HomeMy WebLinkAboutA002 - Presale Analysis r,
650 Town Center Drive
' Suite 430
EVENSEN [BODGE INC Costa Mesa CA9261b
714/545-1212 800/322-0171
714/557-9126 Fax
44 Montgomery Street
' Suite
500
San Francisco CA 94104
415/955-2675
February 1, 1993 415/955-2676Fax
1
255 South Orange Avenue
Suite 1133
Mr. Steven Schainker, City Manager`J g Orlando FL 32801
Ms. Alice Carroll, Finance Director 407/841-0757 800/624-8M
City of Ames 407/872,2326Fax
515 Clark Avenue
Ames, IA 50010
100 Court Avenue
RE: $8,140,000 General Obligation Refunding Bonds, Series 1993 Suite215
City of Ames, Iowa Des Moines IA 50309
515/282-6138
Dear Mr. Schainker and Ms. Carroll: 5152820252Fax
' Attached is our Presale Analysis prepared in connection with the City's 101 West Ohio,20th Fluor
issuance of $8,140,000 General Obligation Refunding Bonds, Series 1993, Indianapolis IN 46M
proposed for sale on February 9, 1993. 8W/328-82A0
The Presale Analysis summarizes the purpose of this issue, describes how
the Bonds have been structured and discusses other aspects related to the 17370North Laurel Park Drive
marketing of the Bonds. We will prepare a Postsale Analysis reporting Suite 400E
and analyzing the results of the sale after the Bonds have been sold. Detroit(livonia)MI 48152
313/591-4040 8WS89-2800
We look forward to a successful offering. 3 1315 91-45 5 4Fax
' Sincerely, 1951 East Buena Vista
Springfield MO 65804
EVENSEN DODGE, INC. 417/887-1277
V 417/867-7916 Fax
' Wayne S. Burggraaff David M. Dirks 17U Prairie Lane
Senior Vice President Senior Vice President Fargo ND 58103
and Principal 701235-4416 800/328-8M
1 701/239-4597 Fax
/wkb
' 379 Federal Circle
Enclosure Columbus(Delaware)OH 43015
614/363-5577 800/628-7900
614/363-4887 Fax
701 Brazos,Suite 500
Austin TX 78701
' 512/320-9047 800284-5612
222 South Ninth Street,Suite 3800 512/3241419 Fax
Minneapolis,MN 55402
' 612/338-3535 800/328-8200
FAX 612/338-7264
371037/2
TABLE OF CONTENTS
Page
Purposeof the Sale..................................................................................................... 1
Sourcesand Uses of Funds.......................................................................................2
' Proposed Terms and Conditions of Sale................................................................. 3
' Savings Report............................................................................................................4
BiddingRequirements...............................................................................................8
' Rating........................................................................................................................... 8
Federal Tax Considerations and Regulations........................................................ 9
' Official Statement Disclosure................................................................................. 10
GeneralMarket Conditions.................................................................................... 10
Proposed Financing Timetable............................................................................... 12
' List of Participants.................................................................................................... 13
' 371037/3
' PURPOSE OF THE SALE
This Presale Analysis presents background information for the City's use in
considering the issuance of$8,140,000* General Obligation Refunding Bonds, Series
1993 at a public sale on February 9, 1993. The Bonds will be issued to provide funds
for the early redemption of a portion of the City's outstanding general obligation
debt. This debt will be replaced by the Refunding Bonds which will carry lower
interest rates, thereby reducing the City's debt service obligation.
' The amounts and maturities to be refunded are presented below:
BONDS TO BE REFUNDED
Issue Amount Years Escrowed To
1988 Central City Hall $4,900,000 6/95-08 Call Date, 6/1/96 (1)
1989 Sewer Improvement Bonds $2,550,000 6/97-04 Call Date, 6/1/96
It is expected that the refunding issue will lower total debt service payments by
approximately $435,213 over the next sixteen years. This savings is after the
deduction of all issuance related costs.
(1) The 1995 and 1996 maturities will be escrowed to their maturity dates.
' *Subject to change.
371037/1 1
SOURCES AND USES OF FUNDS - BONDS
A schedule presenting the estimated sources and uses of funds for this financing
' follows.
Amount
' SOURCES:
Bond Proceeds $8,140,000.00
' Total Sources $8,140,000.00
USES:
Cost of Escrow $7,9751918.35
Cost of Issuance 85,000.00
Underwriter's Discount 73,260.00
' Miscellaneous 5,821.65
Total Uses 8,140,000.00
371037/2 2
' PROPOSED TERMS AND CONDITIONS OF SALE
' Principal Amount of Issue: $81140XV
Dated Date of Bonds: February 15, 1993
Proposed Sale Date: February 9, 1993
' Type of Sale: Competitive.
