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HomeMy WebLinkAboutA014 - Certification of examination from Dorsey & Whitney dated October 19, 1995DES MOINES RESIDENT ATTORNEYS ROBERT H. HELMICK DAVID L. CLAYPOOL ROBERT E. JOSTEN EDWIN N. McINTOSH NORENE D. JACOBS DENNIS W. JOHNSON STEVEN J. DICKINSON JEFFREY M. HURLBURT DAVID D. GROSSHLAUS DoRSEY & WHITNEY PROFESSIONAL LIMITED LIABILITY PARTNERSHIP 801 GRAND, SUITE 3900 DES MOINES, IOWA 50309-2790 (515) 283-1000 FAX (515) 283-1060 October 19, 1995 MINNEAPOLIS, MINNESOTA NEW YORE, NEW YORE WASHINGTON, D. C. I)ENVER,COLORADO FARGO, NORTH DAKOTA ROCHESTER MINNESOTA BILLINGS: MONTANA GREAT FALLS, MONTANA MISSOULA, MONTANA ORANGE COUNTY, CA LONDON, ENGLAND BRUSSELS, BELGIUM We hereby certify that we have examined a certified copy of the proceedings of the City Council of the City of Ames, in the County of Story, State of Iowa (the "Issuer"), passed preliminary to the issue by the Issuer of its General Obligation Corporate Purpose Bonds (the "Bonds") in the amount of $4,195,000, dated October 1, 1995, in the denomination of $5,000 each, or any integral multiple thereof, maturing on June 1 in each of the respective years and in the principal amounts and bearing interest payable semiannually, commencing June 1, 1996, at the respective rates, as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annum 1996 $345,000 4.50% 2002 $350,000 4.60% 1997 $350,000 4.50% 2.003 $350,000 4.60% 1998 $350,000 4.50% 2004 $350,000 4.60% 1999 $350,000 4.50% 2005 $350,000 4.60% 2000 $350,000 4.60% 2006 $350,000 4.70% 2001 $350,000 4.60% 2007 $350,000 4.80% but the Bonds maturing in each of the years 2004 to 2007, inclusive, are subject to redemption prior to maturity at the times and on the terms specified in the Bonds. Based upon our examination, we are of the opinion, as of the date hereof, that: 1. The aforementioned proceedings show lawful authority for such issue under the laws of the State of Iowa. 2. The Bonds are valid and binding general obligations of the Issuer. 3. All taxable property within the corporate boundaries of the Issuer is subject to the levy of taxes to pay the principal of and interest on the Bonds without constitutional or statutory limitation as to rate or amount. DoiRSEY & WHITNEY PROFESSIONAL Limi­) LIABIL- PARTNERSTUV EM 4. The interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. 5. The Bonds are not "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, therefore in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is not allowed for any of that portion of such financial institutions' interest expense allocable to interest on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. DORSEY & WHITNEY P.L.L.P �74 �— 1"`'� 419370-16 FDC - G.O. We, the undersigned Mayor, City Clerk and City Treasurer, of the City of Ames, in Story County, Iowa (the "City"), do hereby certify that we are now and were at the time of the execution of the City's $4,195,000 General Obligation Corporate Purpose Bonds, Series 1995B, dated October 1, 1995 (the "Bonds"), the officers respectively above indicated; and that in pursuance of Chapter 384 of the Code of Iowa, a resolution adopted by the City Council on September 26, 1995 (the "Resolution"), the Bonds have been heretofore lawfully sold and this day by us lawfully issued and delivered to the purchaser thereof (the "Purchaser"), and the Purchaser has paid the City the sum of $4,162,686.25, receipt of which is hereby acknowledged, which amount represents the principal amount of the Bonds ($4,195,000), minus total discount ($41,945.00), plus accrued interest ($9,631.25). The Bonds mature on June 1 in each of the years, in the respective principal amounts and bear interest payable semiannually, commencing June 1, 1996, at the respective rates, as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum Year Amount Per Annum 1996 $345,000 4.50% 2002 $350,000 4.60% 1997 $350,000 4.50% 2003 $350,000 4.60% 1998 $350,000 4.50% 2004 $350,000 4.60% 1999 $350,000 4.50% 2005 $350,000 4.60% 2000 $350,000 4.60% 2006 $350,000 4.70% 2001 $350,000 4.60% 2007 $350,000 4.80% Each of the Bonds has been executed with the facsimile signatures of the aforesaid officers, with a facsimile of the official seal of the City imprinted thereon; and the Bonds have been fully