10-441���
Presented by
0
Council File # 10-��
Green Sheet # 3108236
-�oN g
L, MINNESOTA
DECLARING THE OFFICIAL INTENT OF THE CITY OF SAINT PAUL,
MINNESOTA TO REIMBURSE CERTAIN EXPENDIT'IJRES FROM THE
PROCEEDS OF A WATER REVENUE NOTE, SERIES 2010 TO BE ISSUED BY
1`HE CITY AND GIVING PRELINIINARY APPROVAL TO THE ISSUANCE BY
THE CITY OF SAINT PAUL, MINNESOTA OF ITS WAT'ER REVENUE NOTE,
SERIES 2010
1 WIIEREAS, the Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the "Reimbursement
2 Regularions") providing that proceeds of tar-exempt bonds used to reimburse prior expenditures will not be
3 deemed spent unless certain requirements aze met; and
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
WHEREAS, the City of Saint Paul, Minnesota (the "Ciry"), a duly organized and existing home
rule charter city organized and existing under its charter and the ConstiCutron and laws of the State of
MinnesoCa, has ceceived a request from the Boazd of Watei Commissioners of the City of Saint Paul (the
"Water Board") for the City to issue a Water Revenue Note, Series 2010 (the "Series 2010 Note"), in the
origi�ai aggregate principal amou�t not to exceed $30,000,000; and
WIIEREAS, the request of the Water Boazd for the City to issue the Series 2010 Note was foc�mally
made pursuant to a resolution of the Water Boud adopted on April 13, 2010; and
WHERF,AS, the Water Boazd has identified the following capital drinking water projects for that
the Water Boazd will fund with pioceeds of the sale of the Serias 2010 Note: (i) the replacement of the
Dale Street Reservoir ($6,000,000); (ii) lead service replacement projects ($3,500,000); and (iii) the
replacement of water meters throughout the service azea of the Utility ($20,SOQ000) (collectively, the
"2010 Projects"); and
WI�REAS, the City expects to incur certain expenditures for the 2010 Projects that may be
financed temporarily from sources other than proceeds of the Series 2010 Note and reimbursed from the
proceeds of the Series 2010 Note; and
22 WHEREAS, the City has determined to make this declaration of official intent to reimburse certain
23 costs from proceeds of the Series 2010 Note or other tax-exempt bonds or other obligations in accordance
24 with the Reimbursement Regularions; and
25 WHEREAS, the City Treasurer and City Debt Manager in consultation with the City's financial
26 advisor, Springsted Incorporated, and Water Boazd staff have deternuned that it is beneficial to the City to
27 enter into negotiarions with the Minnesota Public Facilities Authority (the "PFA'� to purchase the Series
28 2010 Note; and
29
30 WHEREAS, the PFA has indicated to City staff, Water Board Staff and Springsted IncorQorated, that
31 the PFA will purchase the Series 2010 Note at an interest rate than is substantially less than the interest rate
�o - 4�1
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
that the City could achieve for the Series 2010 Note if it were to be offered for sale to the public; and
WHEREAS, the PFA provides below market loans to municipalities such as the City pursuant for
certain drinldng water projects and the Water Board has made an application to the PFA for the 2010
Projects; and
WIIEREAS, the PFA would purchase the Series 2010 Note pursuant to the terms of a Bond
Purchase and Project Loan Aa eement (the "MPFA Loan Ab eemenP') between the City and the PFA,
a�d, if necessary, the Water Board; and
WIIEREAS, the City Debt Manaaer recommends the City proceed to issue the Series 2010 Note in
an amount not to exceed $3Q000,000; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCII. OF THE CITY OF St1INT
PAUL, MINNESOTA, AS FOLLOWS:
L The City proposes to pay all or a portion of the costs of the 2010 Projects from proceeds
of the Series 2010 Note in an amount no[ to exceed $30,000,000.
47 2. The Ciry reasonably expects to reimburse the expenditures made for certain costs of the
48 2010 Projects from the proceeds of the Series 2010 Note. All reimbursed expeuditures will be capital
49 expe�ditures, costs of issuance of the Series 2010 Note, or other expenditures eligible for reimbursement
50 under Section 1.150-2(d)(3) of the Reimbursement Regulations.
51 3. This Resolution has been made not later than 60 days after payment of any original
52 expenditure to be subject to a reimbursement allocation with respect to the proceeds of the Series 2010
53 Note or other obligations, except for the following expenditures: (a) costs of issuance of bonds or other
54 obligations; (b) costs in an amount not in excess of $1OQ000 or 5 percent of the proceeds of an issue of bonds
55 or other obligations; or (c) "preliminary expenditures" up to an amount not in excess of 20 percent of th�
56 aggegate issue price of the issue or issues that finance or aze reasonably expected by the City to fmance the
57 project for which the preliminary expenditures were incurred. The term `preliminary expenditures" includes
58 architectural, engineering, surveying, bond issuance, and similar costs that are incuned prior to
59 commencement of acquisition, conskuction or rehabilitation of a project, other than land acquisition, site
60 prepazation, and similaz costs incident to commencement of construction.
