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Home My WebLink About95-95 RESOLUTIONRESOLUTION NO. 95-95 A RESOLUTION APPROVING AN UNDERWRITING SERVICES AGREEMENT IN THE AMOUNT OF $9.94 PER $1,000 OF BONDS ISSUED FOR THE REFINANCING OF THE 1979 CONTINU ING EDUCATION CENTER REVENUE BONDS WITH LLAMA COMPANY. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. The Council hereby approves an underwriting services agreement in the amount of $9.94 per $1,000 of bonds issued for the refinancing of the 1979 Continuing education Center Revenue bonds with Llama Company and authorizes the Mayor and City Clerk to execute same. A copy of the agreement is attached hereto marked Exhibit "A" and made a par( hereof. PASSED AND APPROVED this 5th day of July , 1995. APPROVED: i By: �. • <G .71. r,_ Fred Hanna. Mayor ATTEST') By: (I/2% c /CL LJ J Traci Paul, City Clerk Llama Companys June 19, 1995 The Honorable Fred I lanna Mayor of Fayetteville 113 W. Mountain Street Fayetteville, Arkansas 72701 Dear Mayor Hanna: Llama Company is pleased to present this Letter of Engagement to act as the senior manager to the City of Fayetteville for its upcoming IIMR tax bond issue. The firm is fully committed to the City of Fayetteville and to the successful and timely completion of this highly important financing. The scope of services will be as submitted in our response to the City's Request for Proposal *95-7, dated May 19, 1995. As compensation for the investment Nanking services related to the financing, Llama Company will be paid an underwriter's d.scount of $9.94 per bond contingent upon closing of this bond issue. This discount includes all of the management fee, sales takedown, underwriting risk and underwriters expenses for Llama Company. The City will be responsible for the other issuance costs of the financing which may be paid from bond proceeds. Thank you for giving us this opportunity to contin::e our relationship with the City of Fayetteville and we look forward to a successful financing. If our proposal and fee for services meet with your approval, please indicate with your signature, below. Sincerely, / A-Mez� David C. Hausam Vice President cc: Loren Carlson, Senior Managing Director Collin Chow, Vice President City of FayettpGille // / By: ( Date: 7-S 9tl One Mcllroy Plaza • Suite 302 • Fayetteville. Arkansas 72701 • (50:.) 444-4000 • FAX4 444-4042 Llama Company Proposal to provide: Underwriting Services for: The City of assaaaak Fayetteville May 19. 1995 Llama Company May 19, 1995 The Honorable Fred Hanna Mayor of Fayetteville 113 W. Mountain Street Fayetteville, Arkansas 72701 Dear Mayor Hanna: On behalf of Llama Company, we are pleased to present our credentials to provide underwriting services to the City of Fayetteville. As we have shown from our previous financings for the City, Llama Company is well qualified to serve as the City's senior manager. We are confident that a review of our response to the City's request -for -proposal, excerpts of which are highlighted below, will lead the City to conclude that Llama Company's appointment as underwriter is clearly merited and is in the City's best interest. Commitment to Fayetteville. Llama Company has demonstrated its commitment to the City since the openmg of our corporate headquarters in September, 1988. Llama Company was initially staffed with eight employees and has since grown to over 75 highly qualified and experienced professionals The firm and its employees' annual economic impact for the City and NWA is in excess of $10 million. In addition to these commitments, the professionals at Llama Company are heavily involved with the chambers, schools, local governments, and other charitable and non-profit organizations throughout Northwest Arkansas. Commitment to Public Finance. While major New York Wall Street firms such as CS First Boston: Donaldson, Lufkin & Jenrette Securities Corp; and Kidder, Peabody & Co. have recent:y exited from the municipal market, Llama Company remains firmly coraniittcd to the growth of the municipal business and the service of our municipal clients. As an example, Llama Company has nearly doubled its staff by hiring over 35 seasoned professionals from national and regional investment banking, legal, and accounting firms, as well as from municipal issuers. Llama Company is firmly committed to serving the City of Fayetteville and other tax-exempt issuers well into the 21st Century. City of Fayetteville Experience. Over the past five years, Llama Company has sole managed three financings totalling more than $48 million for the City. Each of these issues were marketed at lower interest rates than the then -prevailing market. Please refer to Appendix a. In addition, since 1990 Llama Company has worked with the City's staff to continually monitor the market and analyze the economic benefit of refunding the City's CEC and other outstanding bond debt. As the only full-service investment bank based in Fayetteville, no other firm knows more about the City or its financings than Llama Company. One P.L 1-oy Plata • Su.le 3C2 • Fayetteville. Arkansas 72701 • 1501) 4444000 • FAX #444-4042 Institutional Sales Capabilities. .Llama Company is one of the most successful regional institutional marketing firms in the securities industry. We employ 25 dedicated municipal institutional sales professionals and traders who provide a variety of investment products and services to over 1,100 of the largest and most frequent purchasers of municipal bonds in the industry. In the past five years, the firm has sold over $10 billion to these large sophisticated bond purchasers Retail Sales Capabilities. Llama Company, while being pnmarily a institutional sales firm, is uniquely positioned to serve a large number of high -net -worth individuals, who are some of the most active individual investors of tax-exempt bonds in the United States. Within the past five years, Llama Company has sold over $100 million of tax-exempt bonds to these individuals. In addition, Llama Company has strong relationships with all other Arkansas retail firms and have created special selling groups to enhance our Arkansas retail sales coverage. Capital Commitment. Two important factors that the City should consider in selecting its underwriter are the firm's total capital and the firm's willingness to use this capital on behalf of its clients. As indicated in the body of this proposal, Llama Company has excess net capital of over $18 million and we have consistently demonstrated our willingness and capability to nsk our capital to underwrite our clients' bond issues under difficult market conditions. We hereby pledge to the City that we will, if necessary, underwrite its transactions at a fair pnce to ensure a successful sale regardless of the prevailing market. Full -Service. Llama Company brings to all of its client assignments the financing expertise and market knowledge necessary to structure a transaction at the lowest possible cost of funds. Our relationship with our clients extends to well before and beyond the pricing period. Our banking and marketing professionals are available at a moment's notice to assist the City in evaluating the optimal and most cost effective financing alternatives. In conjunction with the City staff, the firm will develop an effective capital plan, make bond insurance and rating agency presentations, and select the safest but highest yielding bond escrow and/or bond proceeds investment strategy After the sale. the firm will prepare a pricing book which will present a distribution analysis based on the buyer types and geographic region in order to position the City for future sales. Lastly, we commit to providing a secondary market in the City's bonds thereby assuring liquidity to your investors. Once again, Llama Company appreciates this opportunity to present our recommendations to the City. We view this financing as extremely important for both Llama Company and the City. The firm believes we have the necessary qualifications and experience needed to successfully complete any financing on a timely basis. We look forward to working with you, your staff and the City Council as the senior underwriter for the City. If you have any questions or desire any additional information, please do not hesitate to call us at (501) 444-4009. Sincerely, cieN/daea David C. Hausam Vice President :✓)/nom �.- o-0-4 .v-- `_ /1.oc._2 Collin P. Chow Vice President TABLE OF CONTENTS Llama Company SECTION Primary Professionals Support Services ProvidedlSchedule of Events .. :.. :.. ... .. .. 6 Marketing Plan/Sales •Capabilities ..... .. 12 Experience of Proposing Organization ........ .. .. .. .. 16 Bond Rating Process ...... .. .. .. .. 19 Proposed Fees and Expenses .. 23 PAGE APPENDIX Results of Prior Fayetteville Financings ....... .... .. a Llama Company Experience ... .. .......... ......... . . .. b Insurance Break-even Analyses . .. ..... .. .... c Refunding Scenarios Continuing Education Center Bonds ... d Walton Arts Center Bonds .. .. :......... .......... d Schedule of Events . . . . . FINANCING TEAM TEAM SlUPERVISORS Alice L Walton, CEO Loren D Carlson, SMD DAY-TO-DAY BANKERS CREDIT David E Lewis, MD 1 David C. Hausam, VP Collor P. Chow, VP 4 STRUCTURE William G. Watt, MD Steven M. Kerr, VP UNDERWRITING & TRADING Donald B Michael Clanton, SMD Dodd, MD PROFESSIONAL STAFF Llama Company Llama Company's municipal finance effort is made up of the Public Finance, Research.& Analysis, and Sales & Trading Departments From these Departments, Llama Company has assembled a team of highly qualified and experienced professionals to serve the City of Fayetteville These individuals, cumulatively, have over 120 years of experience with various types of financings. In addition , all the other professionals of the firm will be available to assist on the City of Fayetteville s financings on an as -needed basis. Resumes and: responsibilities for each team member fol lows. TEAM SUPERVISORS Ms. Alice Walton and Mr. Loren Carlson will serve as Team Supervisors for the duration of Llama Company's engagement with the City. As Engagement Supervisors, Ms. Walton and Mr. Carlson will pledge to provide ati the necessary resources of the firm to the City's financings to ensure their completion at the lowest cost and in a timely manner. Alice Walton, Chairman and President Ms. Walton founded Llama Company in 1988 and serves as Chairman and President. She is actively involved in all areas of decision making and management. Ms. Walton has been responsible for the Walton family investment portfolio since 1975 She has served as Vice Chairman and head of all investment -related activities for the Arvest Bank Group, establishing the discount brokerage business and the bank dealer operation. Ms. Walton has a Bachelor of Arts in Economics and Finance from Trinity University in San Antonio, Texas, and has also completed graduate work at Tulane University Business School in New Orleans, Louisiana In addition, she has received an Honorary Doctorate .of Business Administration from Southwest Baptist University in Bolivar, Missouri, an Honorary Doctorate from the Philippine Women's University, and an Honorary Doctorate of Human Letters from Audrey Cohen College She has been aciive on the Board of the University of 1 Llama Company Arkansas for Medical Sciences at Little Rock, and the Board of Advisors for the University of Arkansas Graduate Business School at Fayetteville. Ms Walton has also served the State of Arkansas on the Governor's Aerospace Task Force in 1992 and was an international' judge for the Students In Free Enterprise. Ms. Walton serves on the Pace Industries Board of Directors, the Advisory Board for the Arkansas Community Foundation, the Arkansas State University -Beebe Charitable Foundation Board of Trustees, the Asia Society Board of Trustees and Finance, Budget and Investment Committee, the Business Advisory Committee for The transportation Center at Northwestem University, Northwest