HomeMy WebLinkAboutCity Council Resolution 1981-671EXTRACT OF MINUTES OF MEETING OF THE
CITY COUNCIL OF THE CITY OF
PLYMOUTH, HENNEPIN COUNTY, MINNESOTA
Pursuant to due call and notice hereof, a regular meeting
of the City Council of the City of Plymouth was duly held on
Monday, the 28th day of September, 1981 at 7:30 p.m.
The following members of the Council were present:
Councilmembers Hoyt, Neils, Schneideh, and Threinen a
and the following were absent: Mayor Davenport
Councilmember Schneider introduced the
following resolution and moved `_ts adoption.
RESOLUTION NO. 81_ 671
RESOLUTION RELATING TO $8,025,000 GENERAL
OBLIGATION REFUNUING BONDS OF 1976,
SERIES I AND $5,975,000 GENERAL OBLIGATION
REFUNDING BONDS OF 1976, SERIES II:
AUTHORIZING THE SUBSTITUTION OF SECURITIES
IN THE ESCROW ACCOUNTS CREATED FOR THE
PROCEEDS THEREOF
BE IT RESOLVED By the City Council of the City of Plymouth,
Minnesota as follows:
Section 1. Findings.
1.01. The City has issued and sold its $8,025,000 General
Obligation Refunding Bonds of 1976, Series I, dated February 1,
1976 and $5,975,000 General Obligation Refunding Bonds of 1976,
Series II, dated February 1, 1976 (the "Refunding Bonds") to
refund in advance of maturity the following general obligation
improvement bonds of the City (the "Refunded Bonds"):
Res. No. 81-671
Page 2
DA) Bonds refunded by Series I Refunding Bonds:
$6,050,000 General Obligation Improvement Bonds
of 1975, dated August 1, 1975.
B) Bonds refunded by Series II Refunding Bonds:
1. $2,550,000 Public Improvement Bonds of
1969-2, dated July 1, 1969.
2. $1,410,000 Public Improvement Bonds of
1970, dated June 1, 1970.
3. $2,010,000 Public Improvement Bonds of
1970-2, dated July 1, 1970.
4. $4,000,000 General Obligation Improvement
Bonds of 1975, dated August 1, 1975.
1.02. The proceeds of the Refunding Bonds were used by
the City to pay the issuance expenses of the Refunding Bonds,
to establish escrow accounts (the "Escrow Accounts") with
Northwestern National Bank of Minneapolis (the "Agent") for
the payment of the Refunded Bonds, all as provided by Minnesota
Statutes, Section 475.67 (the "Act").
1.03. The funds in the Escrow Accounts for the respective
issues were invested and remain invested in United States
Government Obligations listed in Exhibit A to the Resolution.
1.04. Subdivision 9 of the Act provides that the Agent
may be directed to reinvest the balance in the Escrow Accounts
from time to time and the Escrow Account agreements with the
Agent permit such reinvestment upon approval of bond counsel.
Subidivsion 6 of the Act further provides that funds in the
Escrow Accounts in excess of the amounts needed from time to
time to pay principal or premium if any, and interest on the
Refunded Bonds may be remitted to the City.
1.05. This Council has been advised by representatives of
Ehlers and Associates, Inc., financial consultants ("Ehlers")
and Dain Bosworth Incorporated, investment brokers, ("Dain
Bosworth") that significant savings in funds needed to
service the Escrow Accounts would be achieved by the City by
the redemption of a portion of the obligations in the Escrow
Accounts and the use of such redemption proceeds for the
purchase of other United States Government Securities, at
market value, with a yield substantially higher than the
obligations redeemed. A proposal prepared by Ehlers
and Dain Bosworth is attached hereto as Exhibit B which sets
Res. No. 81-671
Page 3
forth the obligations to be redeemed, the obligations to be
purchased, the expenses to be incurred and paid in connection
with the purchase and sale of the obligations, and the estimated
net savings to the City resulting from the purchase and
sale of the obligations. The market prices of the obligations
to be purchased for the respective Escrow Accounts may vary
from the market price indicated on Exhibit B, and the savings
actually achieved by the City will vary in direct proportion
thereto.
Section 2. Purchase and Sale of Obligations.
2.01. It is found and determined that it is desirable
and in the best interests of the sound financial management of
the City that the purchase and sale of obligations in the Escrow
Accounts, substantially as set forth in Exhibit B, be accomplished
in accordance with Federal law and the Act.
2.02. The Mayor, City Manager and City Clerk are
authorized and directed, in cooperation with Ehlers, Dain Bosworth
and the Agent, to take the following actions in connection
with the respective Escrow Accounts.