61 4. This Resolution is an expresslon of the reasouable expectations of the City based on the
62 facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for
63 the 2010 Projects and the principal amount of the Series 2010 Note described herein are consistent with
64 the City's budgetary and financial circumstances. No sources other than proceeds of tax-exempt bonds or
65 other obligations to be issued by the City are, or aze reasonably expected to be, reserved, allocated on a
66 lo�g-term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay
67 expenditure for the 2010 Pxojects.
68 5. This Resolution is intended to constimte a declazation of official intent for purposes of
69 the Reimbursement Regulations.
70 6. Preliminary approval is hereby granted for the issuance of the Series 2010 Note, in an
71 original aggregate principal amount not to exceed $30,000,000. The City Treasurer, City Debt Manager,
72 and Springsted Incorporated are hereby authorized to enter into negotiations with PFA as to the terms of
73 and iuterest rate for the Series 2010 Note. The Series 2010 Note shall be issued as a fixed rate debC
74 instnzment with a final maturity date of not more than 21 years. The City Council of the Ciry will
2
1v • 44l
75
76
77
78
79
80
81
82
83
84
85
consider a final bond resolution at a later date setting forth the fina] terms of the Note and formally
authorizing the issuance and sale thereof to PFA.
7. The Mayor (or his designee), the Director, Office of Financial Services (or her
designees), the City Treasurer, and the City Debt Manager are authorized to execute any documents
necessary (including the MPFA Loan Agreement) in order to establish the interest rate with respect to the
Series 2010 Note so that the City may achieve the lowest cost of financing for the 2010 Projects. In the
event that the Mayor (or his designees), the Director, Office of Financial Services (or her designees), the
Ciry Txeasurer (or his designees), oi the City Debt Manager aze unavailable to execute such necessary
documents, any other councilmember, officer or employee of the City is authorized to execute such
documents as determined by the Saint Paul City Attomey's Office.
86 7. Springsted Incorporated is hereby appointed financial advisor to the City with respect to
87 the Series 2010 Note and Kennedy & Graven, Chartered is appointed to serve as Bond Counsel to the
88 Ciry with respect to the issuance of the 2010 Note.
Yeas Na s Absent Req� d� � ent f: � �
BosffOm
Cartez ,/
Harris .i By:
✓
Adopted by Council: Date
Adoption Certified by Cou cil Secretary
sy:
Approved 'a Date �J 1/ �dGo
By: (���
- T
Approve t han �al i ces
By:
Approved by City tto y
BY- ��" I�
U
Approy by a r for S ssi to Council
B
SA385-79 (BW�
367144v3
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
)eparfinenNOffice/Council: Date Initiated:
kv - 44�
FS -FinancialServices 26APR2010 Green Sheet NO: 3108236
Contact Person & Phone:
Bob Geurs
2668837
Must Be on Council Agenda by (Date):
OSMAY-10
Doc. Type: RESOLUTION
E-0ocumenf Required: Y
Document Contact Bob Geurs
Conhct Pho�: 266-883i
�■/
Assign
Number
For
Routing
Order
Total # of Signature Pages _(Glip All Locations for Signature)
Execute the attached resolurion declaring the official intent of the City of Saint Paul, Minnesota to reimbuise certain expenditures
from the proceeds of a$30M Water Revenue Note, Series 2010 to be issued by the City to the Minnesota Public Facilities Authority
("PFA") and Iock the interest rate on the loan with PFA.
Recommendations: Approve (A� or Reject (RJ:
Pfanning Commission
CIB Committee
Civil Service Commission
Personal Service Contracts Must Answer the Pollowing Questions:
1. Has this persoNfirm ever worked under a contract for this department?
Yes No
2. Has this person�rm ever been a city employee?
Yes No
3. Dces this person/firm possess a skill not nortnally possessed by any
cument city employee?
Yes No
Expiain all yes answers o� separate sheet and attach to green sheet.
Initiating Probiem, Issues, Opportunity (Who, What, When, Where, Why):
The City has received a request from the Boazd of Water Commissioners for the Ciry to issue a Water Revenue Note, not to exceed
$30,OOQ000. This financing with PFA is approximately I%below what the City can currently borrow at. The final City resolution
will be considered in June.
AdvantageslfApproved:
The Note will be issued
Disadvantages If Approved:
Noneknown
Disadvantages If Nof Approved:
The Note will not be issued.
Total Amount of
Transaction:
Punding Source:
Financial Information:
(Explain)
CostlRevenue Budgeted:
Activity Number:
April 27, 2010 4:12 PM Page 7
Supplemental Report
May 5, 2010 Agenda
Ttem #9, Resolurion 10-441, GS 3108236
Preliminary approval to issue Water Revenue Note
Se1ow is informat�on on the SPRW S proposal which comes before you today for prehmmary approval to issue a 536,000,000 water
revenue note. The proposal takes advantage of very favorable borrowm� and construct�on climates.
