HomeMy WebLinkAbout20070402 - VI-05VI-5
MEMORANDUM
TO: Honorable Mayor and City Councilmembers
FROM: Dave Osberg, City Administrator
DATE: March 29, 2007
SUBJECT: DCC Equipment Acquisition Financing Resolution
RECOMMENDED CITY COUNCIL ACTION
It is recommended that the City Council take action approving the enclosed "Resolution
Ratifying the Proposed Issuance and Sale of Dakota Communications Center Public
Safety Revenue Bonds, Providing for Allocated Share of the Payment Thereof."
BACKGROUND
The City of Hastings is a member of the Dakota Communications Center which will open
this fall, and serve as the Joint Dispatch Center for Cities in Dakota County, along with
Dakota County. In anticipation of the opening, significant investments are being made in
the new facility, and in the new equipment needed for operation. The attached letter and
supporting documentation provided by DCC Executive Director Kent Therkelsen
provides an excellent explanation of the resolution and the financing mechanism being
used to acquire the equipment. The City of Hastings will be responsible for its
proportional share of 4.08%, with an annual payment of about $49,500 for each of the
next six years, and a smaller payment in the final year of $19,455 in 2013. Staff
recommends approval of the attached Resolution.
DAKOTA COMMUNICATIONS CENTER
March 15, 2007
Dave Osberg
City Administrator
City of Hastings
101 4"' Street. E.
Hastings, MN 55033
RE: FINANCING -DCC EQUIPMENT ACQUISITIONS
Dear Administrator Osberg,
This letter and resolution regarding DCC equipment acquisition financing are being provided for use at your
upcoming City Council meeting.
Background
Dakota Communications Center budget provided approximately $6.629 million for the acquisition of equipment and
reimbursements for conversion costs. The capital expenditures are proposed to be financed with the issuance of
debt to be repaid with member assessments over a seven year period consistent with the approved DCC Budget.
The DCC Executive Committee recommended at its November 8 meeting and the Board approved at its
November 15 meeting, retaining Dorsey Law as legal counsel and Springsted Incorporated as fiscal consultants for
the issuance of the debt.
At its December 2006 meeting, the Board concurred with the Executive Board recommendation to proceed with
the issuance of revenue bonds to finance the equipment acquisitions. The equipment acquisition process, award of
contracts and approval of debt issuance is anticipated to be completed by April 2007.
Resolution Ratifving the Proaosed Issuance and Sale of Dakota Communications Center Public Safetv
Revenue Bonds
Each member of the Dakota Communication Center is being requested to approve the Resolution relating to the
issuance of the debt. A copy of the Resolution is attached. The Resolution recommends approval of a Resolution
whereby the debt will not exceed $7.6 million; however, based on current market conditions the final bond issue is
anticipated to be $7.435 million. The salient terms and conditions are as follows:
RESOLUTION N0.
RESOLUTION RATIFYING THE PROPOSED ISSUANCE
AND SALE OF DAKOTA COMMUNICATIONS CENTER
PUBLIC SAFETY REVENUE BONDS, PROVIDING FOR
ALLOCATED SHARE OF THE PAYMENT THEREOF
WHEREAS, pursuant to Minnesota Statutes, Section 471.59, the Cities of Apple Valley,
Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights,
Rosemount, South St. Paul, and West St. Paul, and the County of Dakota, Minnesota
(collectively, the "Members"), have entered into that certain Joint Powers Agreement
Establishing the Dakota Communications Center (the "Agreement"); and
WHEREAS, the Agreement establishes the Dakota Communications Center joint powers
entity ("DCC") for the purpose of, among others, acquiring and providing the facilities,
infrastructure, hardware, software, services and other items necessary and appropriate for the
establishment, operation and maintenance of a joint law enforcement, fue, EMS, and other
emergency communications system for the mutual benefits of the Members and the people of
Dakota County; and
WHEREAS, the Agreement authorizes DCC to incur debt obligations for capital projects
that do not exceed 10 years as necessary to accomplish DCC purposes; and
WHEREAS, the Agreement provides that the costs of capital projects of DCC in the
approved capital budget will be shared by the Members pursuant to a "Cost Allocation Model"
as defined in the Agreement; and
WHEREAS, the Board of Directors of DCC has proposed the financing of capital
equipment for authorized DCC purposes (the "Project") through the issuance of public safety
revenue bonds of DCC (the "Bonds"), which Bonds will be secured by the obligation of the
Members to pay their proportionate shares of capital costs pursuant to the Cost Allocation
Model, and has included debt service for the Bonds in DCC's capital budget;
NOW, THEREFORE, BE IT RESOLVED by the governing body of the City of Hastings,
Minnesota (the City), as follows:
SECTION 1. RATIFICATION OF BOND ISSUANCE. The City hereby ratifies and
approves the issuance and sale of the Bonds in a total principal amount not to exceed $7,600,000
on the further terms and conditions as provided by DCC.
