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Home My WebLink About[05] Northland Securities, Equipment Certificate Sale Council Agenda Item 5 MEETING DATE: February 5, 2018 AGENDA ITEM: Equipment Certificates Sale – Tammy Omdal, Northland Securities, Inc. SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None PREVIOUS COUNCIL ACTION: Council approved the equipment list for the debt issuance. BACKGROUND INFORMATION: Tammy Omdal, Northland Securities, will be present to discuss the 2018A GO Equipment Certificates issue to purchase general city equipment. The 2018A issue will “replace” annual payments from the 2013 Equipment Certificate issue for payments beginning in 2019 and continuing for five years. Due to the size of the issue, a bond rating was not requested. In addition, the certificates will be sold locally to a willing bank buyer. The certificates were presented to financial institutions in Stearns County and around Minnesota. Grand Marais State Bank offered the best rates (2.5% that was estimated) and will be awarded the certificate purchase. The equipment certificates sale summaries and related resolution to adopt the certificates are enclosed. The rates are very favorable. BUDGET/FISCAL IMPACT: $265,000 General Obligation Equipment Certificates ATTACHMENTS: Request for Council Action – Equipment Certificate Sales Resolution 2018-006 Authorize GO Equipment Certificate Issue 2018A and Equipment Certificate Sale Summary G.O. Equipment Certificate of Indebtedness, Series 2018A Sale Summary Final Bank Term Sheet REQUESTED COUNCIL ACTION: Authorize execution of Resolution 2018-006 providing for the issuance and sale of the $265,000 Equipment Certificates, Series 2018A, pledging for the security thereof net revenues and levying a tax for the payment thereof. RESOLUTION NO. 2018-006 PROVIDING FOR THE ISSUANCE AND SALE OF A $265,000 GENERAL OBLIGATION EQUIPMENT CERTIFICATE OF INDEBTEDNESS, SERIES 2018A AND LEVYING A TAX FOR THE PAYMENT THEREOF WHEREAS, the City of St. Joseph, Minnesota (the "City"), has heretofore determined and declared that it is necessary and expedient to issue a $265,000 General Obligation Equipment Certificate of Indebtedness, Series 2018A (the "Certificate"), pursuant to Minnesota Statutes, Chapter 475 and Minnesota Statutes, Section 412.301, to finance the purchase of various equipment for the City (the "Equipment"); and WHEREAS, each item of equipment to be financed by the Certificate has an expected useful life at least as long as the term of the Certificate; and WHEREAS, the amount of the Certificate does not exceed one-quarter of one percent (0.25%) of the estimated market value of the taxable property in the City ($323,141,800 times 0.25% is $807,855); and WHEREAS, the Certificate is being sold pursuant to a private sale as permitted Minnesota Statutes, Sections 412.301 and 475.60, Subdivision 2(1). NOW, THEREFORE, BE IT RESOLVED by the Council of the City of St. Joseph, Minnesota, as follows: 1. Acceptance of Offer. The offer of Grand Marais State Bank, Grand Marais, Minnesota, to purchase the Certificate and to pay therefor the sum of $265,000, all in accordance with the terms and at the rate of interest hereinafter set forth, is hereby accepted. 2. Certificate Terms; Original Issue Date; Denominations; Maturities; Interest. The Certificate shall be dated February 28, 2018, as the date of original issue, be issued forthwith on or after such date in fully registered form, be numbered R-1 in the denomination of $265,000, maturing on December 15, 2023. The Certificate shall bear interest payable semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing December 15, 2018, calculated on the basis of a 360-day year of twelve 30-day months, at the rate of 2.50% per annum. 3. Purpose. The Certificate shall provide funds to finance the Equipment. The total cost of the Equipment, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is estimated to be at least equal to the amount of the Certificate. 4. No Optional Redemption. This Certificate of this issue is not subject to optional redemption and prepayment prior to the stated maturity date. 5. Mandatory Redemption. This Certificate shall be redeemed by lot in the following years and principal amounts, without any premium, plus accrued interest thereon to such redemption dates: 10511161v1 Mandatory Redemption Schedule December 15, 2023 Term Certificate Year Principal Amount 2019 $50,000 2020 52,000 2021 53,000 2022 54,000 2023 (maturity) 56,000 or, if less than such amount is then outstanding, an amount equal to the aggregate principal amount of the Certificate then outstanding. 