HomeMy WebLinkAboutX-C-1 Providing for the Competitive Negotiated Sale of General Obligation Improvement Bonds
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: Melanie Lammers, Finance Manager
Date: June 17, 2019
Item: Set Sale Date for Issuance of Bonds
Council Action Requested:
Approve the sale date as July 15, 2019 for $3,935,000 of General Obligation
Bonds, as well as corresponding resolution.
Background Information:
These bonds are for the financing of various street improvement projects within
the City, including Louis Lane neighborhood and Bohlken Drive/31st West
neighborhood. These obligations will be sold by a competitive negotiated sale in
accordance with Minnesota Statues, Chapters 429, 444, and 475. The rating of
these bonds will take place the week of June 24th, 2019.
Financial Impact:
Bonds and interest payments are factored into the City’s debt structure.
Advisory Commission Discussion:
N/A
Council Committee Discussion:
N/A
Attachments:
Resolution
Finance Plan
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EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL
CITY OF HASTINGS, MINNESOTA
HELD: June 17, 2019
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Hastings, Dakota and Washington Counties, Minnesota, was duly held at the City
Hall on June 17, 2019, at 7:00 P.M. for the purpose in part of authorizing the competitive
negotiated sale of the $3,935,000 General Obligation Bonds, Series 2019A.
The following members were present:
and the following were absent:
Member _______________ introduced the following resolution and moved its adoption:
RESOLUTION NO. _______________
RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF
GENERAL OBLIGATION BONDS, SERIES 2019A
A. WHEREAS, the City Council of the City of Hastings, Minnesota (the "City"), has
heretofore determined that it is necessary and expedient to issue General Obligation Bonds,
Series 2019A (the "Bonds") to finance various improvement projects in the City; and
B. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis,
Minnesota ("Northland"), as its independent municipal advisor and is therefore authorized to sell
the Bonds by competitive negotiated sale in accordance with Minnesota Statutes, Section 475.60,
Subdivision 2(9); and
C. WHEREAS, the City has retained Briggs and Morgan, Professional Association,
in Minneapolis, Minnesota as its bond counsel for purposes of this financing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hastings,
Minnesota, as follows:
1. Authorization. The City Council hereby authorizes Northland to solicit proposals
for the competitive negotiated sale of the Bonds.
2. Meeting; Proposal Opening. The City Council shall meet at the time and place
specified in the Notice of Sale, in substantially the form attached hereto as Exhibit A, for the
purpose of considering sealed proposals for and awarding the sale of the Bonds. The Finance
Manager, or designee, shall open proposals at the time and place specified in the Notice of Sale.
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3. Notice of Sale. The terms and conditions of the Bonds and the negotiation thereof
are in substantially in the form set forth in the Notice of Sale attached hereto as Exhibit A and
hereby approved and made a part hereof.
4. Official Statement. In connection with the competitive negotiated sale of the
Bonds, the Finance Manager and other officers or employees of the City are hereby authorized to
cooperate with Northland and participate in the preparation of an official statement for the
Bonds, and to execute and deliver it on behalf of the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by member
_______________ and, after 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.
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STATE OF MINNESOTA
COUNTIES OF DAKOTA AND WASHINGTON
CITY OF HASTINGS
I, the undersigned, being the duly qualified and acting Clerk of the City of Hastings,
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 the City's $3,935,000 General Obligation
Bonds, Series 2019A.
WITNESS my hand on June 17, 2019.
__________________________________
Clerk
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EXHIBIT A
NOTICE OF SALE
$3,935,000*
GENERAL OBLIGATION BONDS, SERIES 2019A
CITY OF HASTINGS, MINNESOTA
(Book-Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals (also referred to herein as “bids”) will be opened by the City’s Finance Manager, or designee, on
Monday, July 15, 2019, at 10:30 A.M., CT, at the offices of Northland Securities, Inc. (the City’s “Municipal
Advisor”), 150 South 5th Street, Suite 3300, Minneapolis, Minnesota 55402. Consideration of the Proposals for
award of the sale will be by the City Council at its meeting at the City Offices beginning Monday, July 15, 2019
at 7:00 P.M., CT.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.,
b) faxed to Northland Securities, Inc. at 612-851-5918,
c) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to Northland
Securities, Inc. by telephone at 612-851-5900 or 612-851-4945, or
d) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the manner
described below, until 10:30 A.M., CT, on Monday, July 15, 2019. Proposals may be submitted electronically
via PARITY™ or its successor, pursuant to this Notice until 10:30 A.M., CT, but no Proposal will be received
after the time for receiving Proposals specified above. To the extent any instructions or directions set forth in
PARITY™, or its successor, conflict with this Notice, the terms of this Notice shall control. For further
information about PARITY™, or its successor, potential bidders may contact Northland Securities, Inc. or i-
Deal at 1359 Broadway, 2nd floor, New York, NY 10018, telephone 212-849-5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY™ or its
successor. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder
and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted.
BOOK-ENTRY SYSTEM
The Bonds will be issued by means of a book-entry system with no physical distribution of bond certificates
made to the public. The Bonds will be issued in fully registered form and one bond certificate, representing the
aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as
nominee of Depository Trust Company (“DTC”), New York, New York, which will act as securities depository
of the Bonds.
