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Home My WebLink About07.K.1 City Council Action Request 7.K. Meeting Date 1/17/2024 Department Finance Agenda Category Action Item Title Call for the sale of the 2024A Bonds Staff Recommendation Adopt Resolution 2024-12, Calling for the sale of the $18,205,000 General Obligation Bonds, Series, 2024A. Budget Implication N/A Attachments 1. CC Memo Call for Sale of 2024A Bonds 2. Resolution 2024-12 Calling for sale of 2024A Bonds 3. PreSaleReport.Cottage Grove.2024A To:Mayor and City Council Members Jennifer Levitt, City Administrator From:Brenda Malinowski, Finance Director Date:January 17, 2024 Subject:Call for Sale of the $18,205,000 General Obligation Bonds, Series 2024A INTRODUCTION Funding in the form of bonds is necessary to finance construction for the Utilities Building, 2024 Pavement Management project, Jamaica Avenue project, East Point Douglas project, and equipment. This funding was identified in both the 2024-2028 Capital Improvement Plan and the Financial Management Plan. DISCUSSION The bonds will be repaid with utility revenues (utilities building) special assessments (pavement management project), and future property tax levies (roads and equipment). A pre-sale report from Ehlers includes a timeline for the bond sale as well as other estimates and general information. A workshop was held on January 3rd regarding projects in the 2024 bond issuance. The bond size has been reduced from the $18.5M discussed in workshop to $18.2M after reviewing the construction costs and funds needed for the projects. The $18.2M includes the bonding costs (approximately $532,000) and the $18.5M that was discussed in workshop did not include these bonding costs. The annual debt service payments identified in the pre-sale report for the utilities building are below the debt service amounts included in the 5-year utility rate study for the water and sewer utilities. In addition, the future property tax levy identified in the pre-sale report that will be needed to fund the road and equipment portion of this bond issue are below the debt service amounts included in the Financial Management Plan (FMP). Therefore, the annual debt service payments based on the pre-sale report are below the amounts identified in the utility rate studies and the FMP. ACTION REQUESTED Review the attached Pre-Sale report from Ehlers. Adopt Resolution 2024-12, Calling for the sale of the $18,205,000 General Obligation Bonds, Series 2024A. 130557631v1 EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF COTTAGE GROVE, MINNESOTA HELD: JANUARY 17, 2024 Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Cottage Grove, Washington County, Minnesota, was duly held at City Hall on January 17, 2024, at 7:00 P.M., for the purpose, in part, of authorizing the competitive negotiated sale of $18,205,000 General Obligation Bonds, Series 2024A. The following members were present: and the following were absent: Member ________________ introduced the following resolution and moved its adoption: RESOLUTION NO. 2024-12 RESOLUTION PROVIDING FOR THE SALE OF $18,205,000 GENERAL OBLIGATION BONDS, SERIES 2024A A. WHEREAS, the City Council of the City of Cottage Grove, Minnesota (the "City") has heretofore determined that it is necessary and expedient to issue the City's $18,205,000 General Obligation Bonds, Series 2024A (the "Bonds"), to finance street improvement and street reconstruction projects, purchase of equipment and construction of a building to be used by water, sanitary sewer and stormwater utilities; and B. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville, Minnesota ("Ehlers"), as its independent municipal advisor for the Bonds in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9). NOW, THEREFORE, BE IT RESOLVED by the City of Cottage Grove, Minnesota, as follows: 1. Authorization. The City Council hereby authorizes Ehlers to assist the City for the sale of the Bonds. 2. Meeting; Proposal Opening. The City Council shall meet at 7:00 P.M. on February 21, 2024, for the purpose of considering proposals for and awarding the sale of the Bonds. 3. Official Statement. In connection with said sale, the officers or employees of the City are hereby authorized to cooperate with Ehlers 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. 130557631v1 2 The motion for the adoption of the foregoing resolution was duly seconded by Council Member _______________________ and, after full discussion thereof and upon a vote being taken thereon, the following Council Members voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. 130557631v1 3 STATE OF MINNESOTA WASHINGTON COUNTY CITY OF COTTAGE GROVE I, the undersigned, being the duly qualified and acting Clerk of the City of Cottage Grove, 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 the minutes relate to providing for the issuance and sale of $18,205,000 General Obligation Bonds, Series 2024A. WITNESS my hand on January 17, 2024. __________________________________________ Clerk x x x x x x x x x x x City of Cottage Grove, Minnesota $18,205,000 General Obligation Bonds, Series 2024A Issue Summary Assumes Current Market Non-BQ AAA Rates +75bps Total Issue Sources And Uses Dated 03/12/2024 | Delivered 03/12/2024 Improvements Street Reconstruction Utility Equipment Issue Summary Sources Of Funds Par Amount of Bonds $1,080,000.00 $4,995,000.00 $11,605,000.00 $525,000.00 $18,205,000.00 Utility Funds/Other Revenues 53,800.00 265,800.00 1,400,000.00 - 1,719,600.00 Prepaid Assessments 78,000.00 - - - 78,000.00 Total Sources $1,211,800.00 $5,260,800.00 $13,005,000.00 $525,000.00 $20,002,600.00 Uses Of Funds Total Underwriter's Discount (1.000%) 10,800.00 49,950.00 116,050.00 5,250.00 182,050.00 Costs of Issuance 8,186.77 37,863.77 87,969.79 3,979.67 138,000.00 Deposit to Capitalized Interest (CIF) Fund 34,737.77 161,992.19 - 15,819.30 212,549.26 Deposit to Project Construction Fund 1,156,800.00 5,010,800.00 12,800,000.00 500,000.00 19,467,600.00 Rounding Amount 1,275.46 194.04 980.21 (48.97) 2,400.74 Total Uses $1,211,800.00 $5,260,800.00 $13,005,000.00 $525,000.00 $20,002,600.00 Series 2024A GO Bonds - P | Issue Summary | 1/10/2024 | 8:38 AM City of Cottage Grove, Minnesota $18,205,000 General Obligation Bonds, Series 2024A Issue Summary Assumes Current Market Non-BQ AAA Rates +75bps Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 03/12/2024 - - - - - 02/01/2025 - - 616,983.66 616,983.66 616,983.66 08/01/2025 - - 348,141.25 348,141.25 - 02/01/2026 775,000.00 3.500% 348,141.25 1,123,141.25 1,471,282.50 08/01/2026 - - 334,578.75 334,578.75 - 02/01/2027 805,000.00 3.400% 334,578.75 1,139,578.75 1,474,157.50 08/01/2027 - - 320,893.75 320,893.75 - 02/01/2028 