HomeMy WebLinkAboutA018 - Presale AnalysisPRESALE ANALYSIS
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$3,205,oaa
GENERAL OBLIGATION
REFUNDING BONDS, SERIES 1998B
CITY OF AMES, IOWA
EVENSEN DODGE INC
F I N A N C I A L C 0 N S U L T A N 1 S
EVENSEN DODGE INC
November 6, 1998
Mr. Steven Schainker, City Manager
Ms. Alice Carroll, Director of Finance
City of Ames
515 Clark Avenue
Ames, IA 50010
RE: $3,205,000 General Obligation Refunding Bonds, Series 1998E
Dear Mr. Schainker and Ms. Carroll:
Attached is our Presale Analysis prepared in connection with the City's issuance of
$3,205,000 General Obligation Refunding Bonds, Series 1998B proposed for sale on
November 10, 1998.
The Presale Analysis summarizes the purpose of this issue, describes how the Bonds have
been structured and discusses other aspects related to the marketing of the Bonds. We
will prepare a Postsale Analysis reporting and analyzing the results of the sale after the
Bonds have been sold.
We look forward to a successful offering.
Sincerely,
EVENSEN DODGE, INC.
David M. Dirks
Senior Vice President
/ilp
Enclosure
4.�
Lucas A. Baker
Financial Analyst
0371137 100 Court Avenue, Suite 215, Des Moines, Iowa 50309
(515) 282-6138 (515) 282-0252 FAX
TABLE OF CONTENTS
Section Page
IPurpose of the Sale ......................................................................... ..................... I
2 Proposed Terms and Conditions of Sale .............................................................. 2
3 Preliminary Debt Schedule and Savings Report .................................................. 3
4 Bidding Requirements .......................................................................................... 6
5 Rating ................................................................................................................... 7
6 Continuing Disclosure ............................... .......................................................... 8
7 General Market Conditions .................................................................................. 9
8 Proposed Financing Timetable ........................................................................... 1.1
9 List of Participants .............................................................................................. 12
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SECTION 1
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This Presale Analysis presents background information for the City's use in considering
the issuance of $3,205,000 General Obligation Refunding Bonds, Series 1998E at a
public sale on November 10, 1998.
The proceeds of the Bonds will be used to refund the 2000-2004 maturities of the City's
General Obligation Bonds, Series 1992, dated June 1, 1992 ("The Refunded Bonds").
The Refunded Bonds will be called and paid on June 1, 1999 at a price of 100.
Dated Original Maturities Amount Call Call
Amount Refunded Refunded Date Price
6/1/92 $6,010,00 2000/2004 $3,125,00 6/l/99 PAR
Sources and Uses of Funds
Sources of Funds:
Par Amount of Bonds
Accrued Interest
Total Sources of Funds
Uses of Funds:
Deposit to Escrow Account
Cost of Issuance
Underwriters Discount
Accrued Interest
Contingency
Total Uses of Funds
no=
EVENSEN DODGE INC
0371137
$3,205,000.00
9,843.96
$3,214,843.96
$3,155,682.10
33,000.00
16,025.00
9,843.96
53,214,843.96
Page I
SECTION 2
PROPOSED TERMS
AND CONDITIONS OF SALE
Principal Amount of Issue: $3,205,000
Dated Date of Bonds: November 1, 1998
Proposed Sale Date: November 10, 1,998
Type of Sale: Competitive
First Interest Payment: June 1, 1999
Maturity Date and Amounts: June I as follows:
Year
Amount
2000
$665,000
2001
655,000
2002
640,000
2003
615,000
2004
615,000
Call Feature: The Bonds are not subject to prior redemption.
Bank Qualified: The Bonds are "Qualified Tax -Exempt Obligations."
Security: The Bonds are general obligations of the City secured
by its full faith and credit and power to levy taxes
without limitation as to rate or amount against all
taxable property in its territory.
