HomeMy WebLinkAboutX-E-02 Resolution to Approve Sale Date for Competitive Negotiated Sales of General Obligation Bonds, Series 2022A City Council Memorandum
To: Mayor Fasbender & City Councilmembers From: Chris Eitemiller, Finance Manager Date: April 4, 2022 Item: Set Sale Date for Issuance of Bonds Council Action Requested: Approve the sale date as May 2, 2022 for $6,800,000 General Obligation Improvement Bonds as
well as corresponding resolution. Background Information:
These bonds are for the financing of the 2022 street improvement project, a water tower reconditioning project and a storage building for the Public Works department within the City. These obligations will be sold by a competitive negotiated sale in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9). The rating of these bonds will take place the week of April 4. Financial Impact: Bond 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 Municipal Advisory Agreement
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EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL
CITY OF HASTINGS, MINNESOTA
HELD: April 4, 2022
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 April 4, 2022, at 7:00 P.M. for the purpose in part of authorizing the competitive
negotiated sale of the $6,800,000 General Obligation Bonds, Series 2022A.
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 2022A
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 2022A (the "Bonds") to finance City's 2022 street improvement projects, utility projects
and acquisition and betterment of a public works facility; 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 Taft Stettinius & Hollister LLP, 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 Attachment 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 Attachment 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 $6,800,000 General Obligation
Bonds, Series 2022A.
WITNESS my hand on April 4, 2022.
__________________________________ Clerk
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ATTACHMENT A
NOTICE OF SALE
$6,800,000*
GENERAL OBLIGATION BONDS, SERIES 2022A 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, May 2, 2022, at 10:00 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, May 2, 2022 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) emailed to PublicSale@northlandsecurities.com d) 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 612-851-4968, or e) submitted electronically. Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the
manner described below, until 10:00 A.M., CT, on Monday, May 2, 2022. Proposals may be submitted electronically via PARITY™ or its successor, pursuant to this Notice until 10:00 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.
* 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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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. 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 June 1, 2022)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429, 444, and 475 and Section 475.521. Proceeds will be used to finance the City's 2022 street improvement projects, water improvements, including water tower painting, sewer improvements, finance a Public Works Storage Facility and pay costs
associated with the issuance of the Bonds. The Bonds are payable from special assessments against benefited properties, net water and sewer revenues 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 February 1, 2023, 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 next 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 Year Amount 2024 $615,000 2028 $665,000 2032 $735,000 2025 625,000 2029 685,000 2033 755,000 2026 645,000 2030 700,000 2027 655,000 2031 720,000
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.
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INTEREST RATES All rates must be in integral multiples of 1/20th or 1/8th of 1%. The rate for any maturity may not be more than 2.00% less than the rate for any preceding maturity. 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 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
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(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 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
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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.
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, 2031 through 2033 are subject to redemption and prepayment at the option of the City on February 1, 2030 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 thirty days after award, subject to an approving legal opinion by Taft Stettinius and Hollister, 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 $6,732,000.00 (99.00%) and accrued interest on the principal sum of $6,800,000 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:
Chris Eitemiller, Finance Manager Hastings City Hall 101 4th Street East Hastings, Minnesota 55033 A good faith deposit (the "Deposit") in the amount of $136,000 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
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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. 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
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Bonds. The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale. Dated: April 4, 2022 BY ORDER OF THE HASTINGS CITY COUNCIL /s/ Chris Eitemiller 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 2022A (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 _________________, 2022.
(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 Taft Stettinius & Hollister LLP, Bond Counsel in connection with
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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: June 1, 2022.
_______________________________________
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 2022A (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 and bid award, 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.
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(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 _______________, 2022.
(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).
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 Taft Stettinius & Hollister LLP, 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: June 1, 2022.
______________________________________
By: ____________________________________ Its: ________________________________
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Finance Plan
City of Hastings, Minnesota
$6,800,000
General Obligation Bonds, Series 2022A
April 4, 2022
150 South 5th Street, Suite 3300
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC | Registered MSRB and SEC
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Northland Securities, Inc. Page 1
Contents
Executive Summary
Issue Overview
Purpose
Authority
Structure
Security and Source of Repayment
Plan Rationale
Issuing Process
Attachment 1 – Preliminary Debt Service Schedules
Attachment 2 – Estimated Levy Schedules
Attachment 3 – Related Considerations
Bank Qualified
Arbitrage Compliance
Continuing Disclosure
Premiums
Rating
Attachment 4 – Calendar of Events
Attachment 5 - Risk Factors
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Executive Summary
The following is a summary of the recommended terms for the issuance of $6,800,000 General
Obligation Bonds, Series 2022A (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 the 2022 street
improvement and utility projects; to finance a Public Works
storage facility; and to pay the 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 of the Improvement Portion of the Bonds, net
water revenues of the City’s Municipal Water Utility for
payment of the Water Portion of the Bonds, net sewer revenues
of the City’s Municipal Sewer Utility for the Sewer Portion of
the Bonds and ad valorem taxes for payment of the CIP Portion
of the Bonds.