First Interest Payment: June 1, 1993
Maturity Date and Amounts: June 1 as follows:
Year Amount
1993 $125,000
1994 110,000
1995 335,000
1996 325,000
1997 690,000
' 1998 705,000
1999 695,000
2000 710,000
' 2001 730,000
2002 7407000
2003 755,000
2004 770,000
' 2005 370,000
2006 365,000
2007 360,000
' 2008 3551000
Call Feature. Bonds maturing on June 1, 2001 and
' thereafter are subject to redemption
prior to maturity on June 1, 2000 and
on any date thereafter at a price of par
plus accrued interest.
Not Qualified Tax-Exempt
Obligation: Not Bank Qualified.
' Security: General Obligation, unlimited tax levy.
*Subject to change.
' 371037/3 3
' SAVINGS REPORT
The following table compares the debt service on the Refunding Bonds to the debt
service on the Refunded Bonds. The Refunding Bonds have been structured to
target savings in the 1995 and 1996 fiscal years since these are the years on which the
City's projected debt service levy is highest.
' 371037/4 4
CITY OF AMES, IOWA
$2,780,000 G.O. REFUNDING BONDS, SERIES 1993
(ALLOCATION TO-1989_SEWER_REVENUE BONDS)
SAVINGS REPORT
' -.----_ PROPOSED DEBT SERVICE-- - --- - - --- PRIOR -- -----.--- --CUMULATIVE
DATE-- -- - PRINCIPAALL COUPON INTEREST TOTAL
TOTA SAVINGS
L D/S SAVINGS -
6/ 1/93 35,000.00 2.500000 46,125.83 81,125.83 88,550.00 13,958.66 13,958.66
' 12/ 1/93 68,751.25
6/ 1/94 30,000.00 2.900000 68,751.25 167,502.50 177,100.00 9,597.50 23,556.16
12/ 1/94 68,316.25
6/ 1/95 30,000.00 3.750000 68,316.25 166,632.50 177,100.00 10,467.50 34,023.66
12/ 1/95 67,753.75
' 6/ 1/96 30,000.00 4.150000 67,753.75 165,507.50 177,100.00 11,592.50 45,616.16
12/ 1/96 67,131.25
6/ 1/97 280,000.00 4.400000 67,131.25 414,262.50 427,100.00 12,837.50 58,453.66
12/ 1/97 60,971.25
' 6/ 1/98 301,000.00 4.650010 60,971,25 421,942,51 435,475.00 13,532.50 71,986.16
12/ 1/98 53,996.25
6/ 1/99 295,000.00 4.850000 53,996.25 402,992.50 417,050.00 14,057.50 86,043.66
12/ 1/99 46,842.50
6/ 1/ 0 315,000.00 5.000000 46,842.50 408,685.00 423,350.00 14,665.00 100,708.66
12/ 1/ 0 38,967.50
6/ 1/ 1 340,000.00 5.150000 38,967.50 417,935.00 427,650.00 9,715.00 110,423.66
12/ 1/ 1 30,212.50
6/ 1/ 2 355,000.00 5.250000 30,212.50 415,425.00 429,900.00 14,475.00 124,898.66
12/ 1/ 2 20,893.75
6/ 1/ 3 375,000.00 5.350000 20,893.75 416,787.50 430,225.00 13,437.50 138,336.16
12/ 1/ 3 10,862.50
6/ 1/ 4 395,000.00 5.500000 10,862.50 416,725.00 428,600.00 11,875.00 150,211.16
-------------- -------------- -------------- -------------- --------------
' 2,780,000.00 1,115,523.33 3,895,523.33 4,039,200.00 150,211.16
ACCRUED 6,534.49 6,534.49
2,780,000.00 1,108,988.84 3,888,988.84 4,039,200.00 150,211.16
' Dated 2/ 1/93 with Delivery of 2/18/93
Bond Years 21,711.667
Average Coupon 5.137898
Average Life 7.809952
' N I C % 5.253136 % Using 99.1000000
N 0 T E : Savings on 6/ 1/93 Include Accrued Interest of 6,534.49
Net Present Value Savings at: 5.3000% Equals 115,548,18 or 4.1564% of Par of the Current Issue
or 4.5313% of Par of the Prior Issue
Prepared by Evensen Dodge, Inc.
