Loading...
RESO 24-015 - Sale of General Obligation Improvement Bonds Series 2024ADocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB RESOLUTION NO.24-015 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2024A IN THE PROPOSED AGGREGATE PRINCIPAL AMOUNT OF $3,710,000 BE IT RESOLVED by the City Council (the "Council") of the City of Golden Valley, Minnesota (the "City"), as follows: Section 1. Bonds Authorized 1.01. It is hereby found, determined and declared that the City should issue its General Obligation Improvement Bonds (the "Bonds") in the approximate principal amount of $3,710,000, in order to finance public improvements, including without limitation the City's 2024 Pavement Management Program (the "Project"), including costs of issuance of the Bonds, subject to further details regarding the sale of the Bonds to be set forth in a resolution to be considered by the City Council at a subsequent meeting. 1.02. City staff are authorized and directed to take all other actions necessary to carry out the intent of this resolution. Section 2. Authority of Municipal Advisor. Ehlers and Associates, Inc. (the "Municipal Advisor") is authorized and directed to negotiate the sale of the Bonds. The City Council will meet on Monday, March 19, 2024, or another date selected by City staff, to consider proposals on the Bonds and take any other appropriate action with respect to the Bonds. Section 3. Authority of Bond Counsel. The law firm of Kennedy & Graven, Chartered, as bond counsel for the City ("Bond Counsel"), is authorized to act as bond counsel and to assist in the preparation and review of necessary documents, certificates and instruments relating 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. Section 4. Covenants. In the resolution awarding the sale of the Bonds, the City Council will set forth the covenants and undertakings required by Minnesota Statutes, Chapters 429 and Minnesota Statutes, Chapter 475, as amended (collectively, the "Act"). Section 5. Official Statement. In connection with the sale of the Bonds, the officers or employees of the City are authorized and directed to cooperate with the Municipal Advisor and participate in the preparation of an official statement for the Bonds and to deliver it on behalf of the City upon its completion. Section 6. Declaration of Official Intent to Reimburse Expenditures. 6.01 The Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the "Reimbursement Regulations") providing that proceeds of tax-exempt bonds used to reimburse prior expenditures will not be deemed spent unless certain requirements are met; the City expects to incur certain expenditures with respect to projects that may be financed temporarily from sources other than bonds, and reimbursed from the proceeds of tax-exempt bonds. GL135-52-932687.vl DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB 6.02 The City has determined to make a declaration of official intent (the "Declaration") to reimburse certain costs with respect to the Project from proceeds of the Bonds in accordance with the Reimbursement Regulations. 6.03 All reimbursed expenditures will be capital expenditures, costs of issuance of the Bonds, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Reimbursement Regulations. 6.04 This Declaration has been made not later than sixty (60) days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of the Bonds, except for the following expenditures: (a) costs of issuance of bonds; (b) costs in an amount not in excess of $100,000 or 5% of the proceeds of an issue; or (c) "preliminary expenditures" up to an amount not in excess of 20% of the aggregate issue price of the issue or issues that finance or are reasonably expected by the City to finance the project for which the preliminary expenditures were incurred. The term "preliminary expenditures" includes architectural, engineering, surveying, bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction or rehabilitation of a project, other than land acquisition, site preparation, and similar costs incident to commencement of construction. 