Repayment Term The Bonds will mature annually each February 1 in the years
2024 through 2033. Interest on the Bonds will be payable on
February 1, 2023 and semiannually thereafter on each February
1 and August 1.
Estimated Interest Rate Average coupon: 2.56%
True interest cost (TIC): 2.72%
Prepayment Option Bonds maturing on and after February 1, 2031, will be subject
to redemption on February 1, 2030, and any day thereafter at a
price of par plus accrued interest.
Rating A rating will be requested from Standard & Poor’s (“S&P”). 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, May 2, 2022 @ 10:00 A.M.
Council Consideration Monday, May 2, 2022 @ 7:00 P.M.
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Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the following:
• The City’s 2022 street improvement projects (the “Improvement Portion”),
• Water utility projects and a water tower painting project (the “Water Portion”),
• Sewer utility projects (the “Sewer Portion”), and
• A Public Works storage facility (the “CIP 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 by a City cash contribution applied towards
the CIP Portion of the Bonds. Construction bids are expected to be received on April 8, 2022, at
which time the size of the Bonds will be updated. 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 and Section 475.521.
Improvement Portion
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 pass a resolution ordering the improvements
by at least a 4/5 majority. The public hearing has been held on March 7, 2022, for the
Improvement Portion and all corresponding resolutions passed with a 4/5 majority.
Water and Sewer Portions
Under Chapter 444, general obligation utility revenue bonds may be issued to build, construct,
reconstruct, repair, enlarge, improve, or in any other manner obtain sanitary sewer, water and
storm sewer facilities, and maintain and operate the facilities inside or outside a city’s corporate
limits.
Street
Improvement Water Sewer CIP
Issue
Summary
Sources Of Funds
Par Amount of Bonds $3,375,000.00 $1,980,000.00 $410,000.00 $1,035,000.00 $6,800,000.00
Planned Issuer Equity Contribution ---1,000,000.00 1,000,000.00
Total Sources $3,375,000.00 $1,980,000.00 $410,000.00 $2,035,000.00 $7,800,000.00
Uses Of Funds
Deposit to Project Construction Fund 3,255,000.00 1,945,000.00 403,000.00 2,000,000.00 7,603,000.00
Deposit to Capitalized Interest (CIF) Fund 54,845.00 --16,808.33 71,653.33
Total Underwriter's Discount (1.000%)33,750.00 19,800.00 4,100.00 10,350.00 68,000.00
Costs of Issuance 28,077.02 16,471.85 3,410.84 8,610.29 56,570.00
Rounding Amount 3,327.98 (1,271.85)(510.84)(768.62)776.67
Total Uses $3,375,000.00 $1,980,000.00 $410,000.00 $2,035,000.00 $7,800,000.00
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Capital Improvement Plan Portion
Under Section 475.521, a capital improvement is a major expenditure of City funds for the
acquisition or betterment of public lands, buildings, or other improvements used, such as a city
hall, library, public safety, or public works facility, which has a useful life of five years or more.
The maximum amount of principal and interest for capital improvement bonds cannot exceed
0.16% of the estimated market value of taxable property in the City. The City’s 2022 preliminary
estimated market value is $2,320,208,800 ($2,320,208,800 x 0.0016 = $3,712,334). The maximum
amount of principal and interest in a calendar year is estimated to be approximately $115,968,
which is less than $3,712,334. The City does not have any additional outstanding CIP debt.
Before issuing bonds under a Capital Improvement Plan (“CIP”), the City must hold a public
hearing on the CIP and the proposed bonds and must then approve the CIP and authorize the
issuance of the bonds by at least a 3/5 majority. The City held the required public hearing and
approved the CIP on February 22, 2022.
If a petition signed by voters equal to at least 5 percent of the votes cast in the last general election
requesting a vote on the issuance of bonds is received by the clerk within 30 days after the public
hearing, then the bonds may not be issued unless approved by the voters at an election. The
Calendar of Events provided in Attachment 4 indicates that the 30-day period expired on March
24, 2022.