835,000.00 3.350% 320,893.75 1,155,893.75 1,476,787.50 08/01/2028 - - 306,907.50 306,907.50 - 02/01/2029 860,000.00 3.350% 306,907.50 1,166,907.50 1,473,815.00 08/01/2029 - - 292,502.50 292,502.50 - 02/01/2030 880,000.00 3.350% 292,502.50 1,172,502.50 1,465,005.00 08/01/2030 - - 277,762.50 277,762.50 - 02/01/2031 910,000.00 3.350% 277,762.50 1,187,762.50 1,465,525.00 08/01/2031 - - 262,520.00 262,520.00 - 02/01/2032 935,000.00 3.400% 262,520.00 1,197,520.00 1,460,040.00 08/01/2032 - - 246,625.00 246,625.00 - 02/01/2033 970,000.00 3.400% 246,625.00 1,216,625.00 1,463,250.00 08/01/2033 - - 230,135.00 230,135.00 - 02/01/2034 1,000,000.00 3.400% 230,135.00 1,230,135.00 1,460,270.00 08/01/2034 - - 213,135.00 213,135.00 - 02/01/2035 1,035,000.00 3.500% 213,135.00 1,248,135.00 1,461,270.00 08/01/2035 - - 195,022.50 195,022.50 - 02/01/2036 1,010,000.00 3.650% 195,022.50 1,205,022.50 1,400,045.00 08/01/2036 - - 176,590.00 176,590.00 - 02/01/2037 1,040,000.00 4.000% 176,590.00 1,216,590.00 1,393,180.00 08/01/2037 - - 155,790.00 155,790.00 - 02/01/2038 1,075,000.00 4.100% 155,790.00 1,230,790.00 1,386,580.00 08/01/2038 - - 133,752.50 133,752.50 - 02/01/2039 1,115,000.00 4.200% 133,752.50 1,248,752.50 1,382,505.00 08/01/2039 - - 110,337.50 110,337.50 - 02/01/2040 1,170,000.00 4.300% 110,337.50 1,280,337.50 1,390,675.00 08/01/2040 - - 85,182.50 85,182.50 - 02/01/2041 695,000.00 4.350% 85,182.50 780,182.50 865,365.00 08/01/2041 - - 70,066.25 70,066.25 - 02/01/2042 725,000.00 4.450% 70,066.25 795,066.25 865,132.50 08/01/2042 - - 53,935.00 53,935.00 - 02/01/2043 755,000.00 4.500% 53,935.00 808,935.00 862,870.00 08/01/2043 - - 36,947.50 36,947.50 - 02/01/2044 790,000.00 4.550% 36,947.50 826,947.50 863,895.00 08/01/2044 - - 18,975.00 18,975.00 - 02/01/2045 825,000.00 4.600% 18,975.00 843,975.00 862,950.00 Total $18,205,000.00 - $8,356,583.66 $26,561,583.66 - Yield Statistics Bond Year Dollars $207,246.65 Average Life 11.384 Years Average Coupon 4.0321923% Net Interest Cost (NIC)4.1200345% True Interest Cost (TIC)4.1054929% Bond Yield for Arbitrage Purposes 3.9908100% All Inclusive Cost (AIC)4.1935347% IRS Form 8038 Net Interest Cost 4.0321923% Weighted Average Maturity 11.384 Years Series 2024A GO Bonds - P | Issue Summary | 1/10/2024 | 8:38 AM City of Cottage Grove, Minnesota $18,205,000 General Obligation Bonds, Series 2024A Issue Summary Assumes Current Market Non-BQ AAA Rates +75bps Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 105% of Total Assessments Utility Revenue Levy/ (Surplus)02/01/2025 - - 616,983.66 616,983.66 (212,549.26) 404,434.40 424,656.12 - 424,656.12 -02/01/2026 775,000.00 3.500% 696,282.50 1,471,282.50 - 1,471,282.50 1,544,846.63 53,957.80 904,485.75 586,403.0802/01/2027 805,000.00 3.400% 669,157.50 1,474,157.50 - 1,474,157.50 1,547,865.38 52,348.00 905,352.00 590,165.3802/01/2028 835,000.00 3.350% 641,787.50 1,476,787.50 - 1,476,787.50 1,550,626.88 50,738.22 906,108.00 593,780.6602/01/2029 860,000.00 3.350% 613,815.00 1,473,815.00 - 1,473,815.00 1,547,505.75 49,128.42 906,556.88 591,820.4602/01/2030 880,000.00 3.350% 585,005.00 1,465,005.00 - 1,465,005.00 1,538,255.25 47,518.64 906,478.13 584,258.4902/01/2031 910,000.00 3.350% 555,525.00 1,465,525.00 - 1,465,525.00 1,538,801.25 45,908.83 905,871.75 587,020.6702/01/2032 935,000.00 3.400% 525,040.00 1,460,040.00 - 1,460,040.00 1,533,042.00 44,299.05 904,737.75 