Arkansas Big Brothers/Big Sisters Advisory Board, and the Northwest Arkansas Council as Chairman -Emeritus. Loren D. Carlson, Senior Managing Director Mr. Carlson, who has headed Llama Company's Public Finance Department since August 1994, has over 20 years experience in a wide variety of municipal revenue and general obligation bond transactions, serving as senior manger, co -manager and financial advisor. His responsibilities typically include supervision of all banking functions associated with the financing and direction of the development and implementation of the financings. Prior to joining Llama Company, Mr Carlson spent 12 years with Chemical Securities Inc and its predecessor, Manufacturers Hanover Securities. During that time he supervised the underwriting of 393 transactions totaling $15.5 billion. Prior to joining Manufacturers Hanover, he was employed in the Public Finance Department of Blyth, Eastman, PaineWebber and the Student Loan Marketing Association (Sallie Mae) Mr. Carlson is a.graduate of Drake University and holds a Masters of Business Administration Degree from Adelphi University. DAY-TO-DAY SENIOR BANKERS Mr. David Hausam and Mr. Collin Chow will serve as the senior bankers for the City's financings. They will coordinate the activities of all team members and will serves as the day-to-day contacts for the City. David Hausam, Vice President Mr Hausam joined Llama Company's Public Finance Department in August 1989 and is a senior member of the firm's infrastructure and governmental groups. Since joining Llama Company, Mr. Hausam has worked with various local and state governments in structuring their debt programs. Issuers that Mr Hausam has served as senior banker includes Llama Company the City of Fayetteville, Beaver Water District and Liberty County, Texas, Correctional Facilities Board. His responsibilities include all aspects of financial structuring, cash flow analysis, document preparation and review, feasibility analysis of projects and development of computer modeling programs. He is currently the financial advisor to the Northwest Arkansas Community College and serving as the firm's senior banker to the Northwest Arkansas Regional Airport. Prior tojoining Llama Company, Mr Hausam served as City Treasurer and Comptroller of Bentonville, Arkansas from 1984 to 1989. While with the City of Bentonville, he structured the City's long term debt and designed and implemented their data processing effort. He was also actively involved in industrial development revenue financings for various industries in Bentonville and is currently serving on the Bentonville City Council Mr Hausam also served as Assistant Finance Director for the City of Fayetteville, Arkansas from 1970 to 1984. During this period he was involved in all phases of municipal finance and assisted in the financing of the Continuing Education Center, municipal water and sewer projects and municipal parking projects. David graduated from the University of Arkansas majoring in Business Management Collin P. Chow, Vice President Mr. Chow has over nine years of municipal finance experience, having served as a senior banker orfinancial advisor to many of the largest and most sophisticated municipal issuers in the country. Mr Chow currently serves as head of Llama Company's Municipal Infrastructure Finance Group having joined the firm Bear, Stearns & Co Inc. Mr. Chow was a vice president of that firm's Public Power and West Coast Governmental Banking Groups. Prior to his three year engagement with Bear Steams, Mr. Chow served for four years with Tucker Anthony Incorporated of Boston, Massachusetts where he was manager of its Municipal Quantitative Department He began his career with Masterson & Company in Houston, Texas where he had an opportunity to work extensively with a diverse group of tax-exempt issuers in the southwestern United States. Large municipal issuers to whom Mr. Chow has served as senior banker or financial advisor include the cities of Memphis, Tennessee, San Jose, California; Boston, Massachusetts, and Houston, Texas. Additionally, he has also completed large and complicated financings for Harris County, Texas; San Joaquin County, California, the states of California, Michigan, New Hampshire, and Massachusetts Llama Company Mr. Chow holds a Bachelor of Science Degree in Economics from Suffolk UJniversityin Boston, Massachusetts. CREDIT Mr. David Lewis will use his considerable experience in municipal bond arbitrage to review the credit of the City and make recommendations of measures to be taken to increase the credit worthiness of the City's financings. David E. Lewis, Managing Director After graduating from the University of Arkansas in 1968 with a degree in finance, Mr. Lewis worked for Salomon Brothers 'in their Chicago office from 1960 until 1981. His responsibilities included being in charge ofgovemment and municipal sales for the Chicago territory. Mr Lewis transferred to Salomon's New York office in .1981 and remained with Salomon until 1987. His responsibilities included managing municipal sales for a period of time and working in the government bond department as sales manager for financial futures and options. Prior to joining Llama Company in March 1993, Mr. Lewis was a partner with Greenwich Capital of Greenwich, Connecticut. At Greenwich Capital, he was in charge of the Municipal Arbitrage Department which traded cash municipals. municipal futures, treasury bonds, utility stocks, futures and options STRUCTURE Mr. Steven Kerr, under the direction of Mr. Hausam and Mr. Chow, will develop all the computer modeling for the City of Fayetteville's financing Steven M. Kerr, Vice President Mr. Kerr has broad experience in the analysis of debt structures and their underlying assets His background also includes considerable accounting expertise with an emphasis in the analysis of financial statements and in securities valuation. Prior to Joining Llama Company, Mr. Kerr was with the Capital Markets Group of Ernst & Young LLP in Memphis, Tennessee. During the period of Mr Kerr's association with Ernst & Young LLP, he was primarily responsible for the structuring and analysis of debt securities and the concomitant analysis of the underlying assets in such areas as student loan finance, local municipal finance, FHA hospital and nursing home mortgage bond finance. single and multi -family housing finance, commercial and automobile loan finance, and various other asset-backed securities. Mr Kerr's work also included federal income tax analysis on structured debt financings, the building and operation of management Llama Company information systems and corporate valuation Before that, Mr. Kerr was associated with Morgan Keegan & Company Mr. Kerr is a graduate of Rhodes College in Memphis, Tennessee. UNDERWRLTLIG & TRADING Mr. Donald Clanton and Mr. Michael Dodd will be responsible for the commitment to underwrite the bonds. Furthermore, they will supervise Llama Company's sales and marketing professionals to ensure a through marketing of the City's bonds. Donald B. Clanton, Senior Managing Director Mr. Clanton joined Llama Company in August 1994 as Senior Managing Director, Sales and Trading. In 1964 he received his Bachelor's Degree from Mississippi State University in Marketing and Finance He brings to Llama Company twenty-two years of experience in the securities industry.. Immediately prior to joining Llama Company, Mr. Clanton was based in Memphis, Tennessee as President and Managing Director of Commerce Investment Corporation's institutional group. He joined Commerce in 1985 as First Vice President and Manger of Institutional Sales. From 1981 to 1984, Mr Clanton held the position of Senior Vice President at Union Planters Investment Bankers Group. During his tenure at Union Planters, he significantly expanded sales revenue and staffing levels Mr. Clanton is associated with various business endeavors. He is a member of the Securities Industry Association and the Public Securities Association He served as President and a Board member of the Memphis Investment Bankers Association and has held significant responsibilities with the National Association of Securities Dealers Michael C. Dodd, Managing Director Mr. Dodd joined Llama Company in February 1995 as Managing Director of Trading. He brings to Llama Company twenty-four years of experience in institutional sales, trading, and municipal finance. Mr. Dodd managed the municipal trading operation at Stephens Inc. from 1972 through 1983. From 1984 through 1986, he managed the Municipal Bond Department for UMIC in Memphis, Tennessee Most recently he was Director of Trading at Meridian Capital Markets, a division of Meridian Bank in Reading, Pennsylvania, where he was responsible for risk management in the capital markets group. Mr Dodd attended Arkansas Tech University and .Arizona State University where he majored in International Economics. He served in the U.S. Army Artillery from 1968 through 1970. SERVICES Llama Company The public finance professionals of Llama Company have the capacity and experience to provide all the services necessary to insure the successful development and implementation of the City's financing plan. The following discussion sets forth the basic approach we will take in providing these services. Ability to provide advice to the City on bond market conditions and timing of the sale of its bonds. Llama Company will advise the City as to current and anticipated market conditions and the most appropriate date and time for the sale of the City's bonds. In order to appropriately advise the City as to a desirable date of sale, we will follow the following market indicators. The general conditions of capital markets, including the imposition of any unusual restraints on monetary supply by the Federal Reserve Board; The status of recently sold negotiated and competitive bond issues including syndicate balances; and The supply of issues coming to market. Particular attention will be paid to potentially competitive issues which tend to originate from issuers within the State of Arkansas, as well as issuers in other states which offer bonds of a similar size and credit rating 6 Llama Company Ability to provide assistance to the City in determining the term and amortization schedule, call provisions, and other factors which are relevant to marketing the City's bonds. This shall include the preparation of maturity schedules and debt service projections which represent effective marketing structures for the City's bonds. Llama Company will assist the City, its Bond Counsel and staff in the formulation of a comprehensive financing plan. Llama's role in the formulation of the financing plan will be to relate the needs of the City to those of the capital markets in order to obtain the lowest cost of financing We will collect, review and develop data, prepare debt service models, identify potential purchasers of the bonds, analyze general economic indicators, and review the performance of various financing structures used in recently marketed issues. Llama Company will recommend the term and amortization schedule for any proposed bond issue, taking into consideration the City's requirements, prevailing yield curves, demands of potential buyers, and various annual debt service payment options such as level, level net, accelerated and deferred. Matunty schedules will be analyzed by computer modeling which include estimated interest rates, principal maturities and annual debt requirements. Schedules will be updated, as necessary, to reflect changes in market conditions and to meet the City's needs. Llama Company will review all potential debt structures using serial, term, super -sinker or variable rate bonds and will address the benefits and disadvantages of each structure with the City. We will recommend the optimal structure that will result in the lowest cost of financing while meeting all the needs and requirements of the City. Llama Company will review