' RUNDATE: 01-29-1993 is 15:47:43 FILENAME: AMES KEY: REF-SEWER
e
t
CITY OF AMES, IOWA
$5,360,000 G.O. CITY HALL REFUNDING BONDS, SERIES 1993
' SCENARIO: SAVINGS_TARGETED_FOR-FY 1995 and 1996
SAVINGS REPORT
' - PROPOSED DEBT SERVICE - - - - - PRIOR CUMULATIVE
DATE PRINCIPAL COUPON INTEREST - TOTAL -- ----- D/S SAVINGS SAVINGS
6/ 1/93 90,000.00 2.500000 89,807.50 179,807.50 174,737.50 7,652.73 7,652.73
12/ 1/93 133,586.25
6/ 1/94 80,000.00 2.900000 133,586.25 347,172.50 349,475.00 2,302.50 9,955.2-3
12/ 1/94 132,426.25
6/ 1/95 305,000.00 3.750000 132,426.25 569,852.50 699,475.00 129,622.50 139,577.73
12/ 1/95 126,707.50
' 6/ 1/96 295,000.00 4.150000 126,707.50 548,415.00 676,725.00 128,310.00 267,887.73
12/ 1/96 120,586.25
6/ 1/97 410,000.00 4.400000 120,586.25 651,172.50 653,625.00 2,452.50 270,340.23
12/ 1/97 111,566.25
6/ 1/98 405,000,00 4,650000 111,566.25 628,132.50 630,175.00 2,042.50 272,382,73
12/ 1/98 102,150.00
6/ 1/99 400,000.00 4.850000 102,150.00 604,300.00 606,200.00 1,900.00 274,282.73
12/ 1/99 92,450.00
6/ 1/ 0 395,000.00 5.000000 92,450.00 579,900.00 581,700.00 1,800.00 276,082.73
12/ 1/ 0 82,575.00
6/ 1/ 1 390,000.00 5.150000 82,575.00 555,150.00 556,850.00 1,700.00 277,782.73
12/ 1/ 1 72,532.50
6/ 1/ 2 385,000.00 5.250000 72,532.50 530,065.00 531,650.00 1,585.00 279,367.73
12/ 1/ 2 62,426.25
6/ 1/ 3 380,000.00 5.350000 62,426.25 504,852.50 506,450.00 1,597.50 280,965.23
12/ 1/ 3 52,261.25
6/ 1/ 4 375,000.00 5.500000 52,261.25 479,522.50 480,900.00 1,377.50 282,342.73
12/ 1/ 4 41,948.75
' 6/ 1/ 5 370,000.00 5.650000 41,948.75 453,897.50 455,000.00 1,102.50 283,445.23
12/ 1/ 5 31,496.25
6/ 1/ 6 365,000.00 5.750000 31,496.25 427,992.50 428,750.00 757.50 284,202.73
12/ 1/ 6 21,002.50
6/ 1/ 7 360,000.00 5.850000 21,002.50 402,005.00 402,500.00 495.00 294,697.73
12/ 1/ 7 10,472.50
6/ 1/ 8 355,000.00 5.900000 10,472.50 375,945.00 376,250.00 305.00 285,002.73
---------- ------------- -------------- -------------- --------------
5,360,000.00 2,478,182.50 7,838,182.50 8,110,462.50 285,002.73
ACCRUED 2,465,722=� ==7,825,722=7
5,360,000.00 2,465,459.77 7,825,459.77 8,110,462.50 285,002.73
Dated 2/ 1/93 with Delivery of 2/18/93
' Bond Years 46,251.667
Average Coupon 5.358039
Average Life 8.629042
N I C % 5.462338 % Using 99.1000000
' N 0 T E : Savings on 6/ 1/93 Include Accrued Interest of 12,722.73
Net Present Value Savings at: 5.3000% Equals 250,576.13 or 4.6749% of Par of the Current Issue
or 5.1138% of Par of the Prior Issue
' Prepared by Evensen Dodge, Inc.
