HomeMy WebLinkAbout[07a] Bond Sale Council Agenda Item 7a
MEETING DATE: June 6, 2016
AGENDA ITEM: Bond Sale - Monte Eastvold,Northland Securities, Inc.
SUBMITTED BY: Finance
BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None
PREVIOUS COUNCIL ACTION: Council awarded bids and adopted the capital improvement plan
for the government center.
BACKGROUND INFORMATION: Monte Eastvold,Northland Securities, will be present to discuss
the bond issue for the 2016 GO capital improvement plan bond. The funding sources for the project
include debt levy and use of reserved balances from the 2011 GO CIP bonds.
Standards &Poors updated the City's bond rating. S&P reaffirmed the City's bond rating as AA- with a
stable outlook. The rating is a testament of the financial decisions the Council has made in recent years
committing to strong financial health. The AA-rating provides the City with more bond buyers bidding
lower interest rates. The bond rating summary from S&P is attached.
The most recent estimated amortization schedules are attached. Monte will provide updated schedules at
the meeting. The interest rates remain favorable—near record lows. The resolutions reflect estimates for
closing costs. Monte will also bring the updated resolutions to the meeting for the Council to adopt and
sign.
BUDGET/FISCAL IMPACT: $4,335,000 General Obligation CIP Bonds
ATTACHMENTS: Request for Council Action
Resolution 2016-021 Authorize GO Bond Issue 2016A
2016A General Obligation CIP Bond Schedule
Standards &Poors Rating Summary
REQUESTED COUNCIL ACTION: Authorize execution of Resolution 2016-021 providing for the
issuance and sale of the $4,335,000 Bonds, Series 2016A,pledging for the security thereof net revenues
and levying a tax for the payment thereof.
EXTRACT OF MINUTES OF A MEETING
CITY COUNCIL OF THE
CITY OF ST. JOSEPH, MINNESOTA
HELD: June 6, 2016
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of St. Joseph, Stearns County, Minnesota, was duly held at the City Hall on June 6,
2016, at 6:00 P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of
$4,335,000 General Obligation Capital Improvement Plan Bonds, Series 2016A.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION NO. 2016-021
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $4,335,000 GENERAL
OBLIGATION CAPITAL IMPROVEMENT PLAN BONDS, SERIES 2016A AND LEVYING
A TAX FOR THE PAYMENT THEREOF
A. WHEREAS, on February 1, 2016, the City Council of the City of St. Joseph,
Minnesota(the "City"), held a public hearing on the proposed issuance of general obligation
capital improvement plan bonds and, pursuant to resolution approved and adopted the 2016
through 2020 Five-Year Capital Improvement Plan (the "Plan"), and approved the issuance of
general obligation capital improvement plan bonds to finance the acquisition and construction of
a new city hall and public safety facility (the "Project"), all pursuant to the Plan and in
accordance with the provisions of Minnesota Statutes, Section 475.521; and
B. WHEREAS, a petition (the "Petition") signed by voters equal to five percent of
the votes cast in the City in the last general election requesting a vote on the issuance of the
general obligation capital improvement plan bonds was filed with the Administrator within thirty
days after the public hearings on the Plan and on the issuance of the general obligation capital
improvement plan bonds; and
C. WHEREAS, a petition for revocation of the Petition has been filed with the
Administrator which caused the Petition to be signed by less than five percent of the votes cast in
the City in the last general election; and
D. WHEREAS, the City Council hereby determines and declares that it is necessary
and expedient to issue $4,335,000 General Obligation Capital Improvement Plan Bonds, Series
2016A (the "Bonds" or, individually, a "Bond"), pursuant to Minnesota Statutes, Section 475.521
and Chapter 475, to provide funds to finance the Project; and
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E. WHEREAS, the City has heretofore determined, in accordance with Minnesota
Statutes, Section 475.521, Subd. 4, that the principal and interest to become due in any year on
all the outstanding bonds issued by the City under Minnesota Statutes, Section 475.521,
including the Bonds, will be less than 0.16 percent of the taxable market value of property in the
City; and
F. WHEREAS, the City has retained Blue Rose Capital Advisors, Inc., in
Minneapolis, Minnesota, as its independent financial advisor for the sale of the Bonds and was
therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9); and
G. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of St. Joseph,
Minnesota, as follows:
1. Acceptance of Offer. The offer of Northland Securities, Inc. (the "Purchaser"), to
purchase the Bonds in accordance with the terms and at the rates of interest hereinafter set forth,
and to pay therefor the sum of$ plus interest accrued to settlement, is hereby
accepted.
2. Bond Terms.
(a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds
shall be dated July 1, 2016, as the date of original issue, be issued forthwith on or after such date
in fully registered form, be numbered from R-1 upward in the denomination of$5,000 each or in
any integral multiple thereof of a single maturity (the "Authorized Denominations"), and shall
mature on December 15 in the years and amounts as follows:
Year Amount Year Amount
2017 2027
2018 2028
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
2024 2034
2025 2035
2026 2036
As may be requested by the Purchaser, one or more term Bonds may be issued having
mandatory sinking fund redemption and final maturity amounts conforming to the foregoing
principal repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
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(b) Book Entry Only System. The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York or any of its successors or its
successors to its functions hereunder (the "Depository") will act as securities depository for the
Bonds, and to this end:
(i) The Bonds shall be initially issued and, so long as they remain in book
entry form only (the "Book Entry Only Period"), shall at all times be in the form of a
separate single fully registered Bond for each maturity of the Bonds; and for purposes of
complying with this requirement under paragraphs 5 and 10 Authorized Denominations
for any Bond shall be deemed to be limited during the Book Entry Only Period to the
outstanding principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar(as hereinafter defined) in the name of CEDE
& CO., as the nominee (it or any nominee of the existing or a successor Depository, the
"Nominee").