The note is to be placed with the Mmnesota Public Facilihes Authonty at an estimated TIC of 220% The rate on a
comparable BAB �s TIC of 321%
Further ac[ion wtll be required by fhe Council �n June to actually �ssue the note and to act on a budget amendment.
Responses were provided by Ruth O'Bnen, Financ�al Serv�ces Manager, wrth the Saint Paul Regional Water Serv�ces.
1. Were the 3 pro�ects part of the 2010 budget accepted by the Council in December? The 2010 budget that went to
couucil included one project for meter replacement for $20,OOQ000. This was for $19,550,000 budgeted in 2010
and $150,000 prefuuded in 2009.
We will be preparing a budget ameudment for the Soard of Water Commissioners for the May ll, 2010 meetiug.
The ameudment will include replacement of the Dale Street Reservoir and lead service lines. The amendment
will go to Council for approvat shortly thereafter.
The reservoir was planned for replacement in 2012 with debt issuance. Costs to replace t6e reservoir were
approximately 35% lower than previously anticipated and when compounded with the favorable interest rate it
was advautageous for us to replace at this time rather than waiting two years.
We are not anticipatlng additioual costs.
2. Are additional bonds or notes planned to be issued by the SPRWS m 2010? No.
3. 4Vhen will these prajects be completed; i.e. when will the publ�c "see" their new meters, the new reservoir?
These three projects are to be completed withfn three years.
• The reservoir should be complete with £nishing work in the spriug to early summer of 2071.
• The meter project will take approximately two and three quarter years to complete, includiug start up
time. We anticipate an equal or level replacement strategy (1/3-1/3- 7/3).
• The Iead replacements will run with the project areas and will run for the next three construcYion
periods (April - November).
4. When was the ]ast hme the SPRWS issued bonds/note (exclude refundings)?
SPRWS last issued bonds in 2005. We also have outstauding bonds from 2003 and a 2007 ref�ndiug bond. Total bonds
outstandiug at 12/31l2009 $24 miUiou. In addition fo the bonds, we have two outstanding notes from 1996 and 1998 total
outstanding $9.3 millioa Our debt coverage is over 2.5.
5. How will the issuance of this note affecY water rates?
This debt was funded with a net 2 cent increase in debt service over 2009-2010. There was a 2 cent decrease in
debt service in 2009 as we did uot issae new debt and that coupled with a 4 cent increase in 2010 for debt service
retated to this anticipated debt issue resulted in the net 2 ceut increase.
Overall, [his debt structure and repaymeut will wst us $37.8 million or about 9.5 ceuts per year or $8.30 per year
per resideutial customer over the 20 year life of the bonds. This will be offset by debt structure and the
retirement of existing debt. We are tying iu this debt with the existing debt repayment for rate stabilization. We
had this issuance in mind wheu we built our debt structure for the issuance of debt in 2005 aud the restructuring
in 2007. Debt service will decline starting in 2016.
Compiled by
Borrowing from the SRR over bonds will result in savings of approximately $3.9 million margaret n. Egan
over the 20 year life of the bond. cn�ets�aget Ana�t
Sain[ Paul City Councii
���
Presented by
0
Council File # 10-��
Green Sheet # 3108236
-�oN g
L, MINNESOTA
DECLARING THE OFFICIAL INTENT OF THE CITY OF SAINT PAUL,
MINNESOTA TO REIMBURSE CERTAIN EXPENDIT'IJRES FROM THE
PROCEEDS OF A WATER REVENUE NOTE, SERIES 2010 TO BE ISSUED BY
1`HE CITY AND GIVING PRELINIINARY APPROVAL TO THE ISSUANCE BY
THE CITY OF SAINT PAUL, MINNESOTA OF ITS WAT'ER REVENUE NOTE,
SERIES 2010
1 WIIEREAS, the Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the "Reimbursement
2 Regularions") providing that proceeds of tar-exempt bonds used to reimburse prior expenditures will not be
3 deemed spent unless certain requirements aze met; and
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
WHEREAS, the City of Saint Paul, Minnesota (the "Ciry"), a duly organized and existing home
rule charter city organized and existing under its charter and the ConstiCutron and laws of the State of
MinnesoCa, has ceceived a request from the Boazd of Watei Commissioners of the City of Saint Paul (the
"Water Board") for the City to issue a Water Revenue Note, Series 2010 (the "Series 2010 Note"), in the
origi�ai aggregate principal amou�t not to exceed $30,000,000; and
WIIEREAS, the request of the Water Boazd for the City to issue the Series 2010 Note was foc�mally
made pursuant to a resolution of the Water Boud adopted on April 13, 2010; and
WHERF,AS, the Water Boazd has identified the following capital drinking water projects for that
the Water Boazd will fund with pioceeds of the sale of the Serias 2010 Note: (i) the replacement of the
Dale Street Reservoir ($6,000,000); (ii) lead service replacement projects ($3,500,000); and (iii) the