RUNDATE: 01-29-1993 a 15:44:46 FILENAME: AMES KEY: REF-CITX
CITY OF AMES, IOWA
S8,140,000 G.O. REFUNDING BONDS, SERIES 1993
SCENARIO: CITY HALL-and-SEWER-IMPROVEMENT BONDS
SAVINGS REPORT
- - - - - - PROPOSED DEBT SERVICE - - - - - PRIOR -----
-- - - - CUMULATIVE
DATE PRINCIPAL COUPON INTEREST TOTAL D/S SAVINGS SAVINGS
-------- -------------- ---------- -------------- -------------- -------------- -
6/ 1/93 125,000.00 135,933.33 260,933.33 263,287.50 21,611.39 21,,611.39
12/ 1/93 202,337.50
6/ 1/94 110,000.00 202,337.50 514,675.00 526,575.00 11,900.00 33,,511.39
12/ 1/94 200,742.50
6/ 1/95 335,000.00 200,742.50 736,485.00 876,575.00 140,090.00 173„601.39
12/ 1/95 194,461.25
' 6/ 1/96 325,000.00 194,461.25 713,922.50 853,825.00 139,902.50 313,,503.89
12/ 1/96 187,717.50
6/ 1/97 690,000.00 187,717.50 1,065,435.00 1,080,725.00 15,290.00 328„793.89
12/ 1/97 172,537.50
' 6/ 1/98 705,100.00 172,537.50 1,050,075.00 1,065,650.00 15,575.00 344„368.89
12/ 1/98 156,146.25
6/ 1/99 695,000.00 156,146.25 1,007,292.50 1,023,250.00 15,957.50 360„326.39
12/ 1/99 139,292.50
6/ 1/ 0 710,000.00 139,292.50 988,585.00 1,005,050.00 16,465.00 376„791.39
12/ 1/ 0 121,542.50
6/ 1/ 1 730,000.00 121,542.50 973,085.00 984,500.00 11,415.00 388„206.39
12/ 1/ 1 102,745.00
6/ 1/ 2 740,000.00 102,745.00 945,490.00 961,550.00 16,060.00 404„266.39
12/ 1/ 2 83,320.00
' 6/ 1/ 3 755,000.00 83,320.00 921,640.00 936,675.00 15,035.00 419„301.39
12/ 1/ 3 63,123.75
6/ 1/ 4 770,000.00 63,123.75 896,247.50 909,500.00 13,252.50 432„553.89
12/ 1/ 4 41,948.75
' 6/ 1/ 5 370,000.00 41,948.75 453,897.50 455,000.00 1,102.50 433„656.39
12/ 1/ 5 31,496.25
6/ 1/ 6 365,000.00 31,496.25 427,992.50 428,750.00 757.50 434„413.89
12/ 1/ 6 21,002.50
6/ 1/ 7 360,000.00 21,002.50 402,005.00 402,500.00 495.00 434„908.89
12/ 1/ 7 10 472.50
6/ 1/ 8 355,000.00 ----10.472.50 375,945.00 376,250.00 305.00 435„213.89
-------------- ----- -------------- -------------- --------------
8,140,000.00 3,593,705.83 11,733,705.83 12,149,662.50 435„213.89
22
ACCRUED 74,448.61 ====714,448.61
8,140,000.00 3,574,448.61 11,714,448.61 12,149,662.50 435„213.89
Dated 2/ 1/93 with Delivery of 2/18/93
Bond Years 67,963.333
Average Coupon 5.287713
Average Life 8.349304
N I C % 5.395506 % Using 99.1000000
N 0 T E : Savings on 6/ 1/93 Include Accrued Interest of 19,257.22
Net Present Value Savings at: 5.3000% Equals 366,124.30 or 4.4978% of Par of the Current Issue
or 4.9144% of Par of the Prior Issue
Prepared by Evensen Dodge, Inc.
RUNDATE: 01-29-1993 a 15:55:35 FILENAME: KEY:
BIDDING REQUIREMENTS
Sealed bids will be received until 11:00 A.M., Central Time, on February 9, 1993. At
1 that time they will be opened and tabulated. Council consideration and action will
occur at 7:00 P.M. at a meeting that same day.
The bidders will be required to submit their bids in accordance with requirements
outlined in the Notice of Sale. Bidders will be required to purchase the Bonds at a
price not less than 99.1% of Par. The discount is a marketing feature which allows
the purchaser to take its profit in the discount bid on the Bonds and to reoffer the
Bonds at Par.
The estimated compensation for issues of this size and maturity length should run
between .70% and .90% depending on market conditions. The appropriate
' compensation of a purchaser varies depending upon the issue size, rating and market
conditions. The competitive bid process assures that bidders will keep their profit
margins at appropriate levels.
A second requirement is that interest rates must be bid in ascending order. This
bidding restriction is designed to protect the call feature on the Bonds. The call
i feature, which occurs first in 2001, gives the City the flexibility to refund or call the
Bonds at an earlier date if interest rates drop significantly or if the conditions
affecting debt repayment change.
RATING
' The City will request a rating on the Bonds from Moody's Investors Service and
Standard & Poor's Corporation. Evensen Dodge will assist the City with its rating
application.
371037/8 8
' FEDERAL TAX CONSIDERATIONS AND REGULATIONS
The following resent a brief summaryof federal tax regulations and
rulings whic ipct e present
status of the Bons as well as allowable uses of
proceeds. In reference to the following paragraphs, it is our understanding that the
Bonds:
1. will be issued as governmental purpose Bonds;
2. will not be designated as qualified tax-exempt obligations;
' 3. will not be subject to arbitrage rebate;
4. will not be used in whole or in part for reimbursement of previously expended
funds.
