OFFICIAL NOTICE OF SALE $38,245,000* *(Subject to adjustment as described herein)
CITY OF ANN ARBOR WASHTENAW COUNTY, MICHIGAN 2019 CAPITAL IMPROVEMENT REFUNDING BONDS (LIMITED TAX GENERAL OBLIGATION)
SEALED, FAX OR ELECTRONIC BIDS: Sealed bids for the purchase of the issue of bonds described below of the aggregate par value of $38,245,000 to be issued by the City of Ann Arbor, Washtenaw County, Michigan (“City”), will be received by the undersigned at the office of the City Treasurer, at 301 E. Huron Street, Ann Arbor, Michigan 48107, until 11:30 o’clock, A.M., Eastern Time, on Wednesday, the 16th day of January, 2019, at which time and place such bids will be publicly opened and read.
In the alternative, sealed bids will also be received on the same date and until the same time by an agent of the undersigned at the office of the Municipal Advisory Council of Michigan (“MAC”), Buhl Building, 535 Griswold, Suite 1850, Detroit, Michigan 48226, where they will be publicly opened and read. Bids opened at Ann Arbor, Michigan will be read first, followed by those opened at the alternate location. Bidders may choose either location to present bids and good faith checks, but not both locations.
The Treasurer or other authorized officer of the City will consider and determine the award or rejection of bids prior to 5:00 o’clock, P.M., Eastern Time, on that date.
Signed bids may be submitted by fax by MAC members to the MAC at fax number (313) 9630943 and by other bidders to the City at fax number (734) 994-8991, Attention: Treasurer; provided that faxed bids must arrive before the time of sale and the bidder bears all risks of transmission failure.
Electronic bids will also be received on the same date and until the same time by Bidcomp/Parity as agent of the undersigned. Further information about Bidcomp/Parity, including any fee charged, may be obtained from Bidcomp/Parity, Eric Washington or Client Services, 1359 Broadway, Second Floor, New York, New York 10018, (212) 849-5021. IF ANY PROVISIONS OF THIS NOTICE OF SALE SHALL CONFLICT WITH INFORMATION PROVIDED BY BIDCOMP/PARITY, AS THE APPROVED PROVIDER OF ELECTRONIC BIDDING SERVICES, THIS NOTICE OF SALE SHALL CONTROL.
GOOD FAITH DEPOSIT MUST BE MADE AND RECEIVED following the award of the bonds as described in the section captioned “Good Faith Deposit” below.
DTC BOOK-ENTRY ONLY: The bonds are being initially offered as registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”) under DTC’s BookEntryOnly system of registration. Purchasers of interests in the Bonds (the “Beneficial Owners”) will not receive physical delivery of bond certificates and ownership by the Beneficial Owners of the bonds will be evidenced by book-entry-only. As long as Cede & Co. is the registered owner of the bonds as nominee of DTC, payments of principal and interest will be made directly to such registered owner which will in turn remit such payments to the DTC participants for subsequent disbursement to the Beneficial Owners.
BOND DETAILS: The bonds shall be known as “2019 Capital Improvement Refunding Bonds (Limited Tax General Obligation)” and shall aggregate the principal sum of $38,245,000 (subject to adjustment as described below). The bonds will be fully registered bonds in any denomination of $5,000 or multiples thereof up to the amount of a single maturity, dated the date of their delivery, numbered from 1 upwards, and will bear interest from their date payable on November 1, 2019, and semi-annually thereafter. The bonds shall mature on May 1, in the years and principal amounts as follows (subject to adjustment as described below):
Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Amount $1,595,000 $1,865,000 $1,935,000 $2,015,000 $2,095,000 $2,175,000 $2,225,000 $2,315,000 $2,410,000 $2,495,000 $2,595,000 $2,695,000 $2,795,000 $2,900,000 $3,005,000 $3,130,000
TERM BOND OPTION: The initial purchaser of the bonds may designate any one or more maturities as term bonds and the consecutive maturities which shall be aggregated in any such term bonds. Any such designation must be made within one (1) hour of the bond sale. The amounts of the maturities which are aggregated in any such designated term bond shall be subject to mandatory redemption on May 1 of the years and in the amounts as set forth in the foregoing maturity schedule at a redemption price of par, plus accrued interest, to the date of mandatory redemption.
ADJUSTMENTS TO MATURITY SCHEDULE AND PURCHASE PRICE FOLLOWING SALE: The City reserves the right to increase or decrease the aggregate principal amount of the bonds after receipt of bids and prior to the award of the bonds, through adjustments of the principal amount
of any one or more maturities selected by the City, provided that such adjustments will be made in increments of $5,000, and subject to a maximum aggregate principal amount of the bonds of $42,000,000. In the case of any such adjustments, the purchase price of the bonds submitted by the bidder to whom the bonds are to be awarded will be adjusted proportionately to the adjustment in the principal amount of the bonds and in such manner as to maintain as comparable an underwriter spread as possible to that contained in the bid.
