Loading...
08. Resolution 4326 - Refunding 1986 Sewer Revenue BondsAgenda -April 7, 1997 AGENDA ITEM 8 - RESOLUTION 4326-REFUNDING 1986 SEWER REVENUE BONDS BACKGROUND/CONSIDERATION: Since December, the Finance Director and I have discussed reviewing these bonds. The investigation and information compiled by Amy and D. A. Davidson representatives will allow a refunding of this issue. The refunding will save the City approximately $75,000-$100,000. As you will see by the enclosed financing schedule, timing for the refunding is crucial and we must take action at this meeting to allow us to proceed within the bond deadlines. RECOMMENDATION: This is one of the "no brainer" recommendations. In order to save the City approximately $75,000-$100,000, I highly recommend that we process this refunding. ACTION REQUIRED: Adoption of RESOLUTION #4325 as compiled by D.A. Davidson and reviewed by our staff is required to begin the process. This resolution authorizes the Finance Director and City Manager to establish refunding procedures and allows us to enter into a bond purchase agreement. An additional resolution will be required at the May 5th meeting to finalize the bond resolutions. 97 04/02 12;19 124065430863 DORSEY & WHITNEY 4002/006 MINNEAPt%1V WAaMIMTON, D.C. I.ONPON ukl,h"L.R MONO KONG DES MOINE3 A.OuinIII"M �CpATA IAnA TO: Glen Neier Amy Robertson Clarence Krepps 127 EAST FRONT STRIHT SUITE 310 141530VLA, MONTANA 39902 TIlLEPHONS: (406) 721-6025 FAX:(406) 343-0863 MEMORANDUM K FROM: Mae Nan Ellingson DATE: April 2,1997 RE: Sewerage System Refunding Revenue Bonds, Series 1997 City of Kalispell, Montana CC: Aaron Rudio Wenc.) I+EW YO" DSNVEII %RATTLE FAR 00 BILLI NOS MISSOULA 0"Wr PAL" yffl&l� Attached please find a draft of the initial resolution relating to the above -referenced bond issue, which has been completed using the savings parameters provided to us by D. A. Davidson. D. A. Davidson has reviewed this draft. Please call with your comments as soon as possible, so we can provide you with a final draft for inclusion in the Council Members' packets, which we understand you will need by noon on Thursday. If you have comments or questions about the specific savings parameters, please call Aaron directly. Thanks. 07 U4/UZ 12:ZU U4U6543U&63 DORSEY & WHITNEY 19003/006 CERTIFICATE AS TO RESOLUTION AND VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Kalispell, Montana (the "City"), hereby certify that the attached resolution is a true copy of Resolution No. _ , entitled: "RESOLUTION RELATING TO SEWERAGE SYSTEM REFUNDING REVENUE BONDS, SERIES 1997; AUTHORIZING THE ISSUANCE AND PRIVATE NEGOTIATED SALE THEREOF AND DELEGATING CERTAIN DUTIES RELATED THERETO TO THE CITY MANAGER AND FINANCE DIRECTOR" (the "Resolution"), on file in the original records of the Council in my legal custody; that the Resolution was duly adopted by the Council at a meeting on April 7, 1997, and that the meeting was duly held by the Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon rote being taken on the Resolution at said meeting, the following Council Members voted in favor thereof. • voted against the same: • abstained from voting thereon: • or were absent WITNESS my hand and seal ociaily this day of April, 1997. (SEAL) Clerk of Council ar U4/UZ 12:z0 U4055430853 DORSEY & WHITNEY 004/006 RESOLUTION NO. I-- RESOLUTION RELATING TO SEWERAGE SYSTEM REFUNDING REVENUE BONDS, SERIES 1997; AUTHORIZING THE ISSUANCE AND PRIVATE NEGOTIATED SALE THEREOF AND DELEGATING CERTAIN DUTIES RELATED THERETO TO THE CITY MANAGER AND FINANCE DIRECTOR BE IT RESOLVED by the City Council (the "Council") of the City of Kalispell,, Montana (the "City"), as follows: Section 1. Recitals. under the provisions of Title 7, Chapter 7, Paris 45 and 46 (the "Act"), the City is authorized to issue bonds to refund revenue bonds issued for any of the purposes authorized in Title 7, Chapter 7, Part 44. Pursuant to such authorization, this Council issued and sold Sewerage System Revenue Bonds, Series 1986, of the City, dated as of June 1, 1986, in the original aggregate principal amount of $1,300,000 (the "Outstanding Bonds"). The Outstanding Bonds are currently outstanding in the aggregate principal amount of $955,000, mature on June 15 in the years 1997 through 2006, and bear interest at the basic rates of 6.80% to 7.10% per annu=, The Finance Director of the City estimates that, in today's market, the Outstanding Bonds can be refunded to achieve a net present value debt service savings of $45,000, or 4.75% of the principal amount of the Outstanding Bonds, using the yield of the Series 1997 Bonds as the discount factor, calculated over the term of the Outstanding Bonds. Section 2. Authorization. For the purpose of reducing the interest cost on the indebtedness authorized in Section 1, evidenced by the Outstanding Bonds, it is hereby determined that it is in the best interests of the Council to sell its sewerage system refunding revenue bonds, pursuant to the Act, in order to refund the Outstanding Bonds. Such bonds shall be denominated "Sewerage System Refunding Revenue Bonds, Series 1997" (the "Series 1997 Bonds"), and shall be issued in the aggregate principal amount necessary, but not greater than the amount necessary, to provide funds to pay or redeem the Outstanding Bonds and to pay all