584,005.2002/01/2033 970,000.00 3.400% 493,250.00 1,463,250.00 - 1,463,250.00 1,536,412.50 42,689.25 908,066.25 585,657.0002/01/2034 1,000,000.00 3.400% 460,270.00 1,460,270.00 - 1,460,270.00 1,533,283.50 41,079.47 905,430.75 586,773.2802/01/2035 1,035,000.00 3.500% 426,270.00 1,461,270.00 - 1,461,270.00 1,534,333.50 39,469.67 907,509.75 587,354.0802/01/2036 1,010,000.00 3.650% 390,045.00 1,400,045.00 - 1,400,045.00 1,470,047.25 37,859.89 908,297.25 523,890.1102/01/2037 1,040,000.00 4.000% 353,180.00 1,393,180.00 - 1,393,180.00 1,462,839.00 36,250.09 907,452.00 519,136.9102/01/2038 1,075,000.00 4.100% 311,580.00 1,386,580.00 - 1,386,580.00 1,455,909.00 34,640.31 903,672.00 517,596.6902/01/2039 1,115,000.00 4.200% 267,505.00 1,382,505.00 - 1,382,505.00 1,451,630.25 33,030.51 903,661.50 514,938.2402/01/2040 1,170,000.00 4.300% 220,675.00 1,390,675.00 - 1,390,675.00 1,460,208.75 31,420.73 907,158.00 521,630.0202/01/2041 695,000.00 4.350% 170,365.00 865,365.00 - 865,365.00 908,633.25 - 908,633.25 -02/01/2042 725,000.00 4.450% 140,132.50 865,132.50 - 865,132.50 908,389.13 - 908,389.13 -02/01/2043 755,000.00 4.500% 107,870.00 862,870.00 - 862,870.00 906,013.50 - 906,013.50 -02/01/2044 790,000.00 4.550% 73,895.00 863,895.00 - 863,895.00 907,089.75 - 907,089.75 -02/01/2045 825,000.00 4.600% 37,950.00 862,950.00 - 862,950.00 906,097.50 - 906,097.50 -Total $18,205,000.00 - $8,356,583.66 $26,561,583.66 (212,549.26) $26,349,034.40 $27,666,486.12 $640,338.88 $18,551,717.00 $8,474,430.25Significant Dates Dated3/12/2024First Coupon Date2/01/2025 Yield Statistics Bond Year Dollars$207,246.65Average Life11.384 YearsAverage Coupon4.0321923% Net Interest Cost (NIC)4.1200345%True Interest Cost (TIC)4.1054929%Bond Yield for Arbitrage Purposes3.9908100%All Inclusive Cost (AIC)4.1935347% Series 2024A GO Bonds - P | Issue Summary | 1/10/2024 | 8:38 AM City of Cottage Grove, Minnesota $447,164 General Obligation Bonds, Series 2024A Assessments - 20% Assessed 1.50% over TIC - Equal Prinicpal Assessments Date Principal Coupon Interest Total P+I 12/31/2025 29,810.94 5.400% 24,146.86 53,957.80 12/31/2026 29,810.94 5.400% 22,537.06 52,348.00 12/31/2027 29,810.94 5.400% 20,927.28 50,738.22 12/31/2028 29,810.94 5.400% 19,317.48 49,128.42 12/31/2029 29,810.94 5.400% 17,707.70 47,518.64 12/31/2030 29,810.93 5.400% 16,097.90 45,908.83 12/31/2031 29,810.93 5.400% 14,488.12 44,299.05 12/31/2032 29,810.93 5.400% 12,878.32 42,689.25 12/31/2033 29,810.93 5.400% 11,268.54 41,079.47 12/31/2034 29,810.93 5.400% 9,658.74 39,469.67 12/31/2035 29,810.93 5.400% 8,048.96 37,859.89 12/31/2036 29,810.93 5.400% 6,439.16 36,250.09 12/31/2037 29,810.93 5.400% 4,829.38 34,640.31 12/31/2038 29,810.93 5.400% 3,219.58 33,030.51 12/31/2039 29,810.93 5.400% 1,609.80 31,420.73 Total $447,164.00 - $193,174.88 $640,338.88 Significant Dates Filing Date 1/01/2025 First Payment Date 12/31/2025 Series 2024A GO Bonds - A | SINGLE PURPOSE | 1/10/2024 | 9:20 AM City of Cottage Grove, Minnesota $18,205,000 General Obligation Bonds, Series 2024A Issue Summary Assumes Current Market Non-BQ AAA Rates +75bps Detail Costs Of Issuance Dated 03/12/2024 | Delivered 03/12/2024 COSTS OF ISSUANCE DETAIL Municipal Advisor $85,000.00 Bond Counsel $26,000.00 Rating Agency Fee $26,000.00 Miscellaneous $1,000.00 TOTAL $138,000.00 Series 2024A GO Bonds - P | Issue Summary | 1/10/2024 | 8:38 AM