Structure
The Bonds have been structured over 10 years, with relatively level annual debt service payments.
The proposed structure for the bond issue and preliminary debt service projections for each
portion of the issue 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:
• Special Assessments. The City is expected to levy special assessments against benefited
properties in the amount of $1,400,000 for the Improvement Portion of the Bonds. The
assessments are structured for level annual payments, with interest charged at a rate that
is 1.50% over the True Interest Cost of the Improvement Portion of the Bonds (currently
estimated to be 4.25%). The assessments will be levied in 2022 for first payment in 2023.
• Utility Revenues. Net revenues of the City’s sewer and water utilities (operating funds)
will be pledged for payment of the Sewer Portion and Water Portion of the Bonds. The City
will covenant to adopt sewer and water rates and charges that are sufficient to produce net
revenues equal to at least 105% of the debt service requirements on the Sewer Portion and
Water 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 annual tax levies
averaging approximately $230,556 for the Improvement Portion and $124,523 for the CIP
Portion are needed to produce the statutory requirement of 105% of debt service, after
accounting for assessments, and sewer and water utility revenues. The levies may be
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Northland Securities, Inc. Page 5
adjusted annually based on actual special assessment collections and additional monies in
the debt service fund. The initial tax levy will be made in 2022 for taxes payable in 2023.
Given the timing of the initial revenue from the tax levy, capitalized interest will be
included in the bond issue to cover the first interest payment due on February 1, 2023,
before the first tax collections are received for the Improvement Portion and the CIP
Portion of the Bonds.
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, May 2, 2022, at 10:00 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: Taft Stettinius and Hollister LLP, Minneapolis, Minnesota
Paying Agent: US Bank Trust Company, National Association, St. Paul, Minnesota
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Attachment 1 – Preliminary Debt Service Schedules
Total Combined 2022A Bonds
*Based on Bank Qualified “AA” rates as of March 25, 2022, plus 0.25%.
Date Principal Coupon Interest Total P+I Fiscal Total
06/01/2022 -----
02/01/2023 --110,500.00 110,500.00 110,500.00
08/01/2023 --82,875.00 82,875.00 -
02/01/2024 615,000.00 2.000%82,875.00 697,875.00 780,750.00
08/01/2024 --76,725.00 76,725.00 -
02/01/2025 625,000.00 2.100%76,725.00 701,725.00 778,450.00
08/01/2025 --70,162.50 70,162.50 -
02/01/2026 645,000.00 2.200%70,162.50 715,162.50 785,325.00
08/01/2026 --63,067.50 63,067.50 -
02/01/2027 655,000.00 2.300%63,067.50 718,067.50 781,135.00
08/01/2027 --55,535.00 55,535.00 -
02/01/2028 665,000.00 2.350%55,535.00 720,535.00 776,070.00
08/01/2028 --47,721.25 47,721.25 -
02/01/2029 685,000.00 2.450%47,721.25 732,721.25 780,442.50
08/01/2029 --39,330.00 39,330.00 -
02/01/2030 700,000.00 2.550%39,330.00 739,330.00 778,660.00
08/01/2030 --30,405.00 30,405.00 -
02/01/2031 720,000.00 2.650%30,405.00 750,405.00 780,810.00
08/01/2031 --20,865.00 20,865.00 -
02/01/2032 735,000.00 2.750%20,865.00 755,865.00 776,730.00
08/01/2032 --10,758.75 10,758.75 -