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be
made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be adjusted
to maintain the same gross spread.
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Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a
single maturity through book entries made on the books and records of DTC and its participants. Principal and
interest are payable by the City through U.S. Bank, National Association, St. Paul, Minnesota (the “Paying
Agent/Registrar”), to DTC, or its nominee as registered owner of the Bonds. Transfer of principal and interest
payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments
to beneficial owners by participants will be the responsibility of such participants and other nominees of
beneficial owners. The successful bidder, as a condition of delivery of the Bonds, will be required to deposit the
bond certificates with DTC. The City will pay reasonable and customary charges for the services of the Paying
Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
Date of Delivery (Estimated to be August 8, 2019)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444 and 475. Proceeds will be used
to finance an improvement project and a water project, and to pay costs associated with the issuance of the
Bonds. The Bonds are payable from special assessments levied against benefited property, net revenues of the
City’s water utility, and additionally secured by ad valorem taxes on all taxable property within the City. The
full faith and credit of the City is pledged to their payment and the City has validly obligated itself to levy ad
valorem taxes in the event of any deficiency in the debt service account established for this issue.
INTEREST PAYMENTS
Interest is due semiannually on each February 1 and August 1, commencing August 1, 2020, to registered
owners of the Bonds appearing of record in the Bond Register as of the close of business on the fifteenth day
(whether or not a business day) of the calendar month preceding such interest payment date.
MATURITIES
Principal is due annually on February 1, inclusive, in each of the years and amounts as follows:
Year Amount Year Amount
2021 $330,000 2026 $395,000
2022 370,000 2027 410,000
2023 380,000 2028 415,000
2024 385,000 2029 425,000
2025 390,000 2030 435,000
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds and term
bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory
redemption in each year conforms to the maturity schedule set forth above.
INTEREST RATES
All rates must be in integral multiples of 1/20th or 1/8th of 1%. Rates must be in level or ascending order. All
Bonds of the same maturity must bear a single uniform rate from date of issue to maturity.
ESTABLISHMENT OF ISSUE PRICE
(HOLD-THE-OFFERING-PRICE RULE MAY APPLY – BIDS NOT CANCELLABLE)
The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver
to the City at closing an “issue price” or similar certificate setting forth the reasonably expected initial offering
price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or
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equivalent communications, substantially in the form attached hereto as Exhibit A, with such modifications as
may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel.
All actions to be taken by the City under this Notice of Sale to establish the issue price of the Bonds may be
taken on behalf of the City by the City’s Municipal Advisor and any notice or report to be provided to the City
may be provided to the City’s Municipal Advisor.
The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining “competitive sale”
for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the
“competitive sale requirements”) because:
(1) the City shall disseminate this Notice of Sale to potential underwriters in a manner that is reasonably
designed to reach potential underwriters;
(2) all bidders shall have an equal opportunity to bid;
(3) the City may receive bids from at least three underwriters of municipal bonds who have established
industry reputations for underwriting new issuances of municipal bonds; and
(4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase
the Bonds at the highest price (or lowest cost), as set forth in this Notice of Sale.
Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase of the
Bonds, as specified in the bid.
In the event that the competitive sale requirements are not satisfied, the City shall promptly so advise the winning
bidder. The City may then determine to treat the initial offering price to the public as of the award date of the
Bonds as the issue price of each maturity by imposing on the winning bidder the Hold-the-Offering-Price Rule
as described in the following paragraph (the “Hold-the-Offering-Price Rule”). Bids will not be subject to
cancellation in the event that the City determines to apply the Hold-the-Offering-Price Rule to the Bonds.
Bidders should prepare their bids on the assumption that the Bonds will be subject to the Hold-the-
Offering-Price Rule in order to establish the issue price of the Bonds.
By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the
Bonds to the public on or before the date of award at the offering price or prices (the “Initial Offering Price”),
or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on
behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor
sell unsold Bonds of any maturity to which the Hold-the-Offering Price Rule shall apply to any person at a price
that is higher than the Initial Offering Price to the public during the period starting on the award date for the
Bonds and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the award date; or
(2) the date on which the underwriters have sold at least 10% of a maturity of the Bonds to the public at a
price that is no higher than the Initial Offering Price to the public (the “10% Test”), at which time only
that particular maturity will no longer be subject to the Hold-the-Offering-Price Rule.
The City acknowledges that, in making the representations set forth above, the winning bidder will rely on (i)
the agreement of each underwriter to comply with the requirements for establishing issue price of the Bonds,
including, but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable to the
Bonds, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling
group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer
who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds,
including but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable to the
Bonds, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an
underwriter or dealer who is a member of the selling group is a party to a third-party distribution agreement that
was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer
that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds,
including, but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if applicable to the
Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further
acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding
the requirements for establishing issue price of the Bonds, including but not limited to, its agreement to comply
with the Hold-the-Offering-Price Rule, if applicable to the Bonds, and that no underwriter shall be liable for the
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failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer
that is a party to a third-party distribution agreement to comply with its corresponding agreement to comply with
the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply
with the Hold-the-Offering-Price Rule if applicable to the Bonds.