replacement of water meters throughout the service azea of the Utility ($20,SOQ000) (collectively, the
"2010 Projects"); and
WI�REAS, the City expects to incur certain expenditures for the 2010 Projects that may be
financed temporarily from sources other than proceeds of the Series 2010 Note and reimbursed from the
proceeds of the Series 2010 Note; and
22 WHEREAS, the City has determined to make this declaration of official intent to reimburse certain
23 costs from proceeds of the Series 2010 Note or other tax-exempt bonds or other obligations in accordance
24 with the Reimbursement Regularions; and
25 WHEREAS, the City Treasurer and City Debt Manager in consultation with the City's financial
26 advisor, Springsted Incorporated, and Water Boazd staff have deternuned that it is beneficial to the City to
27 enter into negotiarions with the Minnesota Public Facilities Authority (the "PFA'� to purchase the Series
28 2010 Note; and
29
30 WHEREAS, the PFA has indicated to City staff, Water Board Staff and Springsted IncorQorated, that
31 the PFA will purchase the Series 2010 Note at an interest rate than is substantially less than the interest rate
�o - 4�1
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
that the City could achieve for the Series 2010 Note if it were to be offered for sale to the public; and
WHEREAS, the PFA provides below market loans to municipalities such as the City pursuant for
certain drinldng water projects and the Water Board has made an application to the PFA for the 2010
Projects; and
WIIEREAS, the PFA would purchase the Series 2010 Note pursuant to the terms of a Bond
Purchase and Project Loan Aa eement (the "MPFA Loan Ab eemenP') between the City and the PFA,
a�d, if necessary, the Water Board; and
WIIEREAS, the City Debt Manaaer recommends the City proceed to issue the Series 2010 Note in
an amount not to exceed $3Q000,000; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCII. OF THE CITY OF St1INT
PAUL, MINNESOTA, AS FOLLOWS:
L The City proposes to pay all or a portion of the costs of the 2010 Projects from proceeds
of the Series 2010 Note in an amount no[ to exceed $30,000,000.
47 2. The Ciry reasonably expects to reimburse the expenditures made for certain costs of the
48 2010 Projects from the proceeds of the Series 2010 Note. All reimbursed expeuditures will be capital
49 expe�ditures, costs of issuance of the Series 2010 Note, or other expenditures eligible for reimbursement
50 under Section 1.150-2(d)(3) of the Reimbursement Regulations.
51 3. This Resolution has been made not later than 60 days after payment of any original
52 expenditure to be subject to a reimbursement allocation with respect to the proceeds of the Series 2010
53 Note or other obligations, except for the following expenditures: (a) costs of issuance of bonds or other
54 obligations; (b) costs in an amount not in excess of $1OQ000 or 5 percent of the proceeds of an issue of bonds
55 or other obligations; or (c) "preliminary expenditures" up to an amount not in excess of 20 percent of th�
56 aggegate issue price of the issue or issues that finance or aze reasonably expected by the City to fmance the
57 project for which the preliminary expenditures were incurred. The term `preliminary expenditures" includes
58 architectural, engineering, surveying, bond issuance, and similar costs that are incuned prior to
59 commencement of acquisition, conskuction or rehabilitation of a project, other than land acquisition, site
60 prepazation, and similaz costs incident to commencement of construction.
61 4. This Resolution is an expresslon of the reasouable expectations of the City based on the
62 facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for
63 the 2010 Projects and the principal amount of the Series 2010 Note described herein are consistent with
64 the City's budgetary and financial circumstances. No sources other than proceeds of tax-exempt bonds or
65 other obligations to be issued by the City are, or aze reasonably expected to be, reserved, allocated on a
66 lo�g-term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay
67 expenditure for the 2010 Pxojects.
68 5. This Resolution is intended to constimte a declazation of official intent for purposes of
69 the Reimbursement Regulations.
70 6. Preliminary approval is hereby granted for the issuance of the Series 2010 Note, in an
71 original aggregate principal amount not to exceed $30,000,000. The City Treasurer, City Debt Manager,
72 and Springsted Incorporated are hereby authorized to enter into negotiations with PFA as to the terms of
73 and iuterest rate for the Series 2010 Note. The Series 2010 Note shall be issued as a fixed rate debC
74 instnzment with a final maturity date of not more than 21 years. The City Council of the Ciry will
2
1v • 44l
75
76
77
78
79
80
81
82
83
84
85
consider a final bond resolution at a later date setting forth the fina] terms of the Note and formally
authorizing the issuance and sale thereof to PFA.
