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HomeMy WebLinkAbout2013-05-22 Handout @ Meeting BOND SALE RESULTS FOR CITY OF CENTERVILLE, MINNESOTA $1,485,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A ❖ STANDARD & POOR' S "AA" CREDIT RATING NORTHLAND 10 SECURI'T'IES 45 South 7h Street Suite 2000 Minneapolis, MN 55402 612 - 851 -5900 800 - 851 -2920 May 22, 2013 City of Centerville, Minnesota $1,485,000 General Obligation Improvement Bonds, Series 2013A Financing Overview The City anticipates issuing bonds for the following purposes: 1. $1,485,000 General Obligation Improvement Bonds. Pursuant to MN Statutes, Chapter 429, these bonds will finance various street improvements within the City. Final Maturity will be on February 1, 2029. Summary of Recommended Terms: 1. Type of Sale Public Offering. 2. Proposals Received Wednesday, May 22, 2013 @ 10:30 A.M. 3. Council Consideration Wednesday, May 22, 2013 @ 6:30 P.M. 4. Repayment Term The Bonds will mature annually each February 1, 2016 -2029. Interest will be payable February 1, 2014 and semiannually thereafter on February 1 and August 1. 5. Security General Obligation pledge of the City, and special assessments. 6. Prepayment Option February 1, 2020 and any date thereafter at a price of par plus accrued interest. 7. Tax Status Bradley & Deike, P.A. - Minneapolis, MN 8. Credit Enhancement The City's general obligation debt is rated "AA" by Standard & Poor's Corporation. 9. Paying Agent Northland Trust Services, Inc. Page 2 NORTHLAND SECURITIES Related Considerations: • Bank Qualified - because total tax - exempt debt issued by the City in calendar year 2013 is not expected to be more than $10 million, the bonds will be designated as "bank qualified" obligations pursuant to Federal Tax Law. • Arbitrage Compliance — o Project Construction Fund — All tax exempt issues are subject to federal rebate requirements which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate exemption the City expects to qualify for is the "small issuer exemption." o Debt Service Fund — The City must maintain a bona fide debt service fund for the bonds or be subject to yield restriction in the debt service fund. A bona fide debt service fund involves an equal matching of revenues to debt service expense with a balance forward permitted equal to the greater of the investment earnings in the fund during that year or 1/12 of the debt service of that year. • Book Entry - The Bonds will be global book entry with Northland Trust Inc. designated as the paying agent. As "paperless" bonds, you will avoid the costs of bond printing and annual registrar charges. The Paying Agent will invoice you for the interest semiannually and on an annual basis for the principal coming due. • Continuing Disclosure - The Series 2013A Bonds are subject to the Securities and Exchange Commission's continuing disclosure requirements. Page 3 NORTHLAND 0SECURITIES EXHIBIT A - Tabulation of Bids TABULATION OF BIDS CITY OF CENTERVILLE, MINNESOTA $1,485,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2013A AWARD: RAYMOND JAMES & ASSOCIATES, INC. DATE OF SALE: WEDNESDAY, MAY 22, 2013 S &P UNDERLYING RATING: AA NET TRUE PURCHASE INTEREST INTEREST BIDDER PRICE COST COST (TIC) RAYMOND JAMES & ASSOCIATES, INC. $1,524,681.55 $438,566.37 2.4881266% Memphis, TN ROBERT W. BAIRD & CO., INC. $1,502,213.65 $454,546.35 2.5993389% Milwaukee, WI BOSC, INC. $1,513,689.45 $502,418.88 2.8682961% Menomonee Falls, WI t Paramount decreased from $1,510,000 to $1,485,000. Page 4 NORTHLAND SECURITIES EXHIBIT B - Sources and Uses of Funds Sources & Uses Dated 06/01/2013 1 Delivered 06113/2013 Sources Of Funds Par Amount of Bonds $1,485,000.00 Reoffer 30,706.25 Accrued Interest from 06/01/2013 to 06/13/2013 1,233.96 Total Sources $1,516,940.21 Uses Of Funds Total Underwriter's Discount (0.972%) 14,434.20 Costs of Issuance 2 - 6 - , - 5 -- 5 -- 0 - .0 - 0 b - ep -- o -- si' - t - t - o -- D -- e — bt -- Se ^ 'r - v - i - c - e — F - un -- d ------ 1 Deposit to Project Construction Fund 1,467,215.00 Deposit to Debt Service (Unused Discount) 3,438.45 Rounding Amount 4,068.60 Total Uses $1,516,940.21 Page 5 NORTHLAND S E C U R I T I E S EXHIBIT C — Debt Service Schedule Debt Service Schedule Date Principal Coupon Interest Total P +I Rscal Total 06/13/2013 _ _ 02/01/2014 24,679.17 24,679.17 24,679.17 08/01/2014 18,509.38 18,509.38 - 02/01/2015 18,509.38 18,509.38 37,018.75 08/01/2015 18,509.38 18,509.38 - 02/01/2016 10,000.00 1.625% 18,509.38 28,509.38 47,619. 