By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group
agreement and each third-party distribution agreement (to which the bidder is a party) relating to the initial sale
of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating
each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to
such third-party distribution agreement, as applicable, (A) to comply with the Hold-the-Offering-Price Rule, if
applicable if and for so long as directed by the winning bidder and as set forth in the related pricing wires, (B)
to promptly notify the winning bidder of any sales of Bonds that to its knowledge, are made to a purchaser who
is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term
being used as defined below), and (C) to acknowledge that, unless otherwise advised by the underwriter, dealer
or broker-dealer, the winning bidder shall assume that each order submitted by the underwriter, dealer or broker-
dealer is a sale to the public, and (ii) any agreement among underwriters or selling group agreement relating to
the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language
obligating each underwriter or dealer that is a party to a third-party distribution agreement to be employed in
connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such
retail distribution agreement to comply with the Hold-the-Offering-Price Rule, if applicable, in each case if and
for so long as directed by the winning bidder or the underwriter and as set forth in the related pricing wires.
Notes: Sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale
of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public
for purposes of this Notice of Sale. Further, for purposes of this Notice of Sale:
(1) “public” means any person other than an underwriter or a related party,
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with
the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a
person described in clause (A) to participate in the initial sale of the Bonds to the public (including a
member of a selling group or a party to a third-party distribution agreement participating in the initial
sale of the Bonds to the public).
(3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the
purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting
power or the total value of their stock, if both entities are corporations (including direct ownership by
one corporation or another), (B) more than 50% common ownership of their capital interests or profits
interests, if both entities are partnerships (including direct ownership by one partnership of another),
or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or
the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation
and the other entity is a partnership (including direct ownership of the applicable stock or interests by
one entity of the other), and
(4) “sale date” means the date that the Bonds are awarded by the City to the winning bidder.
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ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER PROPOSALS
The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or
decrease will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the
purchase price will also be adjusted to maintain the same gross spread. Such adjustments shall be made promptly
after the sale and prior to the award of Proposals by the City and shall be at the sole discretion of the City. The
successful bidder may not withdraw or modify its Proposal once submitted to the City for any reason, including
post-sale adjustment. Any adjustment shall be conclusive and shall be binding upon the successful bidder.
OPTIONAL REDEMPTION
Bonds maturing on February 1, 2029 and 2030 are subject to redemption and prepayment at the option of the
City on February 1, 2028 and 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 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
Bond Registrar.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither
the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a
failure or refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in accordance with
terms of the purchase contract. The CUSIP Service Bureau charge for the assignment of CUSIP identification
numbers shall be paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within forty days after award, subject to an approving legal opinion by Briggs and
Morgan, Professional Association, Bond Counsel. The legal opinion will be paid by the City and delivery will
be anywhere in the continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $3,895,650 (99.00%) and accrued interest on the principal sum of $3,935,000 must be
filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to legality.
Proposals for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
Melanie Lammers, Finance Manager
Hastings City Hall
101 4th Street East
Hastings, Minnesota 55033
A good faith deposit (the “Deposit”) in the amount of $78,700 in the form of a federal wire transfer (payable to
the order of the City) is only required from the apparent winning bidder, and must be received within two hours
after the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of the
wire instructions from the Municipal Advisor promptly after the sale. If the Deposit is not received from the
apparent winning bidder in the time allotted, the City may choose to reject their Proposal and then proceed to
offer the Bonds to the next lowest bidder based on the terms of their original proposal, so long as said bidder
wires funds for the Deposit amount within two hours of said offer.
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The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement and
no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with the
accepted Proposal, said amount will be retained by the City. No Proposal can be withdrawn after the time set for
receiving Proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or
continued to another date without award of the Bonds having been made.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC)
basis. The City’s computation of the interest rate of each Proposal, in accordance with customary practice, will
be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City will reserve the right
to: (i) waive non-substantive informalities of any Proposal or of matters relating to the receipt of Proposals and
award of the Bonds, (ii) reject all Proposals without cause, and (iii) reject any Proposal which the City determines
to have failed to comply with the terms herein.
INFORMATION FROM SUCCESSFUL BIDDER
The successful bidder will be required to provide, in a timely manner, certain information relating to the initial
offering price of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal
Revenue Code of 1986, as amended.
OFFICIAL STATEMENT
By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City
agrees that, no more than seven business days after the date of such award, it shall provide to the senior managing
underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an electronic format
as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be provided, annual financial information, including audited financial
statements of the City, and notices of certain material events, as required by SEC Rule 15c2-12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER’S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option
of the successful bidder, the purchase of any such insurance policy or the issuance of any such commitment shall
be at the sole option and expense of the successful bidder of the Bonds. Any increase in the costs of issuance of
the Bonds resulting from such purchase of insurance shall be paid by the successful bidder, except that, if the
City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee.
Any other rating agency fees shall be the responsibility of the successful bidder. Failure of the municipal bond
insurer to issue the policy after the Bonds have been awarded to the successful bidder shall not constitute cause
for failure or refusal by the successful bidder to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
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Dated: June 17, 2019 BY ORDER OF THE HASTINGS, MINNESOTA CITY COUNCIL
/s/ Melanie Lammers
Finance Manager
Additional information may be obtained from:
Northland Securities, Inc.