(iii) With respect to the Bonds neither the City nor the Bond Registrar shall
have any responsibility or obligation to any broker, dealer, bank, or any other financial
institution for which the Depository holds Bonds as securities depository (the
"Participant") or the person for which a Participant holds an interest in the Bonds shown
on the books and records of the Participant (the "Beneficial Owner"). Without limiting
the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have
any such responsibility or obligation with respect to (A) the accuracy of the records of the
Depository, the Nominee or any Participant with respect to any ownership interest in the
Bonds, or (B)the delivery to any Participant, any Owner or any other person, other than
the Depository, of any notice with respect to the Bonds, including any notice of
redemption, or(C) the payment to any Participant, any Beneficial Owner or any other
person, other than the Depository, of any amount with respect to the principal of or
premium, if any, or interest on the Bonds, or(D)the consent given or other action taken
by the Depository as the Registered Holder of any Bonds (the "Holder"). For purposes of
securing the vote or consent of any Holder under this Resolution, the City may, however,
rely upon an omnibus proxy under which the Depository assigns its consenting or voting
rights to certain Participants to whose accounts the Bonds are credited on the record date
identified in a listing attached to the omnibus proxy.
(iv) The City and the Bond Registrar may treat as and deem the Depository to
be the absolute owner of the Bonds for the purpose of payment of the principal of and
premium, if any, and interest on the Bonds, for the purpose of giving notices of
redemption and other matters with respect to the Bonds, for the purpose of obtaining any
consent or other action to be taken by Holders for the purpose of registering transfers
with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as
paying agent hereunder, shall pay all principal of and premium, if any, and interest on the
Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and
all such payments shall be valid and effective to fully satisfy and discharge the City's
obligations with respect to the principal of and premium, if any, and interest on the Bonds
to the extent of the sum or sums so paid.
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(v) Upon delivery by the Depository to the Bond Registrar of written notice to
the effect that the Depository has determined to substitute a new Nominee in place of the
existing Nominee, and subject to the transfer provisions in paragraph 10, references to the
Nominee hereunder shall refer to such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, all payments
with respect to the principal of and premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and given, respectively, by the Bond
Registrar or City, as the case may be, to the Depository as provided in the Letter of
Representations to the Depository required by the Depository as a condition to its acting
as book-entry Depository for the Bonds (said Letter of Representations, together with any
replacement thereof or amendment or substitute thereto, including any standard
procedures or policies referenced therein or applicable thereto respecting the procedures
and other matters relating to the Depository's role as book-entry Depository for the
Bonds, collectively hereinafter referred to as the "Letter of Representations").
(vii) All transfers of beneficial ownership interests in each Bond issued in
book-entry form shall be limited in principal amount to Authorized Denominations and
shall be effected by procedures by the Depository with the Participants for recording and
transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be provided to
the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any
consent or other action to be taken by Holders, the Depository shall consider the date of
receipt of notice requesting such consent or other action as the record date for such
consent or other action;provided, that the City or the Bond Registrar may establish a
special record date for such consent or other action. The City or the Bond Registrar shall,
to the extent possible, give the Depository notice of such special record date not less than
15 calendar days in advance of such special record date to the extent possible.
(ix) Any successor Bond Registrar in its written acceptance of its duties under
this Resolution and any paying agency/bond registrar agreement, shall agree to take any
actions necessary from time to time to comply with the requirements of the Letter of
Representations.
(x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of
surrendering the Bonds for a Bond of a lesser denomination as provided in paragraph 5,
make a notation of the reduction in principal amount on the panel provided on the Bond
stating the amount so redeemed.
(c) Termination of Book-Entry Only System. Discontinuance of a particular
Depository's services and termination of the book-entry only system may be effected as follows:
(i) The Depository may determine to discontinue providing its services with
respect to the Bonds at any time by giving written notice to the City and discharging its
responsibilities with respect thereto under applicable law. The City may terminate the
services of the Depository with respect to the Bond if it determines that the Depository is
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no longer able to carry out its functions as securities depository or the continuation of the
system of book-entry transfers through the Depository is not in the best interests of the
City or the Beneficial Owners.
(ii) Upon termination of the services of the Depository as provided in the
preceding paragraph, and if no substitute securities depository is willing to undertake the
functions of the Depository hereunder can be found which, in the opinion of the City, is
willing and able to assume such functions upon reasonable or customary terms, or if the
City determines that it is in the best interests of the City or the Beneficial Owners of the
Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds
shall no longer be registered as being registered in the bond register in the name of the
Nominee, but may be registered in whatever name or names the Holder of the Bonds
shall designate at that time, in accordance with paragraph 10. To the extent that the
Beneficial Owners are designated as the transferee by the Holders, in accordance with
paragraph 10, the Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of
paragraph 10.
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. Purpose. The Bonds shall provide funds to finance the Project. The total cost of
the Project, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is
estimated to be at least equal to the amount of the Bonds. Work on the Project shall proceed
with due diligence to completion. The City covenants that it shall do all things and perform all
acts required of it to assure that work on the Project proceeds with due diligence to completion
and that any and all permits and studies required under law for the Project are obtained.
4. Interest. The Bonds shall bear interest payable semiannually on December 15 and
June 15 of each year (each, an "Interest Payment Date"), commencing December 15, 2016,
calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per
annum set forth opposite the maturity years as follows:
Maturity Year Interest Rate Maturity Year Interest Rate
2017 2027
2018 2028
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
2024 2034
2025 2035
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2026 2036
5. Redemption. All Bonds maturing on December 15, 2024, and thereafter shall be
subject to redemption and prepayment at the option of the City on December 15, 2023, and on
any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part
of the Bonds subject to prepayment. If redemption is in part, the maturities and the principal
amounts within each maturity to be redeemed shall be determined by the City and if only part of
the Bonds having a common maturity date are called for prepayment, the specific Bonds to be
prepaid shall be chosen by lot by the Registrar. Bonds or portions thereof called for redemption
shall be due and payable on the redemption date, and interest thereon shall cease to accrue from
and after the redemption date. Mailed notice of redemption shall be given to the paying agent
and to each affected registered holder of the Bonds.