registered as to principal and interest in the names of the owners on the registration books of the City maintained by the City Treasurer as Registrar and Paying Agent. We further certify that the Bonds are being issued for the purpose of defraying the cost of the construction of street, drainage and storm sewer improvements; and the acquisition of a fire truck aerial ladder (the "Projects"). We further certify that no controversy or litigation is pending, prayed or threatened involving the incorporation, organization, existence or boundaries of the City, or the titles of the aforesaid officers to their respective positions, or the validity of the Bonds, or the power and duty of the City to provide and apply adequate taxes for the full and prompt payment of the principal of and interest on the Bonds, and that none of the proceedings incident to the authorization and issuance of the Bonds has been repealed or rescinded. We further certify that no appeal of the decision of the City Council to issue the Bonds has been taken to the district court. -1- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA We further certify that all meetings held in connection with the Bonds were open to the public at a place reasonably accessible to the public and that notice was given at least 24 hours prior to the commencement of all meetings by advising the news media who requested notice of the time, date, place and the tentative agenda and by posting such notice and agenda at the City Hall or principal office of the City on a bulletin board or other prominent place which is easily accessible to the public and is the place designated for the purpose of posting notices of meetings. We further certify as follows: 1. The Total Project Costs are estimated to be as follows: Cost of Construction and/or Acquisition $ 4,111,360-00 Qualified Administrative Costs: Underwriter's discount $ 36,676-15 Original Issue Discount $ 5,268.85 Other Costs of Issuance $ 41,695-00 Total Project Costs: $ 4,195,000 2. The net sales proceeds of the Bonds are $4,189,731.15 (the "Net Sales Proceeds"), the same being the Issue Price thereof. 3. The Net Sales Proceeds, including investment earnings thereon, will be invested by the City without restriction as to yield for a period not to exceed three years from the date hereof (the "Three Year Temporary Period"), the following three tests being reasonably expected to be satisfied by the City: a. Time Test: The City has entered into or, within six months of the date hereof, will enter into binding contracts for the Projects with third parties (e.g. engineers or contractors); (i) which are not subject to contingencies directly or indirectly within the City's control; (ii) which provide for the payment by the City to such third parties of an amount equal to at least 5% of the Net Sales Proceeds; b. Expenditure Test: At least 85% of Net Sales Proceeds will be applied to the payment of Total Project Costs within the Three Year Temporary Period; and C. Due Diligence Test: Acquisition and/or construction of the Projects to completion and application of the Net Sales Proceeds to the payment of Total Project Costs will proceed with due diligence. -2- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA Ames /419370-16 /FDC & Ltr 4. The Bonds are payable from ad valorem taxes levied against all taxable property within the City which will be collected in a Debt Service Fund and applied to the payment of interest on the Bonds on each June 1 and December 1 and principal of the Bonds on each June 1 (the 12-month period ending on each June 1 being herein referred to as a "Bond Year"); the Debt Service Fund is used primarily to achieve a proper matching of taxes with principal and interest payments within each Bond Year; the Debt Service Fund will be depleted at least once each Bond Year except for a reasonable carryover amount not to exceed the greater of W the earnings on the fund for the immediately preceding Bond Year; or (ii) 1/12 of the principal and interest payments on the Bonds for the immediately preceding Bond Year; amounts on deposit in the Debt Service Fund will be invested by the City without restriction as to yield for a period of 13 months after their date of deposit. 