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Home My WebLink About2009-09-23 CC Add.'l Handouts FOR CITY OF CENTERVILLE, MINNESOTA $2,430,000 GENERAL OBLlGA nON IMPROVEMENT CROSSOVER REFUNDING BONDS, SERIES 2009B .:. STANDARD AND POOR'S" AA" BOND RATING ASSIGNED NORTHLANDtSECU RI Tl ES 45 South 7'" Street Suite 2500 Minneapolis, MN 55402 612-851-5900 800-851-2920 September 23, 2009 I City of Centerville, Minnesota $2,430,000 General Obligation Improvement Crossover Refunding Bonds, Series 2009B A). PURPOSE The Bonds will be issued to refund in advance of the March 1, 2010 call date the $2,700,000 General Obligation Improvement Bonds, Series 2006A. B). SALE RESULTS ~ Bond rating of "AA" assigned by Standard and Poor's (attached). ~ Bonds purchased by Wells Fargo Brokerage Services, LLC - Minneapolis, MN ~ True interest cost of 2.73%. C). SAVINGS SUMMARY ~ Average interest rate 2006A Bonds ~ Average interest rate NEW 2009B Bonds 4.10% 2.81% ~ Final maturity 2006A Bonds ~ Final maturity NEW 2009B Bonds ~ Call Date NEW 2009B Bonds 2022 2018 February 1, 2015 j.. Total Net Debt Service Reduction ~ Total Present Value Savings ~ Present Value Benefit % $263,561 $169,270 6.43% Page 2 NORTHLAN D tSEC U RI T 1 ES Bid Tabulation ADJUSTED TABULATION OF BIDS CITY OF CENTER VILLE, MINNESOTA $2,430,000- G.O. IMPROVEMENT CROSSOVER REFUNDING BONDS, SERIES 2009B A WARD: WELLS FARGO BROKERAGE SERVICES, LLC DAlE OF SALE: WEDNESDAY, SEPTEMBER 23, 2009 S&P UNDERLYING RATING: AA/Stable Outlook BIDDER PURCHASE PRICE $2,440,619.94 NET INTEREST COST $426.463.39 TRUE INTEREST COST (TIC) 2.7279001% WELLS FARGO BROKERAGE SERVICES, LLC" Minneapolis, MN Amount Rate Maturitv Yield Price Amount Rate Maturitv Yield Price St40,OOO 2.00% 02101111 0.75% 101.558 $ 185,000 2.00% 02/01115 2.00% 100.000 170,000 2.00 02101112 1.10 101.998 190,000 3.00 02/01116 2.40 102.943t 175,000 2.00 0210 \ 113 \.40 ]01.902 200,000 3.00 02101117 2.60 101.950t 175,000 2.00 0210\114 1.80 ]00.814 1,195,000 3.00 02101118 2.85 100.724t ORIGlNAL BIDS TRUE PURCHASE NET INTEREST BIDDER PRICE INTEREST COST COST (TIC) WELLS FARGO BROKERAGE SERVICES, LLC $2,486,042.55 $431,957.45 2.722411% Minneapolis, MN ROBERT W. BAIRD & CO., INC. $2,488,213.85 $43VI9.4R 2.723599% Milwaukee, WI UBS FINANCIAL SERVICES INC. $2,482,248.40 $434,059.93 2.738693% New York, NY UMB BANK N.A. $2,457,675.00 $442,353.33 2.804418% Kansas Cily, MO . Par amount decreased from $2,475,000 to $2,430,000. ** With Wells Fargo Advisors as co-manager and Cronin & Co., [nc. as account member. Bonds priced to par call, t Page 3 NORTHLAND~SEC URITlES Refunding Bonds, Series 2009B - Debt Service Comparison Final City of Centerville, Minnesota G.O. Improvement Crossover Refunding Bonds, Series 2009B Crossover Refund 2006A Bonds Debt Service Comparison Date Total P+I PCF Existing D/S Net New D/S 03/01/2010 (2,420.000.00) 2,616,981.25 196,238.84 03/0112011 225,933.33 225,933.33 03101/2012 231,650.00 231,650.00 03/01/2013 233.250.00 233,250.00 03/01/2014 229,750.00 229,750.00 03/01/2015 .~36,250.00 236,250.00 03/01/2016 237,550.00 237,550.00 03/01/2017 241,850.00 241,850.00 03/01/2018 1,230,850.00 1.230,850.00 03/01/2019 03/01/2020 0310112021 0310112022 Total $2,867,083.33 (2,420,000.00) $2,616,981.25 $3,063,322.17 Old Net D/S 196,981.25 248,525.00 252,825.00 256,665.00 255,035.00 258,122.50 260,722.50 262,922.50 264,620.00 260,805.00 266,675.00 271,805.00 271,180.00 $3,326,883.75 Savings 742.41 22,591.67 21,175.00 23,415.00 25,285.00 21,872.50 23,172.50 21,072.50 (966,230.00) 260,805.00 266,675.00 271,805.00 271,180.00 $263,561,58 PV Analysis Summary (Net to Net) Gross PV Debt Service Savings.. 