7. The Mayor (or his designee), the Director, Office of Financial Services (or her
designees), the City Treasurer, and the City Debt Manager are authorized to execute any documents
necessary (including the MPFA Loan Agreement) in order to establish the interest rate with respect to the
Series 2010 Note so that the City may achieve the lowest cost of financing for the 2010 Projects. In the
event that the Mayor (or his designees), the Director, Office of Financial Services (or her designees), the
Ciry Txeasurer (or his designees), oi the City Debt Manager aze unavailable to execute such necessary
documents, any other councilmember, officer or employee of the City is authorized to execute such
documents as determined by the Saint Paul City Attomey's Office.
86 7. Springsted Incorporated is hereby appointed financial advisor to the City with respect to
87 the Series 2010 Note and Kennedy & Graven, Chartered is appointed to serve as Bond Counsel to the
88 Ciry with respect to the issuance of the 2010 Note.
Yeas Na s Absent Req� d� � ent f: � �
BosffOm
Cartez ,/
Harris .i By:
✓
Adopted by Council: Date
Adoption Certified by Cou cil Secretary
sy:
Approved 'a Date �J 1/ �dGo
By: (���
- T
Approve t han �al i ces
By:
Approved by City tto y
BY- ��" I�
U
Approy by a r for S ssi to Council
B
SA385-79 (BW�
367144v3
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
)eparfinenNOffice/Council: Date Initiated:
kv - 44�
FS -FinancialServices 26APR2010 Green Sheet NO: 3108236
Contact Person & Phone:
Bob Geurs
2668837
Must Be on Council Agenda by (Date):
OSMAY-10
Doc. Type: RESOLUTION
E-0ocumenf Required: Y
Document Contact Bob Geurs
Conhct Pho�: 266-883i
�■/
Assign
Number
For
Routing
Order
Total # of Signature Pages _(Glip All Locations for Signature)
Execute the attached resolurion declaring the official intent of the City of Saint Paul, Minnesota to reimbuise certain expenditures
from the proceeds of a$30M Water Revenue Note, Series 2010 to be issued by the City to the Minnesota Public Facilities Authority
("PFA") and Iock the interest rate on the loan with PFA.
Recommendations: Approve (A� or Reject (RJ:
Pfanning Commission
CIB Committee
Civil Service Commission
Personal Service Contracts Must Answer the Pollowing Questions:
1. Has this persoNfirm ever worked under a contract for this department?
Yes No
2. Has this person�rm ever been a city employee?
Yes No
3. Dces this person/firm possess a skill not nortnally possessed by any
cument city employee?
Yes No
Expiain all yes answers o� separate sheet and attach to green sheet.
Initiating Probiem, Issues, Opportunity (Who, What, When, Where, Why):
The City has received a request from the Boazd of Water Commissioners for the Ciry to issue a Water Revenue Note, not to exceed
$30,OOQ000. This financing with PFA is approximately I%below what the City can currently borrow at. The final City resolution
will be considered in June.
AdvantageslfApproved:
The Note will be issued
Disadvantages If Approved:
Noneknown
Disadvantages If Nof Approved:
The Note will not be issued.
Total Amount of
Transaction:
Punding Source:
Financial Information:
(Explain)
CostlRevenue Budgeted:
Activity Number:
April 27, 2010 4:12 PM Page 7
Supplemental Report
May 5, 2010 Agenda
Ttem #9, Resolurion 10-441, GS 3108236
Preliminary approval to issue Water Revenue Note
Se1ow is informat�on on the SPRW S proposal which comes before you today for prehmmary approval to issue a 536,000,000 water
revenue note. The proposal takes advantage of very favorable borrowm� and construct�on climates.
The note is to be placed with the Mmnesota Public Facilihes Authonty at an estimated TIC of 220% The rate on a
comparable BAB �s TIC of 321%
Further ac[ion wtll be required by fhe Council �n June to actually �ssue the note and to act on a budget amendment.
Responses were provided by Ruth O'Bnen, Financ�al Serv�ces Manager, wrth the Saint Paul Regional Water Serv�ces.
1. Were the 3 pro�ects part of the 2010 budget accepted by the Council in December? The 2010 budget that went to
couucil included one project for meter replacement for $20,OOQ000. This was for $19,550,000 budgeted in 2010
and $150,000 prefuuded in 2009.
We will be preparing a budget ameudment for the Soard of Water Commissioners for the May ll, 2010 meetiug.
The ameudment will include replacement of the Dale Street Reservoir and lead service lines. The amendment
will go to Council for approvat shortly thereafter.
The reservoir was planned for replacement in 2012 with debt issuance. Costs to replace t6e reservoir were
approximately 35% lower than previously anticipated and when compounded with the favorable interest rate it
was advautageous for us to replace at this time rather than waiting two years.
We are not anticipatlng additioual costs.
2. Are additional bonds or notes planned to be issued by the SPRWS m 2010? No.
3. 4Vhen will these prajects be completed; i.e. when will the publ�c "see" their new meters, the new reservoir?
These three projects are to be completed withfn three years.