SECTION 2. AUTHORIZATION OF PAYMENT OF ALLOCATED SHARE OF
DEBT SERVICE. The City hereby authorizes payment of the City's allocated share of principal
of and interest on the Bonds, calculated pursuant to the Cost Allocation Model attached hereto as
Exhibit A .
SECTION 3. TAX LEVY. For payment of the Bonds and the interest thereon when due,
there is hereby levied on all taxable property in the City a duect general ad valorem tax in an
amount required to pay when due the City's allocated share of principal of and interest on the
Bonds as provided in Section 2 hereof. Upon the sale of the Bonds, the City Clerk is hereby
authorized and directed to calculate the such levy and file a certified copy of this resolution along
with the levy in the records of Dakota County to receive certification that the tax required by law
has been levied. The proceeds of the tax, when received, shall be deposited with a fiscal agent or
trustee, as designated by DCC. The tax levied hereunder maybe abated with another source of
revenue of the City as provided by Minnesota law.
SECTION 4. PREPAYMENT. Regardless of the redemption and prepayment terms of
the Bonds, the City reserves the right to prepay, in whole or in part on any date, its allocated
share of principal of and interest on the Bonds in an amount sufficient to defease all or a portion
of its allocated share of the Bonds.
SECTION 5. CONSENT/COOPERATION. The City hereby consents to the distribution
by DCC of an official statement describing the Bonds, the Project and the Members (including
the City), and agrees to take such further actions, and authorizes its appropriate officers to
execute such documents, as shall be necessary to provide for the issuance of the Bonds by DCC
in accordance with the terms of this Agreement and this Resolution.
Adopted: April , 2007.
Title:
Title:
EXHIBIT A
Cost Allocation Model
Percentage
of
Community Allocation
Apple Valley 12.60°i°
Burnsville 17.09%
Dakota County 6.97%
Eagan 18.00°h
Farmington 4.83%
Hastings q Og%
Inver Grove Heights 6.40%
Lakeville 11.48°i°
Mendota Heights 1.74%
Rosemount 4.90%
South Saint Paul 5.87%
West Saint P
aul 6.04%
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Share Tots/ (in pe~centageJ 100%
Debt Structure
The Statement of Financing Sources and Uses is as follows:
Sources & Uses
Sources Of Funds
Par Amount of Bonds ........................................................ $ 7,435,000
Reoffering Premium .......................................................... $ 72.104
Total Sources ................................................................... $ 7,507,104
Uses Of Funds
Deposit to Project Construction Fund ............................... $ 6,629,562
Deposit to Debt Service Reserve Fund (DSRF) ................ $ 743,500
Costs of Issuance ............................................................... $ 76,750
Total Underwriter's Discount (0.725%) ........................... $ 53,904
Rounding Amount ............................................................. $ 3,389
Total Uses ......................................................................... $ 7,507,104
The debt service schedule is subject to change subject to actual bids received at the time of the actual debt
issuance. The following estimates reflect interest rate levels and market conditions at the time of this report.
Net Debt Service Schedule
Date Principal Coupon Interest Total P+l DSR Net New D/S
02/01/2008 1,005,000.00 4.000% 223,050.00 1,228,050.00 (20,717.22) 1,207,332.78
02/01Y2009 965,000.00 4.000% 257,200.00 1,222,200.00 (27,665.48) 1,194,534.52
02101/2010 1,005,000.00 4.000% 218,600.00 1,223,600.00 (27,665.48) 1,195,934.52
02/01/2011 1,030,000.00 4.000°k 178,400.00 1,208,400.00 (27,665.48) 1,180,734.52
02/01/2012 1,085,000.00 4.000°~ 137,200.00 1,222,200.00 (27,665.48) 1,194,534.52
02/01/2013 1,145,000.00 4.000% 93,800.00 1,238,800.00 (27,665.48) 1,211,134.52
02/01/2014 1,200,000.00 4.000% 48,000.00 1,248,000.00 (771,165.48) 476,834.52
Total $7,435,000.00 - $1,156,250.00 $8,591,250.00 (930,210.10) $7,661,039.90
Member Debt Obligation
The bonds will tie secured by the obligation of the individual members of DCC to pay their proportionate shares of
capital costs. Pursuant to Article IV of the JPA, withdrawal of a Member shall not discharge any liability incurred or
chargeable to such Member before the effective date of withdrawal. Article XII of JPA also states that a
withdrawing Member shall continue to be responsible for 100% of that Member's pro rata share of any capital
debts, liabilities or obligations of the DCC that were incurred prior to the date of providing notice of intent to
withdraw and are due and payable before the effective date of withdrawal.
