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Home My WebLink AboutA016 - Vertification Report dated December 9, 1998CITY OF AMES, IOWA DECEMBER 9,1998 McGLADREY&PULLEN. i,.,i.,p Certified Public Accountants and Consultants INDEPENDENT ACCOUNTANT'S VERIFICATION REPORT City of Ames City Hall Allies. Iowa Dorsey & Whitney, LLP 801 Grand, Suite 3900 Des Moines, Iowa Bankers Trust Company 665 Locust Street Des Moines, Iowa Evensen Dodge, Inc. 601 Second Avenue South, Suite 5 100 Minneapolis, Minnesota Pursuant to the request of Evensen Dodge, Inc. (the "Financial Advisor") on behalf of the City of Ames, Iowa (tire "Issuer"), we have performed certain procedures, as discussed below, in connection with the Issuer's proposed issuance of $3,205,000 General Obligation Refunding Bonds, Series 1998B, dated December 1, 1998 (the "1998 Bonds"). Proceeds from the 1998 Bonds will be used to advance refund those bonds originally scheduled to mature in the years 2000 through 2004 (the "Refunded Bonds") of the Issuer's outstanding General Obligation Bonds, dated June 1, 1992 (tire "1992 Bonds"). The procedures were performed solely to assist the addressees of this report in evaluating the C� mathematical accuracy of certain schedules prepared by the Financial Advisor which indicate that: there will be sufficient funds available in an escrow account to be established on December 9, 1998 to pay the remaining debt service payments related to the Refunded Bonds (the "Escrow Requirements"), assuming the Refunded Bonds will be redeemed at par on June 1, 1999; and • the yield on the United States Treasury Certificate of Indebtedness —State and Local Government Series (the "SLGS") to be purchased with 1998 Bond proceeds is less than the yield on the 1998 Bonds. The procedures we performed are summarized below. 1. We independently calculated the future cash receipts from the SLGS (Exhibit A- I), compared the future cash receipts to the Financial Advisor's schedules, and found the future cash receipts to be in agreement. 2. We independently calculated the Escrow Requirements related to the Refunded Bonds using information frorn the Official Statement for the 1992 Bonds, compared the Escrow Requirements to the Financial Advisor's schedules, and found the Escrow Requirements to be in agreement. City of Ames, Iowa Dorsey & Whitney, LLP Bankers Trust Company Evensen Dodge, Inc. L_ December 9, 1998 Page 2 3. Usingthe results of our independent calculations described in procedures I and 2 above and using C_ an assumed initial cash deposit of $0.61 (sixty-one cents) to the escrow account on December 9. 1998, we prepared an escrow account cash flow schedule (attached hereto as Exhibit A). The resulting cash flow schedule indicates that there will be sufficient funds available in the escrow account to pay the Escrow Requirements on a timely basis. 4. We compared the date of the initial subscription letter to Form PD 4262 Department of the Treasury —Bureau of the Public Debt—SLGS Table for Use on November 10, 1998 (tile "SLGS Rate Table"), and found the dates to be the same. S. We compared the interest rate for the SLGS to the SLGS Rate Table and found the interest rate to be less than the applicable maximum allowable interest rate for use on November 10, 1998. 6. We compared the terms (i.e., the principal amount, interest rate, issue date, and maturity date) of the SLGS and to be acquired on December 9, 1998, as summarized herein, to the final SLGS subscription forms provided by the Financial Advisor; we found the terms to be in agreement. T We compared pertinent terms of the Refunded Bonds (i.e., debt service payment dates, annual maturity amounts, interest rates, and optional redemption provisions), as summarized on Exhibit A-2, to the Official Statement for the 1992 Bonds provided by the Financial Advisor; we found the terms to be in agreement. 8. We independently calculated the yield oil the SLGS, and the yield on the 1998 Bonds, assuming a settlement date of December 9, 1998. The term "yield," as used herein, means that yield which, when used in computing the present value of all payments of principal and interest on an obligation Compounded semiannually using a 30/3160-day year basis, produces an amount equal to: in the case of the SLGS, the purchase price Of Such securities-. and, in the case of the 1998 Bonds, the issue price to the public as represented by the Financial Advisor. The results of our yield calculations, which are listed below, were compared to the k leld calculations provided by the Financial Advisor; We found the yields to be in a,,reernent. Yield Exhibit 0 Yield on SLGS 3.61237023% A-1 0 Yield on 1998 Bonds 3.61316187% B Based on performing the agreed -upon procedures, we have found that those schedules provided by the Financial Advisor, when compared to those schedules prepared by us (attached hereto as Exhibits), are arithmetically accurate and reflect, based on the assumptions set forth herein, that: 0 there will be sufficient funds available in