168,528.56 168,528.56 Net PV Cashflow Savings @ 2.586%(Bond Yield)... . Contingency or Rounding Amount... Net Present Value Benefit Net PV Benefit / $2,634,092.41 PV Refunded Debt Service Net PV Benefit / $2,420,000 Refunded Principal... Net PV Benefit / $2,430,000 Refunding Principal 742.41 $169,270.97 6.426% 6.995% 6.966% Refunding Bond Information Refunding Dated Date Refunding Delivery Date 10/0112009 10/2912009 Page 4 NORTHLANotSEC URITIES New Debt Service Schedule - $2,430,000 G.O. Improvement Crossover Refunding Bonds, Series 2oo9B Final City of Centerville, Minnesota G.O. Improvement Crossover Refunding Bonds, Series 2009B Crossover Refund 2006A Bonds Debt Service Schedule Date Principal Coupon Interest T ota\ P+\ 10/29/2009 08/01/2010 53.708.33 53,708.33 02/01/2011 140.000.00 2.000% 32.225.00 172.225.00 03/01/2011 08/01/2011 30.825.00 30.825.00 02/01/2012 170.000.00 2.000"/0 30.825.00 200.825.00 03/01/2012 08/01/2012 29.125.00 29.125.00 02/01/2013 175.000.00 2.000% 29.125.00 204,125.00 03/0112013 08/01/2013 27.375.00 27,375.00 02/01/2014 175,000.00 2.000% 27,375.00 202.375.00 03/01/2014 08/01/2014 25,625.00 25,625.00 02/01/2015 185.000.00 2.000% 25.625.00 210.625.00 03/01/2015 05/0112015 23.775.00 23,775.00 02/01/2016 190,000.00 3.000%, 23.775.00 213,775.00 03/01/2016 08/0112016 20,925.00 20.925.00 02/01(2017 200.000.00 3.000% 20.925.00 220,925.00 03/01/2017 08/01/2017 17.925.00 17,925.00 02/01/2018 1.195.000.00 3.000% 17,925.00 1.212.925.00 03/01/2018 Total $2.430,000.00 $437,083.33 $2,867,083.33 Fiscal Total 225.933.33 231,650.00 233,250.00 229.750.00 236.250.00 237.550.00 241,850.00 1.230.850.00 Daled De~ivery Date ~jrst ~upon Qate 10/01/2009 10/2912009 8/01(2010 First available call date Call Price 2/01/2015 100.??oo000% Accrued Interest from 10101/2009 to 10/29/2009 Bond Year Dollars "Average Life 5.012.78 $15,540.00 6.395 Years AI/erage Coupon Net Interest Cost (~ True Interest Cost (TIC) 2.81263400/0 2.7442947% 2.7279001 % Bond Yield for Arbitrage Purposes Net Interest Cost Weighted AveraQe Maturity 2.5857273% 2.6016649''10 _~310 Years Page 5 NORTHLANotSEC URI TIES Bond Rating Report from Standard & Poor's Page 6 NORTHLAND~SECU R1TIES Summary: Centerville, Minnesota; General Obligation Primary Credit Analyst Scott 0 Garrigan, Chicago (ll31Z-Z33-7014; scott_garrigan@standardandpoors.com Secondary Credit Analyst: Steffanie Dyer. Chicago [I) 312.233.7007; steffanie_dyer@standardandpoorscom Table Of Contents Rationale Outlook Related Research www.st.ndardandpoors.com/r.tingsdirBcl 1 Standard & Poor's. All rights reser~ed, No reprint OJ dissemination without S&P's permission. See Terms of Use/Disclaimer on the last page 7qqr:13l!D[)Li575~, Summary: Centerville, Minnesota; General Obligation Credit Profile US$2475 mil GO imp crossover rtdg bnds ser 20096 dtd 10/01/2009 due 02/01/2016 Long Term Rating AA/Stable Centerville GO Long Term Rating New AA/Stable Affirmed Rationale Standard & Poor's Ratings Services assigned its 'AA' rating to Centerville, Mino,'s series 2009A general obligation (GO) improvement bonds. The rating is based on the following rating factors: . Access to employment throughout the large and diverse Minneapolis-St. Paul area, . Economic indicators that are all better than national averages, . Financial performance we consider to be very strong, and . Financial management practices we consider to be good. The city's unlimited tax GO pledge secures the series 2009B bonds, and proceeds will be used to crossover refund certain maturities of the city's series 2006A bonds. Centerville is located about 15 miles north of St. Paul in Anoka County, Minn. The city is primarily residential in nature (83% of marker value is residential) with housing values that average $300,000.