call premium alternatives and recommend the option that will minimize the overall cost of the financing and provide the most flexible structure to the City. • Llama Company will assist in the development of other financial and investment provisions to be included in the bond documents. These terms include, among others, the establishment of the debt service reserve requirement, Llama Company flow of funds from the required bond accounts, bond issue dates, procedures for investment of bond funds and the terms of the bond sale. In developing these terms, Llama Company will recommend inclusion of terms that are most favorable and flexible to the City while meeting the goals and objectives of any potential bond purchaser Ability to present and evaluate alternative and/or innovative financing mechanisms. Llama Company's bankers have had extensive experience with CAB's, variable rate debt, original issue discount bonds, premium bonds, super -sinker bonds, and derivative products such as floating/inverse floating rate bonds, indexed inverse floating rate bonds and embedded caps. Llama Company will review the City's needs and prepare cost analysis of appropriate financing mechanisms for the City's review. Ability to work with the City to obtain the best possible bond rating including attendance at any presentation to the rating agencies, if requested by the City. Llama Company will use its considerable credit experience to establish the highest possible credit rating for the City. Llama Company will develop a rating strategy and formal rating presentation which highlights the strengths of the City and its management In addition, Llama Company will attend and participate in any presentation. Ability to prepare the Preliminary Official Statement and the final Official Statement and other related documents and materials. Llama Company will prepare the preliminary and official statements to ensure full disclosure in accordance with the most recent guidelines established by the Municipal Securities Rulemaking Board (MSRB) and the Government Finance Officers Association (GFOA). In addition, Llama Company will assist the City's staff and Bond Counsel in the preparation of the Trust Indenture, Bond Ordinance, Arbitrage Certificate and other documents as may be necessary for the financing Also, Llama Company will prepare the draft and 'final Bond Purchase Agreement for the approval of the financing team. Llama Company Ability to determine the feasibility of bond insurance and to arrange for the selection of a bond insurance firm should insurance be desirable on a given issue. Llama Company will use its proprietary bond insurance break- e‘en analysis, please see Appendix c, to determine the economic benefit of insuring the bond issue with one of the major bond insurers and will make recommendations to the City concerning any potential savings from using bond insurance Llama Company will coordinate the preparation of the documents necessary for the insurance review. Ability to arrange for selection of trustee/paying agent/registrar services, if necessary. Llama Company has extensive contacts and experience with a number of banks which provide trustee/paying agent/registrar services. Llama Company will evaluate their proposals and, if the City wishes, select the trustee/paying agent/registrar Ability to attend all meeting of the City, assist in presentations at said meetings, and attend all signing/closings. conferences, etc. as deemed necessary, by the City. Llama Company's team approach to this financing and the location of its headquarters in Fayetteville offer the City an unparalleled level of service and accessibility for any meetings, conferences or presentations which may be deemed necessary by the City. Ability to coordinate printing of the bonds with bond counsel. Llama Company will assist the City's staff and Bond Counsel in determining whether actual bonds will be printed or if the bonds will be offered as book -entry -only. If bonds are to be printed, Llama Company will review and approve the proof of the bonds prior to printing. In addition, Llama will coordinate the printing and distribution of all bond documents, including the bond ordinance, trust indenture, arbitrage statement and the bond purchase agreement to all parties on the distribution list. Llama will coordinate the printing and distribution of the Preliminary Official Statement and the Official Statement to prospective and actual purchasers 9 Llama Company Ability to calculate the fiscal impact of any Statements by the Governmental Accounting Standards Board (GASB) on the refunding of outstanding debt. There are two GASB Statements which set the standards for the accounting for refundings which result in the defeasance of debt Llama Company is familiar with both statements and would work with the City and its CPA to determine the fiscal impact on the City's financial statement from refunding The following is a short discussion of each GASB Statement which govern the recording of transactions involving refundings which result in defeasance of debt "GASES " - Advance Refundings Resulting in Defeasance of Debt" This Statement provides guidance on accounting .for advance refundings which result in defeasance of debt recorded in the long-term debt account group The proceeds of the new debt should be reported as an "other financing source - proceeds of refunding bonds" in the fund receiving the proceeds. Payments to the escrow agent from resources provided by the new debt should be reported as an "other financing use - payment to refunded bond escrow agent." Payments to the escrow agent made with other resources of the entity should be reported as debt service expenditures This Statement also provides guidance on disclosures about advance refundings for all governmental entities regardless of where the debt is recorded The economic gain or loss should be disclosed and is the difference between the present value of the old debt service requirements and the present value of the new debt service requirements, discounted at the effective interest rate of the new debt and adjusted for additional cash paid ' GASBS23 - Accounting and Financial Reporting forRejtndings of Debt Reported by Proprietary Activities" This Statement establishes standards of accounting and financial reporting for current refundings and advance refundings resulting in defeasance of debt reported by proprietary activities that is, proprietary funds and other .governmental entities that use proprietary fund accounting. Refundings:involve the issuance of new debt whose proceeds are used to repay previously issued debt. The proceeds may be used immediately for this purpose ("current refunding"), or may be placed with an escrow agent and invested 10 Llama Company until they are used to pay principal, interest and call premium, if any, on the old debt at a future time ("advanced refunding"). For current refundings and advance refundings resulting in defeasance of debt reported by proprietary activities, this Statement requires that the difference between the reacquisition price and the net carrying amount of the old debt be deferred and amortized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the life of the new debt, whichever is shorter. On the balance sheet, the deferred amount should be reported as a deduction from or an addition to the new debt liability. In addition, this Statement makes the disclosures required by GASBS 7 applicable to current refundings reported by proprietary activities. Proposed Schedule of Events and Assignment of Responsibilities for All Participants Including Time Estimates for Each Step. Please refer to Appendix e for a schedule of events for a typical refunding bond issue. Please note that in some cases there may be legal requirements for public hearings, such as TEFRA hearings or hearings relative to any sewer increase required for debt servicing. Therefore, each financing would require a schedule of events which is tailored to the requirements of each particular financing 11 MARKETING PLAN Llama Company BACKGROUND Llama Company believes that the City of Fayetteville's bonds have a number of uniquely attractive features that will make them extremely attractive to potential investors. These features include - Strong current financials and coverage ratios; State tax exemption and "bank -qualified" status; Current lack of municipal tax-exempt bonds in the market; and Positive profile and strong community support of the City and the Continuing Education Center (CEC) Project in particular. As a result, Llama Company anticipates strong demand across all maturities from all types of buyers, but especially from those who are either Arkansas residents or costate domiciled banks. These potential investors are shown graphically below. *,tines IS% andel Dlatdbution 12 Bwk MN%% 30% N 5 Imafhtf Mix aa_ POItWo OS IndMWu.N 20% 1 1 1 1 1 1 1 �1 1 1 1 Llama Company Although the inherent strengths of the City's bonds will make them easy to sell, Llama Company believes that the City can benefit from utilizing a strong and well crafted marketing plan for their pending financing. There are two important goals that should be the main focus of any successful marketing planmaintaining the strong interest of the current investors in the City's bonds and expanding this universe of existing bondowners If successfully implemented, a well -crafted marketing plan will stimulate an increased demand not only for the City's current CEC refunding bond issue but also for all future financings of the City. As a result, the City can leverage this demand and borrow moneys at the lowest possible rates. Through Llama Company's long and successful business relationship with the City, the firm believes it is the best suited investment banking company to execute this marketing plan and serve as the City's senior manager for this upcoming financing. MARKETING PLAN As the City's senior manager, Llama Company recommends a multi -step, proactive marketing approach to the sale and distribution of the City's securities. Such an approach is a continuous process rather than a procedure undertaken only during pricing, and it will begin with a sophisticated premarketing survey of possible buyers of the City's debt. This survey will isolate and identify the Investors who will determine the ultimate success of the City's sale. The survey will be followed by a series of discussions with these potential investors which will highlight and emphasize the credit and trading strengths of the City's bonds. Finally, Llama Company's marketing strategy includes a commitment to the trading and support of the City's securities in the secondary market. As a result, potential investors can take added confidence in the continuing liquidity and viability of the City's bonds Pre -Marketing. Survey. Steps critical to reducing the City's interest costs must be taken during the premarketing period of the financing. During that time, Llama Company will undertake a comprehensive survey of all existing holders as well as any potential investors of the City's debt. As the City's senior manager for its last three transactions over the past four years, Llama Company has unrivaled knowledge of and experience with current holders of the City's outstanding bonds. Furthermore, as one of the few full-service investment banks which consistently makes a primary and secondary market in all Arkansas municipal tax-exempt securities, Llama Company is frailly aware of any buyer who may have had previous interest in owning securities similar to the City's bonds. By cross- matching these two lists, Llama Company can proactively target all potential buyers of the City's bonds well before the final pricing date. This will permit Llama Company to customize the structure of the City's 13 bonds in ways which will appeal to likely buyers and which will result in a lower -than -normal bond interest rate. Based on this survey, Llama Company has identified that these