150 South 5th Street, Suite 3300
Minneapolis, Minnesota 55402
Telephone No.: 612-851-5900
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EXHIBIT A
(ISSUE PRICE CERTIFICATE – COMPETITIVE SALE SATISFIED)
The undersigned, on behalf of ______________________________ (the "Underwriter"),
hereby certifies as set forth below with respect to the sale of the General Obligation Bonds, Series 2019A (the
"Bonds") of the City of Hastings, Minnesota (the "Issuer").
1. Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public
by the Underwriter are the prices listed in Schedule A (the "Expected Offering Prices"). The Expected
Offering Prices are the prices for the Maturities of the Bonds used by the Underwriter in formulating its bid to
purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by the Underwriter
to purchase the Bonds.
(b) The Underwriter was not given the opportunity to review other bids prior to submitting its
bid.
(c) The bid submitted by the Underwriter constituted a firm offer to purchase the Bonds.
2. Defined Terms.
(a) "Maturity" means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate
Maturities.
(b) "Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related
party" for purposes of this certificate generally means any two or more persons who have greater than 50
percent common ownership, directly or indirectly.
(c) "Sale Date" means the first day on which there is a binding contract in writing for the sale of
a Maturity of the Bonds. The Sale Date of the Bonds is _________________.
(d) "Underwriter" means (i) any person that agrees pursuant to a written contract with the Issuer
(or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial sale of the
Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this
certificate represents the Underwriter's interpretation of any laws, including specifically Sections 103 and 148
of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned
understands that the foregoing information will be relied upon by the Issuer with respect to certain of the
representations set forth in the Nonarbitrage Certificate and with respect to compliance with the federal income
tax rules affecting the Bonds, and by Briggs and Morgan, Professional Association, Bond Counsel in
connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal
income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income
tax advice that it may give to the Issuer from time to time relating to the Bonds.
Dated: _________________, 2019.
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____________________________________________
By__________________________________
Its ______________________________
(ISSUE PRICE CERTIFICATE – HOLD THE PRICE)
The undersigned, on behalf of ________________________________ (the "Underwriter"), on behalf
of itself, hereby certifies as set forth below with respect to the sale and issuance of General Obligation Bonds,
Series 2019A (the "Bonds") of the City of Hastings, Minnesota (the "Issuer").
1. Initial Offering Price of the Bonds.
(a) The Underwriter offered each Maturity of the Bonds to the Public for purchase at the respective
initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of
the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Notice of Sale, the Underwriter has agreed in writing that, (i) for each
Maturity of the Bonds, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price
that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the
"hold-the-offering-price rule"), and (ii) any selling group agreement shall contain the agreement of each dealer
who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each
broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule.
Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Bonds at
a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding
Period.
2. Defined Terms.
(a) "Holding Period" means, for each Maturity of the Bonds, the period starting on the Sale Date
and ending on the earlier of (i) the close of the fifth business day after the Sale Date (________________), or
(ii) the date on which the Underwriter has sold at least 10% of such Maturity of the Bonds to the Public at prices
that are no higher than the Initial Offering Price for such Maturity.
(b) "Maturity" means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate
Maturities.
(c) "Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related
party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent
common ownership, directly or indirectly.
(d) "Sale Date" means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is _______________, 2019.
(e) "Underwriter" means (i) any person that agrees pursuant to a written contract with the Issuer
(or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to
the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person
described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds
to the Public).
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11818362v1
A-10
The representations set forth in this certificate are limited to factual matters only. Nothing in this
certificate represents the Representative's interpretation of any laws, including specifically Sections 103 and 148
of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned
understands that the foregoing information will be relied upon by the Issuer with respect to certain of the
representations set forth in the Nonarbitrage Certificate and with respect to compliance with the federal income
tax rules affecting the Bonds, and by Briggs and Morgan, Professional Association, Bond Counsel, in connection
with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax
purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice
that it may give to the Issuer from time to time relating to the Bonds.
Dated: __________, 2019
______________________________________
By: _________________________________________
Its ________________________________
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Finance Plan
Hastings, Minnesota
$3,935,000
General Obligation Bonds, Series 2019A
June 17, 2019
150 South 5th Street, Suite 3300
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
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Contents
Executive Summary ................................................................................................................................................... 3
Issue Overview ............................................................................................................................................................ 4
Purpose ................................................................................................................................................................ 4
Authority ............................................................................................................................................................. 4
Structure .............................................................................................................................................................. 4
Security and Source of Repayment ........................................................................................................ 4
Plan Rationale ................................................................................................................................................... 5
Issuing Process ................................................................................................................................................. 5
Attachment 1 – Preliminary Debt Service Schedules .................................................................................... 6
Total Combined 2019A Bonds .................................................................................................................. 6
Improvement Portion .................................................................................................................................... 7
Water Portion .................................................................................................................................................... 8
Attachment 2 – Estimated Levy Schedules ........................................................................................................ 9
Improvement Portion .................................................................................................................................... 9
Attachment 3 – Related Considerations .......................................................................................................... 10
Bank Qualification ................................................................................................................................ 10
Arbitrage Compliance ......................................................................................................................... 10
Continuing Disclosure ........................................................................................................................ 10
Premiums .................................................................................................................................................. 11
Rating .......................................................................................................................................................... 11
Attachment 4 – Calendar of Events ................................................................................................................... 12
Attachment 5 - Risk Factors.................................................................................................................................. 13
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Executive Summary
The following is a summary of the recommended terms for the issuance of $3,935,000 General
Obligation Bonds, Series 2019A (the “Bonds”). Additional information on the proposed finance
plan and issuing process can be found after the Executive Summary, in the Issue Overview and
Attachment 3 – Related Considerations.