6.05 This Declaration is an expression of the reasonable expectations of the City based on the facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for the Project and the principal amount of the Bonds described herein are consistent with the City's budgetary and financial circumstances. No sources other than proceeds of the Bonds to be issued by the City are, or are reasonably expected to be, reserved, allocated on a long- term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay such expenditures. 6.06 This Declaration is intended to constitute a declaration of official intent for purposes of the Reimbursement Regulations. Adopted by the City Council of Golden Valley, Minnesota, this 201h day of February 2024. DocuSigned by: Ros yn armon, Mayor ATTEST: DocuSigned by: Theresa c yriia, City Clerk STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) SS. CITY OF GOLDEN VALLEY ) I, the undersigned, being the duly qualified and acting Clerk of the City of Golden Valley, Hennepin County, Minnesota, do hereby certify that I have compared the below extract of minutes of the regular meeting of the City Council held on February 20, 2024 with the original on file in my office, and the extract is a full, true and correct copy of the minutes insofar as they relate to the City's $3,710,000 General Obligation Improvement Bonds, Series 2024A. The motion for the adoption of Resolution No. 24-015, a resolution providing for the issuance and sale of General Obligation Improvement Bonds, Series 2024A in the proposed aggregate principal amount of $3,710,000, was made by Council Member S. Ginis and duly seconded by Council Member D. La Mere -Anderson, and upon vote being taken thereon, the following voted in favor thereof: M. Harris, D. La Mere -Anderson, G. Rosenquist, S. Ginis, and R. Harmon and the following voted against the same: None. whereupon Resolution No. 24-015 was declared duly passed and adopted 5-0. WITNESS my hand and the seal of the City of Golden Valley, Minnesota this 10'h day of April, 2024. F C00%-D•EN b Tesa Schyma, City Cl Ca_of Golden Valley, Minnesota M�NNEgO� DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB February 20, 2024 PRE -SALE REPORT FOR City of Golden Valley, Minnesota $3,710,000 General Obligation Improvement Bonds, Series 2024A rg'N"EHLERS 0 PUBLIC FINANCE ADVISORS Prepared by: Ehlers 3060 Centre Pointe Drive Roseville, MN 55113 Advisors: Stacie Kvilvang, Senior Municipal Advisor Jason Aarsvold, Senior Municipal Advisor Dan Tienter, Municipal Advisor BUILDING COMMUNITIES. IT'S WHAT WE DO. BUILDING COMMUNITIES. IT'S WHAT WE DO. V-1 info@ehlers-inc.com %, 1 (800) 552-1171 ® www.ehiers-inc.com DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB Proposed Issue: $3,710,000 General Obligation Improvement Bonds, Series 2024A Purposes: The proposed debt issue includes financing for the City's 2024 Pavement Management Program, which consist of needed infrastructure improvements on multiple streets in the city. Debt service will be paid by special assessments and ad valorem property taxes. Authority: The Bonds are being issued pursuant to Minnesota Statutes, Chapters: • 429 - Improvement Bonds • 475 - General Bonding Authority Because the City is assessing at least 20% of the project costs, the Bonds can be a general obligation without a referendum and will not count against the City's debt limit. The City intends to levy a total of $830,957 in special assessments to benefitting property owners, of which $290,835 (35%) is estimated to be pre -paid (which reduces the bond issue accordingly). The remaining $540,122 of special assessments will be collected in years 2025 to 2034 at a rate of 1.5% percent over True Interest Cost (TIC) of the bonds. Annual assessments are paid on an equal principal basis. 