investors' maturity demand schedule for the City's bonds will likely be as follows: Investor Maturity Demand 2 4 6 8 10 Years to Maturity On -Going Discussions. On a daily basis during each phase of the financing, Llama Company will share trade ideas, relative value analyses, one-on-one investor contacts or ongoing research to the firm's investing clients. These activities will allow Llama Company to monitor ever- changing buyer preferences and seek out new purchasers of the City's bonds. By actively monitoring the market, Llama Company may be able to spot trading trends which will highlight the benefit of owning the City's bonds. For example, temporary market dislocation and price disparities may prove beneficial for certain investors to swap existing portions of their portfolios for the City's bonds. This will increase the market demand for the City's securities and therefore lower the overall borrowing costs for the City. .Secondary Market .Support As demonstrated by Llama Company's historical willingness to stock bonds on behalf of our investor and issuing clients, the firm is recognized as one of the most aggressive market makers in the current municipal market. Llama Company's focus when pricing new issues is to translate the same market expertise and willingness to take risks into producing the lowest possible interest costs Llama to the firm's municipal clients. Sophisticated buyers are aware that Llama Company maintains a market in all of the issues the firm manages. This Company commitment to the secondary market will assure all owners of the City's 14 bonds of liquidity in all market conditions. In turn, this proven commitment will enhance the sale of the City's bonds and will enable it to borrow at the lowest interest rate. SALES CAPABILITIES Llama Company's distribution efforts are guided by the firm's commitment to the expansion and support of all segments of the institutional and retail markets in order to increase buyer demand and lower the borrowing costs for our municipal clients. Details of our sales capabilities to institutions and high -net worth individuals follow Institutional Sales Llama Company's institutional municipal distribution capabilities are unrivaled among regional investment banking firms. Our sales force sells a variety of investment products and services to over 1,100 of the largest and most frequent purchasers of municipal bonds in the industry. Indeed, the depth and breadth of our institutional sales coverage allows Llama Company to sell not only to these large accounts, which represent over 75% of all institutional buying, but also to many second and third - tier accounts located in the Midwest and Mid -South regions of the country. These ancillary accounts can provide essential additional distribution outlets to issuers like the City of Fayetteville. Over the past five years, Llama Company has sold over $10 billion, or nearly 99% of all of our municipal business, to these large sophisticated bond purchasers. High -Net- Worth Individual Sales. Northwest Arkansas, besides being Llama Company's headquarters to nearly 80 employees, is home to the country's largest retailer, poultry processor, and trucking company, in addition to several other Fortune 500 companies. By virtue of its strategic geographic location and its relative business importance, many of the wealthiest people in the nation reside in this area. Llama Company is uniquely positioned to serve this important group of investors These high -net -worth clients are some of the most active individual investors of tax-exempt bonds in the United States. These clients have had a strong relationship with the firm and its professionals for many years Within the past five years, Llama Company has taken advantage of these prior relationships to sell over $100 million Llama of tax-exempt bonds to these individuals. Company 15 I I I I EXPERIENCE Llama Company FIRM'S DESCRIPT1OPi AND HISTORY Llama Company is a woman -owned -business -enterprise (WBE) headquartered in Fayetteville, Arkansas. The firm was founded as a private limited partnership in 1988 and has continually been owned by the family of the late Sam Walton, founder of Wal-Mart, Inc. Ms. Alice Walton, Mr. Walton's daughter, currently owns approximately 83 9% of the firm and serves as Llama Company's Chairperson and President. While the firm consists of four operational divisions which are Investment Banking, Sales and Trading. Arbitrage, and Administration, well over 80% of the firm's annual revenues are derived from municipal -related business. In light of the foregoing, Ms. Walton, through the efforts of Llama Company, has made providing top quality investment banking services to the State of Arkansas and local municipal issuers within the state the firm's primary corporate mission. Furthermore, while major New York Wall Street firms such as CS First Boston; Donaldson, Lufkin & Jenrette Securities Corp ; and Kidder, Peabody & Co. have recently exited from the municipal market, Llama Company remains firmly committed to the growth of this business. As an example of the firm's commitment, the firm has recently embarked on a major expansion program at our northwest Arkansas headquarters. Since the beginning of 1994, the firm 11 16 has nearly doubled in size by hiring 35 seasoned finance, sales and trading professionals from national or regional investment banking firms. Moreover, aside from our branch office in New York City, Llama Company is currently in the process of setting up additional offices in the cities of Little Rock, Arkansas and Memphis, Tennessee to better serve our existing municipal clients. As a direct result of Llama Company's commitment to the region and the municipal industry, the firm has recently been awarded by two large municipal issuers the senior book -running manager position for transactions totaling approximately $300 million. I A I t . Llama Company and/or its bankers have been senior managers on various types of financings including but not limited to: utility revenue bonds, sale and use tax bonds, hospital revenue bonds, athletic facility revenue bonds, multi -family housing bonds, correctional facility lease revenue bonds, student loan revenue bonds, industrial development revenue bonds and general obligation bonds. We have the experience and knowledge to senior manage any type of financing which the City might contemplate. ORGANIZATIONAL STRUCTURE As the organizational chart portrays below, Llama Company is divided into four main functional groups, with three of these four focused on the municipal industry. The interaction of these groups provides the City of Fayetteville with the financing expertise of Wall Street within its own downtown square. Llama Company CAPITAL Llama Company is one of the most solidly capitalized regional investment banking firms in the United States, with excess net capital available far in excess of applicable requirements. Although technically classified as a WBE, Llama Company's capital strength stands apart from our other competitors As an example, using the most conservative National 17 Association of Securities Dealers guidelines, Llama Company's current excess net capital would allow the firm to sole -senior -manage a tax- exempt, long-term, fixed-rate, investment -grade, municipal financing in excess of $200 million. The firm believes that no other WBE or Disadvantaged Business Enterprise (DBE) can make that claim. In fact, our total capital base is greater than the combined total of all other WBE's and DBE's in the municipal finance industry today. As the following table suggests, Llama Company possesses the financial resources necessary to purchase and underwrite even the largest, most ambitious financing efforts. AS OF TOTAL CAPITAL EQUITY CAPITAL REGULATORY NET CAPITAL EXCESS NET CAPITAL 12/31/94 $23.473.000 $5.973.000 $18,451.000 $18.201.000 12/31/93 $26.867,000 $5,867,000 $18.317,000 $18.]67,000 12/31/92 $24,6]9,000 $3.619.000 $21.925.000 $21,825,000 In addition, Llama Company maintains a $270 million line of credit, which is readily available to support the firm's municipal underwriting and trading efforts. RELEVANT MUNICLPAI. BOND ISSUE Llama's recent senior managed municipal bond issuances are listed in Appendix b. In addition to these issues, Llama Company bankers have senior managed 551 issues totaling in excess of $21.2 billion. Llama Company, as well as its bankers, have also been involved in numerous other bond issues in which it acted as co -manager or financial advisor. Llama Company I I BOND RATING Llama Company ROLE OF FIRM Llama Company believes it is vitally important to communicate the many positive attributes of the Northwest Arkansas region to the rating agencies to enable them to properly assess the creditworthiness of the issuers within this area. However, a rating process is an ongoing and continuous effort that takes place throughout the life of an issuer. Ins not an isolated and singular event that takes place only when aparticular bond financing is ;pending but is an evolving procedure that must communicate the process of change as well as the magnitude of change. Therefore, in discussions with the rating agencies, issuers such as the City need to retain underwriters that have been intimately involved with their prior financings .As the only investment bank headquartered in Fayetteville, Llama Company has a deep understanding of the City's many credit and financial strengths. In addition, the firm has acted as senior manager of the last three City bond issues, as shown in Appendix a, and has a long history of representing the City with the various rating agencies Therefore, Llama Company is uniquely qualified to serve the City and would be pleased to continue to represent the City as its senior manager in all levels of discussions with the rating agencies. Working closely with the City and its staff Llama Company would begin by preparing a detailed demographic and financial analysis of the City and its surrounding metropolitan statistical area (MSA). Then, the firm would make a formal presentation to the rating agencies highlighting the strong economic features of the City and the MSA. Llama Company believes that this approach will result in the highest possible ratings for the City. Finally, the firm remains fully committed to the growth and continued success of the City As an example, Llama Company has recently embarked on a major expansion of personnel in the firm's headquarters located within the City by hiring more than .35 highly -trained and seasoned professionals for our finance, sales and trading departments. I I Levels (19'0lndmt) 180% I60% Strong Population Growth 110% 120% 100% 19'0 1980 1990 1991 (Ins Idex) 130% I20I. 'Ion I00% 1988 C 1990 1991 1992 Y MSA Adaun Per . Capita Income 1989 1990 Fe MSA U.S. Avg Extremely Low Unemployment 99) 1994 Strong Income Growth 1991 1992 GENERAL CREDIT STRENGTHS Since the highest rated credits are generally those issuers with the most outstanding economic attributes and strongest financials, Llama Company believes that the City will be viewed favorably by the rating agencies. In particular, the City has many desirable qualities which are the direct result of the positive economic changes that have taken place in the state in the past few years. These qualities include the following: ► Strong population growth, ► Steady and diversified employment base, ► Highly educated workforce, ► Low unemployment rates, ► High per capita income growth, and ► Moderate debt burden. Specifically, the City is among the fastest growing and wealthiest in the state with a stable and diversified economy that is anchored by the University of Arkansas, the largest employer of the region. The corporate headquarters of Wal-Mart, Tyson Food, J.B. Hunt, and Hudson Food are located in the area, in addition to numerous other large manufacturing and service related industries Wealth levels are above the state average and growing at a faster rate, with unemployment levels significantly below the national and state averages. Please see the graphs on the facing page highlighting the City's significant growth in population, employment and income levels. 