Purpose Proceeds from the Bonds will be used to finance an
improvement project and a water project, and to pay costs
associated with the issuance of the Bonds.
Security The Bonds will be a general obligation of the City. The City
will pledge special assessments collected from benefitted
properties for payment on the Improvement Portion of the
Bonds, and net revenues of the water utility on the Revenue
Portion of the Bonds.
Repayment Term The Bonds will mature annually each February 1 in the years
2021 through 2030. Interest on the Bonds will be payable on
August 1, 2020 and semiannually thereafter on each February 1
and August 1.
Estimated Interest Rate Average coupon: 2.07%
True interest cost (TIC): 2.24%
Prepayment Option Bonds maturing on and after February 1, 2029 will be subject to
redemption on February 1, 2028 and any day thereafter at a
price of par plus accrued interest.
Rating A rating will be requested from Standard & Poor’s Rating
Agency. The City’s general obligation debt is currently rated
"AA” by S&P.
Tax Status The Bonds will be tax-exempt, bank qualified obligations.
Risk Factors There are certain risks associated with all debt. Risk factors
related to the Bonds are discussed in Attachment 5.
Type of Bond Sale Public Sale – Competitive Bids
Proposals Received Monday, July 15, 2019 @ 10:30 A.M.
Council Consideration Monday July 15, 2019 @ 7:00 P.M.
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Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the following projects (together, the “Projects”):
• an improvement project, which includes Louis Lane neighborhood and Bohlken
Drive/31st Street West neighborhood (the “Improvement Portion”),
• a water project, which also includes Louis Lane neighborhood and Bohlken Drive/31st
Street West neighborhood (the “Revenue Portion”).
Proceeds will also be used to pay costs associated with issuing the Bonds. The Bonds have been
sized based on estimates provided by City Staff and the City engineer. The table below contains
the sources and uses of funds for the bond issue.
Authority
The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 429, 444,
and 475.
Under Chapter 429, an Improvement means any type of improvement made under authority
granted by section 429.021, which includes, but is not limited to, improvements to streets and
sidewalks, storm and sanitary sewer systems, and street lighting systems.
Before issuing bonds under Chapter 429, the City must hold a public hearing on the
Improvements and the proposed bonds, and must then pass a resolution ordering the
improvements by at least a 4/5 majority. Public hearings have been held for the Improvement
Portion on February 19, 2019 and all corresponding resolutions have passed with a 4/5
majority.
Structure
The Improvement Portion has been structured over 10 years, with relatively level annual debt
service payments. The Revenue Portion has also been structured over 10 years, with relatively
level annual debt service payments.
The proposed structure for the bond issue and preliminary debt service projections are
illustrated in Attachment 1 and the estimated levies are illustrated in Attachment 2.
Security and Source of Repayment
The Bonds will be general obligations of the City. The finance plan relies on the following
assumptions for the revenues used to pay debt service, as provided by City staff:
Street
Improvements Water
Issue
Summary
Sources Of Funds Par Amount of Bonds $3,120,000.00 $815,000.00 $3,935,000.00 Total Sources $3,120,000.00 $815,000.00 $3,935,000.00 Uses Of Funds Deposit to Project Construction Fund 3,056,300.00 800,000.00 3,856,300.00Total Underwriter's Discount (1.000%)31,200.00 8,150.00 39,350.00Costs of Issuance 30,272.33 7,907.67 38,180.00Rounding Amount 2,227.67 (1,057.67)1,170.00 Total Uses $3,120,000.00 $815,000.00 $3,935,000.00
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• Special Assessments. The City is expected to levy special assessments against benefited
properties in the amount of $1,795,991.67 for the Improvement Portion of the Bonds. The
assessments will be payable over 10 years, with an interest rate of 1.50% over the average
coupon on the Improvement Portion of the Bonds (currently estimated to be 3.60%) and
structured for level annual payments of principal and interest. The plan assumes that the
assessments will be levied in 2019 for initial payment in 2020.
• Utility Revenues. Net revenues of the City’s water utility will be pledged for payment of
the Revenue Portion of the Bonds. The City will covenant to adopt water rates and
charges that are sufficient to produce net revenues equal to at least 105% of the debt
service requirements on the Revenue Portion of the Bonds. In the event there is a
deficiency in the amount of net revenues available for payment of debt service, the City
may levy taxes to cover the insufficiency, but only on a temporary basis until rates are
adjusted.