The Resolution therefore will commit each respective entity to the repayment of the debt, while any bonds are
outstanding or upon receipt of the withdrawal payment. Each entitys respective percentage of debt is the same as
that which was adopted by the Board for the 2007 budgets.
•Page 2
QBSed on $te pre~immary debt service schedule as stated above the member debt responsibilities would be as
follows:
Member °k allot 2007 2008 2009 2010 2011 2012 2013
Apple Valley 12.60% $ 152,124 $ 150,511 $ 150,688 $ 148,773 $ 150,511 $ 152,603 $ 60,081
Burnsville 17.09% $ 206,333 $ 204,146 $ 204,385 $ 201,788 $ 204,146 $ 206,983 $ 81,491
Dakota County 6.97% $ 84,151 $ 83,259 $ 83,357 $ 82,297 $ 83,259 $ 84,416 $ 33,235
Eagan 18.00% $ 217,320 $ 215,016 $ 215,268 $ 212,532 $ 215,016 $ 218,004 $ 85,830
Farmington 4.83% $ 58,314 $ 57,696 $ 57,764 $ 57,029 $ 57,696 $ 58,498 $ 23,031
Hastings 4.08% $ 49,259 $ 48,737 $ 48,794 $ 48,174 $ 48,737 $ 49,414 $ 19,455
Inver Grove Heights 6.40% $ 77,269 $ 76,450 $ 76,540 $ 75,567 $ 76,450 $ 77,513 $ 30,517
Lakeville 11.48% $ 138,602 $ 137,133 $ 137,293 $ 135,548 $ 137,133 $ 139,038 $ 54,741
Mendota Heights 1.74% $ 21,008 $ 20,785 $ 20,809 $ 20,545 $ 20,785 $ 21,074 $ 8,297
Rosemount 4.90% $ 59,159 $ 58,532 $ 58,601 $ 57,856 $ 58,532 $ 59,346 $ 23,365
South Saint Paul 5.87% $ 70,870 $ 70,119 $ 70,201 $ 69,309 $ 70,119 $ 71,094 $ 27,990
West Saint Paul 6.04% $ 72,923 $ 72,150 $ 72,234 $ 71,316 $ 72,150 $ 73,153 $ 28,801
Total 100% $ 1,207,333 $ 1,194,535 $ 1,195,935 $ 1,180,735 $ 1,194,535 $ 1,211,135 $ 476,835
The estimated debt service schedule closely approximates the 2007 DCC Budget as shown below.
Budeet Estimate Variance
Apple Valley $ 152,792 $ 152,124 $ 668
Burnsville $ 207,239 $ 206,333 $ 906
Dakota County $ 84,521 $ 84,151 $ 370
Eagan $ 218,274 $ 217,320 $ 954
Farmington $ 58,570 $ 58,314 $ 256
Hastings $ 49,475 $ 49,259 $ 216
Inver Grove Heights $ 77,609 $ 77,269 $ 340
Lakeville $ 139,210 $ 138,602 $ 608
Mendota Heights $ 21,100 $ 21,008 $ 92
Rosemount $ 59,419 $ 59,159 $ 260
South Saint Paul $ 71,182 $ 70,870 $ 312
West Saint Paul $ 73,243 $ 72,923 $ 320
Total $ 1,212,633 $ 1,207,333 $ 5,301
Prenavment
The Resolution provides for a fixed amount each entity will be responsible for paying for the Irfe of the bonds.
However, each entity will have the opportunity to defease its share of the debt, for whatever reason the entity
decides to pay its share of the debt prior to the maturity date. The fiscal advisor would calculate the amount which
would be needed to be prepaid which with the other accrued interest on investments, would be sufficient to pay the
debt as it matures.
Call Provisions
According to the fiscal advisor and underwriters, a call provision would cost approximately 25 basis points or about
$68,000 in interest costs over the 1'Ife of the debt.
•Page 3
Due to the (8) short duration of the debt, (b) need to provide fimt commitrrlents from DCC members relative to the
debt obligation and (c) the DCC members ability to defease their share of the debt if they so desire, it is
recommended that the debt terms and conditions not provide for a call provision.
Recommendation
The Dakota Communication Center Board recommends member agency approval of the "Resolution Rat'rfying the
Proposed Issuance and Sale of Dakota Communications Center Public Safety Revenue Bonds, Providing for
Allocation Share of the Payment Thereof'
Sinc~ejrel~y,
iC0.7~7 ~..G,k.,i~^
Kent Therkelsen
Executive Director
G Dennis Feller, Fiscal Agent
DF/jh
•Page 4 P.O. Box 62, Rosemount, MN 55068 • Phone: 651-322-1900 • Fax: 651-322-2069