1979 CEC BONDS While the above indicators all point to the creditworthiness of Fayetteville, the City's 1979 Continuing Education Center (CEC) bond issue (the "1979 issue') is especially well -secured. As fully described in the 1979 issue's bond indenture and subsequent resolutions, the City can utilize the following multiple sources of revenues to repay its 1979 issue's debt service: ► 1% citywide hotel, motel and restaurant tax (HMR), ► Net parking revenues from the CEC garage, ► Certain lease revenues from the CEC, ► Statewide tourist turn -back, and ► All available bond fund earnings Llama Company In 1994. the City collected a total of more than $13 million from these diversified revenue sources which represented a debt service coverage of '0 I over 300% of its outstanding 1979 net debt service requirements. In fact, the City's IIMR tax alone, by virtue of its rapid growth from $400,000 collected in 1984 to $1 million collected last year (as shown below), would provide an annual debt service coverage of over 250% of the 1979 net debt service. Revenue Growth rt9..00n.1 1900 1*00 3'00 ,600 0!00 1400 934 1916 1919 .991 1991 :9➢6 Neal M.YIL ea.v.ntTn Based on the foregoing, the City may wish to consider revising its existing CEC bond indenture and using the HMR tax solely to secure the 1995 refunding bond issue By removing all other pledged revenues from the City's 1979 indenture, the City would be able to gain added financial flexibility should it decide to either sell the currently -pledged parking facility or utilize these freed -up revenue sources to secure additional bond financings. In fact, by using these freed -up revenues to construct new projects, Llama Company has calculated that the City would be able to finance an amount up to $1 5 million without increasing the City's current debt .service obligation, extending the final term of the borrowing, raising taxes or mortgaging other assets. Alternatively, should the City decide to extend the cu rent final maturity from 2004 to 2014, the amount of new projects that the City can finance would increase to approximately $3.5 million, again without raising taxes or increasing its existing annual debt service payments. Company REFUNDING OPTION Since the original 1979 CEC issue was sold unrated, the City retains the option of also marketing the 1995 CEC refunding bonds on an unrated basis However, the City may wish to market this issue as a rated issue. Although the City has many positive credit qualities, as discussed above, 21 I I Il I Llama Company and the current 1979 issue's security provisions would provide for a strong credit, the City may wish to consider either obtaining a direct rating or purchasing municipal bond insurance for this bond issue While preliminary discussions with the rating agencies have indicated that this refunding would likely receive an investment grade rating of "A" or better, it may not be cost effective due to the small size of the financing. Additionally, the City would probably have to spend a significant amount of time educating the rating analysts on the GEC's credit structure. As a result, Llama Company would recommend that the City pursue a dual - track approach by also simultaneously analyzing the benefits of purchasing bond insurance. Of course, Llama Company would recommend that the City utilize whichever option yields the greatest economic benefit to the City without exposing the City to undue timing delays and overly restrictive and complicated covenants. To analyze the economic difference between the "AAA" -insured scenario against the other options, Llama Company utilized the firm's proprietary bond insurance break-even program, shown in Appendix c The results of our break-even analysis showed that using indicative interest rates as of May 12th, the City would have achieved a marginally higher present value savings with an insured refunding issue than either of the other financing scenarios. Therefore, our complete refunding analysis, shown in Appendix d, is predicated on an insured transaction. Of course, this relationship may change in the future and Llama Company will use our proprietary program to monitor the market on a continual basis. In addition to the aforementioned CEC refunding analysis, the firm has also included a refunding analysis of the Walton Art Center bond issue in Appendix d 22 FEES Due to the unknown complexity, term, credit and risk of future City of Fayetteville financings, we have limited our response to a representative cost of completing the CEC refunding assuming a 51,845,000 refunding issue. UNDERWRITER'S DISCO lINT Management Fee $2.50 $4,613 Underwriter's Risk $0.00 $ 0 Average Takedown $4.10 $7,565 Expenses Underwriter's Counsel 2.70 5.000 Da:comp/Dalnet 0.00 0 PSA 0,03 55 Day Loan 0.03 55 Federal Funds 0.00 0 1)TY'/Ci7SIP 0.03 550 Clearance 0.08 G Travel" 0.00 0 M:scellaneoas 0.27 500 -total Expenses $3.34 $ 6,160 Total llnderwnting's Discount $9.94 $18.338 Llama Company Does not include rating agency or bond insurance presentation trips. 23 OTHER FEES PAID FROM BON) PROCEEDS Bond Counsel $18,000 Trustee/Registrar 1,500 Escrow Trustee 500 Verification Agent 1,500 Printing & Mailing P/O/S & O/S 1,500 Miscellaneous 1.000 $2&000 Insurance if necessary would cost between 40 and 60 basis points based on total debt service Llama Company M Results o1'Fayetteville's Prior Financings Comparison of the City's True Interest Cost vs. the'General Market $°o I°o C 0 -0 1990 Issue SO.bp Sasings 1 1992 Issue 61 bp Sayings 1994 Issue 1113 bp Saiings i W,1 .n] : ,1 Q2 J] fl (2 94 V� Bond Bul er Key enue Bond Lb1e� OFFICIAL STATEMENT NEW ISSUE RATINGS: Standard & Poor's: "AAA" Moody's: (Capital Guaranty Insurance Company Insured) (See the caption ".RATINGS" herein) In the opinion of Bond Counsel, based eon existing statutes regulations and court decisions and assuming compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code..). as described herein, the interest on the Series 1990 Bonds is not includable in the gross income of the owners thereof for purposes offederal income taxation. Interest on the Series 1990 Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds may be included ;n the calculation for certain taxes, including the alternative minimum tax of corporations as described under the caption "TAX EXEMPTION" herein See the caption "TAX EXEMPTION" herein for' a description of certain provisions of the Code that may affect the tax treatment of interest on the Series 1990 Bonds for certain owners of the Series 1990 Bonds Under existing law, the Series 1990 Bonds and the interest thereon are exempt from allstate. county and municipal taxes in the State of Arkansas. $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series :1990 Dated: October 15,1990 Due: November 15. as shown below Interest on the Senes 1990 Bonds is payable on May 15. 1991, and semiannually thereafter on May.15 and November l5 of each year. The Series :990 Bonds are :ssuable as fu:ly registered bonds in denominations of $5,000 or integral multiples thereof, except for one Series 1990 Bond in the denomination of $4,000 maturing November 15. :991. Principal is payable at the principal corporate trust office of Mcllroy Bank & Trust, in Fayetteville, Arkansas, the trustee (the "Trustee") and the transfer agent. paying agent and bond registrar (the "Bona Registrar"): interest is payable by check or draft mailed to the:registered owner as of the applicable record date at the address as shown or. the bond registration books maintained by the Bond Registrar. The Series 1990 Bonds are subject to redemption prior to maturity as described under the caption "THE SERIES 1990 BONDS — Redemption Prior'to Matunty" herein. The Senes 1990 Bonds are special obligations of the City of Fayettevil:e. Arkansas (the "City"), payable solely from amounts received by or on behalf of the City from a one percent :ocal sales and use tax (the "Sales and Use Tax Revenues") The Series 1990 Bonds are secured by a pledge of the Sales and Use Tax Revenues in amounts sufficient to provide for debt service on the Senes 1990 Bonds and to maintain a debt service reserve as described herein. Accumulated Sales and Use Tax Revenues in excess of such debt service and reserve requirements and certain charges and retainages may be used by the City to finance capitai facilities. The Series 1990 Bonds may also be paid from certain other moneys. and, under certain circumstances. the Series 1990 Bonds may be paid pursuant to the terms of the Financial Guaranty Bond as described herein. The faith and credit of the City are not pledged to the payment of the Series :990 Bonds, and the issuance of the Series :990 Bonds shat: not directly. tndirectl} or contingently obligate the City to levy or to pledge any taxes whatsoever or to make any appropriation for the payment of the Series 1990 Bonds except as provided :n the Trust Indenture described herein with respect to the Sales and Use Tax Revenues. Payment of principal of and interest on the Series 1990 Bonds when Due for Payment which is unpaid by reascr. of Nonpayment (as such terms are defined :n the Financial Guaranty Bond) will be guarantied by a Financial Guaranty Bond (the "Financial Guaranty Bond") to be issued simultaneously with the delivery of the Series 1990 Bonds by Capital Guaranty Insurance Company. l I J"L(^�AS Issuance of Financial Guaranty Bond is a condition to the delivery of tl:e Series 1990 Bonds. MATURITY SCHEDULE Principal Interest Principal Interest Year Amount Rate Year .Amount Rate :991 $ 824.000 6.00, '1997 $1.450,000 6.60% :992 1,065,000 6.10 1998 1,545,000 6.70 1993 1,130.000 6.20 1999 1650.000 6.80 1994 1.205,000 6:30 2000 1.765.000 6.90 1995 1:280,000 6:40 2001 1.890.000 7.00 1996 L360.000 6.50 2002 .2.020.000 7.05 $6,985,000 7.15% Term Bonds due November 15. 2005 $8,850,000 7.25% Term Bonds due November 15. 2008 All Series 1990 Bonds are offered at par plus accrued interest. I I The proceeds of the Series 1990 Bonds wifl be used, along with other avai:able moneys. to firance the acquisition. construction and equipping of certain capital improvements within the City. to fund a debt service reserve and to pay costs' of issuance 'of :he Series 1990 Bonds, including a premium for the Financial Guaranty Bond The Series 1990 Bonds are offered, subject to prior sale. when, as. and if issued and received by t:te Underwriter, subject to the approval of their validity by Brown & Wood Bord Counsel. and :he approva: of certain legal matters by Rose Law Firm, a Professional Association. Counsel to the Underwriter, and by Jerry Rose, Esq.. Cav Attorney. anG subject :'o certain other cond;t:ons. It is expectea that the Series 1990 Bonds will be available for delivery in New York. New York. on or about October 18, 1990 Llama The date of this OfHtial Statement is September 13, 1990: OFFICIAL STATEMENT NEW ISSUE Moody's "A" Standard & Poor's "A" (See caption "RATINGS" herein) In the opinion of Bond Counsel based cr, existing statutes, regulations and court decisions and assuming continuing compliance with certain covenants and requirements of the internal Revenue Code of 1986. asamended (the "Code"). as described herein the interest on the Series 1992 Bonds will not be includable in the gross income of the owners thereof for purposes of federal Income taxation Interest on the Sevres '992 Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals or-crporaltons; however, interest on the Series 1992 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. See the caption "TAX EXEMPTION" herein for a description of cartain provisions of ;tie Code that may affect the fax treatment of interest or. the Series 1992 Bonds for certain owners of the Series 1992 Bonds. Under existing law. Bono Counsel is of the opinion that the Series 1992 Bonds and the interest thereon will be exempt from all state, county and municipal taxes in the State of Arkansas. Assuming continuing compliance with certain representations, Bond Counsel is also or the opinion that the Series 1992 Bonds are "qualified tax-exempt obligations" within the meaning cf Section 265(b.) (3.) of the Code. as described under the caption "INTEREST DEDUCTION FOR FINANCIAL INSTITUTIONS" herein. $10,000,000 City of Fayetteville, Arkansas Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1992 Dated: August 15, 1992 Due: August 15, as shown below The Series 1992 Bonds are issuabie as fully reg steed bonds it dencmnat.ons o` $5.000 or integra, mu t pies thereof. Interest on the Series 1992 Bonds is payable c' February 15. 