• Property Taxes. The remaining revenues needed to pay debt service on the Bonds are
expected to come from property tax levies. The initial projections show an average
annual tax levy of approximately $151,491 is needed to produce the statutory
requirement of 105% of debt service, after accounting for assessments and utility
revenues. The levy may be adjusted annually based on actual special assessment
collections and additional monies in the debt service fund. The initial tax levy will be
made in 2019 for taxes payable in 2020.
Plan Rationale
The Finance Plan recommended in this report is based on a variety of factors and information
provided by the City related to the financed project and City objectives, Northland’s knowledge
of the City and our experience in working with similar cities and projects. The issuance of
General Obligation Bonds provides the best means of achieving the City’s objectives and cost
effective financing. The City has successfully issued and managed this type of debt for previous
projects.
Issuing Process
Northland will receive bids to purchase the Bonds on Monday, July 15, 2019 at 10:30 AM.
Market conditions and the marketability of the Bonds support issuance through a competitive
sale. This process has been chosen as it is intended to produce the lowest combination of
interest expense and underwriting expense on the date and time set to receive bids. The
calendar of events for the issuing process can be found in Attachment 4.
Municipal Advisor: Northland Securities, Inc., Minneapolis, Minnesota
Bond Counsel: Briggs & Morgan P.C., Minneapolis, Minnesota
Paying Agent: U.S. Bank, National Association, St. Paul, Minnesota
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Attachment 1 – Preliminary Debt Service Schedules
Total Combined 2019A Bonds
*Assumes “AA” Rates as of June 7, 2019, plus 0.25%.
Date Principal Coupon Interest Total P+I Fiscal Total
08/08/2019 -----08/01/2020 --76,828.98 76,828.98 -02/01/2021 330,000.00 1.800%39,176.25 369,176.25 446,005.2308/01/2021 --36,206.25 36,206.25 -02/01/2022 370,000.00 1.800%36,206.25 406,206.25 442,412.5008/01/2022 --32,876.25 32,876.25 -
02/01/2023 380,000.00 1.850%32,876.25 412,876.25 445,752.5008/01/2023 --29,361.25 29,361.25 -02/01/2024 385,000.00 1.850%29,361.25 414,361.25 443,722.5008/01/2024 --25,800.00 25,800.00 -
02/01/2025 390,000.00 1.900%25,800.00 415,800.00 441,600.0008/01/2025 --22,095.00 22,095.00 -02/01/2026 395,000.00 1.950%22,095.00 417,095.00 439,190.0008/01/2026 --18,243.75 18,243.75 -02/01/2027 410,000.00 2.000%18,243.75 428,243.75 446,487.5008/01/2027 --14,143.75 14,143.75 -02/01/2028 415,000.00 2.100%14,143.75 429,143.75 443,287.5008/01/2028 --9,786.25 9,786.25 -02/01/2029 425,000.00 2.200%9,786.25 434,786.25 444,572.5008/01/2029 --5,111.25 5,111.25 -02/01/2030 435,000.00 2.350%5,111.25 440,111.25 445,222.50
Total $3,935,000.00 -$503,252.73 $4,438,252.73 -
Date And Term Structure Dated 8/08/2019Delivery Date 8/08/2019First available call date 2/01/2028Call Price 100.000% Yield Statistics Bond Year Dollars $24,325.99Average Life 6.182 YearsAverage Coupon 2.0687866% Net Interest Cost (NIC)2.2305477%True Interest Cost (TIC)2.2388786%All Inclusive Cost (AIC)2.4119643%
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Improvement Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/08/2019 -----08/01/2020 --60,914.56 60,914.56 -
02/01/2021 260,000.00 1.800%31,061.25 291,061.25 351,975.8108/01/2021 --28,721.25 28,721.25 -02/01/2022 295,000.00 1.800%28,721.25 323,721.25 352,442.5008/01/2022 --26,066.25 26,066.25 -
02/01/2023 300,000.00 1.850%26,066.25 326,066.25 352,132.5008/01/2023 --23,291.25 23,291.25 -02/01/2024 305,000.00 1.850%23,291.25 328,291.25 351,582.5008/01/2024 --20,470.00 20,470.00 -02/01/2025 310,000.00 1.900%20,470.00 330,470.00 350,940.0008/01/2025 --17,525.00 17,525.00 -02/01/2026 315,000.00 1.950%17,525.00 332,525.00 350,050.00
08/01/2026 --14,453.75 14,453.75 -02/01/2027 325,000.00 2.000%14,453.75 339,453.75 353,907.5008/01/2027 --11,203.75 11,203.75 -02/01/2028 330,000.00 2.100%11,203.75 341,203.75 352,407.50
08/01/2028 --7,738.75 7,738.75 -02/01/2029 335,000.00 2.200%7,738.75 342,738.75 350,477.5008/01/2029 --4,053.75 4,053.75 -02/01/2030 345,000.00 2.350%4,053.75 349,053.75 353,107.50
Total $3,120,000.00 -$399,023.31 $3,519,023.31 -
Date And Term Structure Dated 8/08/2019Delivery Date 8/08/2019First available call date 2/01/2028Call Price 100.000% Yield Statistics Bond Year Dollars $19,289.33Average Life 6.182 YearsAverage Coupon 2.0686216% Net Interest Cost (NIC)2.2303690%True Interest Cost (TIC)2.2386981%All Inclusive Cost (AIC)2.4117646%
