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Home My WebLink About91-1218 91 - latZ RESOLUTION ACCEPTING THE PROPOSAL OF CHAPMAN AND CUTLER FOR ARBITRAGE CALCULATIONS FOR $7 , 720, 000 GENERAL OBLIGATION CORPORATE PURPOSE BONDS, SERIES 1990 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Larry L. Rice, City Manager, be and is hereby authorized and directed to accept the proposal on behalf of the City of Elgin of Chapman and Cutler to calculate and report arbitrage earnings on $7 , 720, 000 General Obligation Corporate Purpose Bonds, Series 1990, a copy of which is attached hereto and made a part hereof by reference. s/ Robert Gilliam Robert Gilliam, Mayor Pro Tem Presented: December 18, 1991 Adopted: December 18, 1991 Vote: Yeas 6 Nays 0 Recorded: Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk i*n l � Agenda Item No . December 10 , 1991 MEMORANDUM TO: Mayor and City Council FROM: City Manager SUBJECT: Arbitrage Reporting for 1990 G.O. Bond Issue PURPOSE: To consider the proposal from Chapman and Cutler, Bond Council, to calculate and report arbitrage earnings on the 1990 General Obligation bond issue. BACKGROUND: In 1990, the City had one G.O. Bond issue totaling $7 ,720 ,000 . When tax exempt debt of any type incurred by the City exceeds $5 million, arbitrage calculations must be made with ultimate payment of any excess to the federal government. These calculations should be made annually until all bonds mature. Last year the City Council approved Chapman and Cutler for both 1989 bond issues. To safeguard the City against future penalties, a qualified consultant should be used to make and report these earnings. Chapman and Cutler maintains a program that is continually updated as to federal law. Because of the staff shortage in the Accounting Division and the substantial paperwork, the City' s Auditor' s will complete the required forms on both the 1989 and 1990 issues for an amount not to exceed $2,600 this year. FISCAL IMPACT: The annual cost of Chapman and Cutler is $3,000 per issue, as budgeted in the Finance Department. RECOMMENDATION: The staff recommends approval of the Chapman and Cutler p al at the regular Council Meeting. i Lafry-'Rice, City Manager LR/sl I Lam Offices of CHAPMAN AND CUTLER Theodore S. Chapman 111 West Monroe Street, Chicago, Illinois 60603 2 North Central Avenue 1877-1943 TWX 910-221-2103 Telex 206281 Phoenix, Arizona 85004 Henn, E. Cutler 1879-1959 FAX (312) 701-2361 (602)256-4060 Telephone (312)845-3000 50 South Main Street Salt Lake Citv, Utah 84144 (801)533-0066 November 21 , 1991 City of Elgin 150 Dexter Court Elgin, Illinois 60120 Re: $7,720,000 City of Elgin, Kane and Cook Counties, Illinois General Obligation Corporate Purpose Bonds, Series 1990 Dear Sirs: Pursuant to the terms of this letter agreement it is agreed that Chapman and Cutler will provide rebate calculation services as described herein in connection with the $7,720,000 General Obligation Corporate Purpose Bonds, Series 1990 ( the "Bonds" ) issued by the City of Elgin, Kane and Cook' Counties, Illinois (the "Issuer" ) . Scope of Services We will provide on an annual basis a calculation of the amount, if any, subject to rebate under §148 ( f) of the Internal Revenue Code of 1986 ( the "Code" ) . We will also provide to you an opinion of Chapman and Cutler that such calculations have been performed in accordance with §148( f) of the Code and the regula- tions promulgated thereunder . Such calculations and opinion will be based on information to be supplied to us by the Issuer. As required by §148(f) of the Code, the calculations will determine the excess of the amount earned on all non-purpose investments, over the amount which would have been earned if such non-purpose investments were invested at a rate equal to the yield on the Bonds (the "Excess" ) plus any income attributable to the Excess. The initial calculations hereunder will be provided on the later of the first anniversary of the issuance of the Bonds or 30 days from the date on which we receive all of the data from the Issuer necessary to make such calculations . We will provide subsequent annual calculations to you within thirty days of the date on which we receive the related data. We will supply to you forms detailing the data to be supplied. La Offices of CHAPMAN AND CUTLER November 21, 1991 Page 2 You should be aware that our services under this agree- ment will not include an opinion as to the tax-exempt status of the Bonds or as to compliance with the terms of the covenants and documents