15 08/01/2016 - - 18,428.13 18,428.13 - 02/012017 10,000.00 1.625% 18,428.13 28,428.13 46,856.25 08/01/2017 - - 18,346.88 18,346.88 - 02/01/2018 10,000 00 1.625% 18,346.88 28,346.88 46,693.75 _W16 - -- - - - - - -- - - ____ I_8__,_2_6__5__._6_3_ - - - - - - - - - 1/2018 - - 18,265.63 - 02/01/2019 10,000.00 1.625% 18,265.63 28,265.63 46,531.25 08/01/2019 - - 18,184.38 18,184.38 - 02/01/2020 10,000.00 1.625% 18,184.38 28,184.38 46,368.75 08/01/2020 - - 18,103.13 18,103.13 _ _- 02/01/2021 150,000.00 2.000% 18,103.13 ^ 168,103.13 _ 18__ 6,206.25 08/01/2021 - - 16,603.13 16,603.13 - 02/01/2022 155,000.00 2.000% 16,603.13 171,603.13 188,206.25 08/01/2022 - - 15,053.13 15,053.13 - 02/01/2023 155__,00 2.125% 15,053.13 170,053.13 185,106.25 - --- - --- - - - - - -- - -- 1_3_,4_0_6_._25____ - - - - - - - -- - 08/O1/2023 - - 13,406.25 - 02/01/2024 160,000.00 2500% 13,406 25 173,406.25 186,812 50 08/01/2024 - - 11,406.25 11,406.25 - 02/01 /2025 160,000.00 2.500% 11,406.25 171,406.25 182,812.50 08/01/2025 - - 9,406.25 9,406.25 - 02/O1/2026 165,000.00 2.750% 9,406.25 174,406.25 183,812 50 08/01/2026 - - 7,137.50 7,137.50 - 02/01/2027 170,000.00 2.750% 7,137.50 177,137.50 184,275.00 08/01/2027 - - 4,800.00 4,800.00 - 02/01 /2028 170,000.00 3.000% 4,800.00 174,800.00 179,600.00 08/01/2028 2,250.00 2,250.00 - 02/01/2029 150,000 00 3.000% 2,2 152,250.00 154,500.00 Total $1,485,000.00 - $ 441,497.92 $1,926,497.92 - Date And Term Structure Dated 6/01/2013 Delivery Date 6/13/2013 First Coupon Date 2/01/2014 First available call date 2/01/2020 - ----- -- - - - - -- - - -- - - - - - - -- - - -- Call Pr - - -- - - - -- - 100._0000000% - - - - -- ------------------------------ -------------- - - - - -- ---- - - - - -- - - - -- - - - - -- Accr Interes from 06/01/2013 to 06/13/2013 1,233.96 Yield Statistics Bond Ye Dolla $17,005.50 - - - - - -- -- - - -- - -- - - - - - -- ----- - - - - -- Average Life _ _ _ _ _ _ 11.452 Years -- - -- - -- -- -- -- - Average Coupon 2.5962066% Net Interest Cost (NIC) 2.5005196 — rue n ---- I ---- ------------- - - - - -- ----- - - - - -- --- - - - - -- --- -- ------- -- - - - -- - - -- ---- --- ------- - - - - -- - — Tte C ost (TIC) 2.466188 - ---- - - - - -- - All Incl Cost (AIC) 2.64 76521% Page 6 NORTHLAND SECURITIES EXHIBIT D - Pricing Summary Pricing Summary Maturity Maturity Type of Bond Coupon Yield Value Price Dollar Price 02/01/2020 Term 1 Coupon 1.625% 1.625% 50,000.00 100.000% 50,000.00 02/01/2021 Serial Coupon 2.000% 1.700% 150,000.00 101.873% c 152,809.50 02/01/2022 Serial Coupon 2.000% 1.800% 155,000.00 101.244% c 156,928.20 02/01/2023 Serial Coupon 2.125% 1.900% 155,000.00 101.395% c 157,162.25 02/01/2025 Term 2 Co upon 2.500% 2.100% 320,0 00.00 10 2.463% c 327 ,881.60 _.----- - - - --- — -- _— _.------------ - - - - -- - -- --------- - - - - -- 02/01/2027 Term 3 Coupon 2.750% 2.350% 335,000.00 102.442% ------ c 343,180.70 02/01/2029 Term 4 Coupon 3.000% 2.600% 320,000.00 102.420% c 327,744.00 Tota - - - $1,4 - - $1, Bid Information Par Amo unt of Bonds $1 Reoffering Prem or (Discount i 30,706.25 GrossProduction - - -- ------------------ - --- -- ---- ------------ - - - - -- — - - - - -- -------- - - - - -- $1,515,706.25 Total Underwriter's Discount (0.972 %) $(14,434.20) -- ------ - -- - -- — - -- -- - - - - -- -- - -- — -- _ - — -- - - - - Bid (101.096 %) 1,501,272.05 Accrued Interest from 06/01/2013 to 06/13/2013 1,233.96 --- - - -- --------- --------- Total Purch- - ase - - Price - - -- - - - - - -- -- -- - - -- - -- - - - -- - - - $1,502,506.01 Bond Year Dollars $17,005.50 Average Life 11.452 Years Average Coupon - - - - _ - -- - - -- 2.5962066% Net Interest Cost (NIC) 2.5005196% True Interest Cost (TIC) 2.4661883% Page 7 NORTHLAND SECURITIES City of Centerville, Minnesota $1,485,000 General Obligation Improvement Bonds, Series 2013A (15 -year term) Revenue vs. Debt Service (a) (b) (c) (d) (e) (f) (g) (h) (i) 0) (k) (I) Tax