02/01/2033 755,000.00 2.850%10,758.75 765,758.75 776,517.50
Total $6,800,000.00 -$1,105,390.00 $7,905,390.00 -
Yield Statistics
Bond Year Dollars $43,213.33
Average Life 6.355 Years
Average Coupon 2.5579836%
Net Interest Cost (NIC)2.7153425%
True Interest Cost (TIC)2.7248395%
Bond Yield for Arbitrage Purposes 2.5500964%
All Inclusive Cost (AIC)2.8720228%
IRS Form 8038
Net Interest Cost 2.5579836%
Weighted Average Maturity 6.355 Years
Optional Redemption
02/01/2030 @100.000%
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Improvement Portion
Water Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/01/2022 -----
02/01/2023 --54,845.00 54,845.00 54,845.00
08/01/2023 --41,133.75 41,133.75 -
02/01/2024 305,000.00 2.000%41,133.75 346,133.75 387,267.50
08/01/2024 --38,083.75 38,083.75 -
02/01/2025 310,000.00 2.100%38,083.75 348,083.75 386,167.50
08/01/2025 --34,828.75 34,828.75 -
02/01/2026 320,000.00 2.200%34,828.75 354,828.75 389,657.50
08/01/2026 --31,308.75 31,308.75 -
02/01/2027 325,000.00 2.300%31,308.75 356,308.75 387,617.50
08/01/2027 --27,571.25 27,571.25 -
02/01/2028 330,000.00 2.350%27,571.25 357,571.25 385,142.50
08/01/2028 --23,693.75 23,693.75 -
02/01/2029 340,000.00 2.450%23,693.75 363,693.75 387,387.50
08/01/2029 --19,528.75 19,528.75 -
02/01/2030 350,000.00 2.550%19,528.75 369,528.75 389,057.50
08/01/2030 --15,066.25 15,066.25 -
02/01/2031 355,000.00 2.650%15,066.25 370,066.25 385,132.50
08/01/2031 --10,362.50 10,362.50 -
02/01/2032 365,000.00 2.750%10,362.50 375,362.50 385,725.00
08/01/2032 --5,343.75 5,343.75 -
02/01/2033 375,000.00 2.850%5,343.75 380,343.75 385,687.50
Total $3,375,000.00 -$548,687.50 $3,923,687.50 -
Date Principal Coupon Interest Total P+I Fiscal Total
06/01/2022 -----
02/01/2023 --32,185.00 32,185.00 32,185.00
08/01/2023 --24,138.75 24,138.75 -
02/01/2024 180,000.00 2.000%24,138.75 204,138.75 228,277.50
08/01/2024 --22,338.75 22,338.75 -
02/01/2025 180,000.00 2.100%22,338.75 202,338.75 224,677.50
08/01/2025 --20,448.75 20,448.75 -
02/01/2026 185,000.00 2.200%20,448.75 205,448.75 225,897.50
08/01/2026 --18,413.75 18,413.75 -
02/01/2027 190,000.00 2.300%18,413.75 208,413.75 226,827.50
08/01/2027 --16,228.75 16,228.75 -
02/01/2028 195,000.00 2.350%16,228.75 211,228.75 227,457.50
08/01/2028 --13,937.50 13,937.50 -
02/01/2029 200,000.00 2.450%13,937.50 213,937.50 227,875.00
08/01/2029 --11,487.50 11,487.50 -
02/01/2030 205,000.00 2.550%11,487.50 216,487.50 227,975.00
08/01/2030 --8,873.75 8,873.75 -
02/01/2031 210,000.00 2.650%8,873.75 218,873.75 227,747.50
08/01/2031 --6,091.25 6,091.25 -
02/01/2032 215,000.00 2.750%6,091.25 221,091.25 227,182.50
08/01/2032 --3,135.00 3,135.00 -
02/01/2033 220,000.00 2.850%3,135.00 223,135.00 226,270.00
Total $1,980,000.00 -$322,372.50 $2,302,372.50 -
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Sewer Portion
CIP Portion
Date Principal Coupon Interest Total P+I Fiscal Total
06/01/2022 -----
02/01/2023 --6,661.67 6,661.67 6,661.67
08/01/2023 --4,996.25 4,996.25 -
02/01/2024 35,000.00 2.000%4,996.25 39,996.25 44,992.50
08/01/2024 --4,646.25 4,646.25 -
02/01/2025 40,000.00 2.100%4,646.25 44,646.25 49,292.50
08/01/2025 --4,226.25 4,226.25 -
02/01/2026 40,000.00 2.200%4,226.25 44,226.25 48,452.50
08/01/2026 --3,786.25 3,786.25 -
02/01/2027 40,000.00 2.300%3,786.25 43,786.25 47,572.50
08/01/2027 --3,326.25 3,326.25 -
02/01/2028 40,000.00 2.350%3,326.25 43,326.25 46,652.50
08/01/2028 --2,856.25 2,856.25 -