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Water Portion
Date Principal Coupon Interest Total P+I Fiscal Total
08/08/2019 -----08/01/2020 --15,914.42 15,914.42 -
02/01/2021 70,000.00 1.800%8,115.00 78,115.00 94,029.4208/01/2021 --7,485.00 7,485.00 -02/01/2022 75,000.00 1.800%7,485.00 82,485.00 89,970.0008/01/2022 --6,810.00 6,810.00 -
02/01/2023 80,000.00 1.850%6,810.00 86,810.00 93,620.0008/01/2023 --6,070.00 6,070.00 -02/01/2024 80,000.00 1.850%6,070.00 86,070.00 92,140.0008/01/2024 --5,330.00 5,330.00 -02/01/2025 80,000.00 1.900%5,330.00 85,330.00 90,660.0008/01/2025 --4,570.00 4,570.00 -02/01/2026 80,000.00 1.950%4,570.00 84,570.00 89,140.00
08/01/2026 --3,790.00 3,790.00 -02/01/2027 85,000.00 2.000%3,790.00 88,790.00 92,580.0008/01/2027 --2,940.00 2,940.00 -02/01/2028 85,000.00 2.100%2,940.00 87,940.00 90,880.00
08/01/2028 --2,047.50 2,047.50 -02/01/2029 90,000.00 2.200%2,047.50 92,047.50 94,095.0008/01/2029 --1,057.50 1,057.50 -02/01/2030 90,000.00 2.350%1,057.50 91,057.50 92,115.00
Total $815,000.00 -$104,229.42 $919,229.42 -
Date And Term Structure Dated 8/08/2019Delivery Date 8/08/2019First available call date 2/01/2028Call Price 100.000% Yield Statistics Bond Year Dollars $5,036.65Average Life 6.180 YearsAverage Coupon 2.0694184% Net Interest Cost (NIC)2.2312322%True Interest Cost (TIC)2.2395699%All Inclusive Cost (AIC)2.4127291%
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Attachment 2 – Estimated Levy Schedules
Improvement Portion
Date Total P+I 105% Levy
Less: Special
Assessment
Revenue*Net Levy Levy Year
Collection
Year
02/01/2020 ----02/01/2021 351,975.81 369,574.60 218,006.06 151,568.54 2019 202002/01/2022 352,442.50 370,064.63 218,006.06 152,058.57 2020 202102/01/2023 352,132.50 369,739.13 218,006.06 151,733.07 2021 202202/01/2024 351,582.50 369,161.63 218,006.06 151,155.57 2022 202302/01/2025 350,940.00 368,487.00 218,006.05 150,480.95 2023 202402/01/2026 350,050.00 367,552.50 218,006.06 149,546.44 2024 2025
02/01/2027 353,907.50 371,602.88 218,006.06 153,596.82 2025 202602/01/2028 352,407.50 370,027.88 218,006.06 152,021.82 2026 202702/01/2029 350,477.50 368,001.38 218,006.06 149,995.32 2027 202802/01/2030 353,107.50 370,762.88 218,006.06 152,756.82 2028 2029
Total $3,519,023.31 $3,694,974.48 $2,180,060.59 $1,514,913.89
*Special assessment revenue is based on assessments totaling $1,795,991.67 assessed at a rate of 3.60% (1.50%
over the average coupon), with equal annual payments.
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Attachment 3 – Related Considerations
Bank Qualification
We understand the City (in combination with any subordinate taxing jurisdictions or debt
issued in the City’s name by 501(c)3 corporations) anticipates issuing $10,000,000 or less in tax-
exempt debt during this calendar year. Therefore the Bonds will be designated as “bank
qualified” obligations pursuant to Federal Tax Law.
Arbitrage Compliance
Project/Construction Fund. All tax-exempt bond issues are subject to federal rebate
requirements which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate
exemption the City expects to qualify for is the “18 month spending exemption.”
Debt Service Fund. The City must maintain a bona fide debt service fund for the Bonds or be
subject to yield restriction in the debt service fund. A bona fide debt service fund involves an
equal matching of revenues to debt service expense with a balance forward permitted equal to
the greater of the investment earnings in the fund during that year or 1/12 of the debt service of
that year.
The City should become familiar with the various Arbitrage Compliance requirements for this
bond issue. The Resolution for the Bonds prepared by Bond Counsel explains the requirements
in greater detail.
Continuing Disclosure
Type: Full
Dissemination Agent: Northland Securities
The requirements for continuing disclosure are governed by SEC Rule 15c2-12. The primary
requirements of Rule 15c2-12 actually fall on underwriters. The Rule sets forth due diligence
needed prior to the underwriter’s purchase of municipal securities. Part of this requirement is
obtaining commitment from the issuer to provide continuing disclosure. The document
describing the continuing disclosure commitments (the “Undertaking”) is contained in the
Official Statement that will be prepared to offer the Bonds to investors.
