Full Text
City of Missoula, Montana Item to be Referred to City Council Committee Committee: A & F Item: Bond Resolution – Authorizing the negotiated sale of $11,500,000 (maximum par amount) of Taxable Sewer System Revenue Bonds, Series 2010 (Recovery Zone Economic Development Bonds) Date: September 10, 2010 Prepared by: Brentt Ramharter Initiated by: Brentt Ramharter Action Required: Approve the Bond Resolution – Authorizing the negotiated sale of $11,500,000 (maximum par amount) of Taxable Sewer System Revenue Bonds, Series 2010 (Recovery Zone Economic Development Bonds) Recommended Motion: I move the City Council approve the : “RESOLUTION RELATING TO $11,500,000 TAXABLE SEWER SYSTEM REVENUE BONDS, SERIES 2010 (RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS); AUTHORIZING THE ISSUANCE OF THE BONDS THROUGH A NEGOTIATED SALE THEREOF; AUTHORIZING THE MAYOR AND CITY FINANCE DIRECTOR/TREASURER TO SELECT AN UNDERWRITER THROUGH A REQUEST FOR PROPOSAL PROCESS; AND MAKING CERTAIN DECLARATIONS TO SATISFY THE REIMBURSEMENT REGULATIONS OF THE INTERNAL REVENUE CODE” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City at a regular meeting on September 20, 2010, and that the meeting was duly held by the City Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. Referral to committee: September 10, 2010 Committee discussion: September 15, 2010 Deadline: Have council approve at the September 20, 2010 meeting Background and Alternatives Explored: The $11,500,000 (maximum par amount) of Taxable Sewer System Revenue Bonds, Series 2010 (Recovery Zone Economic Development Bonds) utilizes financing that is taxable to handle the construction costs for the recently awarded Sewer Headworks Project, but is subsidized by the federal government to provide the equivalent of tax exempt financing with a 45% interest reimbursement that would be paid to the city at each interest payment date. This financing contains very favorable terms to pay for the costs associated with the sewer plant headworks upgrade. The current sizing for this project is actually projected to be $10,875,000. This ---PAGE BREAK--- resolution identifies a maximum sizing of $11.5 million to accommodate any additional costs requested by the selected underwriter such as bond insurance (these costs would then give us an even lower interest rate). This resolution has been prepared by the City's bond counsel, Dorsey Whitney. This resolution authorizes the following actions to be taken, as the recommended pricing of the bonds will be done on a negotiated basis: 1. Based upon the complexities and timing of issuing the Bonds as taxable Economic Recovery Zone Development Bonds, Springsted, Inc., of St. Paul, Minnesota (“Springsted”), the City’s financial advisor and the City Finance Director/Treasurer have recommended a negotiated sale of the Bonds. This Council hereby confirms a negotiated sale to be in the City’s best interest. 2. The City Finance Director/Treasurer, in consultation with Springsted, is authorized to prepare and submit a request for proposals (“RFP”) for underwriters for the Bonds. 3. Upon receipt of responses to the RFP, the Mayor and City Finance Director/Treasurer, in consultation with Springsted, are hereby authorized to select an underwriter for the Bonds and proceed with the preparation of the documents necessary for the issuance of the Bonds. 4. The City Finance Director/Treasurer, City Clerk and other officers of the City, in cooperation with in cooperation with Springsted, financial consultants to the City, and Dorsey & Whitney LLP, bond counsel to the City, are hereby authorized and directed to prepare a Preliminary Official Statement to be distributed to potential purchasers of the Bonds. Such preliminary official statement shall contain such information as shall be advisable and necessary to describe accurately the City and the security for, and terms and conditions of, the Bonds. The City Finance Director/Treasurer is authorized on behalf of the City to deem such Preliminary Official Statement “near final” as of its date, in accordance with Rule 15c2- 12(b)(1) under the Securities Exchange Act of 1934. Financial Implications: These bond proceeds are needed to complete the financing package developed by the City Council to reconstruct the headworks at the city's wastewater plant. Sewer rates were increased last year by 5% and will be increased by 5% in 2011, 2012 and 2013 to handle the debt service requirements of this financing as well as the revenue bonds issued to complete the Rattlesnake Valley sewer project currently under construction. Attachments: Draft Resolution