02/01/2029 40,000.00 2.450%2,856.25 42,856.25 45,712.50
08/01/2029 --2,366.25 2,366.25 -
02/01/2030 40,000.00 2.550%2,366.25 42,366.25 44,732.50
08/01/2030 --1,856.25 1,856.25 -
02/01/2031 45,000.00 2.650%1,856.25 46,856.25 48,712.50
08/01/2031 --1,260.00 1,260.00 -
02/01/2032 45,000.00 2.750%1,260.00 46,260.00 47,520.00
08/01/2032 --641.25 641.25 -
02/01/2033 45,000.00 2.850%641.25 45,641.25 46,282.50
Total $410,000.00 -$66,584.17 $476,584.17 -
Date Principal Coupon Interest Total P+I Fiscal Total
06/01/2022 -----
02/01/2023 --16,808.33 16,808.33 16,808.33
08/01/2023 --12,606.25 12,606.25 -
02/01/2024 95,000.00 2.000%12,606.25 107,606.25 120,212.50
08/01/2024 --11,656.25 11,656.25 -
02/01/2025 95,000.00 2.100%11,656.25 106,656.25 118,312.50
08/01/2025 --10,658.75 10,658.75 -
02/01/2026 100,000.00 2.200%10,658.75 110,658.75 121,317.50
08/01/2026 --9,558.75 9,558.75 -
02/01/2027 100,000.00 2.300%9,558.75 109,558.75 119,117.50
08/01/2027 --8,408.75 8,408.75 -
02/01/2028 100,000.00 2.350%8,408.75 108,408.75 116,817.50
08/01/2028 --7,233.75 7,233.75 -
02/01/2029 105,000.00 2.450%7,233.75 112,233.75 119,467.50
08/01/2029 --5,947.50 5,947.50 -
02/01/2030 105,000.00 2.550%5,947.50 110,947.50 116,895.00
08/01/2030 --4,608.75 4,608.75 -
02/01/2031 110,000.00 2.650%4,608.75 114,608.75 119,217.50
08/01/2031 --3,151.25 3,151.25 -
02/01/2032 110,000.00 2.750%3,151.25 113,151.25 116,302.50
08/01/2032 --1,638.75 1,638.75 -
02/01/2033 115,000.00 2.850%1,638.75 116,638.75 118,277.50
Total $1,035,000.00 -$167,745.83 $1,202,745.83 -
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Attachment 2 – Estimated Levy Schedules
Improvement Portion
CIP Portion
Date Total P+I CIF 105% Levy
Less: Speical
Assessment
Revenue*Net Levy
Levy
Year
Collection
Year
02/01/2023 54,845.00 (54,845.00)---
02/01/2024 387,267.50 -406,630.88 175,672.54 230,958.34 2022 2023
02/01/2025 386,167.50 -405,475.88 175,672.53 229,803.35 2023 2024
02/01/2026 389,657.50 -409,140.38 175,672.53 233,467.85 2024 2025
02/01/2027 387,617.50 -406,998.38 175,672.53 231,325.85 2025 2026
02/01/2028 385,142.50 -404,399.63 175,672.53 228,727.10 2026 2027
02/01/2029 387,387.50 -406,756.88 175,672.53 231,084.35 2027 2028
02/01/2030 389,057.50 -408,510.38 175,672.53 232,837.85 2028 2029
02/01/2031 385,132.50 -404,389.13 175,672.53 228,716.60 2029 2030
02/01/2032 385,725.00 -405,011.25 175,672.54 229,338.71 2030 2031
02/01/2033 385,687.50 -404,971.88 175,672.55 229,299.33 2031 2032
Total $3,923,687.50 (54,845.00)$4,062,284.63 $1,756,725.34 $2,305,559.29
*Special assessment revenue is based on assessments totaling $1,400,000 assessed at a rate of 4.25% (1.50%
over the TIC, rounded to the nearest 0.05%), with equal annual payments spread over 10 years.
Date Total P+I CIF 105% Levy
Levy
Year
Collection
Year
02/01/2023 16,808.33 (16,808.33)-
02/01/2024 120,212.50 -126,223.13 2022 2023
02/01/2025 118,312.50 -124,228.13 2023 2024
02/01/2026 121,317.50 -127,383.38 2024 2025
02/01/2027 119,117.50 -125,073.38 2025 2026
02/01/2028 116,817.50 -122,658.38 2026 2027
02/01/2029 119,467.50 -125,440.88 2027 2028
02/01/2030 116,895.00 -122,739.75 2028 2029
02/01/2031 119,217.50 -125,178.38 2029 2030
02/01/2032 116,302.50 -122,117.63 2030 2031
02/01/2033 118,277.50 -124,191.38 2031 2032
Total $1,202,745.83 (16,808.33)$1,245,234.38
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Attachment 3 – Related Considerations
Bank Qualified
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 exception.”