6. Registrar. Northland Trust Services, Inc., in Minneapolis, Minnesota, is appointed to act as registrar and transfer agent with respect to the Certificate (the "Registrar"), and shall do so unless and until a successor Registrar is duly appointed, all pursuant to any contract the City and Registrar shall execute which is consistent herewith. The Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. Principal and interest on the Certificate shall be paid to the registered owners (or record owners) of the Certificate in the manner set forth in the form of Certificate. 7. Form of Certificate. The Certificate, together with the Registrar's Certificate of Registration, shall be in substantially the following form: 2 UNITED STATES OF AMERICA STATE OF MINNESOTA STEARNS COUNTY CITY OF ST. JOSEPH R-1 $265,000 GENERAL OBLIGATION EQUIPMENT CERTIFICATE OF INDEBTEDNESS, SERIES 2018A CUSIP Interest Rate Maturity Date Date of Original Issue ______% December 15, 2023 February 28, 2018 __________ REGISTERED OWNER: _______________________________________________ PRINCIPAL AMOUNT: TWO HUNDRED SIXTY-FIVE THOUSAND DOLLARS 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, without option of prior payment, and to pay interest thereon semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing December 15, 2018, 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 Certificate 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 Certificate is payable upon presentation and surrender at maturity hereof at the office of Northland Trust Services, Inc., in Minneapolis, Minnesota (the "Registrar"), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Mandatory redemption principal payments are payable without presentation and surrender to the Registrar. Interest on this Certificate will be paid on each Interest Payment Date and will be paid by check or draft mailed to the person in whose name this Certificate is registered (the "Owner") on the registration books of the Issuer maintained by the 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 Owner hereof as of the Regular Record Date, and shall be payable to the person who is the Owner hereof at the close of business on a date (the "Special Record Date") fixed by the Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to the Owner not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Certificate is payable in lawful money of the United States of America shall be paid by check or draft mailed to the Owner. 3 No Optional Redemption. This Certificate of this issue is not subject to optional redemption and prepayment prior to the stated maturity date. Mandatory Redemption. This Certificate shall be redeemed by lot in the following years and principal amounts, without any premium, plus accrued interest thereon to such redemption dates: Mandatory Redemption Schedule December 15, 2023 Term Certificate Year Principal Amount 2019 $50,000 2020 52,000 2021 53,000 2022 54,000 2023 (maturity) 56,000 or, if less than such amount is then outstanding, an amount equal to the aggregate principal amount of the Certificate then outstanding. Issuance; Purpose; General Obligation. This Certificate is issued as a single instrument 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 February 5, 2018 (the "Resolution"), for the purpose of providing money to finance the purchase of various items of capital equipment for the Issuer. This Certificate is payable out of the General Obligation Equipment Certificate of Indebtedness, Series 2018A Fund of the Issuer. This Certificate 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. Date of Payment Not a Business Day. If the nominal date for payment of any principal of or interest on this Certificate shall not be a business day of the Issuer or of the Owner, then the date for such payment shall be the next such business day and payment on such business day shall have the same force and effect as if made on the nominal date of payment. Transfer. This Certificate is transferable by the Owner in person or the Owner's attorney duly authorized in writing at the principal office of the Registrar upon presentation and