A. Series I Escrow Account.
1. Notice of redemption of $1,680,000 United
States Treasury Department, State and Local
Government Series (SLG) Bonds, bearing
interest at 7.64%, due March 1, 1985 shall
be given.
2. Redemption proceeds, and accrued interest
thereon shall be held as an obligation of the
Series I Escrow Account and immediately
applied to the purchase, at the prevailing
market price, of $1,660,000 United States
Treasury Notes, bearing interest at 8.008,
due February 15, 1985.
3. Any balance of the redemption proceeds in
excess of the purchase price of the obligations,
plus accrued interest, shall be applied to the
payment of redemption penalty and administrative
expenses.
Res. No. 81-671
Page 4
4. Any balance of the redemption proceeds
remaining after the above payments have been made
shall be segregated by the Agent in a separate
subaccount of the Escrow Account, invested by
the Agent from time to time at the direction
of the City, and, at the direction of the City,
transmitted by the Agent to the paying agent for the
Series I Refunding Bonds for application to the
next installment of principal or interest thereon
when due.
B. Series II Escrow Account.
1. Notice of redemption of $926,000 United States
Treasury Department, State and Local
Government Series (SLG) Bonds, bearing interest
at 7.64%, due February 1, 1985 shall be given.
2. Redemption proceeds, and accrued interest
thereon, shall be held as an obligation of the
Series II Escrow Account and immediately applied
to the purchase, at the prevailing market
price of $785,000 United States Treasury Notes,
bearing interest at 14.00%, due December 15,
1984.
3. Any balance of the redemption proceeds in excess
of the purchase price of the obligations, plus
accrued interest, shall be applied to the
payment of redemption penalty and administrative
expenses.
4. Any balance of the redemption proceeds remaining
after the above payments have been made shall
be segregated by the Agent in a separate subaccount
of the Escrow Account, invested by the Agent
from time to time at the direction of the City,
and, at the direction of the City, transmitted by the
Agent to the paying agent for the Series II
Refunding Bonds for application to the next
installment of principal or interest thereon
when due.
Section 3. Transcript: Authorizations: Opinions.
3.01. The Agent is authorized and directed to accomplish
the purchase and sale of obligations for the Escrow Accounts as
set forth herein upon receipt of the following documents:
Res. No. 81-671
Page 5
A. A certified copy of this resolution.
B. A letter from Alexander Grant and Company, Certified
Public Accountants verifying that the payments to be
received from the obligations purchased for the Escrow
Accounts, together with cash and anticipated receipts
from other obligations held in the Escrow Accounts, will
be sufficient to pay the principal of and interest on
the Refunded Bonds when due.
C. An opinion from LeFevere, Lefler, Kennedy, O'Brien &
Drawz, A Professional Association„ nationally recognized
bond counsel, to the effect that the purchase and sale
of the obligations as authorized and contemplated hereby
may be made in a manner consistent with Section 103(c)
of the Internal Revenue Code of 1954, as amended, and
Treasury Regulations promulgated thereunder.
3.02. The Mayor, City Manager, City Clerk and other officers,
employees and agents of the City, including the Agent are authorized
to take all actions necessary to accomplish the purchase and sale
of obligations for the Escrow Accounts as authorized by this
Resolution.
Mayor
Attest: City Clerk
The motion for the adoption of the foregoing resolution was
duly seconded by Councilmember Hoyt , and upon
vote being taken thereon, the following voted in favor thereof:
Councilmembers Hoyt, Schneider, Threinen, and Neils
and the following voted against:
None
whereupon said resolution was declared duly passed and adopted.