• The reservoir should be complete with £nishing work in the spriug to early summer of 2071.
• The meter project will take approximately two and three quarter years to complete, includiug start up
time. We anticipate an equal or level replacement strategy (1/3-1/3- 7/3).
• The Iead replacements will run with the project areas and will run for the next three construcYion
periods (April - November).
4. When was the ]ast hme the SPRWS issued bonds/note (exclude refundings)?
SPRWS last issued bonds in 2005. We also have outstauding bonds from 2003 and a 2007 ref�ndiug bond. Total bonds
outstandiug at 12/31l2009 $24 miUiou. In addition fo the bonds, we have two outstanding notes from 1996 and 1998 total
outstanding $9.3 millioa Our debt coverage is over 2.5.
5. How will the issuance of this note affecY water rates?
This debt was funded with a net 2 cent increase in debt service over 2009-2010. There was a 2 cent decrease in
debt service in 2009 as we did uot issae new debt and that coupled with a 4 cent increase in 2010 for debt service
retated to this anticipated debt issue resulted in the net 2 ceut increase.
Overall, [his debt structure and repaymeut will wst us $37.8 million or about 9.5 ceuts per year or $8.30 per year
per resideutial customer over the 20 year life of the bonds. This will be offset by debt structure and the
retirement of existing debt. We are tying iu this debt with the existing debt repayment for rate stabilization. We
had this issuance in mind wheu we built our debt structure for the issuance of debt in 2005 aud the restructuring
in 2007. Debt service will decline starting in 2016.
Compiled by
Borrowing from the SRR over bonds will result in savings of approximately $3.9 million margaret n. Egan
over the 20 year life of the bond. cn�ets�aget Ana�t
Sain[ Paul City Councii
���
Presented by
0
Council File # 10-��
Green Sheet # 3108236
-�oN g
L, MINNESOTA
DECLARING THE OFFICIAL INTENT OF THE CITY OF SAINT PAUL,
MINNESOTA TO REIMBURSE CERTAIN EXPENDIT'IJRES FROM THE
PROCEEDS OF A WATER REVENUE NOTE, SERIES 2010 TO BE ISSUED BY
1`HE CITY AND GIVING PRELINIINARY APPROVAL TO THE ISSUANCE BY
THE CITY OF SAINT PAUL, MINNESOTA OF ITS WAT'ER REVENUE NOTE,
SERIES 2010
1 WIIEREAS, the Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the "Reimbursement
2 Regularions") providing that proceeds of tar-exempt bonds used to reimburse prior expenditures will not be
3 deemed spent unless certain requirements aze met; and
4
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
WHEREAS, the City of Saint Paul, Minnesota (the "Ciry"), a duly organized and existing home
rule charter city organized and existing under its charter and the ConstiCutron and laws of the State of
MinnesoCa, has ceceived a request from the Boazd of Watei Commissioners of the City of Saint Paul (the
"Water Board") for the City to issue a Water Revenue Note, Series 2010 (the "Series 2010 Note"), in the
origi�ai aggregate principal amou�t not to exceed $30,000,000; and
WIIEREAS, the request of the Water Boazd for the City to issue the Series 2010 Note was foc�mally
made pursuant to a resolution of the Water Boud adopted on April 13, 2010; and
WHERF,AS, the Water Boazd has identified the following capital drinking water projects for that
the Water Boazd will fund with pioceeds of the sale of the Serias 2010 Note: (i) the replacement of the
Dale Street Reservoir ($6,000,000); (ii) lead service replacement projects ($3,500,000); and (iii) the
replacement of water meters throughout the service azea of the Utility ($20,SOQ000) (collectively, the
"2010 Projects"); and
WI�REAS, the City expects to incur certain expenditures for the 2010 Projects that may be
financed temporarily from sources other than proceeds of the Series 2010 Note and reimbursed from the
proceeds of the Series 2010 Note; and
22 WHEREAS, the City has determined to make this declaration of official intent to reimburse certain
23 costs from proceeds of the Series 2010 Note or other tax-exempt bonds or other obligations in accordance
24 with the Reimbursement Regularions; and
25 WHEREAS, the City Treasurer and City Debt Manager in consultation with the City's financial
26 advisor, Springsted Incorporated, and Water Boazd staff have deternuned that it is beneficial to the City to
27 enter into negotiarions with the Minnesota Public Facilities Authority (the "PFA'� to purchase the Series
28 2010 Note; and
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30 WHEREAS, the PFA has indicated to City staff, Water Board Staff and Springsted IncorQorated, that
31 the PFA will purchase the Series 2010 Note at an interest rate than is substantially less than the interest rate
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that the City could achieve for the Series 2010 Note if it were to be offered for sale to the public; and
WHEREAS, the PFA provides below market loans to municipalities such as the City pursuant for
certain drinldng water projects and the Water Board has made an application to the PFA for the 2010
Projects; and
WIIEREAS, the PFA would purchase the Series 2010 Note pursuant to the terms of a Bond
Purchase and Project Loan Aa eement (the "MPFA Loan Ab eemenP') between the City and the PFA,
a�d, if necessary, the Water Board; and
WIIEREAS, the City Debt Manaaer recommends the City proceed to issue the Series 2010 Note in
an amount not to exceed $3Q000,000; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCII. OF THE CITY OF St1INT
PAUL, MINNESOTA, AS FOLLOWS:
L The City proposes to pay all or a portion of the costs of the 2010 Projects from proceeds
of the Series 2010 Note in an amount no[ to exceed $30,000,000.