1993 and semianrually thereafter on Feb•Lary 15 and August 15 of each year by check mailed to the registered owner as of the app icable record date at the address as shown on the bond registrat on book mai-'ta ned by The State F•rst Nationa' Bank. in Texarxana, Arkansas.'the trustee, rarsfer agent. ca.ying agent arc bond registrar Ire 'Trustee" and "Registrar".; Payment' of nlerest w II be made by w.re transfer upon the request of a registered owner o` at least $1,000.000 principal amount of the Ser.es 1992 Bonds. Principal of the Series 1992 Bonds is payable upon presentation and surrender thereof at the corporate trust oVice at the Registrar. The Se - es 1992 Bonds are subject to redemcton prior to maturity as more 'ully described he-e,n .rder the caption "THE SERIES 1992 BONDS — Redemption prior to Maturity. ' The principal' of and Merest and any redenpt on premiJm on the Series:1992 Bonds are secured by a p edge ol, and payable solely from. t':e Net Revenues (as Defined rerein; of the water and sewer system (the "System".; of the City of Fayettev'lie. Arkansas the "City ). The City has covenanted to fix and maintain rates for water and sewer services wh ch shall provide Gross Revenues during each f scal year of the System of at least 410% of the ancLnt required for such fiscal ,year to pay Operating Experses of the Syalem, principal and interest or. the Series 1992 Bonds and ary Parity Indebtedness outstanding. ary Trustee and Registrar ees required deposits into the Dept Service Reserve cLnd and required deposits into the Renewal and Rep'acenert Fund (as each such term is detined herein). See the caption "SECURITY FOR AND SOURCE OF PAYMENT OF THE SERIES 1992 BONGSherein THE SERIES 1992 BONDS ARE SPECIAL OBL'GATIONS OF THE CITY SECURED BY A PLEDGE OF, AND PAYABLE SOLELY FROM, THE NET REVENUES OF THE SYSTEM. THE FAITH AND CREDIT OF THE CITY ARE NOT PLEDGED TO THE PAYMENT OF THE SERIES 1992 BONDS AND THE ISSUANCE OF THE SERIES 1992 BONDS SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE CITY TO LEVY OR PLEDGE ANY TAXES WHATSOEVER OR TO MAKE ANY APPROPRIATION FOR THE PAYMENT OF THE SERIES 1992 BONDS EXCEPT AS DESCRIBED HEREIN WITH RESPECT TO THE NET REVENUES. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. MATURITY SCHEDULE (August 15) Principal Interest (August 15) Principal Interest Maturity Amount Rate .Maturity Amount Rate 4993 $2'5000 300% 20022 S420.00C 5.10% 1994 290.000 350 2CO3 440.000 555 1995 300.000 385 2004 470.000 5:60 1996 310000 4.15 2005 495.000 5.75 1997 325000 4:35 2006 525,000 5.85 1998 340000 4:65 2007 555,000 5.90 1999 360:000 4.70 2008 590,000 6.00 2000 380,000 4.85 2009 625.000 6.05 2001 395000 5.00 $2,905,000 6.15% Term Bond Due August 15, 2012 (All Series 1992 Bonds Offered at Par Plus Accrued Interest) The proceeds 'of :he Series ' 992 Bonds w It be used, along with other available moneys. to 'finance the accuisition, ccr.struction and ecucping of certain cap'ta improverr.ents to t^e System, :o refund t^e City s Water and Sewer Revenue Ref,irding Bonds. Series 1985, to fu -'d a dent service reserve and to day certain costs of issuance of the Se r es 4 992 Bonds. See the cast ons "THE IMPROVEMENTS' and "THE REFUNDING PROGRAM" herein. The Series 1992 Bonds are cYered whe-,.as and r SSLed and received dy the Jnoerwriter and are subject to Ire apprcval of val dity by Brown & Wood. Bond Counsel. and the aperoval of carte n egal matters by Rose Law F rm, a Profess.ona Association, co..nsel to the Jnderwrte-. and by Jerry E. Rose. Esq , City Attorney, and s..bject to certair other cond'tions. It is expected that t'e Series 1992 Bonds wil be available for denvery n New York, New'York on or about September 22. 1992. Llama The date of this Official Statement is August 18,1992. New Issue Rating: Standard & Panes "A" 'OFFICIAL STATEMENT In the' opinion of Bona Counsel, under ensuing law. .assunung compliance with certain covenants described herein. (i) imeres on the Serer 1994 Bonds rs excluded from grow ,ncome for federal income tar purposes, (u) interest on the Series 1994 Bonds is not an iron of tax preference for purposes of :he fieaml ahemouve minunwn tax unposed on manvduats and corporations. Ithl with respect to corporation; interest on the Series 1994 Bonds will be taken into account.W determining adjusted net book income '1ad;'usted curreru'eamtngc for taxable tears begrnntng after December 31, .2959) fm the purpose bf toinpuung the federal' alternative muwnum tax and the federal environmental car; 'it) the Sines 1994 Bondy are "qualified tar-ecempt obligaanns"wttlundhe meaning of Section 265 of the Internal Revenue Code of 1984 as ammde4 and certain financial institutions are dllowea a.deduction•of 80% of unity from on of their interest expenses allocable to interest on the Series 1994 Bonds. I vl interest on the Serves 1994 Bonds •is (aempi from Store'of Arkansas income tax and '0'i.; the Series 1994 Bonds are nor subject to propene in in the State ofArkrnsac 'ln.thu:re.gard 8& TAX EXEMPTION.) $5.,5"00,000 CITY OF FAYETTEVILLE, ARKANSAS WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1994 Dated: October 1. 1994 Due: August'15, asshown below Pnnclpat on the Bonds is payable at The corporate :asst office dl Bank of Oklahoma, N.A.. Tulsa. Oklahoma, as Trustee and Paving Agent (the Trtsrce"). Inter: on the Bonds .s pavablc semiannually on February 15 and Adgust 15 in each year. commencing February :5 1995. by check or draft of the Tustee madcd to the registered owner thereof as of the applicable record date at the address as shown or. the bond registration books maintained tv Rhe Trustee. :'dice Bonds Will be issued only as registerea Bonds in the denomination of 55,000 or any integral multipic thereof. The Bonds are issued on a panty with the Cry s outstanding Waterand Sewer System Refunding and improvement Resenue Bonds. Sens 1992. The Bonds are payable solely from net revenues derived from the operation' UT the City of Fayetteville. Arkansas water and sewer system (the "System"), which amount will be sufficient to pay the principal of, premium, if any, and Interest on the Bonds as the same become due and payable. The City has fixed and has covenanted and agreed to maintain rates for services of the System which shall be sufficient at all times to provide at least 110% (1) for the payment of operation and maintenance expenses of the System, (ii) each veal's required payments of principal. premium if any, and interest on the Bonds. (Iii) the Trustee's and Paying Agent's fees, and (Iv) the required deposits into the Debt Service Reserve Fund and Renewal and Replacement Fund. The Bonds are redeemable as provided nit the section aerem entitled "Redemption Prior :o Maturity:" MATURITY SCHEDULE Year •Amount 'Rate ;Year -Amount Rate 1995 5315000 4 G3'e 1000 $350 000 5.15% 1996 290000 445 205: "370.000 523 1997 305.000 410 2002 :390000 5.35 1998 320,000 490 1003 410:000 3:45 1999 335,000 5:O5 2004 :430,000 535 57,985;000 6Mcc .0Tarr. 'Bonds due Augmt:15. 2008 'Ihe Bonds are dtfered subject to prior sale. when, as and if issued W the City and accepted by the Undenvnter,'subject to the approva. of lega.i:v by (fill :aw Firm. Little Rock. Arkansas, Bond Counsel. Certain legal natters wr:l be passed upon for the C.ty W :he City Attorney.:erry E. Rose. Fayetteville. Arkansas. Cwna in ether lega: matters will be passed upon for the Underwriter W Is ' Co,asc.. Williams & Acdersor., UI:le Rock. Arxarsas. The Bonds will be available for delivery on or About October 2,5.:994. I Dated. 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O O— e1 Q I Q 9sq K WigW TS ≥ f•4'4 j4'4 Y' N N I V1 b n 000' O_ N.,T l"' VIPIP-C..OgO a - NI- -- o - - -OOO - O F„ o ''o o c oo o -l�- - n n -1 s U, u 1 m m 6 O E W ?a Refunding of CEC Bonds Series 1995 Size: $1,845,000 $ PV Savings: $ 350,088 % PV Savings: 18.97% TABLE OF CONTENTS City of Fayetteville, •Arkansas Continuing Education Center Refunding Revenue Bonds Series 1.9.95 ........................... Level Debt Service Scenario Report Page Sources and Uses of Funds ... . . . . ,. ,....... 1 Costof Issuance. . . . . . . . . . . :........ ... .2 Summary of Refunding Results. . . . ..:. r. 3 Bond Debt Service . . . . . . . . . . . . . . . ....... . ... . . . . . . . . . . . . . . 4 Bond Summary Statistics . . . . . . . . . . . . . . . . .. . . ... . . . . . . . . . . . . 5 Prior Bond Debt Service . . . . . . . . . . . . . . . . . . . . r . . . . . . . . . . . _. . :7 Escrcw Requirements ... . . . . . : . . . . . . . . . . . . . ..... . . . . ... . .8 Prccf cf Arbitrage"Yield. . . . . . . . . . . . . . . . . ..... . . . . . . . . ... . 9 Net Debt Service. . ... . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . . ..... :10 Say. ngs . . . . . . . ..... . . . . . . . . . . . . . . . . . . . ..... ... . . . . . . ... :1:1 12 -.May -95 2:51 pm Prepa-ed ty L.aa:CcmpAny (c; 4995 (Finance 2.3CO FAYETTVL:CE:1CvR.FYVARK-.95CEC1) SOURCES AND USES OF FUNDS City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 Level Debt Service Scenario ........................... Par P(us: Less: Sources of Funds Amount Accrued Discount Total Bond Proceeds: Serial Bonds -1,845,000:.CC - - 1,845,000.00 Other Sources of Funds: 1979 Debt Service Reserve 915,000.00 - 915,000.00 1979 Pledged Fund 749,000.00 - 749,000.00 1,664,000.00 - 1,664;000.OG 3,509,000.00 .- - 3,509000.00 Uses of Funds Par Amount Plus: Less: Accrued Disccunt Total Refunding Escrow Deposits: PV cost of cashflows 3,273,299.97 - :- 3,270,299.97 Other Func Deposits: 1995 Debt Service Reserve Fund 184,500.00 - 184,500.00 Del'very Date Expenses: Cost of Issuance 24,000.00 24,000.00 Underwriter's Discount :8,450.00 - 18,450.00 Bond insurance 1'.680.'8 - 11,680.18 5430.18 - - 54,130.18 Crier ,;ses o` Funds: Additional Proceeds 69.85 - - 69.85 3,539,300.00 - - 3,509,000.00 12-vav-95 2:51 qn P-eparec by L.ama Company (c) 199S (Finance 2.3CC FAvE--VL:CECAtvR.FYVAR)t'95CEC') Page :COST OF ISSUANCE City of Fayettevi.I te, Arkansas Continuing Education Center Refunding Revenue Bonds 'Series 1995 Level IDebt 'service Scenario Cost of Issuance S/1000 Amount Bond•Counsei 9.75610 18„000.00 Printing 0.81301 1,500.00 Trustee Fee C.81301 1,500.00 Escrow Agent 0.27100 500.30 Verification .0.81301 1.,500.30 MisceLLaneous .0.54201 1,000.00 13.00813 24,00.00 2 -May -95 2:5' on Prepared by _tan'a ;.wary C:? '995 ;F i•nanee 2.300 FA"E""V.L:CEi..'C"R ,iF"JAgK'95iEC".l wage:2 SUMMARY OF REFUNDING RESULTS City of Fayettevilte, Arkansas Continuing Education Center Refunding Revenue Bonas Series 1995 ................... M.,.... Level Debt Service Scenario Dated Date 6/1571995 Delivery Date 6/15/1995 Arbitrageyield 5.0C2794% Escrow yield 5.CC2794% Bond Par Amount 1,845,000.CC True Interest Cost 5.08315C% Net Interest Cost 5.052805% Average Coupon 4:869828% Ave -age Life .5.465 :Par amount of .refunded bonds 3,165;000:00 Average coupon of refunded bonds -7 858770% Average Li'e .of refunded bonds 5.983 PV of prior debt to 6/'5/1995 8.5002794% 3,662,837.49 Net PV Savings ,350,087.53 Percentage savings of refunded bonds 11.061217% Percentage savings of refunding bonds 18.97[934% 12 -May -95 2:51 prr Prepared by .Lama t'ompany. %e) 1995 nance 2:300 rAYETT'V,;�EZ'0YR;aY.