surrender hereof to the 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 Registrar. Thereupon the Issuer shall execute and the Registrar shall authenticate and deliver, in exchange for this Certificate, one or more new fully registered Certificate 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 Certificate, of the same maturity and bearing interest at the same rate. 4 Fees upon Loss. The Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with any legal or unusual costs regarding lost Certificate. Authentication. This Certificate 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 Registrar. Qualified Tax-Exempt Obligation. This Certificate 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 Certificate, have been done, have happened and have been performed, in regular and due form, time and manner as required by law and that this Certificate, 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. IN WITNESS WHEREOF, the City of St. Joseph, Stearns County, Minnesota, by its City Council has caused this Certificate to be executed on its behalf by the manual or facsimile signatures of its Mayor and its City Administrator, the corporate seal of the Issuer having been intentionally omitted as permitted by law. CITY OF ST. JOSEPH By Rick Schultz, Mayor By Judy Weyrens, Administrator 5 City of St. Joseph, Minnesota $265,000 G.O. Equipment Certificate of Indebtedness, Series 2018A Final Table of Contents Report Sources & Uses1 Debt Service Schedule2 Detail Costs Of Issuance3 105% Levy4 St. Joseph 2018A | SINGLE PURPOSE | 1/29/2018 | 11:15 AM Northland Securities, Inc. Public Finance City of St. Joseph, Minnesota $265,000 G.O. Equipment Certificate of Indebtedness, Series 2018A Final Sources & Uses Dated 02/28/2018 | Delivered 02/28/2018 Sources Of Funds Par Amount of Bonds$265,000.00 Total Sources $265,000.00 Uses Of Funds Costs of Issuance11,253.00 Deposit to Capitalized Interest (CIF) Fund5,281.60 Deposit to Project Construction Fund248,000.00 Rounding Amount465.40 Total Uses $265,000.00 St. Joseph 2018A | SINGLE PURPOSE | 1/29/2018 | 11:15 AM Northland Securities, Inc. Public Finance Page 1 City of St. Joseph, Minnesota $265,000 G.O. Equipment Certificate of Indebtedness, Series 2018A Final Debt Service Schedule DatePrincipalCouponInterestTotal P+IFiscal Total 02/28/2018----- 12/15/2018--5,281.605,281.605,281.60 06/15/2019--3,312.503,312.50- 12/15/201950,000.002.500%3,312.5053,312.5056,625.00 06/15/2020--2,687.502,687.50- 12/15/202052,000.002.500%2,687.5054,687.5057,375.00 06/15/2021--2,037.502,037.50- 12/15/202153,000.002.500%2,037.5055,037.5057,075.00 06/15/2022--1,375.001,375.00- 12/15/202254,000.002.500%1,375.0055,375.0056,750.00 06/15/2023--700.00700.00- 12/15/202356,000.002.500%700.0056,700.0057,400.00 Total$265,000.00-$25,506.60$290,506.60- Date And Term Structure Dated2/28/2018 Delivery Date2/28/2018 First available call date Call Price- Yield Statistics Bond Year Dollars$1,020.26 Average Life3.850 Years Average Coupon2.5000003% Net Interest Cost (NIC)2.5000003% True Interest Cost (TIC)2.4980035% All Inclusive Cost (AIC)3.7012240% IRS Form 8038 Net Interest Cost (NIC)2.5000003% Weighted Average Maturity3.850 Years Bond Yield for Arbitrage Purposes2.4980035% St. Joseph 2018A | SINGLE PURPOSE | 1/29/2018 | 11:15 AM Northland Securities, Inc. Public Finance Page 2 City of St. Joseph, Minnesota $265,000 G.O. Equipment Certificate of Indebtedness, Series 2018A Final Detail Costs Of Issuance Dated 02/28/2018 | Delivered 02/28/2018 COSTS OF ISSUANCE DETAIL Placement Agent$5,500.00 Bond Counsel$5,000.00 Miscellaneous$178.00 Paying Agent/Registrar$575.00 TOTAL $11,253.00 St. Joseph 2018A | SINGLE PURPOSE | 1/29/2018 | 11:15 AM Northland Securities, Inc. Public Finance Page 3 City of St. Joseph, Minnesota $265,000 G.O. Equipment Certificate of Indebtedness, Series 2018A Final 105% Levy City Net Collection LevyYear DateTotal P+ICIF105% LevyLevy Year 12/15/20185,281.60(5,281.60)-- 12/15/201956,625.00-59,456.2559,456.2520182019 12/15/202057,375.00-60,243.7560,243.7520192020 12/15/202157,075.00-59,928.7559,928.7520202021 12/15/202256,750.00-59,587.5059,587.5020212022 12/15/202357,400.00-60,270.0060,270.0020222023 Total$290,506.60(5,281.60)$299,486.25$299,486.25 St. Joseph 2018A | SINGLE PURPOSE | 1/29/2018 | 11:15 AM Northland Securities, Inc. Public Finance Page 4 CityofSt.Joseph,Minnesota $265,000 