The Bond proceeds are subject to special provisions under federal law. The
' proceeds that will be used to call Bonds on June 1, 1996, must be invested at a yield
equal to or less than the yield on the Bonds. The bond proceeds will not be subject
to rebate. Evensen Dodge, Inc. will structure the escrow account so that the
investment of Bond proceeds complies with federal tax law.
' Another provision of the Internal Revenue Code of 1986 is a 100% disallowance of
the interest deduction for banks which purchase tax-exempt Bonds. An exception to
this provision allows banks to deduct interest earned on governmental bonds when
the jurisdiction issues no more than $10 million of tax-exempt debt in the calendar
year. When possible, it is to the City's advantage to designate its tax-exempt debt as
Qualified Tax-Exempt Obligations because such debt is slightly more marketable
under current market conditions.
The City will not designate the Bonds as Qualified Tax-Exempt Obligations, since the
City expects to issue more than$10,000,000 of tax-exempt debt 1n calendar 1993.
371037/9 9
' OFFICIAL STATEMENT DISCLOSURE
The Securities Exchange Commission issued rule 15(c)2-12 in 1990 which states that
underwriters cannot bid on issues of $1,000,000 or more unless they have first
reviewed an official statement which has been designated by the issuing municipality
as a "near final official statement." Though the rule places an obligation on the
' underwriter, it is generally understood that the ultimate responsibility for the quality
of disclosure provided in an official statement rests with the issuer.
Evensen Dodge will assist the City with the preparation and dissemination of a
"nearly final official statement" to the underwriting community prior to the issuance
of the Bonds. A draft will be provided to the City for review and confirmation as to
the accuracy of the Official Statement.
' After the sale, Evensen Dodge will prepare an addendum for the Official Statement
which contains the information determined at the sale, such as the purchaser and the
interest rates on the Bonds. Up to 150 copies of the Official Statement and
' Addendum will be provided to the Purchaser of the Bonds
1 GENERAL MARKET CONDITIONS
A graph showing The Bond Buyer's Index (BBI) dated January 28, 1993 follows. This
' graph shows the movement of tax-exempt rates since 1981. As presented in the
graph, tax-exempt rates are at historical rates.
We have estimated, based on current market conditions, that the Bonds will receive
a net interest rate of between 5.35% and 5.55%. Nevertheless, the possibility of
sudden shifts in the market exist because of its sensitivity to events that cannot be
foreseen. Therefore, we cannot predict what the actual rate of interest will be when
' the Bonds are sold on February 9, 1993.
371037/10 10
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' PROPOSED FINANCING TIMETABLE
Date Task
' January 15 - Evensen Dodge prepares Official Statement.
February 2, 1993
' January 29 Sale memorandum to Bond counsel.February 2 Presale Analysis delivered to City by Evensen Dodge.
' February 2 Council resolution to set hearing.
February 2 Draft Official Statement delivered to City and Bond Counsel.
February 2 City and Bond Counsel supply Evensen Dodge with comments
on Official Statement.
' February 2 Application for rating and official statement filed with rating
agencies.
' February 2 Official Statement distributed to potential bidders.
February 2-9 Evensen Dodge contacts potential bidders, answers rating
questions.
February 9 Bond sale. Council acts on the resolution.
February 9-24 Evensen Dodge prepares final Official Statement.
February 9-24 Evensen Dodge coordinates closing arrangements.
' February 25 Bond closing.
February 26 Postsale Analysis prepared by Evensen Dodge.
371037/12 12
LIST OF PARTICIPANTS
' Issuer
City of Ames Mr. Steven Schainker
51 Clark Avenue City Manager
Ames, IA 50010
Ms. Alice Carroll
515 239-5113 Finance Director
515 239-5325 (FAX)
Ms. Sue Rybolt
Assistant Finance Director
Financial Consultant
' Evensen Dodge, Inc. Mr. Wayne S. Burggraaff
Suite 3800 Senior Vice President
222 South Ninth Street and Principal
' Minneapolis, MN 55402
(612) 338-3535
612 338-7264 (FAX)
' 100 Court Avenue David M. Dirks
Suite 215 Senior Vice President
' Des Moines, IA 50309
�515 282-6138
515� 282-0252 (FAX)
Bond Counsel
' Dorsey& Whitney Mr. Robert Helmick
801 Grand
Suite 3900
Des Moines, IA 50309
�515 283-1000
515 283-1060 (FAX)
' 371037/13 13