To effect a partial redemption of Bonds having a common maturity date, the Registrar
prior to giving notice of redemption shall assign to each Bond having a common maturity date a
distinctive number for each $5,000 of the principal amount of such Bond. The Registrar shall
then select by lot, using such method of selection as it shall deem proper in its discretion, from
the numbers so assigned to the Bonds, as many numbers as, at $5,000 for each number, shall
equal the principal amount of the Bonds to be redeemed. The Bonds to be redeemed shall be the
Bonds to which were assigned numbers so selected;provided, however, that only so much of the
principal amount of each Bond of a denomination of more than $5,000 shall be redeemed as shall
equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in
part, it shall be surrendered to the Registrar(with, if the City or Registrar so requires, a written
instrument of transfer in form satisfactory to the City and Registrar duly executed by the Holder
thereof or the Holder's attorney duly authorized in writing) and the City shall execute (if
necessary) and the Registrar shall authenticate and deliver to the Holder of the Bond, without
service charge, a new Bond or Bonds having the same stated maturity and interest rate and of any
Authorized Denomination or Denominations, as requested by the Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of the Bond so
surrendered.
6. Bond Re isg tray. Northland Trust Services, Inc. in Minneapolis, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all
pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith.
The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is
duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or
record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12.
7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shall be in
substantially the following form:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
STEARNS COUNTY
CITY OF ST. JOSEPH
R- $
GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN BOND, SERIES 2016A
Interest Rate Maturity Date Date of Original Issue CUSIP
% December 15 July 1, 2016
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The City of St. Joseph, Stearns County, Minnesota(the "Issuer"), certifies that it is
indebted and for value received promises to pay to the registered owner specified above, or
registered assigns, in the manner hereinafter set forth, the principal amount specified above, on
the maturity date specified above, unless called for prepayment, and to pay interest thereon
semiannually on December 15 and June 15 of each year (each, an "Interest Payment Date"),
commencing December 15, 2016, at the rate per annum specified above (calculated on the basis
of a 360-day year of twelve 30-day months) until the principal sum is paid or has been provided
for. This Bond will bear interest from the most recent Interest Payment Date to which interest
has been paid or, if no interest has been paid, from the date of original issue hereof. The
principal of and premium, if any, on this Bond are payable upon presentation and surrender
hereof at the principal office of Northland Trust Services, Inc. in Minneapolis, Minnesota(the
"Bond Registrar"), acting as paying agent, or any successor paying agent duly appointed by the
Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft mailed
to the person in whose name this Bond is registered (the "Holder" or 'Bondholder") on the
registration books of the Issuer maintained by the Bond Registrar and at the address appearing
thereon at the close of business on the first day of the calendar month of such Interest Payment
Date (the "Regular Record Date"). Any interest not so timely paid shall cease to be payable to
the person who is the Holder hereof as of the Regular Record Date, and shall be payable to the
person who is the Holder hereof at the close of business on a date(the "Special Record Date")
fixed by the Bond Registrar whenever money becomes available for payment of the defaulted
interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days
prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond
are payable in lawful money of the United States of America. So long as this Bond is registered
in the name of the Depository or its Nominee as provided in the Resolution hereinafter described,
and as those terms are defined therein, payment of principal of, premium, if any, and interest on
this Bond and notice with respect thereto shall be made as provided in the Letter of
Representations, as defined in the Resolution. Until termination of the book-entry only system
pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its
Nominee.
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Optional Redemption. The Bonds of this issue (the "Bonds") maturing on December 15,
2024, and thereafter, are subject to redemption and prepayment at the option of the Issuer on
December 15, 2023, and on any date thereafter at a price of par plus accrued interest.
Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in
part, the maturities and the principal amounts within each maturity to be redeemed shall be
determined by the Issuer; and if only part of the Bonds having a common maturity date are called
for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar.
Bonds or portions thereof called for redemption shall be due and payable on the redemption date,
and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each affected Holder of the Bonds prior to
the date fixed for redemption.
Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive number for each $5,000 of the principal amount of such
Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall
deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at
$5,000 for each number, shall equal the principal amount of the Bonds to be redeemed. The
Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected;provided,
however, that only so much of the principal amount of such Bond of a denomination of more
than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so
selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar
(with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form
satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's
attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond
Registrar shall authenticate and deliver to the Holder of the Bond, without service charge, a new
Bond or Bonds having the same stated maturity and interest rate and of any Authorized
Denomination or Denominations, as requested by the Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal
amount of$4,335,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate, denomination and redemption privilege, issued pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by
the City Council on June 6, 2016 (the "Resolution"), to finance the acquisition and construction
of a new city hall and public safety facility, as provided in the City's Capital Improvement Plan.
This Bond is payable out of the General Obligation Capital Improvement Plan Bonds, Series
2016A Fund of the Issuer. This Bond constitutes a general obligation of the Issuer, and to
provide moneys for the prompt and full payment of its principal, premium, if any, and interest
when the same become due, the full faith and credit and taxing powers of the Issuer have been
and are hereby irrevocably pledged.
Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered
form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully
registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the
principal office of the Bond Registrar, but only in the manner and subject to the limitations
provided in the Resolution. Reference is hereby made to the Resolution for a description of the
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rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal
office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in person or by the Holder's attorney
duly authorized in writing at the principal office of the Bond Registrar upon presentation and
surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the
Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and
deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the
transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized
Denomination or Denominations, in aggregate principal amount equal to the principal amount of
this Bond, of the same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection with the transfer
or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in
whose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond
Registrar shall be affected by notice to the contrary.
Authentication. This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security unless the Certificate of Authentication hereon shall have been executed
by the Bond Registrar.
Qualified Tax-Exempt Obli ag tion. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to happen and to be
performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law, and that this
Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof
and the date of its issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
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IN WITNESS WHEREOF, the City of St. Joseph, Stearns County, Minnesota, by its City
Council has caused this Bond to be executed on its behalf by the facsimile signatures of its
Mayor and its Administrator, the corporate seal of the Issuer having been intentionally omitted as
permitted by law.