47 2. The Ciry reasonably expects to reimburse the expenditures made for certain costs of the
48 2010 Projects from the proceeds of the Series 2010 Note. All reimbursed expeuditures will be capital
49 expe�ditures, costs of issuance of the Series 2010 Note, or other expenditures eligible for reimbursement
50 under Section 1.150-2(d)(3) of the Reimbursement Regulations.
51 3. This Resolution has been made not later than 60 days after payment of any original
52 expenditure to be subject to a reimbursement allocation with respect to the proceeds of the Series 2010
53 Note or other obligations, except for the following expenditures: (a) costs of issuance of bonds or other
54 obligations; (b) costs in an amount not in excess of $1OQ000 or 5 percent of the proceeds of an issue of bonds
55 or other obligations; or (c) "preliminary expenditures" up to an amount not in excess of 20 percent of th�
56 aggegate issue price of the issue or issues that finance or aze reasonably expected by the City to fmance the
57 project for which the preliminary expenditures were incurred. The term `preliminary expenditures" includes
58 architectural, engineering, surveying, bond issuance, and similar costs that are incuned prior to
59 commencement of acquisition, conskuction or rehabilitation of a project, other than land acquisition, site
60 prepazation, and similaz costs incident to commencement of construction.
61 4. This Resolution is an expresslon of the reasouable expectations of the City based on the
62 facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for
63 the 2010 Projects and the principal amount of the Series 2010 Note described herein are consistent with
64 the City's budgetary and financial circumstances. No sources other than proceeds of tax-exempt bonds or
65 other obligations to be issued by the City are, or aze reasonably expected to be, reserved, allocated on a
66 lo�g-term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay
67 expenditure for the 2010 Pxojects.
68 5. This Resolution is intended to constimte a declazation of official intent for purposes of
69 the Reimbursement Regulations.
70 6. Preliminary approval is hereby granted for the issuance of the Series 2010 Note, in an
71 original aggregate principal amount not to exceed $30,000,000. The City Treasurer, City Debt Manager,
72 and Springsted Incorporated are hereby authorized to enter into negotiations with PFA as to the terms of
73 and iuterest rate for the Series 2010 Note. The Series 2010 Note shall be issued as a fixed rate debC
74 instnzment with a final maturity date of not more than 21 years. The City Council of the Ciry will
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consider a final bond resolution at a later date setting forth the fina] terms of the Note and formally
authorizing the issuance and sale thereof to PFA.
7. The Mayor (or his designee), the Director, Office of Financial Services (or her
designees), the City Treasurer, and the City Debt Manager are authorized to execute any documents
necessary (including the MPFA Loan Agreement) in order to establish the interest rate with respect to the
Series 2010 Note so that the City may achieve the lowest cost of financing for the 2010 Projects. In the
event that the Mayor (or his designees), the Director, Office of Financial Services (or her designees), the
Ciry Txeasurer (or his designees), oi the City Debt Manager aze unavailable to execute such necessary
documents, any other councilmember, officer or employee of the City is authorized to execute such
documents as determined by the Saint Paul City Attomey's Office.
86 7. Springsted Incorporated is hereby appointed financial advisor to the City with respect to
87 the Series 2010 Note and Kennedy & Graven, Chartered is appointed to serve as Bond Counsel to the
88 Ciry with respect to the issuance of the 2010 Note.
Yeas Na s Absent Req� d� � ent f: � �
BosffOm
Cartez ,/
Harris .i By:
✓
Adopted by Council: Date
Adoption Certified by Cou cil Secretary
sy:
Approved 'a Date �J 1/ �dGo
By: (���
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Approve t han �al i ces
By:
Approved by City tto y
BY- ��" I�
U
Approy by a r for S ssi to Council
B
SA385-79 (BW�
367144v3
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
)eparfinenNOffice/Council: Date Initiated:
kv - 44�
FS -FinancialServices 26APR2010 Green Sheet NO: 3108236
Contact Person & Phone:
Bob Geurs
2668837
Must Be on Council Agenda by (Date):
OSMAY-10
Doc. Type: RESOLUTION
E-0ocumenf Required: Y
Document Contact Bob Geurs
Conhct Pho�: 266-883i
�■/
Assign
Number
For
Routing
Order
Total # of Signature Pages _(Glip All Locations for Signature)
Execute the attached resolurion declaring the official intent of the City of Saint Paul, Minnesota to reimbuise certain expenditures
from the proceeds of a$30M Water Revenue Note, Series 2010 to be issued by the City to the Minnesota Public Facilities Authority
("PFA") and Iock the interest rate on the loan with PFA.