=SEVENSEN DODGE INC Page 2
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SECTION 3
[-RELIMINARY DEBT SCHEDULE
AND SAVINGS REPORT
The following schedules show the projected debt service payments on the Bonds and
savings to be realized through the refunding transaction. The savings are projected to be
$136,608.75 with a present value of $124,880.43
rM EVENSEN DODGE INC Page 3
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City of Ames, Iowa
$3,205,000 G.O. Refunding Bonds, Series 1998
Uniform Savings 11 Market 2 10/14/98 11 Scale = 6/23/98 Sale
Debt Service Schedule
Date Principal Coupon Interest Period Total Fiscal Total
-------- ------------ ---------- -------------- ---------- --------------
6/ 1/99 68,907.71 68,907.71 68,907.71
12/ 1/99 59,063.75 59,063.75
6/ 1/ 0 665,000.00 3.450000 59,063.75 724,063.75 783,127.50
12/ 1/ 0 47,592.50 47,592.50
6/ 1/ 1 655,000.00 3.600000 47,592.50 702,592.50 750,185.00
12/ 1/ 1 35,802.50 35,802.50
6/ 1/ 2 640,000.00 3.700000 35,802.50 675,802.50 711,605.00
12/ 1/ 2 23 962.50 23,962.50
6/ 1/ 3 630,000.00 3.800000 23:962.50 653,962.50 677,925.00
12/ 1/ 3 11,992.50 11,992.50
6/ 1/ 4 615,000.00 3.900000 11,992.50 626,992.50 638,985.00
-------------- -------------- --------------
3,205,000.00 425,735.21 3,630,735.21
ACCRUED 9,843.96 9,843.96
3,205,000.00 415,891.25 3,620,891.25
Dated 11/ 1/98 with Delivery of 12/ 1/98
Bond Years 11,359.583
Average Coupon 3.747807
Average Life 3.544332
4 1 C % 3.88W77 % Using 99.5000000
T I C % 3.901502 % From Delivery Date
Prepared by Evensen Dodge, Inc.
Micro -Muni Debt Date: 11-06-1998 a 08:42:38 Filename: AMES Key: REF
Page 4
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0371137
City of Ames, Iowa
$3,205,000 G.O. Refunding Bonds, Series 1998
Uniform Savings 11 Market is 10/14/98 11 Scale = 6/23/98 Sale
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Savings Report
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Proposed Debt Service -
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Prior
Cumulative
Date
Principal
Coupon
Interest
Total
Debt Service
------------
Savings ----Savings
------- ---
--------
6/
1/99
--------------
---------- --------------
68,907.71
--------------
68,907.71
--------------
89,687.50
30,623.75
30,623.75
12/
1/99
59,063.75
6/
1/ 0
665,000.00
3.450000
59,063.75
783,127.50
804,375.00
21,247.50
51,871.25
12/
1/ 0
47,592.50
6/
1/ 1
655,000.00
3.600000
47,592.50
750,185.00
769,375.00
19,190.00
71,061.25
12/
1/ 1
35,802.50
6/
1/ 2
640,000.00
3.700000
35,802.50
711,605.00
734,062.50
22,457.50
93,518.75
12/
1/ 2
23,962.50
6/
1/ 3
630,000.00
3.800000
23,962.50
677,925.00
698,125.00
20,200.00
113,718.75
12/
1/ 3
11,992.50
6/
1/ 4
615,000.00
3.900000
11,992.50
638,985.00
661,875.00
22,890.00
136,608.75
--------------
--------------
3,205,000.00
--------------
425,735.21
--------------
3,630,735.21
--------------
3,757,500.00
136,608.75
ACCRUED
9,843.96
90843.96
3,205,000.00
415,891.25
3,620,891.25
3,757,500.00
136,608.75
Dated 11/ 1/98 with Delivery of 12/ 1/98
Bond Years 11,359.583
Average Coupon 3.747807
Average Life 3.544332
N I C % 3.888877 % Using 99.5000000
T I C % 3.901502 % From Delivery Date
N 0 T E : Savings on 6/ 1/99 Include Accrued Interest of 9,843.96
Net Present Value Savings at: 3.7442% Equals 124,880.43 or 3.8964% of Par of the Current issue
or 3.9962% of Par of the Prior Issue
Prepared by Eversen Dodge, Inc.
Micro -Muni Debt Date: 11-06-1998 is 08:42:30
Filename: AMES Key: REF
Page 5
0371137
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BIDDING REQUIREMENTS
Sealed bids will be received until 2:00 P.M., Central Time, on November 10, 1998. At
that time, they will be opened and tabulated. Council consideration and action will occur
at a meeting at 7:00 P.M. the same day.
The bidders will be required to submit their bid in accordance with requirements outlined
in the Notice of Sale. Bidders will be required to purchase the Bonds at a price not less
than 99.5% 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 an issue of this size and maturity length should run
between $4 and $5 per $ 1,000 of bonds 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 non -descending order. This
bidding restriction allows the savings generated from the refunding to be applied
uniformly across the term of the issue.