under which the Bonds were issued. The rebate calcula- tion services described here involve only the calculation of the rebate amount described above, in accordance with applicable law, based solely on the information supplied to us. Should you desire that we make a review of the Bond documents or otherwise provide advice or interpretation with respect to the Bond issue we would be willing to do so on an hourly charge basis. Chapman and Cutler ' s calculation and opinion services under this agree- ment are provided solely to the party or parties hereto; the owners of the Bonds are not third party beneficiaries of such services and neither they nor other third parties may rely on such services. The software and all other products and mate- rials, other than the data supplied by the Issuer, shall remain the exclusive property of Chapman and Cutler . Fee s It is agreed that for providing the calculation ser- vices under this agreement you shall pay Chapman and Cutler an annual calculation fee of $3,000 . The calculation fee will be due upon receipt of the rebate report and opinion letter . Termination You may terminate our services at any time for cause by providing to us written notice 30 days in advance of such termi- nation. You may not terminate our services without cause prior to the date on which we provide the calculations required in connection with the initial anniversary of the issuance of the Bonds; thereafter you may terminate our services without cause at any time upon 120 days ' written notice to us. 1 taw ouiom or CHAPMAN AND CUTLER November 21, 1991 Page 3 We may not resign our duties to perform calculation services prior to providing the calculations required in connec- tion with the initial anniversary of the issuance of the Bonds; thereafter we may resign upon 120 days ' written notice to the Issuer. Sincerely, CHAPMAN AND CUTLER By / Michael A. ker, Manager Arbitrage R bate Services Accepted by: CITY OF ELGIN ELGIN, ILLINOIS Authorized Officer / Law Offices of CHAPMAN AND CUTLER Theodore S. Chapman 111 West Monroe Street, Chicago, Illinois 60603 2 North Central Avenue 1977-1943 Phoenix Arizona 85004 Henry E. Cutler TWX 910-221-2103 Telex 206281 (602)256-4060 1979-1939 FAX (312) 701-2361 Telephone(312)845-3000 50 South Main Street Salt Lake Citv, Utah 94144 (801)533-0066 November 21 , 1991 City of Elgin 150 Dexter Court Elgin, Illinois 60120 Re: $7 ,720,000 City of Elgin, Kane and Cook Counties, Illinois General Obligation Corporate Purpose Bonds, Series 1990 Dear Sirs : Pursuant to the terms of this letter agreement it is agreed that Chapman and Cutler will provide rebate calculation services as described herein in connection with the $7 ,720 , 000 General Obligation Corporate Purpose Bonds, Series 1990 ( the "Bonds" ) issued by the City of Elgin; Kane and Cook Counties , Illinois ( the "Issuer" ) . Scope of Services We will provide on an annual basis a calculation of the amount , if any, subject to rebate under §148 ( f ) of the Internal Revenue Code of 1986 ( the "Code" ) . We will also provide to you an opinion of Chapman and Cutler that such calculations have been performed in accordance with §148 ( f ) of the Code and the regula- tions promulgated thereunder . Such calculations and opinion will be based on information to be supplied to us by the Issuer . As required by §148( f ) of the Code, the calculations will determine the excess of the amount earned on all non-purpose investments , over the amount which would have been earned if such non-purpose investments were invested at a rate equal to the yield on the Bonds ( the "Excess" ) plus any income attributable to the Excess . The initial calculations hereunder will be provided on the later of the first anniversary of the issuance of the Bonds or 30 days from the date on which we receive all of the data from the Issuer necessary to make such calculations . We will provide subsequent annual calculations to you within thirty days of the date on which we receive the related data. We will supply to you forms detailing the data to be supplied. Law Offices of CHAPMAN AND CUTLER November 21 , 1991 Page 2 You should be aware that our services under this agree- ment will not include an opinion as to the tax-exempt status of the Bonds or as to compliance with the terms of the covenants and documents under which the Bonds were issued. The rebate calcula- tion services described here involve only the calculation of the rebate amount described above, in accordance with applicable law, based solely on the