The City has more than $10,000,000 of outstanding debt and is required to undertake “full”
continuing disclosure. Full disclosure requires annual posting of the audit and a separate
continuing disclosure report, as well as the reporting of certain “material events.” Material
events set forth in the Rule, including, but not limited to, bond rating changes, call notices and
issuance of “financial obligations” (such as USDA loans, Public Finance Authority loans, and
lease agreements), must be reported within ten days of occurrence. The report contains annual
financial information and operating data that “mirrors” material information presented in the
Official Statement. The specific contents of the annual report will be described in the
Undertaking that appears in the appendix of the Official Statement. Northland currently serves
as dissemination agent for the City, assisting with the annual reporting. The information for the
Bonds will be incorporated into our reporting.
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Premiums
In the current market environment, it is likely that bids received from underwriters will include
premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the
par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums
reflects the bidder’s view on future market conditions, tax considerations for investors and
other factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid,
regardless of premium.
A premium bid produces additional funds that can be used in several ways:
• The premium means that the City needs less bond proceeds and can reduce the size of
the issue by the amount of the premium.
• The premium can be deposited in the Construction Fund and used to pay additional
project costs, rather than used to reduce the size of the issue.
• The premium can be deposited in the Debt Service Fund and used to pay principal and
interest.
Northland will work with City staff prior to the sale day to determine use of premium (if any).
A consideration for use of premium is the bank qualification of the Bonds.
Rating
A rating will be requested from Standard and Poor’s Rating Agency. The City’s general
obligation debt is currently rated "AA" by S&P. The rating process will include a conference call
with the rating analyst. Northland will assist City staff in preparing for and conducting the
rating call.
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Attachment 4 – Calendar of Events
The following checklist of items denotes each milestone activity as well as the members of the
finance team who will have the responsibility to complete it. Please note this proposed timetable assumes regularly scheduled City Council meetings.
Date Action Responsible Party
June 10 Set Sale Resolution and Finance Plan Sent to City Northland, Bond
Counsel
June 11 Rating Request sent to S&P. Preliminary Official
Statement Sent to City for Sign Off
Northland, City
June 17 Set Sale Resolution Adopted and Review of Finance
Plan
Northland, Bond
Counsel, City Council
Action
Week of June 17 or
June 24
Rating Call Northland, City,
Rating Agency
Week of July 1 Rating Received Northland, City,
Rating Agency
July 8 Awarding Resolution sent to City Northland, Bond
Counsel
July 15 Bond Sale at 10:30 a.m.
Bond Proposal Signed and Awarding Resolution
adopted – 7:00 p.m.
Northland, City
Council Action
August 8
Closing on the Bonds (Proceeds Available) Northland, City Staff,
Bond Counsel
May 2019 June 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 1
5 6 7 8 9 10 11 2 3 4 5 6 7 8
12 13 14 15 16 17 18 9 10 11 12 13 14 15
19 20 21 22 23 24 25 16 17 18 19 20 21 22
26 27 28 29 30 31 23 24 25 26 27 28 29
30
July 2019 August 2019
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 1 2 3
7 8 9 10 11 12 13 4 5 6 7 8 9 10
14 15 16 17 18 19 20 11 12 13 14 15 16 17
21 22 23 24 25 26 27 18 19 20 21 22 23 24
28 29 30 31 25 26 27 28 29 30 31
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Attachment 5 - Risk Factors
Property Taxes: Property tax levies shown in this Finance Plan are based on projected debt
service and other revenues. Final levies will be set based on the results of sale. Levies should be
reviewed annually and adjusted as needed. The debt service levy must be included in the
preliminary levy for annual Truth in Taxation hearings. Future Legislative changes in the
property tax system, including the imposition of levy limits and changes in calculation of
property values, would affect plans for payment of debt service. Delinquent payment of
property taxes would reduce revenues available to pay debt service.
Special Assessments: Special assessments for the financed projects have not been levied at this
time. This Finance Plan is based on the assumptions listed earlier in this report. Changes in the
terms and timing for the actual assessments will alter the projected flow of funds for payment of
debt service on the Bonds. Also, special assessments may be prepaid. It is likely that the income
earned on the investment of prepaid assessments will be less than the interest paid if the
assessments remained outstanding. Delinquencies in assessment collections would reduce
revenues needed to pay debt service. The collection of deferred assessments, if any, has not
been included in the revenue projections. Projected assessment income should be reviewed
annually and adjusted as needed.
Utility Revenues: The City pledges the net revenues of the water utility to the payment of
principal and interest on the Bonds. The failure to adjust rates and charges as needed and the
loss of significant customers will affect available net revenues. If the net revenues are
insufficient, the City is required to levy property taxes or use other revenues to cover the
deficiency. Property taxes can only be used on a temporary basis and may not be an ongoing
source of revenue to pay debt service.
General: In addition to the risks described above, there are certain general risks associated with
the issuance of bonds. These risks include, but are not limited to:
• Failure to comply with covenants in bond resolution.
• Failure to comply with Undertaking for continuing disclosure.
• Failure to comply with IRS regulations, including regulations related to use of the proceeds
and arbitrage/rebate. The IRS regulations govern the ability of the City to issue its bonds as
tax-exempt securities and failure to comply with the IRS regulations may lead to loss of tax-
exemption.
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