Levy Schedule Less: Area A Less Area B Statutory Special Special Annual Cumulative 105% Debt Less Other Assessment Assessment Net City Share Surplus / Cash Year Year Date Scheduled P+I Service City Funds Revenue Revenue (Tax Levy) Deficit Balance Certified Collected Tax Levy X 02/01/2013 - - 2011 2012 02/01/2014 24,679.17 25,913.13 25,913.13 - - - - - 2012 2013 - 02/01/2015 37,018 75 38,869 69 16,381.70 14,795.41 7,692.58 7.42 7.42 2013 2014 7,700.00 F•� 02/01/2016 47,018 75 49,369 69 16,381.70 14,795.41 18,192.58 7.42 14.85 2014 2015 18,200 00 y 02/01/2017 46,856.25 49,199.06 16,381.70 14,795.41 18,02195 (21 95) (7.11) 2015 2016 18,000.00 02101/2018 46,693.75 49,028.44 16,381 70 14,795.41 17,851 33 48 67 41.57 2016 2017 17,900.00 I 02/01/2019 46,531.25 48,85731 16,381.70 14,795 41 17,680 70 19.30 60.86 2017 2018 17,700.00 02/01/2020 46,368.75 48,687.19 16,381.70 14,795.41 17,510 08 (10 08) 5079 2018 2019 17,500.00 02/01/2021 186,206.25 195,516.56 16,38170 14,795.41 164,339.45 (39.45) 1133 2019 2020 164,300.00 C 02/01/2022 188,206.25 197,616.56 16,381.70 14,795 41 166,439.45 (39 45) (28.12) 2020 2021 166,400 00 �D 02/01/2023 185,106.25 194,36156 16,381.70 14,795.41 163,184.45 15.55 (12.57) 2021 2022 163,200.00 �,,,f" 02/01/2024 186,812.50 196,153.13 16,381.70 14,795 41 164,976 02 23.98 11 41 2022 2023 165,000.00 Z 02/01/2025 182,812.50 191,953.13 16,381.70 175,57143 28.58 39.99 2023 2024 175,60000 02/0112026 183,812.50 193,003.13 16,381.70 176,62143 (21 42) 18.56 2024 2025 176,600.00 02/01/2027 184,27500 193,48875 16,381.70 177,107.05 (7.05) 11.51 2025 2026 177,100.00 02/01/2028 179,600 00 188,580.00 16,381 70 172,198.30 1.70 1321 2026 2027 172,200.00 02/01!2029 154,500.00 162,225.00 16,381.70 145,843 30 56.70 6991 2027 2028 145,900.00 (p Total $1,926,497.92 $2,022,822.82 $245,72550 $147,95410 $1,603,23009 $69.91 $1,603,300.00 � z � o CD Revenue Footnotes: r ( e) The special assessment revenue is based on $182,138 of assessments at a rate of 4.00% over a term of fifteen years requiring equal y z annual installments ( f) The special assessment revenue is based on $120,000 of assessments at a rate of 4.00% over a term of ten years requiring equal annual installments rr C rn N A .� LA 00 Northland Securities Public Finance Exhibit F - Standard & Poor's Rating Rationale Page 9 NORTHLAND 0SECURITIES STANDARD &P00R'S RATINGS SERVICES RatingsDirect @ .............................................................................. ............................... Summary: Centerville, Minnesota; General Obligation Primary Credit Analyst: Carol A Hendrickson, Chicago 312- 233 -7062; carol. hendrickson @standardandpoors.com Secondary Contact: Caroline E West, Chicago 312 - 233 -7047; caroline .west @standardandpoors.com Table Of Contents ........................................... ............................... ... ............................... . Rationale Outlook Related Criteria And Research WWW. STANDARDANDPOORS .COM /RATINGSDIRECT MAY 14, 2013 1 1131794 300238792 Summary: Centerville, Minnesota; General Obligation Credit Profile US$1.51 mil GO imp bnds ser 2013A dtd 06/01/2013 due 02/01/2029 Long Term Rating AA /Stable New Centerville GO Long Term Rating AA /Stable Affirmed Rationale Standard & Poor's Ratings Services has assigned its 'AA' rating to Centerville, Minn.'s series 2013A general obligation (GO) improvement bonds and affirmed its 'AA' rating on the city's previously rated issues. The outlook is stable. The rating reflects the following credit characteristics: • Access to employment throughout the large and diverse Minneapolis -St. Paul area; • Strong -to -very strong incomes and per- capita market value; and • Historically very strong general fund reserves, supported by good management. In our view the city's moderately high debt burden and high carrying charges, in part, offset the above strengths. The city's unlimited -tax GO pledge secures the series 2013A bonds, but management plans to pay a portion of debt service from special assessments. It will use bond proceeds to finance various street improvements. Centerville (population: 3,873) is about 15 miles north of St. Paul in Anoka County. The city is primarily residential (76% of market value is residential), and residents have easy access to employment throughout the Minneapolis -St. Paul area. We consider median household effective buying income (EBI) very strong at 147% of the national average, while per- capita EBI is considered good at 108% of the national average. Collection year 2013 net tax capacity decreased 7.3% to $2.9 million compared with collection year 2012. Despite recent decreases in economic market value related to residential market declines, we still consider market value per capita strong at $74,457. Management has reported leading taxpayers and employers have been stable. While new residential growth has not returned to pre- recession levels, management has seen an uptick in new construction over the past year. Despite some decreases in net tax capacity, Centerville expects to maintain very strong reserves. It is largely property tax dependent, and these revenues accounted for 76.5% of the general fund budget in fiscal 2012 (Dec. 31). Centerville has the authority to raise both its tax rate and dollar levy, and while it has maintained a flat levy in recent years, it has also raised its rate to capture the same revenues from a reduced tax base. Management expects to perform in line with its balanced budget for fiscal 2013. Although management has not begun the fiscal 2014 budget process, it expects to adopt a balanced budget. Centerville added $63,000 to general fund reserves in fiscal 2012, increasing total fund equity to $1.21 million. Of this balance, $1.18 million was available, or a very strong 58.6% of expenditures. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT MAY 14, 2013 2 1131794 1300238792 Summary: Centerville, Minnesota; General Obligation We consider the Centerville's financial management practices "good" under Standard & Poor's Financial Management Assessment methodology, indicating that financial management practices exist in most areas, although all may not be formalized or regularly monitored. Highlights of these practices include regular reporting of budget and investment performance to elected officials, a formal five -year capital improvement plan updated annually, and a formal policy to maintain a general fund balance at 40 % -50% of expenditures. Weaknesses include the lack of formalized long -term financial planning and a debt policy beyond state guidelines. We consider the city's overall net debt burden moderately high at 6.2% of market value but more moderate on a per- capita basis at $4,635. In addition, debt service as a percentage of governmental expenditures less capital outlay was a high 30.4% of total government expenditures less capital outlay. Although much of this debt is self - supported, it is with the use of special assessments; we do not give self - support credit for debt serviced by this revenue stream since it is similar in nature to property taxes. Amortization is above average, with 79% of debt to be retired over 10 years. The city has no future debt plans identified at this time. All qualified city employees participate in a pension plan administered by the Public Employees Retirement Association of Minnesota, a cost - sharing, multiple- employer retirement plan. The city made all employer pension contributions as required by state statute in fiscal 2012, which totaled $38,899, or 1.3% of governmental expenditures. Retirees can participate in city health insurance but cover their own costs. Outlook The stable outlook reflects our expectation that management will continue to make necessary adjustments to offset potential further decreases in taxable valuation or other revenue pressures. We do not expect the rating to change within the two -year parameter of the stable outlook because we believe the city will maintain consistently strong reserves. Related Criteria And Research USPF Criteria: GO Debt, Oct. 12, 2006 Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT MAY 14, 2013 3 1131794 1300238792 Copyright © 2013 by Standard & Poor's Financial Services LLC. All rights reserved. No content (including ratings, credit - related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S &P). 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