information supplied to us . Should you desire that we make a review of the Bond documents or otherwise provide advice or interpretation with respect to the Bond issue we would be willing to do so on an hourly charge basis. Chapman and Cutler ' s calculation and opinion services under this agree- ment are provided solely to the party or parties hereto; the owners of the Bonds are not third party beneficiaries of such services and neither they nor other third parties may rely on such services. The software and all other products and mate- rials , other than the data supplied by the Issuer , shall remain the exclusive property of Chapman and Cutler . Fees It is agreed that for providing the calculation ser- vices under this agreement you shall pay Chapman and Cutler an annual calculation fee of $3 ,000 . The calculation fee will be due upon receipt of the rebate report and opinion letter . Termination You may terminate our services at any time for cause by providing to us written notice 30 days in advance of such termi- nation. You may not terminate our services without cause prior to the date on which we provide the calculations required in connection with the initial anniversary of the issuance of the Bonds; thereafter you may terminate our services without cause at any time upon 120 days ' written notice to us. Lw Offk of CHAPMAN AND CUTLER November 21, 1991 Page 3 We may not resign our duties to perform calculation services prior to providing the calculations required in connec- tion with the initial anniversary of the issuance of the Bonds ; thereafter we may resign upon 120 days ' written notice to the Issuer . - Sincerely, CHAPMAN AND CUTLER By Michael A. ker , Manager Arbitrage R bate Services Accepted by: CITY OF ELGIN E IN, ILLINOIS Au ttkrized Officer ADDENDUM DATED AUGUST 1 , 1990 TO OFFICIAL STATEMENT DATED JULY 11 , 1990 NEW ISSUE RATING: "Aa" (Moody' s Investors Service) $7 ,720 ,000 CITY OF ELGIN, ILLINOIS GENERAL OBLIGATION CORPORATE PURPOSE BONDS , SERIES 1990 AMOUNTS , MATURITIES AND INTEREST RATES Principal Due Interest Yield or Principal Due Interest Yield or Amount Jan. 1 Rate Price Amount Jan. 1 Rate Price 100,000 . . . 1993 6.10, 6.100 5 200,000 . . . 1999 6.500 6.50 270,000 . . . 1994 6.15 6.15 200,000 . . . 2000 6.50 6.55 600,000 . . . 1995 6.20 6.20 1,000,000 . . . 2001 6.55 6.60 900,000 . . . 1996 6.25 6.25 1,000,000 . . . 2002 6.60 6.65 1,200,000 . . . 1997 6.30 6.30 1,000,000 . . . 2003 6.65 6.70 200,000 . . . 1998 6.40 6.40 1,050,000 . . . 2004 6.70 6.75 The Official Statement of the City dated July 11 , 1990 (the "Official Statement") with respect to the Bonds is incorporated by reference herein and made a part hereof. The "Final Official Statement" of the City with respect to the Bonds as that term is defined in Rule 15c2-12 of the Securities and Exchange Commission shall be comprised of the following: 1. Official Statement dated July 11, 1990; and 2. This Addendum dated August 1, 1990. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Final Official Statement may be obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE THERE UNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE DATE THEREOF. The City has authorized preparation of the Final Official Statement containing pertinent information relative to the Bonds and the City. Copies of that Final Official Statement can be obtained from the Underwriter, as defined herein. Additional information may also be obtained from the Finance Officer, City of Elgin, 150 Dexter Court, Elgin, Illinois 60120, or from the Public Finance Consultants to the City: Page 1 of 3 Established 1954 Speer Financial, Inc. PUBLIC FINANCE CONSULTANTS 55 EAST MONROE STREET •CHICAGO, ILLINOIS 60603 Area 312-346-3700 ADDITIONAL INFORMATION w References herein to laws, rules, regulations, 'resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document , the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included 'as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. QUALIFIED TAX-EXEMPT OBLIGATIONS The City has designated the Bonds as "qualified tax-exempt obligations" pursuant to the small issuer exemption provided by Section - 265(b) (3) of the Code. CORRECTION The Official Statement dated July 11, 1990, inadvertently overstated the amount of overlapping debt in the "Detail of Overlapping Bonded Debt" table on page 13 , and the "Statement of Indebtedness as of June 19, 1990" table on page 14. Both such tables are revised below. The only change is that the "total debt" amount for the Cook County Forest Preserve District is $13,300,000 rather than $113,300,000. Detail of Overlapping Bonded Debt (As of June 19, 1990) Applicable Total Debt Percent Amount Schools: Community Unit School District #46 . . . . . . . . . . . $ 38,200,000 44.776% $17,104,432 School District #300 . . . . . . . . . . . . . . . . . . . . . . . . . 