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 16 years. Principal on the Bonds will be due on February 1 in the years 2026 through 2040. Interest will be due every six months beginning February 1, 2025. The Bonds will be subject to prepayment at the discretion of the City on February 1, 2034 or any date thereafter. Bank Qualification: Because the City is expecting to issue no more than $10,000,000 in tax exempt debt during the calendar year, the City will be able to designate the Bonds as "bank qualified" obligations. Bank qualified status broadens the market for the Bonds, which can result in lower interest rates. Presale Report February 20, 2024 City of Golden Valley, Minnesota Page 1 DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB Rating: The City's most recent bond issues were rated by Moody's Investors Service. The current rating on those bonds is "Aal". 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 underwriter of the bonds will retain a portion of this reoffering premium as their compensation (or "discount") but will pay the remainder of the premium to the City. 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/increase the net proceeds for the project. The resulting adjustments may slightly change the true interest cost of the issue, either up or down. 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. Presale Report February 20, 2024 City of Golden Valley, Minnesota Page 2 DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB 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 (including this issue) and this issue is over $1,000,000, 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 must ensure compliance with certain sections of the Internal Revenue Code and Treasury Regulations ("Arbitrage Rules") throughout the life of the issue to maintain the tax- exempt status of the Bonds. These Arbitrage Rules apply to amounts held in construction, escrow, reserve, debt service account(s), etc., along with related investment income on each fund/account. IRS audits will verify compliance with rebate, yield restriction and records retention requirements within the Arbitrage Rules. The City's specific arbitrage responsibilities will be detailed in the Tax Certificate (the "Tax Compliance Document") prepared by your Bond Attorney and provided at closing. The Bonds may qualify for one or more exception(s) to the Arbitrage Rules by meeting 1) small issuer exception, 2) spend down requirements, 3) bona fide debt service fund limits, 4) reasonable reserve requirements, 5) expenditure within an available period limitations, 6) investments yield restrictions, 7) de minimis rules, or; 8) borrower limited requirements. 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: The City has retained Ehlers to assist the City in developing a strategy to invest the Bond proceeds until the funds are needed to pay project costs. Risk Factors: Special Assessments: We have included approximately $290,835 of prepaid special assessments. If the City receives a significantly greater amount of prepaid assessments, it may need to increase the property tax levy portion of the debt service to offset lower than Presale Report February 20, 2024 City of Golden Valley, Minnesota Page 3 DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB expected interest earnings or if the City receives less prepayments, they will have to utilize other City funds to offset any shortfall needed to pay project costs. 