OPTIONAL REDEMPTION: The Bonds maturing in the years 2020 through 2029, inclusive, shall not be subject to optional redemption prior to maturity. Bonds maturing on and after May 1, 2030 shall be subject to redemption prior to maturity, at the option of the City, in whole or in part, on any date on and after May 1, 2029, at par plus accrued interest to the date fixed for redemption, without premium or penalty.
With respect to partial redemptions, any portion of a Bond outstanding in a denomination larger than the minimum authorized denomination may be redeemed provided such portion and the amount not being redeemed each constitutes an authorized denomination. In the event that less than the entire principal amount of a Bond is called for redemption, upon surrender of the Bond to the Bond Registrar, the Bond Registrar shall authenticate and deliver to the registered owner of the Bond a new Bond in the principal amount of the principal portion not redeemed.
Notice of redemption shall be sent to the registered holder of each Bond being redeemed by first class mail at least thirty (30) days prior to the date fixed for redemption, which notice shall fix the date of record with respect to the redemption if different than otherwise provided herein. Any defect in such notice shall not affect the validity of the redemption proceedings. Bonds so called for redemption shall not bear interest after the date fixed for redemption provided funds are on hand with the Bond Registrar to redeem the same.
INTEREST RATE AND BIDDING DETAILS: Bonds will bear interest at a rate or rates not exceeding 6.0% per annum, to be fixed by the bids therefor, expressed in multiples of 1/8 or 1/100 of 1%, or both. THE RATE OF INTEREST BORNE BY ANY ONE MATURITY OF BONDS SHALL NOT BE LESS THAN THE INTEREST RATE BORNE BY THE PRECEDING MATURITY, AND SHALL NOT EXCEED THE INTEREST RATE BORNE BY ANY PRECEDING MATURITY BY MORE THAN 3.0%. The interest on any one bond shall be at one rate only, and all bonds maturing in any one year must carry the same interest rate. No proposal for the purchase of less than all of the bonds or at a price less than 99.00% of their par value nor more than 105.00% of their par value will be considered. See “ADJUSTMENTS TO MATURITY SCHEDULE AND PURCHASE PRICE FOLLOWING SALE.”
TRANSFER AGENT AND REGISTRATION: Principal and interest shall be payable at the principal corporate trust office of The Huntington National Bank, Grand Rapids, Michigan, or such other transfer agent as the City may thereafter designate by notice mailed to the registered owner not less than 60 days prior to any change in transfer agent and which shall be qualified to serve as such in Michigan. Interest shall be paid when due by check or draft mailed to the owner as shown by the registration books of the City as of the 15th day of the month prior to any interest payment date. The Bonds will be transferable only upon the registration books of the City kept by the transfer agent. See “DTC Book-Entry Only” above.
PURPOSE AND SECURITY: The bonds are issued pursuant to Act 34, Public Acts of Michigan, 2001, as amended, and a bond authorizing resolution approved by the City Council of the City on November 19, 2018 (the “Bond Resolution”), for the purpose of refunding outstanding bonds of the City issued to pay a substantial portion of the cost of acquiring and constructing a four-level underground public parking structure in the City and related improvements, including street, streetscape and utility improvements, a new downtown alley, improved crosswalks, new streetlights, trees, sidewalks, curbs and bike lanes. The City has pledged its limited tax full faith and credit as security for payment of principal and interest. Pursuant to such pledge, the City shall be obligated to pay the principal of and interest on the bonds as a first budget obligation from its general funds, including the collection of any ad valorem taxes which the City is authorized to levy, but any such levy shall be subject to applicable constitutional, charter and statutory tax rate limitations.
GOOD FAITH DEPOSIT: A deposit in an amount equal to 1.0% of the final principal amount of the bonds is required as a guarantee of good faith on the part of the bidder, to be delivered to the Treasurer of the City in the form of a cashier’s check (or wire transfer of such amount as instructed by the City or its financial advisor) by Noon Eastern Time of the next business day following the sale, to be forfeited as liquidated damages if such bid be accepted and the bidder fails to take up and pay for the bonds. The good faith deposit will be applied to the purchase price of the bonds. No interest shall be allowed on the good faith deposit. Payment for the balance of the purchase price of the bonds shall be made on the delivery date.
AWARD OF BONDS: The bonds will be awarded to the bidder whose bid produces the lowest true interest cost determined in the following manner: the lowest true interest cost will be the single interest rate (compounded on November 1, 2019 and semi-annually thereafter) necessary to discount the debt service payments from their respective payment dates to February 27, 2019 (the anticipated date of delivery of the bonds) in an amount equal to the price bid, excluding accrued interest.
LEGAL OPINION: Bids shall be conditioned upon the unqualified approving opinion of Dykema Gossett PLLC, attorneys of Bloomfield Hills, Michigan, and the original of which will be furnished without expense to the purchaser of the bonds at the delivery thereof. The fees of Dykema Gossett PLLC for services rendered in connection with such approving opinion are expected to be paid from bond proceeds. Except to the extent necessary to issue its approving opinion as to the validity of the bonds, Dykema Gossett PLLC has not examined or reviewed any financial information, statements or material contained in any financial documents, statements or material that have been or may be furnished in connection with the authorization, issuance or marketing of the bonds, and accordingly will not express any opinion with respect to the accuracy or completeness of any such financial information, statements or materials.
CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the bonds, but neither the failure to print CUSIP numbers nor any improperly printed CUSIP numbers shall be cause for the purchaser to refuse to take delivery of and pay the purchase price for the bonds. Application for CUSIP numbers will be made by PFM Financial Advisors LLC, municipal advisor to the City. The CUSIP Service Bureau’s charge for the assignment of CUSIP identification numbers shall be paid by the purchaser.
DELIVERY OF BONDS: The City will furnish bonds ready for execution at its expense. Bonds will be delivered at the principal office of the Bond Registrar, or any other place mutually agreeable, at the expense of the City. The usual closing documents, including a certificate that no litigation is pending affecting the issuance of the bonds, will be delivered at the time of delivery of the bonds. If the bonds are not tendered for delivery by twelve o’clock noon, Eastern Time, on the 45th day following the date of sale, or the first business day thereafter if said 45th day is not a business day, the successful bidder may on that day, or any time thereafter until delivery of the bonds, withdraw its proposal by serving written notice of cancellation on the undersigned, in which event the City shall promptly return the good faith deposit. Payment for the bonds shall be made in Federal Reserve Funds. The bonds will be delivered in the form of a single certificate for each maturity registered as described above under “DTC Book-Entry Only.
ISSUE PRICE: The winning bidder shall assist the City in establishing the issue price of the bonds, in accordance with the requirements set forth in the Preliminary Official Statement relating to the bonds, dated January 7, 2019, and shall deliver to the City at closing an “issue price” or similar certificate setting forth the reasonably expected issue price to the public or the sales price of the bonds, substantially in the form attached as either Appendix G-1 or G-2 of the Preliminary Official Statement, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and bond counsel.
TAX MATTERS: The approving opinion of bond counsel will include an opinion to the effect that, under existing law, assuming compliance by the City with certain covenants, (i) interest on the bonds is excluded from gross income for federal income tax purposes and (ii) is not an item of tax preference for purposes of the federal alternative minimum tax. Such opinion will further state that under existing law the bonds and the interest thereon are exempt from all taxation provided by the laws of the State of Michigan, except estate taxes and taxes on gains realized from the sale, payment or other disposition thereof.
NOT QUALIFIED TAX EXEMPT OBLIGATIONS: The bonds have not been designated as “qualified tax exempt obligations” for purposes of the deduction of interest expense by financial institutions.
OFFICIAL STATEMENT: The City has made available a Preliminary Official Statement relating to the bonds, a copy of which has been posted to www.munios.com.
The Official Statement is in a form deemed final as of its date by the City for purposes of SEC Rule 15c2-12(b)(1), but is subject to revision, amendment and completion of a final Official Statement. The successful bidder shall supply to the City, within 24 hours after the award of the bonds, all pricing information and any underwriter identification determined by the City to be necessary to complete the Official Statement.
The final Official Statement for the bonds will only be made available electronically; no hard copies will be provided to the winning bidder.
The City shall deliver, at closing, an executed certificate to the effect that as of the date of delivery, the information contained in the Official Statement, including revisions, amendments and completions as necessary, relating to the City and the bonds is true and correct in all material respects, and that such Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
CONTINUING DISCLOSURE: The City has undertaken to provide continuing financial disclosure (annual financial information and operating data, including audited financial statements for the preceding fiscal year consistent with the information presented in the Official Statement), and to provide timely notice of the occurrence of certain material events with respect to the bonds, all in accordance with the requirements of SEC Rule 15c2-12.
BOND INSURANCE AT PURCHASER’S OPTION: If the bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the bidder/purchaser, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the bonds. Any increased costs of issuance of the bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the bonds from a rating agency, the City will pay the fee for the requested rating. Any other rating agency fees shall be the responsibility of the purchaser. If the successful bidder obtains a municipal bond insurance policy or other credit enhancement for the bonds in connection with their original issuance, the successful bidder will be required to furnish, prior to and as a condition to delivery of the bonds, in form prepared by bond counsel, a certificate that the premium therefor will be less than the present value of the interest expected to be saved as a result of such insurance or other credit enhancement. FAILURE OF THE MUNICIPAL BOND INSURER TO ISSUE THE POLICY AFTER THE BONDS HAVE BEEN AWARDED TO THE PURCHASER SHALL NOT CONSTITUTE CAUSE FOR FAILURE OR REFUSAL BY THE PURCHASER TO ACCEPT DELIVERY OF THE BONDS FROM THE CITY.
ADDITIONAL INFORMATION: Further information may be obtained from the City’s Financial Consultant, PFM Financial Advisors LLC, Inc., 555 Briarwood Circle, Suite 333, Ann Arbor, Michigan 48108, telephone 734-994-9700.
THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS
ENVELOPES: Envelopes containing the bids should be plainly marked “Proposal for City of Ann Arbor 2019 Capital Improvement LTGO Refunding Bonds”.