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. Northland currently serves as
dissemination agent for the City. We will assist with getting your annual report filed in
compliance with full continuing disclosure regulations.
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.
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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 (“S&P”). 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 from S&P. Northland will assist City staff in preparing for and conducting the rating calls.
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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
January 18, 2022 Resolution Calling for the Public Hearing on the
Capital Improvement Plan and Intent to Issue Capital
Improvement Plan Bonds adopted
Northland
February 8, 2022 Public Hearing Notice Published no later than this
date
Draft Capital Improvement Plan distributed to City
staff
City Staff, Northland,
Bond Counsel
February 11, 2022 General Information Certificate relating to the Bonds
sent to City for completion
Northland
January 2022 February 2022
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 1 2 3 4 5
2 3 4 5 6 7 8 6 7 8 9 10 11 12
9 10 11 12 13 14 15 13 14 15 16 17 18 19
16 17 18 19 20 21 22 20 21 22 23 24 25 26
23 24 25 26 27 28 29 27 28
30 31
March 2022 April 2022
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 1 2
6 7 8 9 10 11 12 3 4 5 6 7 8 9
13 14 15 16 17 18 19 10 11 12 13 14 15 16
20 21 22 23 24 25 26 17 18 19 20 21 22 23
27 28 29 30 31 24 25 26 27 28 29 30
May 2022 June 2022
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7 1 2 3 4
8 9 10 11 12 13 14 5 6 7 8 9 10 11
15 16 17 18 19 20 21 12 13 14 15 16 17 18
22 23 24 25 26 27 28 19 20 21 22 23 24 25
29 30 31 26 27 28 29 30
Holiday
Important Date
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Northland Securities, Inc. Page 13
Date Action Responsible Party
February 22, 2022 Public Hearing – Resolution Approving the Capital
Improvement Plan and Issuance of the bonds Adopted
(3/5 vote required)
City Council Action
February 28, 2022 City returns General Information Certificate to
Northland
City Staff
March 14, 2022 Rating Request sent to S&P Northland, City Staff
March 21, 2022 Preliminary Official Statement Sent to City for Sign Off Northland, City Staff
March 23, 2022 Final project costs and sources of repayment provided
to Northland
City Staff
March 24, 2022 Referendum Period Over
Week of March 28 or
April 4, 2022
Rating Call with S&P Northland, City Staff,
Rating Agency
March 30, 2022 Set Sale Resolution and Finance Plan Sent to City Northland, Bond
Counsel
April 4, 2022 Set Sale Resolution Adopted and Review of Finance
Plan – 7:00 p.m.
Northland, Bond
Counsel, City Council
Action
April 8, 2022 Construction Bids Received City Staff
April 14, 2022 Rating Received Northland, City Staff,
Rating Agency
April 27, 2022 Awarding Resolution sent to City Northland, Bond
Counsel
May 2, 2022 Bond Sale at 10:00 a.m.
Bond Proposal Signed and Awarding Resolution
adopted – 7:00 p.m.
Northland, City
Council Action
June 1, 2022 Closing on the Bonds (Proceeds Available) Northland, City Staff,
Bond Counsel
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Northland Securities, Inc. Page 14
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 Improvement Portion of 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 sewer and water utilities to the
payment of principal and interest on the Sewer Portion and Water Portion of the Bonds,
respectively. 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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MUNICIPAL ADVISORY SERVICE AGREEMENT
BY AND BETWEEN
THE CITY OF HASTINGS, MINNESOTA
AND
NORTHLAND SECURITIES, INC.
This Agreement is made and entered into by and between the City of Hastings, Minnesota (hereinafter
"Client") and Northland Securities, Inc., of Minneapolis, Minnesota (hereinafter "Northland").
WITNESSETH
WHEREAS, the Client desires to have Northland provide it with advice on the structure, terms, timing
and other matters related to the issuance of the General Obligation Bonds, Series 2022A (the “Debt”)
serving in the role of municipal (financial) advisor, and
WHEREAS, Northland is a registered municipal advisor with both the Securities and Exchange
Commission (“SEC”) and the Municipal Securities Rulemaking Board (“MSRB”) (registration # 866-
00082-00), and
WHEREAS, Northland will act as municipal advisor in accordance with the duties and responsibilities
of Rule G-42 of the MSRB, and
WHEREAS, the MSRB provides a municipal advisory client brochure on its website (www.msrb.org)
that describes the protections that may be provided by the MSRB rules, including professional
competency, fair dealing, duty of loyalty, remedies for disputes and how to file a complaint with an
appropriate regulatory authority, and
WHEREAS, the Client and Northland are entering into this Agreement to define the municipal
advisory relationship at the earliest opportunity related to the inception of the municipal advisory
relationship for the Debt, and
WHEREAS, Northland desires to furnish services to the Client as hereinafter described,
NOW, THEREFORE, it is agreed by and between the parties as follows:
SERVICES TO BE PROVIDED BY NORTHLAND
Northland shall provide the Client with services necessary to analyze, structure, offer for sale and close
the Debt. The services will be tailored to meet the needs of this engagement and may include:
