CR 09-092 Authorize Sale of $2,890,000 Taxable Housing Improvement Area Housing Bonds, Series 2009C-4 ca
October 29, 2009 City of Hopkins City Council Report 2009 -092
AUTHORIZE SALE OF $2,890,000 TAXABLE HOUSING
IMPROVEMENT AREA HOUSING BONDS, SERIES 2009C
Proposed Action
Staff recommends approval of the following motion: Adopt Resolution 2009 -059 Resolution Providing for
the Sale of $2,890,000 Taxable Housing Improvement Area Bonds Series 2009C.
Adoption of this motion will result in the bonds being offered for sale on November 17, 2009.
Overview
Following an analysis of the City's outstanding debt it was determined that market conditions exist to realize
substantial savings on the 1999A and 1999B Taxable Housing Improvement Area Bonds by refunding these
issues. The bonds were originally sold to finance the Westbrooke Patio Homes and Valley View Housing
projects. Housing Improvement fees are collected on the taxes to pay the debt service. Refunding these issues
will provide substantial funds for the housing districts at the conclusion of the bond issue thus providing funds
for the housing districts to make improvements or enhancements to the property.
Primary Issues
The bond proceeds will be used to finance current refunding of all of the City's callable Taxable GO Housing
Improvement Bonds and will result in a savings of $111,000 on the 1999A issue and $225,000 on the 1999B
issue. Total savings is $336,000 between the two issues.
Staff Recommendation
Staff recommends approval of this resolution and further recommends, along with the City's financial advisor,
that we ask for a rating from Standard & Poors for the issue. The cost of the rating will be paid with bond
proceeds.
Supporting Information
• Resolution No. 2009 -059
• Bond Sale Report
L G• , y �
Christine M. Harkess, CPA, CGFM
Finance Director
Financial Impact: $ _2890,000 in bond proceeds; est $336,000 savings in refunding Budgeted: Y/N No
Source: Debt Service Funds
Related Documents (CIP, ERP, etc.): None Notes:
Debt Issuance Services
Pre-Sale Report for I
Q,890,000 Taxable General Obligation
Housing Improvement Area Refunding Bonds, Series 200• 1
Includes:
Current Refunding of $1,465,000 Taxable G.O. Housing
improvement Bonds, Series 1•••A
Current Refunding of $2,565,000 Taxable G.O. Housing
Improvement Bonds, Series 19•• B
EHLERS
LEADERS IN PUBLIC FINANCE
www.ehlers-inc.com
Minnesota phone 651-697-8500 3060 Centre Pointe Drive
Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 551 1 3 -11 22
Debt Issuance Services
Proposed Issue: $2,890,000 Taxable General Obligation Housing Improvement Area
Refunding Bonds, Series 2009C
Purpose: For the Series 2009C Bonds, we recommend the City combine two
refundings of existing bond issues in order to increase the par amount to
make it more attractive in the market which in turn will reduce interest
rates. In addition, combining the issues will reduce issuance costs. The
2009C Bonds consist of the following purposes:
1) To finance the current refunding of all of the City's callable Taxable
General Obligation Housing Improvement Bonds, Series 1999A, dated
May 5, 1999 (the "Prior 1999A Bonds "). The Prior 1999A Bonds were
issued in the amount of $1,465,000 and are callable in the amount of
$1,010,000. The savings will begin with a lower interest payment on
August 1, 2010. Based on interest rates of 1.75% to 5.1 %, the estimated
savings as a result of the refunding is approximately $111,000 after all fees
and expenses.
The Bonds were originally issued to finance the second phase of
improvements to be undertaken in the City's Housing Improvement Area
No. 2 (the "Area ") for the Westbrooke Patio Homes. The ordinance
establishing the Area was amended by the City Council to authorize these
improvements on January 19, 1999. On April 6, 1999, the City Council
approved an agreement with the Westbrooke Patio Home Condominium
Association to provide funds to make the following improvements:
Rebuild streets and drives; Add curb, gutter, sidewalks; Correct site
drainage; Rebuild retaining walls; and Replace siding and doors and
related improvements.
2) To finance the current refunding of all of the City's callable Taxable
General Obligation Housing Improvement Bonds, Series 1999B, dated
August 2, 1999 (the "Prior 1999B Bonds "). The Prior 1999B Bonds were
issued in the amount of $2,565,000 and are callable in the amount of
$1,795,000. The savings will begin with a lower interest payment on
August 1, 2010. Based on interest rates of 1.75% to 5.1 %, the estimated
savings as a result of the refunding is approximately $225,000 after all fees
and expenses.
The Bonds were originally issued to finance improvements in the City's
Housing Improvement Area No. 3 (the "Area "). The ordinance
establishing the Area was adopted by the City Council on January 5, 1999.
3 Presale Report
November 4, 2009
r w
Debt Issuance Services
On March 2, 1999, the City Council approved an agreement with the
Valley Park Condominium Association to provide funds to make the
following improvements: Mansard Replacement; Replace Patio Doors and
Rails; Replace Downspouts; Upgrade Entries; Repair and Paint Stucco
Timbers; Sidewalk Replacement; Rebuild Parking Lots; and Construct
Trash Buildings.
Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapters 587
and 475 and because they will be fees imposed on the housing units, the
bonds do not count against the City's statutory debt limit.
Funding Source(s): The Bonds will be general obligations of the City and as such are secured
by a pledge of the City's full faith, credit, and taxing powers. For the
Bonds it is the intent of the City to utilize fees imposed on the housing
units to make the annual principal and interest payments.
Risk Factors: All bonds included within this report are general obligation bonds secured
by the City's full faith, credit and taxing powers. This pledge helps
improve the credit worthiness of the bonds and reduces interest costs. The
pledge does mean that if any of the revenue expected to pay the debt
service cost is not available that the City will increase the debt levy to pay
the debt service. There is risk for this increase any time the full faith and
credit pledge is provided.
Arbitrage Monitoring: The City will need to monitor its debt service funds to insure compliance
with IRS parameters and to avoid penalties for carrying too high of a
balance during the life of the issue.
Rating: The City currently carries a Standard & Poor's "AA -" credit rating on its
outstanding bonds. We are proposing to have the Bonds rated by Standard
& Poor's.
If the lowest bidder on the Bonds elects to purchase bond insurance, the
rating for the issue will be higher than the City's bond rating because this
issue will instead carry the rating of the bond insurance company selected
by the bidder.
Bank Qualification: Because the Bonds are taxable, they will not count against the City's bank
qualification limit.
Term /Call Feature: The Bonds maturing February 1, 2017, and thereafter will be subject to
prepayment at the discretion of the City on February 1, 2016.
Other We will continue to monitor the market and the call dates for the City's
Considerations: outstanding debt and will alert you to any future refunding opportunities.
e °'_ Presale Report
November 4, 2009
Page 3
Proposed Debt Issuance Schedule
Pre-Sale Review by Council:
Distribute Official Statement:
Conference Call with Rating Agency:
City Council Meeting to Award Sale of the Bonds
Estimated Closing Date:
Attachments
Debt Issuance Services
November 4, 2009
November 5, 2009
November 10, 2009
November 17, 2009
December 15, 2009
Resolution Authorizing Ehlers to Proceed With Bond Sale
Sources and Uses of Funds
Proposed Debt Service Schedule
Ehlers Contacts
Financial Advisors: Rebecca Kurtz
Dave Callister
Bond Analysts: Diana Lockard
Debbie Holmes
Bond Sale Coordinator: Alicia Aulwes
(651) 697-8516
(651) 697-8553
(651) 697-8534
(651) 697-8536
(651) 697-8523
The Official Statement for this financing will be mailed to the Council Members at their home address for
review prior to the sale date.
Presale Report November 4, 2009
Page 4
Resolution No.
Council Member
introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$2,890,000 Taxable General Obligation Housing Improvement Area
Refunding Bonds, Series 2009C
WHEREAS, the City Council of the City of Hopkins, Minnesota, has heretofore determined
that it is necessary and expedient to issue the City's $2,890,000 Taxable General Obligation
Housing Improvement Area Refunding Bonds, Series 2009C (the "Series 2009C Bonds "), to
current refund the Taxable General Obligation Housing Improvement Area Bonds, Series
1999A and to current refund the Taxable General Obligation Housing Improvement Area
Bonds, Series 199913; 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 the City of Hopkins,
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 7:30 p.m. on November
17, 2009, 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 4th day of November, 2009.
City Clerk
Debt Issuance Services
Pre-Sale Report for
$2,890,000 Taxable General Obligation
Housing Improvement Area Refunding Bonds, Series 20091
Includes:
Current Refunding of $1,465,000 Taxable G.O. Housing
Improvement Bonds, Series 1999A
Current Refunding of $2,565,000 Taxable G.O. Housing
Improvement Bonds, Series 1999B
19 EHLERS
LEADERS IN PUBLIC FINANCE
www.ehiers-inc.com
Minnesota phone 651-697-8500 3060 Centre Pointe Drive
Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122
Debt Issuance Services
® ®0
WE
Proposed Issue: $2,890,000 Taxable General Obligation Housing Improvement Area
Refunding Bonds, Series 2009C
Purpose: For the Series 2009C Bonds, we recommend the City combine two
refundings of existing bond issues in order to increase the par amount to
make it more attractive in the market which in turn will reduce interest
rates. In addition, combining the issues will reduce issuance costs. The
2009C Bonds consist of the following purposes:
1) To finance the current refunding of all of the City's callable Taxable
General Obligation Housing Improvement Bonds, Series 1999A, dated
May 5, 1999 (the "Prior 1999A Bonds "). The Prior 1999A Bonds were
issued in the amount of $1,465,000 and are callable in the amount of
$1,010,000. The savings will begin with a lower interest payment on
August 1, 2010. Based on interest rates of 1.75% to 5.1 %, the estimated
savings as a result of the refunding is approximately $111,000 after all fees
and expenses.
