9.a) Staff Report-Resolution to Prepay Fire Hall Bonds � �
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SCANDIA
Sta/'f Report
Date of Meeting: September 17, 2013
To: CiTy Council
From: Kristina Handt, City Administrator
Re: Resolution to Prepay Fire Hall Bonds
Agenda Item#: 9.a)
Background:
As we began discussing this spring,there is fund balance in the debt service fund for the bond
payments on the fire hall/public works building. The call date of the bonds is December 1,2013.
Within 90 days of the call date,the City is able to give notice to the bond holders that they intend to
prepay some or all of the outstanding bonds.
Also, the 2014 proposed budget assumes these prepayments.
Issue:
Should the City Council approve the resolution to prepay the fire hall bonds?
Proposal Details:
Included in your packet is a copy of Resolution 09-17-13-03. The resolution would approve paying
all of the bonds due in 2015 ($110,000)and a portion of the bonds in 2014 ($65,000).
Fiscal Impact:
At the end of 2012,the fire hall debt service fund had a balance of$178,467. The $175,000
mentioned in the resolution would come from this fund balance. The Trustee/Paying Agent will
charge the City approximately$250 for their work related to the early notification to the
bondholders.
Options:
1) Approve Resolution 09-17-13-03
2) Amend and then Approve resolution 09-17-13-03
3) Do not approve Resolution 09-17-]3-03
Recommendation:
Option 1.
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RESOLUTION NO.09-17-13-03
RESOLUTION PROVIDING FOR THE PREPAYMENT AND
REDEMPTION OF CERTAIN OUTSTANDING
GENERAL OBLIGATION BUILDING CROSSOVER REFUNDING BONDS OF THE CITY
(ORIGINALLY ISSUED BY THE TOWN OF NEW SCANDIA)
BE IT RESOLVED By the City Council of the City of Scandia,Minnesota(the"City"),as follows:
1. On May l, 2005, the Town of New Scandia, Minnesota (the "Town") issued its General
Obligation Building Crossover Refunding Bonds, Series 2005A (the `Bonds"), in the original aggregate
principal amount of$685,000. The City was incorporated as a city effective January 1, 2007, and assumed
all debt obligations of the Town. Bonds maturing on or after December 1, 2014 are subject to redemption
and prepayment on December 1, 2013 and on any date thereafter at a price of par plus accrued interest. The
final maturity ofthe Bonds is December 1,2015.
2. It is determined that it is in the best interests of the sound financial management of the City
that a portion ofthe Bonds maturing on December l, 2014, and all Bonds maturing on December 1,2015, be
prepaid and redeemed on December l, 2013 and those Bonds are hereby called for redemption on that date.
Specifically, the City intends to partially prepay the December 1, 2014 maturity by depositing$65,000 with
the Registrar(defined herein),leaving$40,000 in principal (plus accrued interest thereon)remaining and due
on December l,2014.
3. Northland Trust Services, Inc.,as registrar for the Bonds(the"Registrar"), is authorized and
directed to publish, in accordance with law, a notice of call for redemption of the Bonds in the form attached
hereto as EXHIBIT A, and to mail a copy of the notice by first class mail (postage prepaid),to the registered
owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar.
Passed and adopted by the City Council of the City of Scandia, Minnesota this 17th day of
September,2013.
CITY OF SCANDIA, MINNESOTA
Mayor
Attest:
City Administrator
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STATE OF MINNESOTA
COUNTY OF WASHINGTON
CITY OF SCANDIA
I, the undersigned, being the duly qualified and acting Administrator of the City of Scandia,
Minnesota, do hereby certify that I have carefully compared the attached and foregoing extract of minutes of
a regular meeting of the City Council held on September 17, 2013, with the original thereof on file in my
office and the same is a full, true and complete transcript therefrom insofar as the same relates to the
prepayment and redemption of $685,000 General Obligation Building Crossover Refunding Bonds,
Series 2005A,of the City,originally issued by the Town of New Scandia,Minnesota.
WITNESS My hand as City Administrator and the corporate seal of the City this day of
,2013.
City Administrator
City of Scandia,Minnesota
(SEAL)
EXHIBIT A
FORM OF NOTICE OF CALL FOR REDEMPTION
$685,000
GENERAL OBLIGATION BUILDING CROSSOVER REFUNDING BONDS, SERIES 2005A
CITY OF SCANDIA, MINNESOTA
NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Scandia,
Minnesota(the"City"),there have been called for redemption and prepayment on
DECEMBER 1,2013
a portion of the outstanding bonds of the City (originally issued by the Town of New Scandia,Minnesota,
but assumed by the City on January l, 2007) designated as General Obligation Building Crossover
Refunding Bonds, Series 2005A, dated May ], 2005, having stated maturity dates of December 1 in the
years 2014 and 2015, totaling$175,000 in principal amount, and with the following CUSIP numbers (the
"Bonds"):
Year of Maturity Amount CUSIP
2014 $65,000* 648639 BB7
2015 110,000 648639 BCS
*Represents a partial prepayment of the full maturity amount of$105,000.
The Bonds are being called at a price of par plus accrued interest to December 1, 2013, on which
date all interest on said Bonds will cease to accrue. Holders of the Bonds hereby called for
redemption are requested to present their Bonds for payment at Northland Trust Services, Inc.,
on or before December 1, 2013, at the following address:
Northland Trust Services, Inc.
45 South Seventh Street, Suite 2000
Minneapolis, Minnesota 55402
Attn: Lori A. Giampaolo, Chief Operating Officer
Important Notice: In compliance with the Economic Growth and Tax Relief
Reconciliation Act of 2003, the City is required to withhold a specified percentage of the
principal amount of the redemption price payable to the holder of any Bonds subject to
redemption and prepayment on the Redemption Date, unless the City is provided with the Social
Security Number or Federal Employer ldentification Number of the holder, property certified.
Submission of a fully executed Request for Taxpayer ldentification Number and Certification,
Form W-9 (Rev. October 2007), will satisfy the reyuirements of this paragraph.
The Registrar will not be responsible for the selection or use of the CUSIP number, nor is
any representation made as to the correctness indicated in the Redemption Notice or on any
Bond. It is included solely for convenience of the Holders.
Dated: ,2013.
BY ORDER OF THE CITY COUNCIL
By
City Administrator
City of Scandia,Minnesota