Planning and Development
1. Assist Client officials to define the scope and the objectives for the Debt.
2. Investigate and consider reasonably feasible financing alternatives.
3. Assist the Client in understanding the material risks, potential benefits, structure and other
characteristics of the recommended plan for the Debt, including issue structure, estimated debt
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2
service payments, projected revenues, method of issuance, bond rating, sale timing, and call
provisions.
4. Prepare a schedule of events related to the issuance process.
5. Coordinate with bond counsel any actions needed to authorize the issuance of the Debt.
6. Attend meetings of the Client and other project and bond issue related meetings as needed and as
requested.
Bond Sale
1. Assist the Client with the preparation, review and approval of the preliminary official statement
(POS).
2. Assist the Client and bond counsel with preparing and publishing the Official Notice of Sale if
required by law.
3. Prepare and submit application for bond rating(s) and assist the Client with furnishing the rating
agency(s) with any additional information required to conduct the rating review. Assist the Client
with preparing and conducting the rating call or other presentation.
4. Assist the Client in receiving the bids, compute the accuracy of the bids received, and recommend
to the Client the most favorable bid for award.
5. Coordinate with bond counsel the preparation of required contracts and resolutions.
Post-Sale Support
1. Assist the Client with the preparation of final official statement, distribution to the underwriter
and posting on EMMA.
2. Coordinate the bond issue closing, including making all arrangements for bond printing,
registration, and delivery.
3. Furnish to the Client a complete transcript of the transaction, if not provided by bond counsel.
There are no specific limitations on the scope of this agreement.
COMPENSATION
For providing these services with respect to the Debt, Northland shall be paid a lump sum of $27,420.
The fee due to Northland shall be payable by the Client upon the closing of the Bonds.
Northland agrees to pay the following expenses from its fee:
• Out-of-pocket expenses such as travel, long distance phone, and copy costs.
• Production and distribution of material to rating agencies and/or bond insurance companies.
• Preparation of the bond transcript.
The Client agrees to pay for all other expenses related to the processing of the bond issue(s) including,
but not limited to, the following:
• Engineering and/or architectural fees.
• Publication of legal notices.
• Bond counsel and local attorney fees.
• Fees for various debt certificates.
• The cost of printing Official Statements, if any.
• Client staff expenses.
• Airfare and lodging expenses of one Northland official and Client officials when and if traveling
for rating agency presentations.
• Rating agency fees, if any.
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Municipal Advisory Service Agreement
3
• Bond insurance fees, if any.
• Accounting and other related fees.
It is expressly understood that there is no obligation on the part of the Client under the terms of this
Agreement to issue the Debt. If the Debt is not issued, Northland agrees to pay its own expenses and
receive no fee for any municipal advisory services it has rendered pursuant to this Agreement.
CONFLICTS OF INTEREST
Northland, as your Municipal Advisor, mitigates conflicts through its adherence to its fiduciary duty
to the Client, which includes a duty of loyalty to the Client in performing all municipal advisory
activities for the Client. This duty of loyalty obligates Northland to deal honestly and with the utmost
good faith with the Client and to act in the Client’s best interests without regard to our own financial
or other interests. In addition, because Northland is a broker-dealer with significant capital due to the
nature of its overall business, the success and profitability of Northland is not dependent on
maximizing short-term revenue generated from individualized recommendations to its clients but
instead is dependent on long-term profitably built on a foundation of integrity, quality of service and
strict adherence to its fiduciary duty. Furthermore, Northland’s municipal advisory supervisory
structure leverages our long-standing and comprehensive broker-dealer supervisory processes and
practices, and provides strong safeguards against individual representatives of Northland potentially
departing from our regulatory duties due to personal interests. The disclosures below describe, as
applicable, any additional mitigations that may be relevant with respect to any specific conflict
disclosed below.
