Purposes 5.6976859%
All Inclusive Cost (AIC)6.1470852%
HopkinsSeries 2025B Taxab | SINGLE PURPOSE | 6/26/2025 | 3:17 PM
City of Hopkins, Minnesota
$4,615,000 Taxable General Obligation HIA Bonds, Series 2025B
Assumes Current Market Taxable AA+ Rates plus 50bps
Detail Costs Of Issuance
Dated 08/26/2025 | Delivered 08/26/2025
COSTS OF ISSUANCE DETAIL
Municipal Advisor $35,000.00
Bond Counsel $19,000.00
Rating Agency Fee $19,000.00
Miscellaneous $1,000.00
TOTAL $74,000.00
HopkinsSeries 2025B Taxab | SINGLE PURPOSE | 6/26/2025 | 3:17 PM