costs of issuing the Series 1997 Bonds including, without limitation, the fees and expenses of bond counsel, the fees of the paying agent and registrar, the fee of the escrow agent, if any, and the costs of printing the Preliminary Official Statement, the Official Statement and the Series 1997 Bonds (the „Costs of Issuance".). The Outstanding Bonds are subject to redemption on June 15,:'1997, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the. date of redemption. It is hereby determined to be in the best interest of the Council that the Outstanding Bonds be called for redemption on June 15, 1997 and that the m: u30vc 14:41 U4V004JU603 DORSEY E ;HITN Y It005:006 Council issue its refunding bonds (the "Series 1997 Bonds`l, as authorized by Section 7-7-4501 of the Act and the Bond Resolution), in order to refund the Outstanding Bonds and pay costs associated therewith. Section 3. Authorization of Sale of Bonds. Pursuant to the Act, this Council hereby determines that it would be in the best interests of the Council to sell the Series 1997 Bonds at a private negotiated sale to D_ A. Davidson & Co., of Great Falls, Montana (the "Purchaser"). The Series 1997 Bonds shall be sold to the Purchaser on the terms and at a purchase price subject to the foP.owing limitations and conditions: (1) the aggregate principal amount of the Series 1997 Bonds shall not exceed the amount necessary to refund the Outstanding Bonds, pay Costs of Issuance and to provide underwriter's discount of up to 2%; (2) the debt service payable on the Series 1997 Bonds (including any additional interest) is such that the net present value of debt service savings to be achieved by the refunding is not less than 4.75% of the principal amount of the Outstanding Bonds to be refunded, using the yield of the Bonds as the discount factor, calculated over the term of the Outstanding Bonds; (3) the average annual interest rate on the Series 1997 Bonds (including any additional iaaterest) is at Ieast fifty-hundredtbs percent (0S4%) less than the average annual interest rate on the Outstanding Bonds; and (4) the term of the Series 1997 Bonds shall not exceed 9 years and 1 month. All Coasts of Issuance shall be paid by the City from either the proceeds of the Series 1997 Bonds or other available funds of the City. The City Manager and the Finance Director are hereby authorized and directed to approve the principal amount, purchase price, maturity dates (provided that the final maturity date is not later than June 15, 2006), principal amounts, interest rates and redemption provisions of the Series 1997 Bonds, subject to the limitations contained in the preceding paragraph and the Act. Upon approving such terms, the City Manager and the Finance Director are hereby authorized and directed to approve, execute and deliver to the Purchaser a bond purchase agreement (the 'Bond Purchase Agreement"), containing the agreement of the City to sell, and the agreement of the Purchaser to purchase, the Series 1997 Bonds on the terms so approved, and containing such other provisions as the City Manager, Finance Director and the City Attorney shall deem necessary and appropriate. In the event of the absence or disability of the City Manager or the Finance Director, or such other officer of the City as the City Attorney shall deem to be authorized, shall make such approvals and execute and deliver the Bond Purchase Agreement. The execution and delivery by appropriate officers of the City of the Bond Purchase Agreement shall be conclusive as to the approval of such officers of the terms of the -41 Series 1997 Bonds and the agreement of the City to sell the Series 1997 Bonds on such terms in accordance with the provisions thereof. _a_ Ut V4/V;: ie:Z1 W4UO3430563 DORSEY & WHITNEY 10000/006 The form of the Series 1997 Bonds and the security therefor shall be prescribed by a subsequent resolution to be adopted by this Council. Section 4. Freliminau Official Statement The City Manager and the Finance Director and other officers of the City, in cooperation with the Purchaser, are hereby authorized and directed to prepare a Preliminary Official Statement to be distributed by the Purchaser to potential purchasers of the Series 1997 Bonds. The City Manager and the ]Finance Director (or in the event of the absence or disability of either the City Manager or the Finance Director, another member of this Council) are hereby authorized and directed on behalf of the City to approve the Preliminary Official Statement and deem it a "final" official statement as of its date, in accordance with Rule 15c2-12(b)(1) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. Section 5, Continuing 2j.* losure. Bidders and other participating underwriters in the primary offering of the Series 1997 Bonds need not comply with paragraph (b)(5) of Rule 150-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), because the aggregate principal amount of the Series 1997 Bonds and any other securities required to be integrated with the Series 1997 Bonds is less than $1,000,000. Consequently, the City will not enter into any undertaking to ,provide continuing disclosure of any kind with respect to the Series 1997 Bonds. Attest: Passed and approved this 7th day of April, 1997. Clerk of Council -3- CITY OF KALISPELL, MONTANA Mayor