'Res. No. 81-671
Page 6
CITY OF PLYMOUTH, HENNEPIN COUNTY, MINNESOTA
Presentation of
Potential Savings Immediately Available
to The City by Restructure of The
Minor Portion of The Existing Refunding
Escrow Account, Series I and II
Established as of February 1, 1976
Prepared by; Ehlers & Associates and
Dain Bosworth Incorporated
September 28, 1981-
Res. No. 81-671
Page 7
City of Plymouth, Hennepin County, Minnesota
Summary of Estimated Savings
by the Restructure of the Minor Portion of
the Existing Refunding Escrow Account, Series I and Series II
Established as of February 1, 1976
(See attached Exhibits for Calculation of Savings)
Income:
Redemption $1,680,000 U.S. Treasury Dept SLGS,
7.64%, due 3/1/85 $1,680,000.00
Accrued Interest (3/1/81-9/30/81 @ 7.19%) 9,596.62
Redemption $926,000 U.S. Treasury Dept SLGS,
7.64%, due 2/1/85 926,000.00
Accrued Interest (8/1/81-9/30/81 @ 7.19%) 11,126.97
Total Income $2,626,723.59
Expenses:
Purchase $1,660,000 U.S. Treasury Notes, 8.00%
due 2/15/85 @ 81.50 $1,352,900.00
Accrued Interest (8/15/81-9/30/81) 16,372.60
Purchase of $785,000 U.S. Treasury Notes, 14.00%
due 12/15/84 @ 95.00 745,750.00
Annual Interest (6/15/81-9/30/81) 32,217.26
Redemption Penalty charged by U.S. Treasury Dept. 66,723.64
Cash necessary to remain in Escrow
Administ.rat7ve Expenses
Total Expenses
Estirn;:,._2d Total Income
Less _stimated Total Expenses
Estimated Net Savings, Series I and lI
8,394.40
49,438.00
$2, 271, 795.90
$2,626,723.59
2,271,795.90
$ 354,927.69
Res. No. 81-671
Page 8
EXHIBIT I -A
City of Plymouth, Hennepin County, Minnesota
Calculation of Savings
by the Restructure of the Minor Portion of
the Existing Refunding Escrow Account, Series
Established as of February 1, 1976
Cash Flow of Original Security vs Replacement Security
Security
to be Redeemed
Replacement Security
1,680,000 SLG
$1,660,000 Tsy Notes
7.64% 3/1/85
8.00%
2/15/85
Cumulative
Receipt
Receipt
Receipt
Receipt
Cash
Date
Amount
Date
Amount
Balance
9/30/81
$ 4,432.00*
$ 4,432.00
3/1/82
$ 64,176.00
2/15/82
66,400.00
6,656.00
9/1/82
64,176.00
8/15/82
66,400.00
8,880.00
3/1/83
64,176.00
2/15/83
66,400.00
11,140.00
9/1/83
64,176.00
8/15/83
66,400.00
13,328.00
3/1/84
64,176.00
2/15/84
66,400.00
15,552.00
9/1/84
64,176.00
8/15/84
66,400.00
17,776.00
3/1/85
1,744,176.00
2/15/85
1,726,400.00
-0-
$2,129,232.00
$2,124,800.00
*Cash necessary to remain in Escrow.
Res. No. 81-671
Page 9
EXHIBIT II -A
City of Plymouth, Hennepin County, Minnesota
Calculation of Savings
by the Restructure of the Minor Portion of
the Existing Refunding Escrow Account, Series II
Established as of February 1, 1976
Cash Flow of Original Security vs Replacement Security
Security to be Redeemed 'eplacement Security
$926,000 SLG $785,000 Tsy Notes
7.64% 2/1/85 14.00% 12/31/84 Cumulative
Receipt Receipt Receipt Receipt Cash
Date Amount Date Amount Balance
*Cash necessary to remain in Escrow.
$ 3,962.40
23,539.20
43,166.00
62,962.80
82,269.60
101,846.40
121,423.20
-0-
9/30/81
$ 3,962.40*
2/1/82
$ 35,373.20
12/31/81
54,950.00
8/1/82
35,373.20
6/16/82
54,950.00
2/1/83
35,373.20
12/31/82
54,950.00
8/1/83
35, 373.20
6;'1:6/83
54, 950.00
2/1/84
35,373.20
12,/31/83
54,950.00
8/1/84
35,373.20
6/16/84
54,950.00
2/1/85
961,373.20
12/31/84
839,950.00
$1,173,612.40
$1,169,650.00
*Cash necessary to remain in Escrow.
$ 3,962.40
23,539.20
43,166.00
62,962.80
82,269.60
101,846.40
121,423.20
-0-
STATE OF MINNESOTA )
COUNTY OF HENNEPIN ) SS.
CITY OF PLYMOUTH )
I, the undersigned, being the duly qualified and acting City
Clerk of the City of Plymouth, 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 Monday,
Septgmber 28, 1981, with the original thereof on file in my
office and the same is a full, true and complete transcript
therefrom insofar as the same related to the substitution of
securities in the escrow accounts relating to $8,025,000 General
Obligation Refunding Bonds of 1976, Series I and $5,975,000
General Obligation Refunding Bonds of 1976, Series II, of the
City.
WITNESS My hand as City Clerk and the corporate seal of the
City this 1st day of October , 1981.
City Clerk
City of Plymouth, Minnesota
(SEAL)