Northland serves a wide variety of other clients that may from time to time have interests that could
have a direct or indirect impact on the interests of the Client. For example, Northland serves as
Municipal Advisor to other Municipal Advisory clients and, in such cases, owes a regulatory duty to
such other clients just as it does to the Client under this Agreement. These other clients may, from time
to time and depending on the specific circumstances, have competing interests, such as accessing the
new issue market with the most advantageous timing and with limited competition at the time of the
offering. In acting in the interests of its various clients, Northland could potentially face a conflict of
interest arising from these competing client interests. In other cases, as a broker-dealer that engages in
underwritings of new issuances of municipal securities by other municipal entities, the interests of
Northland to achieve a successful and profitable underwriting for its municipal entity underwriting
clients could potentially constitute a conflict of interest if, as in the example above, the municipal
entities that Northland serves as underwriter or municipal advisor have competing interests in seeking
to access the new issue market with the most advantageous timing and with limited competition at
the time of the offering. However, none of these other engagements or relationships would impair
Northland’s ability to fulfill its regulatory duties to the Client.
The compensation for services provided in this Agreement is customary in the municipal securities
market, however, it may pose a conflict of interest. The fees due under this Agreement are in a fixed
amount established at the outset of the Agreement. The amount is usually based upon an analysis by
Client and Northland of, among other things, the expected duration and complexity of the transaction
and the Scope of Services to be performed by Northland. This form of compensation presents a
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4
potential conflict of interest because, if the transaction requires more work than originally
contemplated, Northland may suffer a loss. Thus, Northland may recommend less time-consuming
alternatives, or fail to do a thorough analysis of alternatives. This conflict of interest is mitigated by
supervisory policies and procedures to ensure the scope of services within the transaction align with
other comparable engagements. By executing this Agreement, the Client acknowledges and accepts
the potential conflicts of interest posed by the compensation to Northland. Northland does not
participate in any payments to be retained, nor participate in any fee splitting agreements or
arrangements.
Northland is also a broker-dealer that engages in a broad range of securities-related activities to service
its clients, in addition to serving as a Municipal Advisor or Underwriter. Such securities-related
activities, which may include but are not limited to the buying and selling of outstanding securities,
including securities of the Client, may be undertaken on behalf of, or as counterparty to, the Client,
and current or potential investors in the securities of the Client. These other Northland clients may,
from time to time and depending on the specific circumstances, have interests in conflict with those of
the Client, such as when their buying or selling of the Client’s securities may have an adverse effect on
the market for the Client’s securities. However, any potential conflict arising from Northland effecting
or otherwise assisting such other clients in connection with such transactions is mitigated by means of
such activities being engaged in on customary terms through other business units of Northland that
operate independently from Northland’s Municipal Advisory business, thereby reducing or
eliminating the likelihood that the interests of such other clients would have an impact on the services
provided by Northland to the Client under this Agreement. Northland has policies and procedures in
place to ensure that Northland as a broker-dealer is not participating in bidding or determining market
prices for the Client’s transaction that is covered under this Agreement.
Northland Capital Holdings is the parent company of Northland Securities. A subsidiary of
Northland Capital Holdings is Northland Trust, Inc. Northland Trust provides paying agent services
to issuers of municipal bonds. The Client is solely responsible for the decision on the source of paying
agent services. Any engagement of Northland Trust is outside the scope of this Agreement. No
compensation paid to Northland Trust is shared with Northland Securities.
Northland is not aware of any additional material conflicts of interest that could reasonably be
anticipated to impair Northland’s ability to provide advice to or on behalf of the Client in accordance
with the standards of conduct for municipal advisors.
LEGAL AND DISCIPLINARY ACTIONS
There are no legal or disciplinary events reported by the Securities and Exchange Commission
contained in Form MA or Form MA-I. The Client can find information about these forms and accessing
information related to Northland at www.sec.gov/municipal/oms-edgar-links.
SUCCESSORS OR ASSIGNS
The terms and provisions of this Agreement are binding upon and inure to the benefit of the Client
and Northland and their successors or assigns.
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5
TERM OF THIS AGREEMENT
This Agreement may be terminated by thirty (30) days written notice by either the Client or Northland
and it shall terminate sixty (60) days following the closing date related to the issuance of the Debt.
Dated this 4th day of April, 2022.
Northland Securities, Inc.
By:
Tammy Omdal, Managing Director
By:
Jessica Green, Managing Director
By: _________________________________
Clifton Schultz, Managing Director
City of Hastings, Minnesota
By: _________________________________
Its: _________________________________
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