Date of Registration: Registrable by: NORTHLAND TRUST SERVICES,
INC.
Payable at: NORTHLAND TRUST SERVICES,
INC.
CITY OF ST. JOSEPH,
BOND REGISTRAR'S STEARNS COUNTY, MINNESOTA
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the Bonds /s/Facsimile
described in the Resolution Mayor
mentioned within.
Northland Trust Services, Inc.
Minneapolis, Minnesota, /s/Facsimile
Bond Registrar Administrator
By
Authorized Signature
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN- as joint tenants with right of survivorship
and not as tenants in common
UTMA - as custodian for
(Cust) (Minor)
under the Uniform Transfers to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and does
hereby irrevocably constitute and appoint attorney to transfer the Bond on
the books kept for the registration thereof, with full power of substitution in the premises.
Dated:
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the
face of the within Bond in every particular, without
alteration or any change whatever.
Signature Guaranteed:
Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm
having a membership in one of the major stock exchanges or any other "Eligible Guarantor
Institution" as defined in 17 CFR 240.17 Ad-15(a)(2).
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address:
(Include information for all joint owners if the Bond is held by joint account.)
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PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
AUTHORIZED
SIGNATURE
DATE AMOUNT OF HOLDER
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8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of
the City by the signatures of its Mayor and Administrator and be sealed with the seal of the City;
provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate
seal has been omitted. In the event of disability or resignation or other absence of either officer,
the Bonds may be signed by the manual or facsimile signature of the officer who may act on
behalf of the absent or disabled officer. In case either officer whose signature or facsimile of
whose signature shall appear on the Bonds shall cease to be such officer before the delivery of
the Bonds, the signature or facsimile shall nevertheless be valid and sufficient for all purposes,
the same as if the officer had remained in office until delivery.
9. Authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this resolution unless a Certificate of Authentication on
the Bond, substantially in the form hereinabove set forth, shall have been duly executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different
Bonds need not be signed by the same person. The Bond Registrar shall authenticate the
signatures of officers of the City on each Bond by execution of the Certificate of Authentication
on the Bond and, by inserting as the date of registration in the space provided, the date on which
the Bond is authenticated, except that for purposes of delivering the original Bonds to the
Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue of
July 1, 2016. The Certificate of Authentication so executed on each Bond shall be conclusive
evidence that it has been authenticated and delivered under this resolution.
10. Registration; Transfer; Exchange. The City will cause to be kept at the principal
office of the Bond Registrar a bond register in which, subject to such reasonable regulations as
the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds
and the registration of transfers of Bonds entitled to be registered or transferred as herein
provided.
Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the
City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of
registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee
or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a
like aggregate principal amount, having the same stated maturity and interest rate, as requested
by the transferor;provided, however, that no Bond may be registered in blank or in the name of
"bearer" or similar designation.
At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized
Denomination or Denominations of a like aggregate principal amount and stated maturity, upon
surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever
any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond
Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the
Holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City.
13
7690515v1
All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
obligations of the City evidencing the same debt, and entitled to the same benefits under this
resolution, as the Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar,
duly executed by the Holder thereof or the Holder's attorney duly authorized in writing.
The Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the City contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to
close its transfer books between record dates and payment dates. The Finance Director is hereby
authorized to negotiate and execute the terms of said agreement.
11. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in
exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any Bond shall be paid on each
Interest Payment Date by check or draft mailed to the person in whose name the Bond is
registered (the "Holder") on the registration books of the City maintained by the Bond Registrar
and at the address appearing thereon at the close of business on the first day of the calendar
month of such Interest Payment Date(the "Regular Record Date"). Any such interest not so
timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular
Record Date, and shall be payable to the person who is the Holder thereof at the close of
business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money
becomes available for payment of the defaulted interest. Notice of the Special Record Date shall
be given by the Bond Registrar to the Holders not less than ten days prior to the Special Record
Date.
13. Treatment of Registered Owner. The City and Bond Registrar may treat the
person in whose name any Bond is registered as the owner of the Bond for the purpose of
receiving payment of principal of and premium, if any, and interest (subject to the payment
provisions in paragraph 12) on, the Bond and for all other purposes whatsoever whether or not
the Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice
to the contrary.
14. Delivery; Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price,
and the Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby created a special fund to be designated the
"General Obligation Capital Improvement Plan Bonds, Series 2016A Fund" (the "Fund") to be
administered and maintained by the Finance Director as a bookkeeping account separate and
apart from all other funds maintained in the official financial records of the City. The Fund shall
14
7690515v1
be maintained in the manner herein specified until all of the Bonds and the interest thereon have
been fully paid. There shall be maintained in the Fund the following separate accounts:
(a) Construction Account. To the Construction Account there shall be credited the
proceeds of the sale of the Bonds, less accrued interest received thereon and capitalized interest.
From the Construction Account there shall be paid all costs and expenses of financing the
Project, including the cost of any construction contracts heretofore let and all other costs incurred
and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65. Moneys in the
Construction Account shall be used for no other purpose except as otherwise provided by law;
provided that the proceeds of the Bonds may also be used to the extent necessary to pay interest
on the Bonds due prior to the anticipated date of commencement of the collection of taxes herein
levied or covenanted to be levied; and provided further that if upon completion of the Project
there shall remain any unexpended balance in the Construction Account, the balance shall be
transferred by the City Council to the Debt Service Account.
(b) Debt Service Account. There are hereby irrevocably appropriated and pledged to,
and there shall be credited to, the Debt Service Account: (i) accrued interest received upon
delivery of the Bonds; (ii) $ of available funds of the City to be deposited at
bond closing in an amount sufficient to pay interest on the Bonds due on or before June 15,
2017; (iii) all collections of taxes herein and hereafter levied for the payment of the Bonds; (iv)
all funds remaining in the Construction Account after completion of the Project and payment of
the costs thereof, (v) all investment earnings on funds held in the Debt Service Account; and (vi)
any and all other moneys which are properly available and are appropriated by the governing
body of the City to the Debt Service Account. The Debt Service Account shall be used solely to
pay the principal and interest of the Bonds and any other general obligation bonds of the City
hereafter issued by the City and made payable from said account as provided by law.