Recommendations: Approve (A� or Reject (RJ:
Pfanning Commission
CIB Committee
Civil Service Commission
Personal Service Contracts Must Answer the Pollowing Questions:
1. Has this persoNfirm ever worked under a contract for this department?
Yes No
2. Has this person�rm ever been a city employee?
Yes No
3. Dces this person/firm possess a skill not nortnally possessed by any
cument city employee?
Yes No
Expiain all yes answers o� separate sheet and attach to green sheet.
Initiating Probiem, Issues, Opportunity (Who, What, When, Where, Why):
The City has received a request from the Boazd of Water Commissioners for the Ciry to issue a Water Revenue Note, not to exceed
$30,OOQ000. This financing with PFA is approximately I%below what the City can currently borrow at. The final City resolution
will be considered in June.
AdvantageslfApproved:
The Note will be issued
Disadvantages If Approved:
Noneknown
Disadvantages If Nof Approved:
The Note will not be issued.
Total Amount of
Transaction:
Punding Source:
Financial Information:
(Explain)
CostlRevenue Budgeted:
Activity Number:
April 27, 2010 4:12 PM Page 7
Supplemental Report
May 5, 2010 Agenda
Ttem #9, Resolurion 10-441, GS 3108236
Preliminary approval to issue Water Revenue Note
Se1ow is informat�on on the SPRW S proposal which comes before you today for prehmmary approval to issue a 536,000,000 water
revenue note. The proposal takes advantage of very favorable borrowm� and construct�on climates.
The note is to be placed with the Mmnesota Public Facilihes Authonty at an estimated TIC of 220% The rate on a
comparable BAB �s TIC of 321%
Further ac[ion wtll be required by fhe Council �n June to actually �ssue the note and to act on a budget amendment.
Responses were provided by Ruth O'Bnen, Financ�al Serv�ces Manager, wrth the Saint Paul Regional Water Serv�ces.
1. Were the 3 pro�ects part of the 2010 budget accepted by the Council in December? The 2010 budget that went to
couucil included one project for meter replacement for $20,OOQ000. This was for $19,550,000 budgeted in 2010
and $150,000 prefuuded in 2009.
We will be preparing a budget ameudment for the Soard of Water Commissioners for the May ll, 2010 meetiug.
The ameudment will include replacement of the Dale Street Reservoir and lead service lines. The amendment
will go to Council for approvat shortly thereafter.
The reservoir was planned for replacement in 2012 with debt issuance. Costs to replace t6e reservoir were
approximately 35% lower than previously anticipated and when compounded with the favorable interest rate it
was advautageous for us to replace at this time rather than waiting two years.
We are not anticipatlng additioual costs.
2. Are additional bonds or notes planned to be issued by the SPRWS m 2010? No.
3. 4Vhen will these prajects be completed; i.e. when will the publ�c "see" their new meters, the new reservoir?
These three projects are to be completed withfn three years.
• The reservoir should be complete with £nishing work in the spriug to early summer of 2071.
• The meter project will take approximately two and three quarter years to complete, includiug start up
time. We anticipate an equal or level replacement strategy (1/3-1/3- 7/3).
• The Iead replacements will run with the project areas and will run for the next three construcYion
periods (April - November).
4. When was the ]ast hme the SPRWS issued bonds/note (exclude refundings)?
SPRWS last issued bonds in 2005. We also have outstauding bonds from 2003 and a 2007 ref�ndiug bond. Total bonds
outstandiug at 12/31l2009 $24 miUiou. In addition fo the bonds, we have two outstanding notes from 1996 and 1998 total
outstanding $9.3 millioa Our debt coverage is over 2.5.
5. How will the issuance of this note affecY water rates?
This debt was funded with a net 2 cent increase in debt service over 2009-2010. There was a 2 cent decrease in
debt service in 2009 as we did uot issae new debt and that coupled with a 4 cent increase in 2010 for debt service
retated to this anticipated debt issue resulted in the net 2 ceut increase.
Overall, [his debt structure and repaymeut will wst us $37.8 million or about 9.5 ceuts per year or $8.30 per year
per resideutial customer over the 20 year life of the bonds. This will be offset by debt structure and the
retirement of existing debt. We are tying iu this debt with the existing debt repayment for rate stabilization. We
had this issuance in mind wheu we built our debt structure for the issuance of debt in 2005 aud the restructuring
in 2007. Debt service will decline starting in 2016.
Compiled by
Borrowing from the SRR over bonds will result in savings of approximately $3.9 million margaret n. Egan
over the 20 year life of the bond. cn�ets�aget Ana�t
Sain[ Paul City Councii