ITEM NUMBER: 6.C.
School Board Regular Meeting
- Meeting Date:
- 01/19/2016
- Prepared By:
- Jerry Kolander
Item Type:
Subject:
Sale of General Obligation Refunding Bonds - ADDENDUM
Background:
Northland Securities, our financial advisory firm, has recommended that we forward refund a portion of our Series 2008 General Obligation Bonds. Northland Securities has estimated that our school district can save our local property taxpayers an estimated $950,000 by the refinancing of this debt. The recommended resolution is as follows:
RESOLUTION APPROVING THE ISSUANCE OF GENERAL OBLIGATION CROSSOVER REFUNDING BONDS, SERIES 2016A; COVENANTING AND OBLIGATING THE DISTRICT TO BE BOUND BY AND TO USE THE PROVISIONS OF MINNESOTA STATUTES, SECTION 126C.55 TO GUARANTEE THE PAYMENT OF THE PRINCIPAL AND INTEREST ON THE BONDS
BE IT RESOLVED by the School Board of Independent School District 77, (Mankato Area Public Schools), State of Minnesota (herein, the “District”), as follows:
1. The School Board hereby finds and declares that it is necessary and expedient for the District to sell and issue fully registered General Obligation Crossover Refunding Bonds, Series 2016A in the total aggregate principal amount of not to exceed $9,700,000 (herein, the “Series 2016A Bonds”). The proceeds of the Series 2016A Bonds will be used to crossover refund, on February 1, 2019, all or a portion of the February 1, 2020 through 2027 maturities of the District’s General Obligation School Building Bonds, Series 2008A, dated August 1, 2008 as the date of original issue (the “Series 2008A Bonds”).
2. The School Board desires to proceed with the sale of the Bonds by direct negotiation with Northland Securities, Inc. (herein, “NSI”). NSI will purchase the Bonds in an arm’s-length commercial transaction with the City.
3. The Board Chair and the Superintendent or the Director of Business Affairs are hereby authorized to approve the sale of the Series 2016A Bonds in an aggregate principal amount of not to exceed $9,700,000 and to execute a bond purchase agreement for the purchase of the Bonds with NSI, provided the total savings is at least $950,000 and the savings meet the 3% savings test as set forth in Minnesota Statutes 475.67, subdivision 12.
4. Upon approval of the sale of the Bonds by the Board Chair and the Superintendent or the Director of Business Affairs, the School Board will take action at its next regularly scheduled or special meeting thereafter to adopt the necessary approving resolutions as prepared by the District's bond counsel.
5.
6. NSI is authorized to prepare and distribute an Official Statement related to the sale of the Bonds.
7. If the Board Chair and the Superintendent or the Director of Business Affairs have not approved the sale of the bonds to NSI and executed the related bond purchase agreement by June 30, 2016 this resolution shall expire.
RESOLUTION APPROVING THE ISSUANCE OF GENERAL OBLIGATION CROSSOVER REFUNDING BONDS, SERIES 2016A; COVENANTING AND OBLIGATING THE DISTRICT TO BE BOUND BY AND TO USE THE PROVISIONS OF MINNESOTA STATUTES, SECTION 126C.55 TO GUARANTEE THE PAYMENT OF THE PRINCIPAL AND INTEREST ON THE BONDS
BE IT RESOLVED by the School Board of Independent School District 77, (Mankato Area Public Schools), State of Minnesota (herein, the “District”), as follows:
1. The School Board hereby finds and declares that it is necessary and expedient for the District to sell and issue fully registered General Obligation Crossover Refunding Bonds, Series 2016A in the total aggregate principal amount of not to exceed $9,700,000 (herein, the “Series 2016A Bonds”). The proceeds of the Series 2016A Bonds will be used to crossover refund, on February 1, 2019, all or a portion of the February 1, 2020 through 2027 maturities of the District’s General Obligation School Building Bonds, Series 2008A, dated August 1, 2008 as the date of original issue (the “Series 2008A Bonds”).
2. The School Board desires to proceed with the sale of the Bonds by direct negotiation with Northland Securities, Inc. (herein, “NSI”). NSI will purchase the Bonds in an arm’s-length commercial transaction with the City.
3. The Board Chair and the Superintendent or the Director of Business Affairs are hereby authorized to approve the sale of the Series 2016A Bonds in an aggregate principal amount of not to exceed $9,700,000 and to execute a bond purchase agreement for the purchase of the Bonds with NSI, provided the total savings is at least $950,000 and the savings meet the 3% savings test as set forth in Minnesota Statutes 475.67, subdivision 12.
4. Upon approval of the sale of the Bonds by the Board Chair and the Superintendent or the Director of Business Affairs, the School Board will take action at its next regularly scheduled or special meeting thereafter to adopt the necessary approving resolutions as prepared by the District's bond counsel.
5.
(a) The District hereby covenants and obligates itself to notify the Commissioner of Education of a potential default in the payment of principal and interest on the Bonds and to use the provisions of Minnesota Statutes, Section 126C.55 to guarantee payment of the principal and interest on the Bonds when due. The District further covenants to deposit with the Bond Registrar or any successor paying agent three (3) days prior to the date on which a payment is due an amount sufficient to make that payment or to notify the Commissioner of Education that it will be unable to make all or a portion of that payment. The Bond Registrar for the Bonds is authorized and directed to notify the Commissioner of Education if it becomes aware of a potential default in the payment of principal or interest on the Bonds or if, on the day two (2) business days prior to the date a payment is due on the Bonds, there are insufficient funds to make that payment on deposit with the Bond Registrar. The District understands that as a result of its covenant to be bound by the provisions of Minnesota Statutes, Section 126C.55, the provisions of that section shall be binding as long as any Bonds of this issue remain outstanding.
(b) The District further covenants to comply with all procedures now or hereafter established by the Department of Finance and Education of the State of Minnesota pursuant to Minnesota Statutes, Section 126C.55, subdivision 2(c) and otherwise to take such actions as necessary to comply with that section. The Board Chair, Clerk, Superintendent or Director of Business Affairs is authorized to execute any applicable Minnesota Department of Education forms.
6. NSI is authorized to prepare and distribute an Official Statement related to the sale of the Bonds.
7. If the Board Chair and the Superintendent or the Director of Business Affairs have not approved the sale of the bonds to NSI and executed the related bond purchase agreement by June 30, 2016 this resolution shall expire.
Recommended Action:
As a result of these potential savings to our taxpayers, the administration recommends that the School Board take action to approve the resolution. If the resolution is approved, the bonds would be sold through a negotiated sale. Final School Board action would occur at the next Board meeting scheduled after the sale.