No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire
higher yielding investments or to replace funds which were used directly or indirectly to acquire
higher yielding investments, except (1) for a reasonable temporary period until such proceeds are
needed for the purpose for which the Bonds were issued and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To
this effect, any proceeds of the Bonds and any sums from time to time held in the Construction
Account or Debt Service Account (or any other City account which will be used to pay principal
or interest to become due on the bonds payable therefrom) in excess of amounts which under
then applicable federal arbitrage regulations may be invested without regard to yield shall not be
invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage
regulations on such investments after taking into account any applicable "temporary periods" or
"minor portion" made available under the federal arbitrage regulations. Money in the Fund shall
not be invested in obligations or deposits issued by, guaranteed by or insured by the United
States or any agency or instrumentality thereof if and to the extent that such investment would
cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
16. Tax Levy; Coverage Test. To provide moneys for payment of the principal and
interest on the Bonds there is hereby levied upon all of the taxable property in the City a direct
15
7690515v1
annual ad valorem tax which shall be spread upon the tax rolls and collected with and as part of
other general property taxes in the City for the years and in the amounts as follows:
Levy Years Collection Years Amount
See Attached Schedule
The tax levies are such that if collected in full they, together with other revenues herein
pledged for the payment of the Bonds, will produce at least five percent in excess of the amount
needed to meet when due the principal and interest payments on the Bonds. The tax levies shall
be irrepealable so long as any of the Bonds are outstanding and unpaid, provided that the City
reserves the right and power to reduce the levies in the manner and to the extent permitted by
Minnesota Statutes, Section 475.61, Subdivision 3.
17. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with
respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The City may also discharge its obligations with respect to any prepayable Bonds called
for redemption on any date when they are prepayable according to their terms, by depositing
with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. The City may also at any time
discharge its obligations with respect to any Bonds, subject to the provisions of law now or
hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a
suitable banking institution qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if
notice of redemption as herein required has been duly provided for, to such earlier redemption
date.
18. Compliance With Reimbursement Bond Regulations. The provisions of this
paragraph are intended to establish and provide for the City's compliance with United States
Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the
"reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the
City to reimburse itself for any expenditure which the City paid or will have paid prior to the
Closing Date (a"Reimbursement Expenditure").
The City hereby certifies and/or covenants as follows:
(a) Not later than sixty days after the date of payment of a Reimbursement
Expenditure, the City (or person designated to do so on behalf of the City) has made or will have
made a written declaration of the City's official intent (a "Declaration") which effectively (i)
states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement
16
7690515v1
Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional
description of the property, project or program to which the Declaration relates and for which the
Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the
general functional purpose thereof from which the Reimbursement Expenditure was to be paid
(collectively the "Project"); and (iii) states the maximum principal amount of debt expected to be
issued by the City for the purpose of financing the Project;provided, however, that no such
Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for
the Project, defined in the Reimbursement Regulations to include engineering or architectural,
surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not
exceed twenty percent of the "issue price" of the Bonds, and (ii) a de minimis amount of
Reimbursement Expenditures not in excess of the lesser of$100,000 or five percent of the
proceeds of the Bonds.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of
the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the
Reimbursement Regulations.
(c) The "reimbursement allocation" described in the Reimbursement Regulations for
each Reimbursement Expenditure shall and will be made forthwith following (but not prior to)
the issuance of the Bonds and in all events within the period ending on the date which is the later
of three years after payment of the Reimbursement Expenditure or one year after the date on
which the Project to which the Reimbursement Expenditure relates is first placed in service.
(d) Each such reimbursement allocation will be made in a writing that evidences the
City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30
days after the Bonds are issued, shall be treated as made on the day the Bonds are issued.
Provided, however, that the City may take action contrary to any of the foregoing
covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating
in effect that such action will not impair the tax-exempt status of the Bonds.
19. General Obligation Pledge. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the balance in the Debt
Service Account is ever insufficient to pay all principal and interest then due on the Bonds and
any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds
of the City which are available for such purpose, and such other funds may be reimbursed with
or without interest from the Debt Service Account when a sufficient balance is available therein.
20. Certificate of Registration. The Administrator is hereby directed to file a certified
copy of this resolution with the County Auditor of Stearns County, Minnesota, together with
such other information as the County Auditor shall require, and to obtain from the County
Auditor the certificate that the Bonds have been entered in the County Auditor's Bond Register
and that the tax levy required by law has been made.
21. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the
17
7690515v1
issuance of the Bonds, certified copies of all proceedings and records of the City relating to the
Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Bonds as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
22. Continuing Disclosure. The City is the sole obligated person with respect to the
Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"),
promulgated by the Securities and Exchange Commission (the "Commission")pursuant to the
Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the
"Undertaking") hereinafter described:
(a) Provide or cause to be provided to the Municipal Securities Rulemaking Board
(the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual
financial information and operating data in accordance with the Undertaking. The City reserves
the right to modify from time to time the terms of the Undertaking as provided therein.
(b) Provide or cause to be provided to the MSRB notice of the occurrence of certain
events with respect to the Bonds in not more than ten (10) business days after the occurrence of
the event, in accordance with the Undertaking.
(c) Provide or cause to be provided to the MSRB notice of a failure by the City to
provide the annual financial information with respect to the City described in the Undertaking, in
not more than ten (10) business days following such occurrence.
(d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph
and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be
enforceable on behalf of such Holders;provided that the right to enforce the provisions of these
covenants shall be limited to a right to obtain specific enforcement of the City's obligations under
the covenants.