`JARK-95;E,:.:) 'Page:3 BOND DEBT SERVICE City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Boras Series 1995 Level Debt Service Scenario ........................... Dated Date 6/15/1995 Delivery Date 6/15/1995 Period Ending Principal Coupon Interest Debt Service Arn.a t Debt Service .gun 15, 1995 Oct 1, 1995 50,000.00 4.300% 26,011.96 76,011.96 76,011.96 Apr 1, 1996 - - 43,096.25 43,C96.25 - Oct 1, 1996 165,000.00 4.500% 43,096.25 208,096.25 251,192.5C Apr 1, 1997 - - 39,383.75 39,383.75 - Oct 1, 1997 170,000.00 4.600% 39,383.75 209,383.75 248,767.5C Apr 1, 1998 - 35,473.75 35,473.75 - Oct 1, 1998 180,000.00 4.700% 35,473.75 215,473.75 250,947.50 Apr 1, 1999 - 31,243.75 31,243.75 . Oct 1, :1999 :90,000.00 4.750% 31,243.75 221,243.75 252,487.5C Apr 1, 2000 - - 26,731.25 26,731.25 - Oct 1, 2000 200,000.00 4.800% 26,731.25 226,731.25 253,462.50 Apr 1, 2001 - - 21,931.25 21,931.25 - Oct 1, 2001 205,000.00 4.850X 21,931.25 226,931.25 248,862.50 Apr 1, 2002 - - 16,960.00 16,960.00 - Oct 1, 2002 215,700.00 4.900% 16,960.00231,960.00 248,920.00 Aor 1, 2003 - - 1,692.50 11,692.50 - Oct 1, 2003 237,770.30 4.957% ",692.50 241,692.50 253,385.00 Abr 1, 2004 - - 6,000.00 6,000.00 - Oct 1, 2004 240,000.00 5.000% 6,370.00 246,000.00 252,000.00 1,845,CCO.00 491,036.96 2,336,036.96 2,336,036.96 12 -May -95 2:51 pn Prepared by _Lana Company (U 1995 (Finance 2.303 FAYETTv_ecEr3YR.,FWARK-95CEC1, Page 4 BOND SUMMARY STATISTICS City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 ........................... Level Debt Service Scenario Dated Date 6/15/1995 Delivery Date 6/15/1995 Last Maturity 1C/01/2004 Arbitrage Yield 5.002794% True Interest Cost (TIC) 5.083150% Net Interest Cost (NIC) 5.052805% All -In TIC 5.513843% Average Coupon 4.869828% Average Life (years) 5.465 Duration of Issue (years) 4.717 Par Amount 1,645,000.00 Bond Proceeds 1,845,000.00 Total :Interest 491,036.96 Net Irterest 509,486.96 Total Debt Service 2,336,036.96 Max'ram Annual Debt Service 253,462.50 Average Annual Debt Service 251,336.91 Underwriter's Fees (per $1000) Average Takedown - Other Fee 10.000000 ota. Underwriter's D-scount 0.000303 aid Price 99.000000 Bond Caroonent Par Val..e Average ar'ce Ccupon Average Life Ser1al Bonds 1,845,330.CG 100.CCC 4.8701 5.465 1,845,CCC.D0 5.465 12 -May -95 2:51 pm Prepa-ed by Lama Comcary (c) 1995 (°inane 2:300 rAYETTVL:"E"'OYR, F°VARK'95CEC'.) Page 5 BCND SUMMARY STATISTICS City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 Level Debt Service Scenario ........................... Par Value + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense - Other Amounts Target Value Target Date Yield TIC 1,845,000.00 18,450.00 1,826,550.00 6/15/1995 5.083150% All -In TIC 1,845,CC0.00 -18,450.00 -24,000.00 -11,680.18 1,790,869.82 6/15/1995 5.513843% Arbitrage Yield 1,845,000.00 11,680.18 1,833,319.82 6/15/,995 5.002794% l2 -"ay -95 2:51 pm Prepared by LLama Careany (c) 1995 (Finance 2.300 --AYETTVL:CECICVR,FVVARK-95CEC1) Page 6 PRIOR BOND DEBT SERVICE City 0f Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 ........................... Level Debt Service Scenario Period Ending Principal Coupon •Interest Debt Service Annual Debt Service Jun 15, 1995 - - - - Oct 1, 1995 190,000.00 7.500% 123,478.13 313,478.13 313,478.'.3 Apr 1, 1996 1'.6,353.13 116,353.13 - Oct 1, 1996 200,000.00 7.500% 116,353.13 316,353.13 432,706.26 Apr 1, 1997 - - 108,853.13 1C8,853.13 - Oct 1, 1997 220,000.00 7.500% 108,853.13 328,853.13 437,706.26 Apr 1, 1998 - 100,603.13 100,603.13 . Oct 1, 1998 230,000.00 7.875% 100,603.13 330,603.13 431,206.26 Apr 1, 1999 - - 9',546.88 91,546.88 Oct 1, 1999 250,000.00 7.875% 9,546.88 341,546.88 433,093.76 Apr 1, 2000 - 8',703.13 81,703.13 - Oct 1, 2000 275,000.00 7.875% 8',703.13 356,703.13 438,406.26 Apr 1, 2001 - - 70,875.00 70,875.00 - Oct 1, 2001 300,000.30 7.875% 70,875.00 370,875.00 441,750.00 Apr 1, 2002 - - 59,062.50 59,062.50 - Oct 1, 2002 325,000.30 7.875% 59,062.5C 384,062.50 443,25.00 Apr 1,2003 - - 46,265.63 46,265.63 - Oct 1, 2003 350,300.00 7.875% 46,265.63 396,265.63 442,53.26 Apr 1,'2004 - - 32,484.38 32,484.38 - Oct 1, 2004 825,000.00 7.875% 32,484.38 857,484.38 889,968.76 3,165,000.00 ,538,971-95 4,703,9-71.95 4,703,97:.95 2 -May -95 2:51 p0 Prepared by Llama Company (c) 1995 (Finance 2.300 FAYETT9_:CEC'OYR,FYVARK-95CEC1) Page 7 ESCROW REQUIREMENTS City of FayetteviLLe, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 Level Debt Service Scenario Period Principal Redemption Ending PrircipaL :nterest Redeemed Premium Total Oct 1, 1995 19C,CCC.00 123,478.13 2,975,000.00 29,750.00 3,318,228.13 19C,CCO.00 123,478.13 .2,975.,000.OO 29,750.00 3,318228.13 12 -may -95 2:51 pm Prepared ty Lama Company (c) 1995 ('inane 2.300 �AYETTV.:;.E�1OYR,F�VARK-95CEC1) Page 8 PROOF OF ARBITRAGE YIELD City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 ..........-'-- Level Debt Service Scenario Date Debt Service Present Value to 6/15/1995 a 5.0027938% Oct 1, 1995 76,011:96 74,914.05 Apr 1, 1996 43096.25 41,437.26 Oct 1, 1996 208,096.25 195,202.80 Apr 1, 1997 39,383.75 36,342.01 Oct 1, 1997 209,383.75 186,941.27 Apr 1, 1998 35,473.75 30,898.65 Oct 1, 1998 215,473.75 183,103.66 Apr 1, 1999 31,243.75 25.,902.16 Oct 1, :999 221,243.75 178,942.74 Apr ',:2000 26,731.25 21,092.72 Oct t, 2000 226,73.25 174,539.97 Apr 1, 2001 21,931.25 16,470.89 Oct 1, 2001 226,931.25 166,271.66 Apr 1., 2002 6,960.00 12,123.28 Oct 1, 2002 231,960.00 161,762.36 Apr 1, 2003 :1,692.50 7,955.03 Oct 1, 20C3 241,692.50 160,423.50 Aor 1, 2CC4 6,000.00 3,885.32 Oct 1, 2CC4 246,000.CC 155,410.49 2,336,736.96 1,833;319.82 P^oceeds Summary Delivery date Par Value Arbitrage expenses :Target for yield calculation 6/15/4995 1,845,000.00 -11,680.8 1,833,39.82 12 -May -95 2:51 or Dreoared by Plana Company (c) 1995 (France 2333 F4YE-TVL:CEC10"R,FYVARK-95CEC11 Page 9 NET DEBT SERVICE City of Fayetteville, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 ..._ - Level Debt Service Scenario Cate Total Debt Service 1995 Debt Service Reserve Fund Net Debt Service Oct 1, 1995 76,011.96 2,717.77 73,294.19 Apr 1, 1996 43,096.25 4,615.C8 38,481.17 Oct 1, 1996 208,096.25 4,615.68 203,481.17 Apr 1, 1997 39,383.75 4,615.C8 34,768.67 Oct 1, 1997 209,383.75 4,615.C8 204,768.67 Apr 1, 1998 35,473.75 4,615.68 30,858.67 Oct 1, 1998 215,473.75 4,615.08 210,858.67 Apr 1, 1999 31,243.75 4,615.G8 26,628.67 Oct 1, 1999 221,243.75 4•,615.08 216,628.67 Apr 1, 2000 26,73.25 4,615.08 22,116.47 Oct 1, 2000 226,73.25 4•,615.08 222,116.:7 Apr 1, 2001 21,93:.25 4,615.08 17,316.'7 Oct ', 2001 226,931.25 4,615.08 222,36.7 Apr 1, 2002 16,960.00 4,615.08 12,344.92 Oct 1, 2002 231,963.70 4,615.08 227,344.92 Apr 1, 2003 11,692.50 4,615.08 7,077.42 Oct 1, 2003 241,692.50 4,615.08 237,077.42 Apr 1, 2C04 6,707.30 4,615.08 1,384.92 Oct 1, 20C4 246,000.30 189,115.08 56,884.92 2,336,736.96 270,289.21 2,065,747.75 2 -May -95 2:51 pm P-ecared by Llama Comca-y (c) 1995 (F'ra-ce 2.300 FAYE"VL:CEC10YR,FYVARK-95CEC1; Page 7 SAVINGS City of FayetteviLLe, Arkansas Continuing Education Center Refunding Revenue Bonds Series 1995 Level Debt Service Scenario Present Value Date Prior Debt Service Refunding Debt Service Savings Annual Savings to 6/15/1995 a 5.CO27938% Oct 1, 1995 313,478.13 76;011.96 237,466.17 237,466.17 234,036.23 Apr 1, 1996 116,353.13 43,096.25 73,256.88 - 7C,436.86 Oct It 1996 316,353.13 208;096.25 108,256.88 181,513.76 101,549.38 Apr 1, 1997 108,853.13 39,383.75 :69;469;38 - 63,574.86 Oct I, 1997 328,853.13 209,383:75 119,469.38 188,938.76 106,664.23 Apr 1, 1998 100,603.13 35,47375 65,129.38 - 56,729.55 Oct 1, 1998 330,603.13 215,473:75 115,129.38 180,258.76 97,833.77 Apr 1, 1999 91,546.88 31243.75 .60303.13 - 49,993.40 Oct 1, 1999 341,546.88 221;243.75 120;303.13 180,606;26 97,301.60 Apr 1, 2000 81,7C3.13 26,731.25 54,971.88 - 43,376.44 Oct It 2000 356,703.13 226,731.25 129,971.88 184,943.76 100,053.64 Apr 1, 2001 70,875.60 21,931;25 48,943.75 - :36,757.92 Oct 1, 2001 370,875.00 226,931.25 143,943.75 192,887.50 105,467.04 Apr 1, 2002 59,062.50 16,960.00 42,102.50 - 30,095.53 Oct I, 2002 384,062.50 231,960.00 152,102.50 194,205.00 106,071.99 Apr 1, 2003 46,265.63 11,692.50 34,573.13 - 23.,521.95 Oct 1, 2003 396,265.63 241,692.50 154,573.13 189,146.26 102,597.98 Apr It 2004 32,484.38 6,000.00 26,484.38 - 17,15C.03 Oct 1, 2004 857,484.38 246,000.00 611,484.38 637,968.76 386,305.24 4,703,971.95 2,336,036.96 2,367,934.99 2,367,934.99 1,829,517.67 Savincs.Sumner PV of savings from cash f.ow 1,829,517.67 Less: Prior funds on hand -1,664,000.00 Pius: Refunding funds on hand 184,569.85 Net PV Savings 350,087.52 12 -May -95 2:54 pm Prepared cy Liana Company (c) 1995 (Finance 2.300 FA"ETTVL:CECIOYR,;YVARK-95CECi) Page 11 Refunding of Walton Arts Center Bonds Series 1995 Size: $2,665,000 $ PV Savings: $ 316,591 % PV Savings: 11.88% TABLE OF CONTENTS City of Fayetteville, Arkansas Sales Tax Capital IcTprovement Refunding Bonds Series 1995 Level Debt .Service Scenario ............................ Report Page Sources and Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Cost of Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Summary of Refunding Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Bond Summary Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Prior Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Escrow Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 8 Proof of Arbitrage Y i e:d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . 9 Net Debt Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . 10 Savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . 11 2 -May -95 3:11 pm Prepa-ea by Liana Conmany Cc) 1995 (°finance 2.300 rAYE-'VL: FAVCA502,rYVARK-05CAP:MP) SOURCES AND USES OF FUNDS City of Fayetteville,•ArKanas Sales Tax Capital Improvement Refunding Bonds Series 1995 Level Debt Service Scenario Per PLus: Less: Sources of Funds Amount Accrued Discount Total Bond Proceeds: Serial Bonds 2,665.;000.00 - - 2,665,CC0.00 Other Sources of Funds: 1986 Debt Service Reserve 397,000;00 - - 397,000.00 1986 Revenue Fund 507.000.00 - - 5C7,000.00 904,000.00 - - 904,000.00 3,569,000.00 - - 3,569,000.00 Par Plus: Less: Uses of Funds Amount AccrLed Discount Total Refunding Escrow Deposits: PV cost of cashf Lows 3,233,192.48 - - 3;233,192.48 Other Fund Deposits: 1995 Debt Service Reserve Fund 266,5CC.CC - - 266,500.00 Delivery Date Expenses: Cost of Issuance 24,CCC.CO - - 24,000.00 Underwriter's D•sccurt 26,65C.CC - - 26,650.00 Bond Insurance 18,170.35 - - 18.170.35 68,820.35 - - 68,820.35 Other Uses of Fures: Additional Proceeds 487.17 - - 487:17 3.,569,000.00 - - 3,569,000.;,0 12 -May -95 3:11 Pry Prepared by ,lama arca-y (c) 1995 (rinance 2.300 rAYETTV.:FA"CA5;2,FY'VARK-950AP;pP) Page COST CF ISSUANCE City of Fayetteville., Arkansas Sates Tax Capital .Irorovement Refunding Bonds Series 1995 —__________________________ Level Debt Service Scenario .___________________________ Cost of issuance S/1000 Amount Bond Counsel 6.75422 18,000.00 Printing C.56285 1,500.00 Trustee Fee 0.56285 1,500.00 Escrow Agent C.18762 500.09 Verificat?on 0.56285 1,500.00 Miscellaneous 0.37523 1,000.00 9.00563 24,000.00 12 -May -95 3:11 pm prepared by Ltama Company (c) -995 ('inance 2.300ZAYETTVL:FA'CASO2,'TVARK-95'CAP]MO) Page 2 SUMMARY OF REFUNDING RESULTS City of Fayetteville, Arkansas Sales Tax Capital Incrovement:Refunding Bonds Series 1995 ........................... Leve: Debt Service Scenario Dated Date 6/15/1995 Delivery Date 6/15/1995 Arbitrage yield 5.085869% Escrow yield 5.085869% Bond Par Amount 2,665,000.00 True Interest Cost 5.140874% Net Interest Cost 5.115328% Average Coupon 4.978419% Average Life :7.3C4 Par amount of reft-ded bonds 3j210,000.00 Average coupon of refunded bonds 7.013960% Average life of refunded bores 7.646 PV of p^ior debt to 6115/1995 a 5.085869% 3,600,433.33 Net PV Savings 316,590.85 Percentage savings of refunded bonds 9.862643% Percentage savings cf refunding bonds 11.879582% 2 -May -95 3:11 pm Prepa-ed by Llama Company (c; 199`. (Finance 2.300 FAvE"VL: FAYCASC2,FWARK- 95CAP IMP; Page 3 ' BOND DEBT SERVICE City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds ----------------------- Level .