$400,000. With a population of 3,800, the city's residents have easy access to employment throughout the Minneapolis-St. Paul area. All of the city's available economic indicators are favorable. Median household effective buying income (EBI) is considered very strong at 144% of the national average, while per capita EBI is considered good at 110% of the national average. In addition, estimated market value of $383 million translates to $99,833 per capita, a value we consider to be very strong. Although draw downs in the general fund balance totaling $400,000 have occurred over the previous two audited years for construction of a public works facility, financial performance remains very strong, in our opinion. As of Dee. 31, 2008, the unreserved general fund balance was $1.2 million, or a very strong 44.0% of expenditures. The city is expecting to achieve balanced operations for 2009 after adjusting its budget to account for about a $120,000 reductions in revenues due to state aid and building permit revenues. We consider the city's financial management practices to be good under Standard & Poor's Financial Management Assessment (FMA) methodology. An FMA of good indicates that financial management practices exist in most areas, although all may nor 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 that is updated annually, and an informal policy to maintain a general fund balance that represents at least 45% of expenditures. Although no formal debt managemenr or financial planning policies exist, the above strengths offset Standard & Poor's RetingsDirect I September 18, 2009 2 Standard & Poor's. All rights reserved, No reprint ordisserninalion without S&P's permission. See Terms of Use/Disclaimer on the last pags ;{;!ai~: 130\Ju6;;1'!J:j Summary: Centerville, Minnesota; General Obligation these vulnerabilities to the FMA. The city's overall net debt burden is considered high at $6,945 per capita but mOre moderate at 7.0% of market value. In addition, debt service in the city's governmental funds has been above 25% from 2006~2008, a figure we consider to be high. 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 they are similar in nature to property taxes. Outlook The stable oudook on the rating is supported by our expectation that the city will continue to benefit from its access to employment throughout the Minneapolis~St. Paul region, and that the city's very strong financial performance will remain consistent with historical trends. Related Research USPF Criteria: "GO Debt," Oct. 12,2006 Complete ratings information is available to RatingsDirect subscribers at www.raringsdirect.com. AJI ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Ratings in the left navigation bar, select Find a Rating. www.Slandardandpoors.com/ralingsdirecl 3 Standard & Poor's. All rights reser~ed, No reprint or dissemination witllOul S&P's permission. See Terms of Use/Disclaimer on the last page iO!~:; ,: '(:::6~7:'3