The Mayor and Administrator of the City, or any other officer of the City authorized to
act in their place (the "Officers") are hereby authorized and directed to execute on behalf of the
City the Undertaking in substantially the form presented to the City Council subject to such
modifications thereof or additions thereto as are(i) consistent with the requirements under the
Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.
23. Negative Covenant as to Use of Bond Proceeds and Project. The City hereby
covenants not to use the proceeds of the Bonds or to use the Project, or to cause or permit them
to be used, or to enter into any deferred payment arrangements for the cost of the Project, in such
a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103
and 141 through 150 of the Code.
24. Tax-Exempt Status of the Bonds; Rebate. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(a) requirements relating to temporary periods for investments, (b) limitations on amounts
18
7690515v1
invested at a yield greater than the yield on the Bonds, and (c) the rebate of excess investment
earnings to the United States. The City expects to satisfy the twenty four month expenditure
exemption for gross proceeds of the Bonds as provided in Section 1.148-7(d)(1) of the
Regulations. If any elections are available now or hereafter with respect to arbitrage or rebate
matters relating to the Bonds, the Mayor, the Finance Director, or either of them, are hereby
authorized and directed to make such elections as they deem necessary, appropriate or desirable
in connection with the Bonds, and all such elections shall be, and shall be deemed and treated as,
elections of the City.
25. Designation of Qualified Tax-Exempt Obligations. In order to qualify the Bonds
as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after June 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(c) the City hereby designates the Bonds as "qualified tax exempt obligations" for
purposes of Section 265(b)(3) of the Code;
(d) the reasonably anticipated amount of tax exempt obligations (other than private
activity bonds, treating qualified 501(c)(3)bonds as not being private activity bonds) which will
be issued by the City (and all entities treated as one issuer with the City, and all subordinate
entities whose obligations are treated as issued by the City) during this calendar year 2016 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2016 have been designated for purposes of Section 265(b)(3) of the Code; and
(f) the aggregate face amount of the Bonds does not exceed $10,000,000.
The City shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this paragraph.
26. Official Statement. The Official Statement relating to the Bonds prepared and
distributed by Northland is hereby approved and the officers of the City are authorized in
connection with the delivery of the Bonds to sign such certificates as may be necessary with
respect to the completeness and accuracy of the Official Statement.
27. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to the Bond Registrar
on the closing date for further distribution as directed by the Purchaser.
28. Severability. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this resolution.
19
7690515v1
29. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
20
7690515v1
STATE OF MINNESOTA
COUNTY OF STEARNS
CITY OF ST. JOSEPH
I, the undersigned, the Administrator of the City of St. Joseph, Minnesota, do hereby
certify that I have compared the attached and foregoing extract of minutes with the original
thereof on file in my office, and that the same is a full, true and complete transcript of the
minutes of a meeting of the City Council, duly called and held on the date therein indicated,
insofar as such minutes relate to authorizing the issuance and awarding the sale of$4,335,000
General Obligation Capital Improvement Plan Bonds, Series 2016A.
WITNESS my hand on June 6, 2016.
Administrator
21
7690515v1
CIP 4.330 Revised
CITY OF ST. JOSEPH, MINNESOTA
G.O. CAPITAL IMPROVEMENT PLAN BONDS OF 2016
Year
(12-15)
Principal
Est.
Interest
Rate
Interest
Total
Debt
Payment
Statutory
5.0096
Coverage
Cash
On
Hand
Other
Funds
sales
Tax
Revenues
Tax
Levy
Annual
surplus/
Deficit
Cumulative
Balance
2016
0
0.00%
39,118
39,118
0
90,000
0
0
0
50,882
50,882
2017
185,000
0.95%
93,883
278,883
292,827
Est. Average Coupon:
0
0
230,000
-48,883
2,000
2018
185,000
1.05%
92,125
277,125
290,981
Est. Bond Closing Date:
0
0
276,000
-1,125
875
2019
190,000
1.25%
90,183
280,183
294,192
0
0
280,000
-183
692
2020
190,000
1.35%
87,808
277,808
291,698
0
0
278,000
193
885
2021
190,000
1.50%
85,243
275,243
289,005
0
0
277,000
1,758
2,642
2022
195,000
1.65%
82,393
277,393
291,262
0
0
277,000
-393
2,250
2023
195,000
1.70%
79,175
274,175
287,884
0
0
277,000
2,825
5,075
2024
200,000
1.80%
75,860
275,860
289,653
0
0
277,000
1,140
6,215
2025
205,000
1.90%
72,260
277,260
291,123
0
0
277,000
-260
5,955
2026
210,000
2.00%
68,365
278,365
292,283
0
0
277,000
-1,365
4,590
2027
210,000
2.10%
64,165
274,165
287,873
0
0
277,000
2,835
7,425
2028
215,000
2.25%
59,755
274,755
288,493
0
0
277,000
2,245
9,670
2029
225,000
2.40%
54,918
279,918
293,913
0
0
277,000
-2,918
6,752
2030
230,000
2.50%
49,518
279,518
293,493
0
0
277,000
-2,518
4,235
2031
235,000
2.65%
43,768
278,768
292,706
0
0
277,000
-1,768
2,467
2032
240,000
2.75%
37,540
277,540
291,417
0
0
277,000
-540
1,927
2033
245,000
2.85%
30,940
275,940
289,737
0
0
277,000
1,060
2,987
2034
255,000
2.95%
23,958
278,958
292,905
0
0
277,000
-1,958
1,030
2035
260,000
3.05%
16,435
276,435
290,257
0
0
277,000
565
1,595
2036
270,000
3.15%
8,505
278,505
292,430
0
0
277,000
-1,505
90
2037
0
0.00%
0
0
0
0
0
0
0
0
4,330,000 1,255,910 5,585,910 5,824,1321 90,000 0 0 5,496,0001 90
Application ;of Funds; ai ii 11 lilt 11 r i 111111 BondilnNAaio'n, a 11 :11:11 '1 Ili
2016 Government Center Project (A)
4,800,000
Bonds Dated:
7/1/2016
Less* City Cash Contribution
-585,000
Bonds Mature:
12/15/17 Through 12/15/36
Total Hard Costs
4,215,000
Interest Payments:
12/15/16 & Semiannually Each 6/15 &
Add.- Issuance Expenses
12/15 Thereafter.