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: Moody's Investors Service, Inc. Summary: The decisions to be made by the City Council are as follows: • Accept or modify the finance assumptions described in this report, and • Adopt the resolution attached to this report. Presale Report February 20, 2024 City of Golden Valley, Minnesota Page 4 DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB Pre -Sale Review by City Council: February 20, 2024 Distribute Official Statement: Week of February 26, 2024 Conference with Rating Agency and Due Diligence Call to Review Official Statement: Week of March 11, 2024 City Council Meeting to Award Sale of the Bonds: March 19, 2024 Estimated Closing Date: April 9, 2024 Attachments Estimated Sources and Uses of Funds Estimated Proposed Debt Service Schedule Resolution Authorizing Ehlers to Proceed with Bond Sale Stacie Kvilvang, Senior Municipal Advisor (651) 697-8506 Jason Aarsvold, Senior Municipal Advisor (651) 697-8512 Dan Tienter, Municipal Advisor (651) 697-8537 Silvia Johnson, Lead Public Finance Analyst (651) 697-8580 Alicia Gage, Senior Financial Analyst (651) 697-8551 Presale Report February 20, 2024 City of Golden Valley, Minnesota Page 5 DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB City of Golden Valley, Minnesota $3,710,000 General Obligation Improvement Bonds, Series 2024A Assumes Current Market Aa1 Rates plus 50bps 15 Year Bonds and 10 Year Assessments Sources & Uses Dated 04/09/2024 1 Delivered 04/09/2024 Sources Of Funds Par Amount of Bonds $3,710,000.00 Prepaid Assessments 290,835.00 Total Sources $4,000,835.00 Uses Of Funds Total Underwriter's Discount (1.200%) 44,520.00 Costs of Issuance 61,000.00 Deposit to Project Construction Fund 3,890,882.00 Rounding Amount 4,433.00 Total Uses $4,000,835.00 Series 2024A GO Imp Bonds I SINGLE PURPOSE 1 2/ 9/2024 1 12:28 PM EHLERS DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB City of Golden Valley, Minnesota $3,710,000 General Obligation Improvement Bonds, Series 2024A Assumes Current Market Aa1 Rates plus 50bps 15 Year Bonds and 10 Year Assessments Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 04/09/2024 - - - 02/01/2025 104,990.22 104,990.22 104,990.22 08/01/2025 - - 64,720.00 64,720.00 - 02/01/2026 225,000.00 3.500% 64,720.00 289,720.00 354,440.00 08/01/2026 - - 60,782.50 60,782.50 - 02/01/2027 230,000.00 3.400% 60,782.50 290,782.50 351,565.00 08/01/2027 - - 56,872.50 56,872.50 - 02/01/2028 235,000.00 3.250% 56,872.50 291,872.50 348,745.00 08/01/2028 - - 53,053.75 53,053.75 - 02/01/2029 240,000.00 3.250% 53,053.75 293,053.75 346,107.50 08/01/2029 - - 49,153.75 49,153.75 - 02/01/2030 245,000.00 3.250% 49,153.75 294,153.75 343,307.50 08/01/2030 - - 45,172.50 45,172.50 - 02/01/2031 250,000.00 3.250% 45,172.50 295,172.50 340,345.00 08/01/2031 - - 41,110.00 41,110.00 02/01/2032 255,000.00 3.300% 41,110.00 296,110.00 337,220.00 08/01/2032 - - 36,902.50 36,902.50 - 02/01/2033 260,000.00 3.350% 36,902.50 296,902.50 333,805.00 08/01/2033 - - 32,547.50 32,547.50 - 02/01/2034 265,000.00 3.400% 32,547.50 297,547.50 330,095.00 08/01/2034 - - 28,042.50 28,042.50 - 02/01/2035 275,000.00 3.450% 28,042.50 303,042.50 331,085.00 08/01/2035 - - 23,298.75 23,298.75 - 02/01/2036 230,000.00 3.550% 23,298.75 253,298.75 276,597.50 08/01/2036 - - 19,216.25 19,216.25 02/01/2037 235,000.00 3.650% 19,216.25 254,216.25 273,432.50 08/01/2037 - - 14,927.50 14,927.50 - 02/01/2038 245,000.00 3.800% 14,927.50 259,927.50 274,855.00 08/01/2038 - - 10,272.50 10,272.50 - 02/01/2039 255,000.00 3.900% 10,272.50 265,272.50 275,545.00 08/01/2039 - - 5,300.00 5,300.00 - 02/01/2040 265,000.00 4.000% 5,300.00 270,300.00 275,600.00 Total $3,710,000.00 - $1,187,735.22 $4,897,735.22 - Yield Statistics Bond Year Dollars Average Life Average Coupon $33,164.22 8.939 Years 3.5813752% Net Interest Cost (NIC) 3.7156162% True Interest Cost (TIC) 3.7281624% Bond Yield for Arbitrage Purposes 3.5645398% All Inclusive Cost (AIC) 3.9569189% IRS Form 8038 Net Interest Cost 3.5813752% 8.939 Years Series 2024A GO Imp Bonds I SINGLE PURPOSE 1 2/ 9/2024 1 12:28 PM EHLERS PUBLIC FINANCE ADVISORS DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB City of Golden Valley, Minnesota $3,710,000 General Obligation Improvement Bonds, Series 2024A Assumes Current Market Aa1 Rates plus 50bps 15 Year Bonds and 10 Year Assessments Debt Service Schedule Date Principal Coupon Interest Total P+I 105% of Total Assessments Levy/(Surplus) 02/01/2025 - - 104,990.22 104,990.22 110,239.73 - 110,239.73 02/01/2026 225,000.00 3.500% 129,440.00 354,440.00 372,162.00 82,098.54 290,063.46 02/01/2027 230,000.00 3.400% 121,565.00 351,565.00 369,143.25 79,289.90 289,853.35 02/01/2028 235,000.00 3.250% 113,745.00 348,745.00 366,182.25 76,481.28 289,700.97 02/01/2029 240,000.00 3.250% 106,107.50 346,107.50 363,412.88 73,672.64 289,740.24 02/01/2030 245,000.00 3.250% 98,307.50 343,307.50 360,472.88 70,864.00 289,608.88 02/01/2031 250,000.00 3.250% 90,345.00 340,345.00 357,362.25 68,055.38 289,306.87 02/01/2032 255,000.00 3.300% 82,220.00 337,220.00 354,081.00 65,246.74 288,834.26 02/01/2033 260,000.00 3.350% 73,805.00 333,805.00 350,495.25 62,438.10 288,057.15 02/01/2034 265,000.00 3.400% 65,095.00 330,095.00 346,599.75 59,629.46 286,970.29 02/01/2035 275,000.00 3.450% 56,085.00 331,085.00 347,639.25 56,820.84 290,818.41 02/01/2036 230,000.00 3.550% 46,597.50 276,597.50 290,427.38 - 290,427.38 02/01/2037 235,000.00 3.650% 38,432.50 273,432.50 287,104.13 287,104.13 02/01/2038 245,000.00 3.800% 29,855.00 274,855.00 288,597.75 288,597.75 02/01/2039 255,000.00 3.900% 20,545.00 275,545.00 289,322.25 289,322.25 02/01/2040 265,000.00 4.000% 10,600.00 275,600.00 289,380.00 289,380.00 Total $3,710,000.00 - $1,1879735.22 $4,897,735.22 $5,142,621.98 $694,596.88 $4,448,025.10 Significant Dates Dated First Coupon Date Yield Statistics 4/09/2024 2/01/2025 Bond Year Dollars $33,164.22 Average Life 8.939 Years Average Coupon 3.5813752% Net Interest Cost (NIC) True Interest Cost (TIC) Bond Yield for Arbitrage Purposes All Inclusive Cost (AIC) Series 2024A GO Imp Bonds I SINGLE PURPOSE 1 2/ 912024 1 12:28 PM ►EHLERS PUBLIC FINANCE ADVISORS 3.7156162% 3.7281624% 3.5645398% 3.9569189% DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB City of Golden Valley, Minnesota $540,122 General Obligation Improvement Bonds, Series 2024A Assessments - 10 Years TIC plus 1.50% - Equal Principal Assessments Date Principal Coupon Interest Total P+I 12/31/2025 54,012.20 5.200% 28,086.34 82,098.54 12/31/2026 54,012.20 5.200% 25,277.70 79,289.90 12/31/2027 54,012.20 5.200% 22,469.08 76,481.28 12/31/2028 54,012.20 5.200% 19,660.44 73,672.64 12/31/2029 54,012.20 5.200% 16,851.80 70,864.00 12/31/2030 54,012.20 5.200% 14,043.18 68,055.38 12/31/2031 54,012.20 5.200% 11,234.54 65,246.74 12/31/2032 54,012.20 5.200% 8,425.90 62,438.10 12/31/2033 54,012.20 5.200% 5,617.26 59,629.46 12/31/2034 54,012.20 5.200% 2,808.64 56,820.84 Total $540,122.00 - $154,474.88 $694,596.88 Significant Dates Filing Date First Payment Date Series 2024A GO Imp Bonds I SINGLE PURPOSE 1 2/ 9/2024 1 12:29 PM 1/01/2025 12/31 /2025 +EHLERS L- I i, I Ikfl.I I DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93DO-8886E58EO8DB City of Golden Valley, Minnesota $3,710,000 General Obligation Improvement Bonds, Series 2024A Assumes Current Market Aa1 Rates plus 50bps 15 Year Bonds and 10 Year Assessments Detail Costs Of Issuance Dated 04/09/2024 1 Delivered 04/09/2024 COSTS OF ISSUANCE DETAIL Municipal Advisor Bond Counsel Rating Agency Fee Miscellaneous TOTAL Series 2024A GO Imp Bonds I SINGLE PURPOSE 1 2/ 9/2024 1 12:28 PM $31,000.00 $14,000.00 $15,000.00 $1,000.00 $61,000.00 EHLERS