ZTEEVENSEN DODGE INC Page 6
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SECTION 5
RATING
The City has requested ratings on the Bonds from Moody's Investors Service, Inc. and
Standard & Poor's. Evensen Dodge is assisting the City with its rating applications.
The City and representatives of Evensen Dodge made a presentation to Moody's
Investors Service, Inc. on October 21, 1998 in Ames at the City's offices.
On November 5, 1998, Standard & Poor's issued a press release confirming a rating of
AA on the City's general obligation debt including the Bonds. S&P cited the City's
stable and diversified economic base; strong financial position; and moderate debt burden
as the rationale behind the rating. Moody's has not yet issued its rating, but the
expectation is that its "Aaa" rating will be confirmed.
SE EVENSEN DODGE INC Page 7
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CONTINUING DISCLOSURE
The Securities and 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 City.
Evensen Dodge has assisted the City with the preparation and dissemination of a "nearly
final official statement" to the underwriting community prior to the sale of the Bonds.
After the sale Evensen Dodge will prepare an addendum to the Official Statement which
contains the information determined at the sale, such as the purchaser and the interest
rates on the Bonds. Up to 100 copies of the Official Statement and Addendum will be
provided to the purchaser of the Bonds.
Beginning in July of 1995, issuers must also covenant to provide continuing disclosure on
the Bonds as long as the Bonds are outstanding. For the City, the continuing disclosure
will consist of the filing of an information statement and the timely filing of notice of the
occurrence of certain material events.
The information report consists of an audited financial report and updated information
similar to the disclosure information provided with the official statement for the Bonds.
Material events consist of 11 specific events which must be disclosed if they occur. The
City will execute a Continuing Disclosure Undertaking which sets forth the covenant by
the City to provide continuing disclosure and which specifies the type of information that
must be updated annually.
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5--mSEVENSEN DODGE INC
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0371137
SECTION 7
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A graph showing The Bond Bnyer's Index (BBI) dated November 6, 1998 follows. This
graph shows the movement of tax-exempt rates since 1982. The BBI has been volatile in
1998, and has risen in recent weeks. The BBI fell as low as 4.87% in October
approaching a 20-year low point. It has since risen to 5.04 but is still well below
historical averages for the past 20 years.
We have estimated, based on current market conditions, that the Bonds will receive a net
interest rate of between 3.75% and 4.00%. Nevertheless, the possibility of sudden shifts
in the market exists 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
November 10, 1998.
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R5*0-EVENSEN DODGE INC Page 9
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CITY OF AMES, IOWA
$31205,000
General Obligation Corporate Purpose Bonds,
Series 1998B
Tentative Schedule of Events
(Prepared October 18, 1998)
October 1998
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November 1998
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DATE ACTION
October 19, 1998
October 21, 1998
iOctober 26, 1998
October 30, 1998
November 6, 1998
November 10, 1998
November 11 -
December 1, 1998
December 2, 1998
December 9, 1998
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NEVENSEN DODGE INC
0371137
December 1998
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Initial draft of Official Statement to City.
Ratings presentation to Moody's Investors Services, Inc. at the
City.
Revised Official Statement distributed for review and final
comments.
Official Statement printed and mailed to prospective bidders.
Presale to City.
Bond sale.
Prepare closing documents.
Bond closing.
Postsale to City.
Page I I
Issuer
City of Ames
515 Clark Avenue
Ames, IA 50010
Mr. Steven Schainker
City Manager
Ms. Alice Carroll
Director of Finance
Ms. Sue Rybolt
Assistant Director of Finance
515/239-5113
515/239-5325 (FAX)
Financial Advisor
Evensen Dodge, Inc.
100 Court Avenue, Suite 215
Des Moines, IA 50309
Mr. David M. Dirks
Senior Vice President
515/282-6138
515/282-0252 (FAX)
601 Second Avenue South, Suite 5 100
Minneapolis, MN 55402
Mr. Wayne S. Burggraaff
Senior Vice President and Principal
Mr. Lucas A. Baker
Financial Analyst
612/338-3535
612/338-7264 (FAX)
I
Bond Counsel
Dorsey & Whitney LLP
801 Grand, Suite 3900
Des Moines, IA 50309
Robert H. Helmick, Esq.
515/283-1000
515/283-1060 (FAX)
N= EVENSEN DODGE INC Page 12
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