Est. Underwriter's Discount @1.96%
84,868
Call Option:
Callable 12/15/2023 @ Par Plus
Est. Capitalized Interest (0 Months)
0
Accrued Interest.
Est. Fairness Opinion
3,500
Purchase Price:
$4,245,132
Est. Bond Counsel
10,000
Est. Average Coupon:
2.5011%
Est. Credit Rating Fee
11,500
Est. Net Effective Rate:
2.6701%
Est. County Auditor Fee/Misc.
400
Bond Sale Date:
June 6, 2016.
Est. Misc.
0
Est. Bond Closing Date:
June 30, 2016.
Est. Registration/Trustee Fee
5,500
Paying Agent/Trustee:
Northland Trust Services
Total
4,330,768
Bond Counsel:
Briggs & Morgan, P.A.
Rounded For Issuance
4,330,000
CtyHslI1&PubIIdSafetY'F0cility%PFoje,'ct,(A)H1[iIii 11 l l
Construction/Plans/Specs (As Bid) &
4,800,000
Contingencies
Total Improvement Costs:
4,800,000
Monte Eastvold, V.P. Northland Securities, Inc. Dated: 4/12/2016
CIP 4.330 Revised
CITY OF ST. JOSEPH, MINNESOTA
G.O. CAPITAL IMPROVEMENT PLAN BONDS OF 2016
Average Monthly Incr: $4.58 $8.06 $11.54
Monte Eastvold, V.P. Northland Securities, Inc. Dated: 4/12/2016
Tax impact Analysis:
Annual
Tax
ResidentiaiMarket Value
Est.
Tax Capacity
Capacity $100,000
$150,000
$200,000
Tax
Value Incr.
Rate
Net Tax Capacity
Year
Levy
1.0096
Increase
$718
$1,263
$1,808
2016
0
3,233,970
2017
230,000
3,266,310
7.04%
50.56
88.94
127.31
2018
276,000
3,298,973
8.37%
60.07
105.67
151.26
2019
280,000
3,331,963
8.40%
60.34
106.14
151.93
2020
278,000
3,365,282
8.26%
59.31
104.33
149.36
2021
277,000
3,398,935
8.15%
58.51
102.93
147.34
2022
277,000
3,432,924
8.07%
57.93
101.91
145.89
2023
277,000
3,467,254
7.99%
57.36
100.90
144.44
2024
277,000
3,501,926
7.91%
56.79
99.90
143.01
2025
277,000
3,536,945
7.83%
56.23
98.91
141.60
2026
277,000
3,572,315
7.75%
55.67
97.93
140.19
2027
277,000
3,608,038
7.68%
55.12
96.96
138.81
2028
277,000
3,644,118
7.60%
54.58
96.00
137.43
2029
277,000
3,680,560
7.53%
54.04
95.05
136.07
2030
277,000
3,717,365
7.45%
53.50
94.11
134.72
2031
277,000
3,754,539
7.38%
52.97
93.18
133.39
2032
277,000
3,792,084
7.30%
52.45
92.26
132.07
2033
277,000
3,830,005
7.23%
51.93
91.34
130.76
2034
277,000
3,868,305
7.16%
51.41
90.44
129.47
2035
277,000
3,906,988
7.09%
50.91
89.54
128.18
2036
277,000
3,946,058
7.02%
50.40
88.66
126.92
2037
0
3,985,519
0.00%
0.00
0.00
0.00
5,496,000
Average Annual Incr:
$55.00
$96.76
$138.51
Average Monthly Incr: $4.58 $8.06 $11.54
Monte Eastvold, V.P. Northland Securities, Inc. Dated: 4/12/2016
3,5,6,90,92,151, 214
S&P Global Ratings assigned its 'AA-' long-term rating to St. Joseph, Minn.'s 2016A general
obligation (GO) capital improvement plan bonds. At the same time, S&P Global Ratings
affirmed its 'AA-' rating on the city's outstanding GO bonds. The outlook is stable.
A pledge of the city's full faith, credit, and resources and an agreement to levy ad valorem
property taxes without limitation as to rate or amount secure the series 2016A bonds.
Several of the city's rated GO bonds outstanding are also secured by additional revenue pledges,
but we rate all of the bonds based on the city's GO pledge.
Bond proceeds for the 2016A series will be used to construct a government center building.
The long-term rating reflects our assessment of the following factors for the city:
•Adequate economy, with projected per capita effective buying income at 65.4% and market
value per capita of $50,796, though that is advantageously gaining from access to a broad and
diverse metropolitan statistical area (MSA) and a local stabilizing institutional influence;
•Strong management, with "good" financial policies and practices under our financial
management assessment (FMA) methodology;
•Adequate budgetary performance, with an operating surplus in the general fund but an operating
deficit at the total governmental fund level in fiscal 2015;
•Very strong budgetary flexibility, with an available fund balance in fiscal 2015 of 74% of
operating expenditures;
•Very strong liquidity, with total government available cash at 116.1% of total governmental
fund expenditures and 3.4x governmental debt service, and access to external liquidity we
consider strong;
•Weak debt and contingent liability position, with debt service carrying charges at 34.2% of
expenditures and net direct debt that is 348.7% of total governmental fund revenue, but rapid
amortization, with 74.1% of debt scheduled to be retired in 10 years; and
•Strong institutional framework score.