-_'._-- Series 1995 ---__-_- ---------- Dated Date 6/15/:995 Delivery Date 6/15/:995 Period Annual Ending P-incipal Coupon Interest Debt Service Debt Service Jun 15, 1995 - - - - - Nov 15, 1995 65,000.00 4.3CC% 54,175.00 119,175.00 119,175.00 May 15, 1996 - - 63,612.50 63,612.50 Nov 15, 1996 465,000.00 4.SCG% 63,612.50 228,612.50 292,225.00 May 15, 1997 - - 59,900.00 59,900.00 - Nov 15, 1997 175,000.00 4.600% 59,900.00 234,900.00 294;800.00 May 15, 1998 - - 55,875.30 55,875.00 - Nov 15, 1998 180,700.30 4.700% 55,875.00 235,875.00 291;750.00 May 15, 1999 - - 51,645.00 51,645.00 - Nov 15, 1999 190.,000.70 4.750% 51,645.00 241,645.00 293,290.00 May 15, 2000 - - 47,132.50 47,132.50 - Nov 15, 2000 200,000.00 4.800% 47,132.50 247,132.50 294,265.00 May 15, 2001 - - 42,332.50 42,332.50 - Nov 15, 2001 217,000.00 4.850% 42,332.50 252,332.50 294,665.00 - May 15, 2002 - - 37,240.00 37;240.00 - Nov 15, 2002 215,CCC.00 4.900% 37,24C.00 252240.00 289,480.70 May 15, 2003 - - 3,972.50 31,972.50 - Nov 15, 2003 23C,CCC.CC 4.950% 3:,972.50 261,972.50 293,945.77 May 15, 2004 - - 26,280.00 26,280.00 - Nov 15, 2004 24C,000.CC 5.000% 26,280.CC 266,280.00 292,560.37 May 15, 2005 - - 20,28O.CC 20,280.00 - Nov 15, 2005 250,000.00 5.050% 20,280.CC 270,280.00 290,560.CC May 15, 2706 - - 13,967.5C 13,967.50 - Nov 15, 2006 265,000.00 5.100% 13,967.SC -278,967.50 292,935.CC May 15, 2CC7 - - 7,210.CD 7,20.00 Nov 45, 2CC7 280,000.00 5.150% 7,210:00 287,20.00 294,427.CC 2,665,000.00 969,07000 3,634,070.00 3,634,77C.00 I' :,2 -°ay -95 3:1' pm Prepared by Llama Company (C) 995 (F.rance 2.3tG FAYETTV.:FAYCAS02,FYVARK-95CAPIMP.) Page 4 BOND SUNNARY STATISTICS City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds Series '.995 Level Debt Service Scenario Dated Date 6/15/1995 Delivery Date 6/15/1995 Last Maturity 11/15/2007 Arbitrage Yield 5.085869% True Interest Cost (TIC) 5.140874% Met Interest Cost (NIC) 5.115328% All -In TIC 5.418264% Average Coupon 4.978419% Average Life (years) 7.304 Duration of Issue (years) 5.979 Par Amount 2,665,000.00 Bond Proceeds 2.,665,000.00 Total :nterest 969,070.00 Net interest 995,720.00 Total Debt Service 3,634,070.00 Maximum Annual Debt Service 294,800.00 Average Annual Debt Service 292,676.78 Underwriter's Pees (per $1000) Average Takedown - Other Fee 10.000OCO Tctal ..nderwrite-'s Discount 13.000CCC 9id Price 99.CCCCCC Par Average Average Bond Compone^t Value Price Coupon L'fe Serial Bonds 2,665,000.00 100.000 4.9787 7.304 2,665,000.00 7.3C4 12 -May -9`. 3:': cn Prepared by _Lana Conoany ;c; 1905 (Finance 2:300 FAYETTV.:FAYCAS02.,C"VAMK-95CAPIMP.) Page 5 BOND SU401ARY STATISTICS City of Fayetteville, Arkansas Sates Tax Capital Improvement Refunding Bonds Series 1995 ........................... Level Debt Service Scenario All -In Arbitrage TIC TIC Yield Par Value 2,665,300.00 2,665,000.00 2,665,000.00 + Accrued Interest - - + Premium (Discount) - - - - Underwriter's Discount -26.,650.30 .-26,650.00 - Cost of Issuance Expense -24,000.00 - Other Amounts - -18,170:35 .18,170.35 Target Value 2,638,350.00 2,596,179.65 2;646,829.65 Target Cate 6/15/995 6/15/1995 6/15/1995 Yield 5.440874% 5.418264% 5.085869% 12 -May -95 3:" rn oreparec by L.ara Company (c) 199`. (Finance 2.300 FAYETT'V _: FAYCAS02, FY'JARK-95CAP:MP) Page 6 PRIOR BOND DEBT SERVICE City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds Series 1.995 -..........'--------------- Level Debt Service Scenario ........................... Period Ending Principal Coupon -Interest Debt Service Annual Debt Service Jun 15, 1995 - -- - - Nov 15, 1995 135,000.00 6.000% 110,257.50 , 245,257.50245,257.50 May 15, 1996 - - 106,207.50 106,207.50 Nov 15, 1996 135,000.00 6.50% 106,207.5C 241,207.50 347,415.00 May 15, 1997 - - 102,056.25 1C2,056.25 Nov 15, 1997 155,000.00 6.300% 102,056.25 257,056.25 359,112.50 May 15, 1998 - - 97,173.75 97,173.75 Nov 15, 1998 170,000.30 6.450% 97,173.75 267,173.75 364,347.50 May 15, 1999 - - 9',691.25 91,691.25 - Nov 15, 1999 195,000.70 6.600% 91,691.25 286,691.25 378,382.50 May 15, 2000 - - 85,256.25 85,256.25 - Nov 15, 2000 225,000.30 6.750% 85,256.25 31C,25625 395,512.50 May 15, 2001 - - 77,662.50 77.662.5C - Nov 15, 2001 260,000.30 6.900% 77,662.50 337,662.5C 415,325.00 May 15, 2002 - - 68,692.50 68,692.50 - Nov 15,2002 270,000.30 7.00% 68,692.50 338,692.50 407,385.00 May 15, 2003 - - 59,107.53 59;107.50 - Nov 15, 2003 285,000.70 7.100% 59,107.53 344,107.50 403,2:5.00 May 15, 2004 - - 48,990.00 48,990.00 - Nov 15, 2004 3'0,000.30 7.100% 48,990.30 358,990.00 407,980.00 May 15, 2005 - - 37,985.30 37,985.00 - Nov 15, 2005 330,000.30 7.100% 37,985.30 367,985.00 405,970.00 May 15,'2006 - - 26,270.30 26,270.33 - Nov 15, 2006 355,000.30 7.100% 26,273.30 381,27C.33 407,540 -CO May 15, 2007 - - 13,667.50 3,667.50 Nov 15, 2007 385,000.30 7.100% 13,667.50 398,667.53 412,335.CO 3,20,000.30 1,739,777.50 4,949,777.53 4,949,777.50 12 -May -95 3:1pn prepared by Llama ccmany :c; 1995 (F'.^ante 2.3CC FACE'TVL:FA�GAS02,FYVARK-95CADIMc) Page 7 ESCROW REQUIREMENTS City of Fayetteville, Arkansas Sales Tax capital Improvement Refunding Bonds Series 1995 LeveL Debt Service Scenario Period Principal Ending Interest Redeemed Tatal Jul 15, 1995 36,752.50 3:,210,000.00 :3,266,752.50 36,752.50 3:,20,000.00 3,266,752.50 :12 -May -95 3:11 pm Precarec by Llama Company (c) 199S (Finance 2.300 FAYET'VL:FA°CAS02,FYVARC-95CAP:MP) Page 8 I Sales 1 ' Date Nov 15, May 15, ' Nov 15, May 15, Nov 15, May 15, ' Nov 15, May 15, Nov 15, 'May 15, Nov:5, May 15, No Nov 15, MaMay 15, v 15, Nov'5, No Nov 15, iMaNov 15,v 15, 4o May 15, Nov t5, 'May '5, v :5, May :5, No Nov 15, PROOF OF ARBITRAGE YIELD City of Fayetteville, Arkansas Tax Capital Improvement - Refunding Bonds Series 1995 Level Debt Service Scenario --------------------------- Present VaLue to 6/15/1995 'Debt Service a 5.0858689% 1995 119,175.00 116,707.04 1996 63,612.50 60,750.32 1996 228;612.50 212,912.11 1997 '59,900.00 54,402.83 1997 234,9C0.00 208,052.02 1998 55,875.00 48,261.49 1998 235,875.00 198,682.38 1999 51,645.00 42,422.86 1999 241,645.70 193,572.55 2000 47,132.50 36,819.74 2000 247,132.50 188,27139 2001 42,332.50 31,450.14 2001 252,332.50 182,816.83 2002 37,240.00 26,311.58 2002 252,240.00 173,798:27 2003 31,972.50 21,483.37 2003 261,972.50 171,662.62 2004 26,280.00 16,793.44 2004 266,280.03 165,938.47 2005 20,280.30 12,324.54 2005 270,283.30 160,180.99 2006 13,967.50 8,072.54 2006 278,967.50 157,231.36 2007 7,213.00 3,962.92 2007 287,210.00 153,947.86 3,634,C70.00 2,646,829.65 Proceeds SuTinary Delivery date Par Value Arbitrage expenses Target for yie.d calculation 6/15%1995 2,'665,000.00 -18,170.35 2,646,829.65 '2 -°ay -95 3:11 pm Preoarec by Taira Company (c7 1995 (rinarce 2,300 FAY'_TTVL:FAY;.ASC2,FYVAVC-95C4P1'P) Fage'9 I li II C NET'DEBT SERVICE City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds .Series 1995 Level Debt :Service Scenario ............. .""'."'.... Date Total Debt Service 19.95 Debt Service Reserve Fund Net Debt Service Nov 15, 1995 119,175.00 5.,647.43 113,527.57 May 15, 1996 63,612.50 6,776.92 56,835.58 Nov 15, 1996 228,612.50 '6.,776.92 221,835.58 May 15, 1997 .599900.00 :6,776.92 53,123.08 Nov 15, 1997 234,900.00 6,776.92 228,123.08 May 15, 1998 55,875.00 6,776.92 49,098.08 Nov 15, 1998 235,875.00 6,776.92 229,098.08 May 15, 1999 .51,645.00 6,776.92 44,868.08 Nov 15, 1999 241,645.00 6,776.92 234,868.08 May 15, 2000 47,132.50 6,776.92 40,355.58 Nov 15, 2000 247,132.50 6,776.92 240,355.58 May 15, 2001 42,332.50 6,776.92 35,555.58 Nov 15, 2001 252,332.50 6,776.92 245,555.58 May 15, 2002 37,240.00 6,776.92 30,463.08 Nov 15, 2002 252,240.cc 6,776.92 245,463.08 May 15, 2003 31,972.5C 6,776.92 25,195.58 Nov 15, 2003 261,972.50 6,776.92 255,195.58 May 15, 2004 26,280.00 6,776.92 19,503.08 Nov 15, 2004 266,280.00 6,776.92 259,503.08 May 15, 2005 20,280.00 6,776.92 13,503.08 Nov 15, 2005 27C,280.00 6,776.92 263,5C3.C8 May 15, 2006 13,967.50 6,776.92 7,19C.58 Nov 15, 2006 278,967.50 6,776.92 272,19C.58 May 15, 2007 7,210.00 6,776.92 433.C8 Nov 15, 2007 287,210.00 273,276.92 13,933.08 3,634,070.00 434,793.51 3,199,276.49 12 -"ay -95 3:11 pa Prepared by Mama Company (c) 1995 (rinance 2:300 FAYETTVL:=ATCAS02, FYVARK-95CAP1MP) Pa5e 1� SAVINGS City of Fayetteville., Arkansas Sates Tax Capital Improvement Refunding Bonds Series 1995 Level Debt Service Scenario ........................... Present Value Date Prior Debt Service Refunding Debt Service Savings Annual Savings to 6/'5/1995 2 5.0858689% Nov 15, 1995 245,257.50 119,175.CO 126,082.50 126,082.50 123,471.49 May 15, 1996 106,207.50 63,612.50 42,595.00 - 40,678.48 Nov 15, 1996 241,207.50 228,'612.50 12,595.00 55,190.30 11,730.02 May 15, 1997 102,056.25 59,900.00 42,156.25 - 38,287.47 Nov 15, 1997 257,056.25 234,900.00 22,156.25 64,312.50 19,623.89 May 15, 1998 97,173.75 55,875.00 41,298.75 - 35,671.39 Nov 15, 1998 267,173.75 235,875.00 31,298.75 72,597.50 .26,363.58 May 15, 1999 91,691.25 51,645.00 40,04625 - 32,895.28 Nov 15, 1999 286,691.25 241,645.00 45,046:25 85,092.50 36,084.82 May 15, 2000 85,256.25 47,132.50 38,123.75 - 29,782.13 Nov 15, 2000 310,256.25 247,132.50 63,123.75 101,247.50 48,089.17 May 15, 2001 77,662.50 42,332.50 35,330.00 26,247.77 Nov 15, 2001 337,662.50 252,332.50 85,330.00 120,660.00 61,822.24 May 15, 2002 68,692.50 37,24C.00 31,452.50 22,222.47 Nov 15, 2002 338,692.50 252,24C.00 86,452.50 117,905.00 .59,567.46 May 15, 2003 59,107.50 31,972.50 27,135.00 - 18,232.89 Nov 15, 2003 344,107.50 261,972.50 82,135.00 109,270.00 53,820.57 May 15, 2004 48,990.00 26,280.00 22,710.00 - 14,512.14 Nov 15, 2004 358,990.00 266,280.00 92,710.00 115,420.00 57,774.36 May 15, 2005 37,985.00 20,280.00 17,705.00 - 10,759.66 Nov 15, 2005 367,985.0C 270,280.00 97,705.00 115,410.00 57,904.70 May 15, 2006 26,270.CO 13,967.50 12,302.50 - 7,110:25 Nov 15, 2006 381,270.00 278,967.53 102,302.50 114,605.00 57,659.63 May 15, 2007 13,667.50 7,210.03 6,457.50 - 3,549.31 Nov 15, 2007 398,667.50 287,210.30 111,457.50 117,915.00 59;742.50 4,949,777.50 3,634,070.90 1,315,707.50 1,315;707.50 953,603.68 LI I Sav' ,qs Sumar PV of savings from cash flow 953,603.68 Less: Prior funds on hand -904,000.00 Plus: Refunding funds an hand 266,987.17 Met PV Savings 316,590.85 12 -May -95 3:11 pm P-epared by Lama Company (c; 1995 (Finance 2.300 rAYETTVL:FAYCAS02,FYVARK-95CAP9MP:, Page 11 SAMPLE MASTER SCHEDULE CITY OF FAYETTEVILLE, ARKANSAS WEEK # -. '•• :.'ACTION. ; t. RESPONSIBLE PARTIES 1 Hire Underwriters and Bond Counsel FCC, FCS Organizational Conference Call or Meeting FCS, BC;U, UC t Discussion with Rating Agencies and%or Bond Insurance Companies U 112 Review of Debt Service Structures and Terms FCS, BC, U. UC 1/2 Recommendations made to the City Staff on Need to Seek a Rating and/or Bond insurance U 2 First Draft of Community Profile (if necessary) FCS 2 First Draft of Bond Documents BC, UC 3 Meeting to Review Community Profile FCS, U 3 Conference Call or Meeting to Review Bond Documents FCS, BC. U, CC 3 Second Draft of Community Profile FCS 3 Second Draft of Bond Documents Distributed BC, UC 3 Select TrusteetPaying Agent/Registrar FCS, U. T 3 Mail Drafts o: Community Profile and Bond Documents to Rating Agencies and/or Insurance Companies, if necessary FCS, BC. U. UC 3 Select Escrow Verification Agent (Applies only to Refunding Bonds) FCS, U, EVA 3 Conference Call or Meeting to Review Bcnd Documents FCS, BC, U. UC 3 Discussior. with Rating Agencies and/or Bcnd Insurance Companies FCS, U. R4. BI 4 Receive Indication of Rating and/or Bond Insurance RA. BI 4 Final Draft of Bond Documents BC, UC 4 Print Preliminary Official Statement U, CC 4 Mail Preliminary Official Statement to Prospective Buyers U 5 Pricing Meeting or Conference Call FCS. U 5 Offer Bond Issue U 5 Approve Bond Purchase Agreement and Bond Ordinance FCC. FCS. BC, U. UC. T 9 Pre -close Bond issue FCS. BC, U, UC. T 9 Close Bond Issue FCS, BC. U, UC. T