GeneralObligationEquipmentCertificateofIndebtedness,Series2018A SaleSummary January29,2018 PURPOSE:ToprovidefundstopurchasegeneralequipmentfortheCity;andtopay costsassociatedwiththeissuanceoftheCertificate FINANCEPLAN:TheCertificateisbeingissuedpursuanttoMinnesotaStatutes,Chapter 475andSection412.301.TheCertificateispayablefromadvaloremtaxes. RESULTS:CertificatewaspurchasedbyGrandMaraisStateBank RESULTS(CONTINUED): Final 1/29/18 ParAmount$265,000 AverageCoupon2.50% TrueInterestCost(TIC)2.50% AllInCost(AIC)3.70% RECOMMENDATION:Theinterestrateisreflectiveofcurrentmarketratesfortax exempt,bankqualifiedsecurities.NorthlandSecurities recommendstheCityadopttheResolutionandawardthe CertificatetoGrandMaraisStateBank. MainTollFree 612-851-5900800-851-2920 | th 45South7Street,Suite2000Minneapolis,MN55402 | MemberFINRAandSIPC NorthlandSecurities.com | FINALBANK TERM SHEET City of St. Joseph, Minnesota General ObligationEquipmentCertificate of Indebtedness, Series 2018A City of St.JosephSt. Joseph, located in StearnsCounty, is located in central Minnesota. The City is approximately eight mileswest of St. Cloud and 70 miles northwest of the Minneapolis-St. Paul Metropolitan Area. Access is provided via County Roads 2 and 75. In addition, Interstate Highway 94 is adjacent to the City. The City’s population is approximately 6,772. Purchaser:Grand Marais State Bank 211 E. Hwy 61 Grand Marais, MN 55604 Attn: William Von Holtum Telephone: 218-387-2441 Email: bvonholtum@qwestoffice.net Mark Youngdahl Telephone:218-387-2441 Email: myoungdahl@grandmaraisstatebank.com IssuerContact:City of St. Joseph, Minnesota 75 Callaway St,E St. Joseph, MN 56374 Attn: Lori Bartlett, City Finance Director Telephone: 320-3637201 Email: lbartlett@cityofstjoseph.com Placement Agent:Northland Securities, Minneapolis, Minnesota Tammy OmdalTelephone:612-851-4964 Email: tomdal@northlandsecurities.com Amy SteckelbergTelephone:612-851-4945 Email:asteckelberg@northlandsecurities.com Bond Counsel:Briggs and Morgan, P.A., Minneapolis, MN Par Amount:$265,000 Purchase Price:$265,000 Pricing Date:January 29, 2018 Award Meeting:February 5, 2018 Dated Date:February 28, 2018 Closing Date:February 28, 2018 1/29/2018 1/29/2018 Interest Due:June15and December 15, commencing December15, 2018. Term Bond: Maturity DateInterest RatePar AmountAverage Life 12/15/20232.50%$265,0003.850years Mandatory Sinking Fund:2023Term Bond 12/15/2019$50,000 12/15/2020$52,000 12/15/2021$53,000 12/15/2022$54,000 12/15/2023$56,000 Optional Redemption:The Certificateisnot subject to optional redemption or prepayment prior to maturity. Rating:Not Rated Authority and Purpose:The Certificateisbeing issued pursuant to Minnesota Statutes, Chapter 475and Section 412.301. Proceeds of the Certificatewill be used to provide funds to purchase general equipment for the Cityand to pay costs associated with issuance of the Certificate. Security:The Certificate will be a general obligation of the City. The Certificate ispayable from ad valorem taxes. Bank Qualified:The Certificatewill be designated as abank qualified tax– exempt obligations. No Continuing DisclosureThe City will not enter into an undertaking to annually provide continuing disclosure information with respect to the Certificate. Tax Exemption:In the opinion of Bond Counsel to be delivered at closing, interest on the Certificateis excluded from gross income for state of Minnesotaand federal income tax purposes and is not an item of tax preference for purposes of the federal minimum tax imposed on individuals. APPROVED ONLY FOR DISTRIBUTION TO FINANCIAL INSTITUTIONS. Information is based on sources considered to be reliable, but is not warranted by Northland Securities, Inc. th Street,Suite 2000,Minneapolis, MN 55402 800-851-2920 Northland Securities, Inc., 45 South 7 Member FINRA and SIPC 1/29/2018 Additional Provisions:The Certificatewill be held with the Purchaserand not reoffered to the public. The Certificatewill be issued in $1,000 denominations. One typewritten certificateper term maturity will be printed. PayingAgent:Northland Trust Services, Inc., Minneapolis, Minnesota. APPROVED ONLY FOR DISTRIBUTION TO FINANCIAL INSTITUTIONS. Information is based on sources considered to be reliable, but is not warranted by Northland Securities, Inc. th Street,Suite 2000,Minneapolis, MN 55402 800-851-2920 Northland Securities, Inc., 45 South 7 Member FINRA and SIPC