Adequate economy
We consider St. Joseph's economy adequate. The city, with an estimated population of 6,614, is
located in Stearns County in the St. Cloud MSA, which we consider to be broad and diverse. The
city also benefits, in our view, from a stabilizing institutional influence. The city has a projected
per capita effective buying income of 65.4% of the national level and per capita market value of
$50,796. Overall, the city's market value grew by 4.1% over the past year to $336.0 million in
2016. The county unemployment rate was 3.6% in 2015.
St. Joseph is located about 8 miles west of St. Cloud. The city's residents benefit from their
participation in the nearby St. Cloud-area economy with many residents commuting into the city
for employment opportunities. The large student population at the College of St. Benedict,
located within the city, suppresses income levels somewhat. In our view, College of St. Benedict
acts as a stabilizing institution that we believe adds to credit strength. Management has indicated
that there has been significant development in residential, retail, and industrial sectors within city
limits. Management expects market value to continue increasing, and due to the development
within the city, we view this as likely.
Strong management
We view the city's management as strong, with "good" financial policies and practices under our
FMA methodology, indicating financial practices exist in most areas, but that governance
officials might not formalize or monitor all of them on a regular basis.
The city uses three years of historical trends and considers current economic conditions when
making revenue and expenditure assumptions in its budget. Management provides the council
with a monthly budget-to-actual report but does not regularly report to the council on investment
holdings. The city does not have a long-term financial plan but has five-year capital
improvement plans for various departments that are updated annually and include funding
sources. The city has its own investment policy and debt management policy. The city's reserve
policy requires a minimum general fund reserve of four to six months of the next year's budgeted
expenditures in the general fund (excluding the fire department) for cash flow purposes.
Adequate budgetary performance
St. Joseph's budgetary performance is adequate in our opinion. The city had surplus operating
results in the general fund of 9.6% of expenditures, but a deficit result across all governmental
funds of negative 7.0% in fiscal 2015.
The city reported a slight surplus is fiscal 2014 and a $245,000 surplus in 2015 as a result of
higher than expected building permit revenues and realizing positive variances as a result of
adopting a conservative budget. The city has adopted a breakeven budget for fiscal 2016, but is
expecting to report a general fund surplus and is on track with that result. The city anticipates
balanced general fund operations in fiscal 2017. We expect that the city will maintain at least
balanced general fund operations, and may show drawdowns in total governmental funds.
Very strong budgetary flexibility
St. Joseph's budgetary flexibility is very strong, in our view, with an available fund balance in
fiscal 2015 of 74% of operating expenditures, or $2.0 million. We expect the available fund
balance to remain above 30% of expenditures for the current and next fiscal years, which we
view as a positive credit factor.
We expect the city will maintain very strong budgetary flexibility as the city has a formal reserve
policy of maintaining between four and six months of general fund expenditures and is expecting
a surplus in 2016.
Very strong liquidity
In our opinion, St. Joseph's liquidity is very strong, with total government available cash at
116.1% of total governmental fund expenditures and 3.4x governmental debt service in 2015. In
our view, the city has strong access to external liquidity if necessary.
Based on past issuance of debt, we believe that the issuer has strong access to capital markets to
provide for liquidity needs if necessary. We anticipate that liquidity will remain very strong as
the city will likely add to its reserves at the end of fiscal 2016 and expects balanced operations in
2017. At the end of March 2016, the majority of the city's investments were in CDs, so we do not
consider its use of investments to be aggressive. Management reports no contingent liquidity
risks from financial instruments with payment provisions that change upon the occurrence of
certain events.
Weak debt and contingent liability profile
In our view, St. Joseph's debt and contingent liability profile is weak. Total governmental fund
debt service is 34.2% of total governmental fund expenditures, and net direct debt is 348.7% of
total governmental fund revenue. Approximately 74.1% of the direct debt is scheduled to be
repaid within 10 years, which is in our view a positive credit factor.
The city could potentially issue up to $5.5 million in additional bonds during the next two years.
The city's utility revenue has recently been insufficient to support debt service payments as the
city relies on transfers from governmental funds to cover debt payments. The city transferred
$93,000 from the debt service relief fund in 2015 to assist in paying debt service. The city is also
gradually increasing its water and sewer rates with the anticipation that the resultant revenue will
provide sufficient funds to pay debt service on its GO water and sewer revenue debt. After hiring
a consultant to review the water and sewer funds' current and future health, the city has approved
additional rate increases for 2016. Per Governmental Accounting Standards Board (GASB)
Statement No. 68 standards, which the city implemented for its financial statements ended Dec.
31, 2015, the city contributed 100% of its annual pension cost in calendar 2015. As of the most
recent validation the pension funded ratio is 78.2%
St. Joseph's combined required pension and actual other postemployment benefits (OPEB)
contributions totaled 2.8% of total governmental fund expenditures in 2015. The city made its
full annual required pension contribution in 2015.
The city contributes to the Public Employees' Retirement Association of Minnesota and the city's
Volunteer Firefighters' Relief Association. The city has only an implicit liability for other
postemployment benefits because retirees can stay on the city's health insurance plan until the
age of 65 if they pay the entire premium.
Strong institutional framework
The institutional framework score for Minnesota cities with a population greater than 2,500 is
strong.
Outlook
The stable outlook reflects our view that the city will maintain its very strong budget flexibility
and liquidity profile. We do not anticipate changing the rating within the two-year outlook
period.
Upside scenario
If the debt profile moderates significantly while the city maintains very strong budgetary
flexibility, or if economic indicators improve significantly, we could raise the rating.
Downside scenario
A lower rating is possible if budgetary flexibility falls to a level we feel is not consistent with
similarly-rated peers.
3,5,6,90,92,151, 214
Criteria:
USPF Criteria: Local Government GO Ratings Methodology And Assumptions, Sept. 12,
2013
USPF Criteria: Financial Management Assessment, June 27, 2006
USPF Criteria: Debt Statement Analysis, Aug. 22, 2006
USPF Criteria:
Methodology: Rating Approach To Obligations With Multiple Revenue Streams, Nov. 29,
2011
USPF Criteria: Assigning Issue Credit Ratings Of Operating Entities, May 20, 2015
Criteria: Use of CreditWatch And Outlooks, Sept. 14, 2009
Related Research:
S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency,
Sept. 12, 2013
2015 Update Of Institutional Framework For U.S. Local Governments