the escrow account to pay the Escrow Requirements; and • the yield on the SLGS is less than the yield oil the 1998 Bonds. City of Ames, }ovm Dorsey &Wbi LLP Bankers Trust Company EvensenDodge, Inc. December 9,l998 Pmge3 This engagement was performed in accordance with standards established by the American Institute of Certified Public Accountants (dne "/\ICP&"). The sufficiency of these procedures is solely the responsibility nfthe specified users oftile report. We make no representation regarding the sufficiency of the procedures summarized above, either for the purpose for vvhiub this report has been requested or for any other purpose. We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion outhe mchievabi|ityofthe anticipated escrow account cash sufficiency mryield calculations. Accordingly, in accordance with standards for attestation services established by thc f\lCPA, we do not express such an *pinion. Had we performed an exumbuutmo or pedbno^d additional procedures, other matters might have corne to our attention that would have been reported to you. The rcau|$ of our independent calculations with respect omthe proposed transactions are summarized in the accompanying exhibits. The original computations, along with related characteristics and assumptions contained herein, were provided hy the Financial Advisor onbehalf oftile Issuer. We relied solely on this information and these assumptions and limited our work to performing those procedures set forth above. This report is issued solely for the information of, and assistance no, the addressees of this report and is not to be quoted or referred to in unydmuunocnt, except for the Official Statement and required closing transaction documents. Additionally, this report should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. However, this report is u matter of public record and its distribution is not limited. Under the ienuo of our engagement, we have no obligation to update this report because of events or transactions occurring subsequent tothe date ofthis report. / Minneapolis, Minnesota December o,|oV8 WOMM CITY OF AMES, IOWA ESCROW ACCOUNT CASH FLOW Escrow Total Cash Requirements Receipts Related to From SLGS Refunded Bonds Cash Date (Exhibit A- I) (Exhibit A-2) Balance Initial cash deposit on December 9, 1998 $ - $ - $ 0.61 06/01/99 3,214,686.89 3,214,687.50 0.00 S 3,214,686.89 S 3,214,687.50 CITY OF AMES, IOWA CASH RECEIPTS FROM AND YIELD ON SLGS Present Value on December 9, Total Cash 1998 Using Receipt Interest Receipts a Yield of Date Type Rate Principal Interest From SLGS 3.61237023% 06/01/99 Cert. 3.619% S 3,160,167 S 54,519.89 S 3,214,686.89 S 3,160,167.00 Purchase price of SLGS S 3,160,167.00 The present value of the future cash receipts from the SLGS, on December 9, 1998 using a yield of 3.61237023 percent, is equal to the purchase price of the SLGS; therefore, the yield on the SLGS is equal to 3.61237023 percent. EXHIBITA-2 CITY OF AMES, IOWA ESCROW REQUIREMENTS RELATED TO REFUNDED BONDS Total Escrow Requirements Related to Date Principal Interest Refunded Bonds 06/01/99 S 3,125,000 (1) S 89,687.50 S 3.2 1477.50 (1) Consists of the following bonds to be optionally redeemed at par on June 1, 1999: Maturity Date Interest (June 1) Principal Rate 2000 625,000 5.60% 2001 625,000 5.65% 2002 625,000 5.75% 2003 625,000 5.80% 2004 625,000 5.90% EXHIBITA-3 CITY OF AMES, IOWA ESTIMATED SOURCES AND USES OF FUNDS Sources: Principal amount of 1998 Bonds S 3,205,000.00 Accrued interest 2,547.94 S 3,207,547.94 Uses: Purchase price of SLGS S 3,160,167.00 Initial cash deposit to escrow account O.61 Underwriter's discount 4,487.00 Issuance costs 40,000.00 Deposit to Debt Service Fund 2,547.94 Contingency 345.39 S 3.207.547.94 EXHIBIT CITY OF AMES, IOWA YIELD ON 1998 BONDS Present Value on Debt December 9, Service 1998 Using Payment Interest Total Debt a Yield of Date Principal Rate Interest Service 3.61316187% 06/01/99 57,328.75 S 57,328.75 S 56,356.27 12/01/99 57,328.75 57,328.75 55,356.21 06/01/00 665,000 3.45% 57,328.75 722,328.75 685,098.37 12/01/00 - - 45,857.50 45,857.50 42,722.10 06/01/01 655,000 3.50% 45,857.50 700,857.50 641,351.41 12/01/01 - - 34,395.00 34,395.00 30,916.18 06/01/02 640,000 3.60% 34,395.00 674,395.00 595,427.61 12/01/02 - - 22,875.00 22,875.00 19,838.09 06/01/03 630,000 3.65% 22,875.00 652,875.00 556,151.31 12/01/03 - - 11,377.50 11,377.50 9,519.93 06/01/04 615,000 3.70% 11,377.50 626,377.50 514,810.46 S 3.20570-0 S 400,996.25 S 3.605,996.2-7-7 3,207,547 94 Issue price of 1998 Bonds for yield calculation purposes Principal amount of 1998 Bonds S 3,205,000.00 Plus accrued interest 2,547.94 S 3,207,547.94 Note: It is assumed that all of the 1998 Bonds have been reoffered at par. The sum of the present value of debt service payments to be made on the 1998 Bonds, on December 9, 1998 using a yield of 3.613 16187 percent, is equal to the issue price ofthe 1998 Bonds for yield calculation purposes; therefore, the yield on the 1998 Bonds is equal to 3.613 16187 percent.