6,190,000 7.981% 494,024 School District #301 . . . . . . . . . . . . . . 9,998,000 0.000%(3) 200 Elgin Community College District #509 . . . . . . . . 8,035,000 22.130% 1 778,146 Total Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19:376,802 Other Than Schools: Cook County(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $654,815,000 0.220% $ 1,440,593 Cook County Forest Preserve District . . . . . . . . . 13 ,300,000 0.220% 29,260 Metropolitan Area Water Reclamation District . 688,085,000 0.021% 144,498 Kane County(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,325,000 15.342% 2,504,582 Kane County Forest Preserve District . . . . . . . . . 5,595,000 15.342% 858,385 Bartlett Park District . . . . . . . . . . . . . . . . 910,000 0.054% 491 Elgin Special Service Area Number 4 . . . . . . . . . . 875,000 100.000% 875,000 Dundee Township Park District . . . . . . . . . . . . . . . . 670,000 10.737% 71,938 Total Other Than Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,924,747 Total Overlapping Bonded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,301,549 Notes (1) Includes general obligation bonds outstanding , Cook County' s proportionate share of Public Building Commission of Chicago Revenue Bonds, notes issued under a demand note program, and interim financing notes. Does not include anticipation notes. (2) Includes principal amount of bonds issued for Kane County Public Building Commission, which are secured by lease rental payments which are a direct obligation of the County. (3) Less than 0.01%. Page 2 of 3 Statement of Indebtedness As of June 19, 1990 (Including the Bonds) Per Capita Percent of Amunt (Est. 1990 Estimated Applicable Pop 72,000 EAV True Value Equalized Assessed Valuation, 1989(1) ..... 569,954,997 $ 7,916.04 100.00% 33.337. Est' ted True Value, 1989 ................ 1,709,864,991 23,748.12 300.00. 100.00% Dire �Debt(2) .. .... ............. $ 45,405,000 630.63 7.9Tl. 2.66% Less:.]Self Supporting Debt(3) ............. 22,625,000 314.24 3.97% 1.327. Net Direct Debt .................. 22,780,000 316.39 4.00% 1.34% Overlapping Bonded Debt: Schools ..... ......................... $ 19,376,802 $ 269.12 3.40% 1.13% •f All Other .... .... .. 5,924,747 82.29 1.04% 0.34% ..... ... ... ........ Total Net Direct & Overlapping Bonded Debt 48,081,549 667.80 8.44% 2.81% Notes: (1) The 1989 Valuation for the portion of the City in Cook County is estimated to be identical to the 1988 valuation, and is thus underestimated. Excludes $740,954 of incremental tax increment district valuation. (2) The City is a hcrm rule unit under the 1970 Illinois Constitution and, as such, has no general obligation debt limit, is not required to seek refere dL n approval for the issuance of bonds, and has no statutory tax rate limitations for any purpose. (3) See details in the Official Statement. UNDERWRITING The Bonds were offered for sale by the City at a public, competitive sale on July 25 , 1990. The best bid submitted at the sale was submitted by Trust Company Bank, Atlanta, Georgia (the "Underwriter") . The City awarded the contract for sale of the Bonds to the Underwriter at a price of $7,669,820. The Underwriter has represented to the City that the Bonds have been subsequently re-offered to the public initially at the yields or prices set forth in this Addendum. INVESTMENT RATING The Bonds have been rated "Aa" by Moody's Investors Service. The City has supplied certain information and material concerning the Bonds to such rating service as part of its application for an investment rating on the Bonds. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Bonds. An explanation of the significance of investment ratings may be obtained from the rating agency: Moody's Investors Service, 99 Church Street, New York, New York 10007, telephone: (212) 553- 0300. AUTHORIZATION The Official Statement dated July 11, 1990 and this Addendum dated August 1, 1990, for the $7,720,000 General Obligation Corporate Purpose Bonds, Series 1990, have been prepared under authority of the City and have been authorized for distribution by the City. /s/ GEORGE VAN DE VOORDE /s/ DOLONNA MECHUM Mayor City Clerk City of Elgin, Illinois City of Elgin, Illinois Page 3 of 3