5. The City Council has adopted resolutions declaring its official intent to acquire and construct the Projects and finance the same with the Bonds (the "Intent Resolutions"); none of the Total Project Costs to be paid for from the Net Sales Proceeds are for expenditures made for a Project more than 60 days prior to the date of adoption of the Intent Resolution with respect to that Project, except for W costs of issuance of the Bonds; (ii) costs aggregating an amount not in excess of the lesser of $100,000 or 5% of the Net Sales Proceeds; (iii) costs for preliminary expenditures (including architectural, engineering, surveying, soil testing, and similar costs incurred prior to commencement of acquisition or construction of the Projects, other than land acquisition, site preparation and similar costs) not in excess of 20% of the Issue Price of the Bonds; the City will allocate Net Sales Proceeds to reimbursement of such expenditures no later than 18 months after the later of W the date any such expenditure was originally paid or (ii) the date the Projects are placed in service, but in no event more than 3 years after such expenditure was originally paid; and such allocations will be made by the City in writing. 6. Not more than 50% of the Net Sales Proceeds will be invested in nonpurpose investments (as defined in Section 148(f)(6)(A) of the Internal Revenue Code of 1986, as amended (the "Code")) having a substantially guaranteed yield for four years or more (e.g., a four-year guaranteed investment contract or a Treasury Obligation that does not mature for four years). 7. The weighted average maturity of the Bonds does not exceed the reasonably expected economic life of the Projects, the calculation of which is set out on Exhibit A attached hereto. -3- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA Ames/419370-16/FDC & Ur 8. The amount received as accrued interest will be set aside and deposited into the City's Debt Service Fund as provided in the Resolution and used to pay interest on the Bonds due on the first payment date. 9. To our best knowledge and belief, there are no facts, estimates or circumstances which would materially change the foregoing conclusions. On the basis of the foregoing, it is not expected that the Net Sales Proceeds will be used in a manner that would cause the Bonds to be "arbitrage bonds" under Section 148 of the Code and the regulations prescribed under that section. The City has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon. We further certify that the Purchaser has advised the City that the reasonably expected reoffering price of the Bonds to the public is $4,189,731.15. We further certify that due provision has been made for the collection of taxes sufficient to pay the principal of and interest on the Bonds when due. All payments coming due before the collection of any such taxes will be paid promptly when due from legally available funds. We further certify that the present financial condition of the City is as follows: Actual (100%) value of taxable property within the City, except moneys and credits, as entered on the 1994 State and County tax lists $1,261,156,605 Taxable value (after rollback) of all taxable property within the City, except moneys and credits, as entered on the 1994 State and County tax lists $ 993,271,951 Tax increment value, as entered on the 1994 State and County tax lists $ 4,681,597 Total bonded indebtedness payable from taxes, including the Bonds $ 31,190,000 All other indebtedness of any kind $ -0- -4- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA Ames /419370-16/FDC & Ur IN WITNESS WHEREOF, we have hereunto affixed our hands and the seal of the aforementioned City, as of October 19, 1995. (Seal) CITY OF AMES, IOWA Mayor C--1t-v Cle.- rle City Trea0er -5- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA Exhibit A List of Financed Assets Comprising Projects with Expected Economic Lives and Weighted Average Calculation Amount Paid From Weighted Asset-1 Bond Proceeds Life Life 2 Street Improvements $ 3,587,896 20 $ 71,757,911 Storm Sewer Improvements $ 357,120 24 $ 8,570,887 Fire Truck Aerial Ladder 249,984 6 $—jA2292-0 $4,195,000 $81,828,703 TOTAL Total of Column 4 ($81,828703) Average Economic Life (19.506) Total of Column 2 ($4,195,000) 1 Includes only assets financed with Bond Proceeds 2 Value of the asset multiplied by its life