The Bonds were originally issued to finance the second phase of
improvements to be undertaken in the City's Housing Improvement Area
No. 2 (the "Area ") for the Westbrooke Patio Homes. The ordinance
establishing the Area was amended by the City Council to authorize these
improvements on January 19, 1999. On April 6, 1999, the City Council
approved an agreement with the Westbrooke Patio Home Condominium
Association to provide funds to make the following improvements:
Rebuild streets and drives; Add curb, gutter, sidewalks; Correct site
drainage; Rebuild retaining walls; and Replace siding and doors and
related improvements.
2) To finance the current refunding of all of the City's callable Taxable
General Obligation Housing Improvement Bonds, Series 1999B, dated
August 2, 1999 (the "Prior 1999B Bonds "). The Prior 1999B Bonds were
issued in the amount of $2,565,000 and are callable in the amount of
$1,795,000. The savings will begin with a lower interest payment on
August 1, 2010. Based on interest rates of 1.75% to 5.1 %, the estimated
savings as a result of the refunding is approximately $225,000 after all fees
and expenses.
The Bonds were originally issued to finance improvements in the City's
Housing Improvement Area No. 3 (the "Area "). The ordinance
establishing the Area was adopted by the City Council on January 5, 1999.
0 Presale Report
November 4, 2009
Page 2
Deb Issuance Se rvices
On March 2, 1999, the City Council approved an agreement with the
Valley Park Condominium Association to provide funds to make the
following improvements: Mansard Replacement; Replace Patio Doors and
Rails; Replace Downspouts; Upgrade Entries; Repair and Paint Stucco
Timbers; Sidewalk Replacement; Rebuild Parking Lots; and Construct
Trash Buildings.
Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapters 587
and 475 and because they will be fees imposed on the housing units, the
bonds do not count against the City's statutory debt limit.
Funding Source(s): The Bonds will be general obligations of the City and as such are secured
by a pledge of the City's full faith, credit, and taxing powers. For the
Bonds it is the intent of the City to utilize fees imposed on the housing
units to make the annual principal and interest payments.
Risk Factors: All bonds included within this report are general obligation bonds secured
by the City's full faith, credit and taxing powers. This pledge helps
improve the credit worthiness of the bonds and reduces interest costs. The
pledge does mean that if any of the revenue expected to pay the debt
service cost is not available that the City will increase the debt levy to pay
the debt service. There is risk for this increase any time the full faith and
credit pledge is provided.
Arbitrage Monitoring: The City will need to monitor its debt service funds to insure compliance
with IRS parameters and to avoid penalties for carrying too high of a
balance during the life of the issue.
Rating: The City currently carries a Standard & Poor's "AA -" credit rating on its
outstanding bonds. We are proposing to have the Bonds rated by Standard
& Poor's.
If the lowest bidder on the Bonds elects to purchase bond insurance, the
rating for the issue will be higher than the City's bond rating because this
issue will instead carry the rating of the bond insurance company selected
by the bidder.
Bank Qualification: Because the Bonds are taxable, they will not count against the City's bank
qualification limit.
Term /Call Feature: The Bonds maturing February 1, 2017, and thereafter will be subject to
prepayment at the discretion of the City on February 1, 2016.
Other We will continue to monitor the market and the call dates for the City's
Considerations: outstanding debt and will alert you to any future refunding opportunities.
3 1114 Presale Report
November 4, 2009
Page 3
Debt Issuance Services
Proposed Debt Issuance Schedule
Pre-Sale Review by Council:
Distribute Official Statement:
Conference Call with Rating Agency:
City Council Meeting to Award Sale of the Bonds
Estimated Closing Date:
November 4, 2009
November 5, 2009
November 10, 2009
November 17, 2009
December 15, 2009
Attachments
Resolution Authorizing Ehlers to Proceed With Bond Sale
Sources and Uses of Funds
Proposed Debt Service Schedule
Ehlers Contacts
Financial Advisors: Rebecca Kurtz
Dave Callister
Bond Analysts: Diana Lockard
Debbie Holmes
Bond Sale Coordinator: Alicia Aulwes
(651) 697-8516
(651) 697-8553
(651) 697-8534
(651) 697-8536
(651) 697-8523
The Official Statement for this financing will be mailed to the Council Members at their home address for
review prior to the sale date.
Presale Report
I —
November 4, 2009
Page 4
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 2009 -059
Council Member introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$2,890,000 Taxable General Obligation Housing Improvement Area Refunding Bonds,
Series 2009C
WHEREAS, the City Council of the City of Hopkins, Minnesota, has heretofore determined
that it is necessary and expedient to issue the City's $2,890,000 Taxable General Obligation
Housing Improvement Area Refunding Bonds, Series 2009C (the "Series 2009C Bonds "), to
current refund the Taxable General Obligation Housing Improvement Area Bonds, Series
1999A and to current refund the Taxable General Obligation Housing Improvement Area
Bonds, Series 199913; 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 the City of Hopkins,
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 7:30 p.m. on November
17, 2009, for the purpose of considering sealed proposals for and awarding the sale of
the Bonds.
3. 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 4th day of November, 2009.
I
Eugene Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk