8.2.B. SR 02-21-2012~~ REQUEST FOR ACTION
.iffier
To Item Number
Ma or and Ci Council 8.2 B
Agenda Section Meeting Date Prepared by
General Business Februa 21, 2012 Tim Simon, Finance Director
Item Description Reviewed by
Resolution Awarding the Sale of $1,595,000 General Obligation Cal Portner, Ci Administrator
Improvement Refunding Bonds, Series 2012B Reviewed by
Action Requested
The City Council is asked to approve the following:
1. A resolution awarding the sale of $1,595,000 General Obligation Improvement Refunding Bonds,
Series 2012B; fixing their form and specifications; directing their execution and delivery; providing
for their payment; and providing for the redemption of bonds refunded thereby.
2. Refunding Escrow Agreement.
Background/Discussion
On June 4, 2007, the city issued $3,090,000 in General Obligation Improvement Bonds, Series 2007C.
The bonds were used for the Deerfield and Irving Street improvement project. The bonds are repaid with
special assessments and an annual tax levy. On January 17, 2012, the City Council authorized staff to get
bids to refund the bonds fox interest cost savings.
Mark Ruff of Ehlers and Associates will be at the Council meeting to present the results of the sale of the
General Obligation Improvement Refunding Bonds, Series 2012B, for the street improvement project.
Bids will be received until noon on February 21, 2012.
In addition, staff held a rating call with Standard & Poor's on February 9, 2012, the results of the rating
call will be presented at the meeting. At the time of this memo preparation, Standard & Poor's has not
released the report.
Financial Impact
The estimated savings will occur over the remaining five years at a present value of slightly less than
$70,000. We will be able to adjust our portion of the tax levy starting in 2012 for taxes payable 2013. The
source of repayment will not change from the prior bonds: special assessments and tax levy.
Attachments
• A resolution awarding the sale of $1,595,000 General Obligation Improvement Refunding Bonds,
Series 2012B; fixing their form and specifications; directing their execution and delivery; providing
for their payment; and providing for the redemption of bonds refunded thereby.
• Refunding Escrow Agreement
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Action Motion by Second by Vote
Follow Up
P®NE~E~ 1f
Extract of Minutes of Meeting
of the City Council of the
City of Elk River, Sherburne County, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of
Elk River, Minnesota, was duly held in the City Hall in the City on Tuesday, February 21, 2012,
commencing at 6:30 o'clock P.M.
The following members were present:
and the following were absent:
The Mayor announced that the next order of business was consideration of the proposals
which had been received for the purchase of the City's $1,595,000 General Obligation Improvement
Refunding Bonds, Series 2012B.
The City Clerk presented a tabulation of the proposals that have been received in the manner
specified in the Terms of Proposal for the Bonds. The proposals are as set forth in Exhibit A
attached.
3982A9v1 JSB EL185-17
After due consideration of the proposals, Member then introduced
the following resolution, and moved its adoption.
RESOLUTION NO.
A RESOLUTION AWARDING THE SALE OF $1,595,000 GENERAL
OBLIGATION IMPROVEMENT REFUNDING BONDS, SERIES 2012B;
FIXING THEIR FORM AND SPECIFICATIONS;
DIRECTING THEIR EXECUTION AND DELIVERY;
PROVIDING FOR THEIR PAYMENT;
AND PROVIDING FOR THE REDEMPTION OF
BONDS REFUNDED THEREBY.
BE IT RESOLVED By the City Council of the City of Elk River, Sherburne County,
Minnesota (the "City") as follows:
Section 1. Sale of Bonds.
1.01. Background; Findings. It is hereby determined that:
(a) the City is authorized by the provisions of Minnesota Statutes, Chapter
475 (the "Act") and Section 475.67, Subdivision 13 of the Act to issue and sell its general
obligation bonds to refund outstanding bonds when determined by the City Council to be
necessary and desirable;
(b) it is necessary and desirable that the City issue approximately $1,595,000
General Obligation Improvement Refunding Bonds, Series 2012B (the "Bonds") to
refund in advance of maturity and at their redemption date the 2014 to 2018 maturities of
the City's General Obligation Improvement Bonds, Series 2007A, dated June 26, 2007
(the "Refunded Bonds") in the principal amount of $3,090,000 is callable on February 1,
2013.
1.02. Award to the Purchaser and Interest Rates. The proposal of
(the "Purchaser") to purchase the Bonds of the City
described in the Terms of Proposal thereof is hereby found and determined to be a reasonable offer
and is hereby accepted, the proposal being to purchase the Bonds at a price of
$ plus accrued interest to date of delivery, for Bonds bearing interest as
follows:
398249v1 JSB EL185-17 2
Year Interest Rate
2014
2015
2016
Year Interest Rate
2017
2018
1.03. Purchase. The Finance Director is directed to retain the good faith check of the
Purchaser, pending completion of the sale of the Bonds. The Mayor and Finance Director are
directed to execute a contract with the Purchaser on behalf of the City.
1.04. Terms and Principal Amounts of the Bonds. The City will forthwith issue and sell
the Bonds in the total principal amount of $1,595,000 originally dated as of March 15, 2012, in the
denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward, bearing
interest as above set forth, and maturing serially on February 1, without option of prior payment, in
the years and amounts as follows:
Year Amount Year Amount
2014 $335,000 2017 $310,000
2015 325,000 2018 305,000
2016 320,000
As may be requested by the Purchaser, one or more term Bonds may be issued having
mandatory sinking fund redemption and final maturity amounts conforming to the foregoing
principal repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
Section 2. Registration and Pa ice.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The
interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check
or draft issued by the Registrar described herein.
2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest
payment date preceding the date of authentication to which interest on the Bond has been paid or
made available for payment, unless (i) the date of authentication is an interest payment date to
which interest has been paid or made available for payment, in which case the Bond will be dated as
of the date of authentication, or (ii) the date of authentication is prior to the first interest payment
date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds
is payable on February 1 and August 1 of each year, commencing August 1, 2012, to the registered
owners of record as of the close of business on the fifteenth day of the immediately preceding
month, whether or not that day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating
agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the
City and the Registrar with respect thereto are as follows:
398249v1 JSB EL185-17 3
(a) Re ig ster. The Registrar must keep at its principal corporate trust office a
bond register in which the Registrar provides for the registration of ownership of Bonds and
the registration of transfers and exchanges of Bonds entitled to be registered, transferred or
exchanged.
(b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by
the registered owner thereof or accompanied by a written instrument of transfer, in form
satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney
duly authorized by the registered owner in writing, the Registrar will authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Bonds of a
like aggregate principal amount and maturity, as requested by the transferor. The Registrar
may, however, close the books for registration of any transfer after the fifteenth day of the
month preceding each interest payment date and until that interest payment date.
(c) Exchange of Bonds. When Bonds are surrendered by the registered owner
for exchange the Registrar will authenticate and deliver one or more new Bonds of a like
aggregate principal amount and maturity as requested by the registered owner or the owner's
attorney in writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly
cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is
satisfied that the endorsement on the Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar will incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person in
whose name a Bond is registered in the bond register as the absolute owner of the Bond,
whether the Bond is overdue or not, for the purpose of receiving payment of, or on account
of, the principal of and interest on the Bond and for all other purposes, and payments so
made to a registered owner or upon the owner's order will be valid and effectual to satisfy
and discharge the liability upon the Bond to the extent of the sum or sums so paid.
(g) Taxes, Fees. and Charges. The Registrar may impose a charge upon the
owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for
any tax, fee or other governmental charge required to be paid with respect to the transfer or
exchange.
(h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or
is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number,
maturity date and tenor in exchange and substitution for and upon cancellation of the
mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon
the payment of the reasonable expenses and charges of the Registrar in connection
398249v1 JSB EL185-17 4
therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar
of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the
ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in
form, substance and amount satisfactory to it and as provided by law, in which both the City
and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be
cancelled by the Registrar and evidence of such cancellation must be given to the City. If
the mutilated, destroyed, stolen or lost Bond has already matured or been called for
redemption in accordance with its terms it is not necessary to issue a new Bond prior to
payment.
2.04. Appointment of Initial Re ig smear. The City appoints U.S. Bank National
Association, St Paul, Minnesota, as the initial Registrar. The Mayor and the Administrator Director
are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon
merger or consolidation of the Registrar with another corporation, if the resulting corporation is a
bank or trust company authorized by law to conduct such business, the resulting corporation is
authorized to act as successor Registrar. The City agrees to pay the reasonable and customary
charges of the Registrar for the services performed. The City reserves the right to remove the
Registrar upon 30 days' notice and upon the appointment of a successor Registrar, in which event
the predecessor Registrar must deliver all cash and Bonds in its possession to the successor
Registrar and must deliver the bond register to the successor Registrar. On or before each principal
or interest due date, without further order of this Council, the Finance Director must transmit to the
Registrar moneys sufficient for the payment of all principal and interest then due.
2.05. Execution Authentication and Delivery. The Bonds will be prepared under the
direction of the Administrator and executed on behalf of the City by the signatures of the Mayor,
and Administrator, provided that those signatures may be printed, engraved or lithographed
facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears
on the Bonds ceases to be such officer before the delivery of a Bond, that signature or facsimile will
nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office
until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any
purpose or entitled to any security or benefit under this Resolution unless and until a certificate of
authentication on the Bond has been duly executed by the manual signature of an authorized
representative of the Registrar. Certificates of authentication on different Bonds need not be signed
by the same representative. The executed certificate of authentication on a Bond is conclusive
evidence that it has been authenticated and delivered under this Resolution. When the Bonds have
been so prepared, executed and authenticated, the Administrator will deliver the same to the
Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore
made and executed, and the Purchaser is not obligated to see to the application of the purchase
price.
2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive Bonds
one or more typewritten temporary Bonds in substantially the form set forth in Section 3 with such
changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon
the execution and delivery of definitive Bonds the temporary Bonds will be exchanged therefor and
cancelled.
398249v1 JSB EL185-17 5
Section 3. Form of Bond.
3.01. The Bonds will be printed or typewritten in substantially the following form:
No. R- UNITED STATES OF AMERICA $
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
GENERAL OBLIGATION IMPROVEMENT REFUNDING BOND,
SERIES 2012B
Date of
Rate Maturity Original Issue CUSIP
February 1, 20_ March 15, 2012
Registered Owner: Cede & Co.
The City of Elk River, Minnesota, a duly organized and existing municipal corporation in
Sherburne County, Minnesota (the "City"), acknowledges itself to be indebted and for value
received promises to pay to the Registered Owner specified above or registered assigns, the
principal sum set forth above on the maturity date specified above without option of prior payment,
with interest thereon from the date hereof at the annual rate specified above, payable February 1 and
August 1 in each year, commencing August 1, 2012, to the person in whose name this Bond is
registered at the close of business on the fifteenth day (whether or not a business day) of the
immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the
principal hereof are payable in lawful money of the United States of America by check or draft by
U.S. Bank National Association, St. Paul, Minnesota, as Registrar, Paying Agent, Transfer Agent
and Authenticating Agent, or its designated successor under the Resolution described herein. For
the prompt and full payment of such principal and interest as the same respectively become due, the
full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged.
The Bonds of this issue are not subject to prepayment prior to their maturity.
The City Council has designated the issue of this Bond as a "qualified tax exempt
obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code") relating to disallowance of interest expense for financial institutions and
within the $10 million limit allowed by the Code for the calendar year of issue.
This Bond is one of an issue in the aggregate principal amount of $1,595,000 all of like
original issue date and tenor, except as to number, maturity date, interest rate and denomination,
398249v1 JSB EL185-17 6
all issued pursuant to a resolution adopted by the City Council on February 21, 2012
(the "Resolution"), for the purpose of providing money for a crossover advance refunding of
callable maturities of the City's General Obligation Improvement Bonds, Series 2007C, pursuant
to and in full conformity with the Constitution and laws of the State of Minnesota, including
Minnesota Statutes, Section 475.67 and Chapter 429. The interest hereon is payable until the
Redemption Date, primarily out of the Escrow Account in the City's General Obligation
Improvement Refunding Bonds, Series 2012B Fund and after the Redemption Date from special
assessments against property specially benefited by local improvements and from ad valorem
taxes, as set forth in the Resolution to which reference is made for a full statement of rights and
powers thereby conferred. The full faith and credit of the City are irrevocably pledged for
payment of this Bond and the City Council has obligated itself to levy ad valorem taxes on all
taxable property in the City without limitation as to rate or amount to pay the principal and
interest on this Bond. The Bonds of this series are issued only as fully registered Bonds in
denominations of $5,000 or any integral multiple thereof of single maturities.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond is
transferable upon the books of the City at the principal office of the Registrar, by the registered
owner hereof in person or by the owner's attorney duly authorized in writing, upon surrender hereof
together with a written instrument of transfer satisfactory to the Registrar, duly executed by the
registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of
other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or
Bonds to be issued in the name of the transferee or registered owner, of the same aggregate
principal amount, bearing interest at the same rate and maturing on the same date, subject to
reimbursement for any tax, fee or governmental charge required to be paid with respect to such
transfer or exchange.
The City and the Registrar may deem and treat the person in whose name this Bond is
registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of
receiving payment and for all other purposes, and neither the City nor the Registrar will be affected
by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota to be done, to
exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to
make it a valid and binding general obligation of the City in accordance with its terms, have been
done, do exist, have happened and have been performed as so required, and that the issuance of this
Bond does not cause the indebtedness of the City to exceed any constitutional, or statutory
limitation of indebtedness.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the
Registrar by manual signature of one of its authorized representatives.
398249v1JSB EL185-17 ']
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, Minnesota, by its
City Council, has caused this Bond to be executed on its behalf by the facsimile or manual
signatures of the Mayor and City Administrator and has caused this Bond to be dated as of the
date set forth below.
Dated:
CITY OF ELK RIVER, MINNESOTA
(Facsimile) (Facsimile)
City Administrator Mayor
CERTIFICATE OF AUTHENTICATION
This is one. of the Bonds delivered pursuant to the Resolution mentioned within.
U.S. BANK NATIONAL ASSOCIATION
By
The following abbreviations, when used in the inscription on the face of this Bond, will be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants UNIF GIFT MIN ACT Custodian
in common (Gust)
TEN ENT -- as tenants under Uniform Gifts or
by entireties Transfers to Minors
JT TEN -- as joint tenants with
right of survivorship and Act ........... .
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
(Minor)
398249v1 JSB EL185-17
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and all rights thereunder, and
does hereby irrevocably constitute and appoint attorney to transfer the said Bond
on the books kept for registration of the within Bond, with full power of substitution in the
premises.
Dated:
Notice: The assignor's signature to this assignment must correspond with the name
as it appears upon the face of the within Bond in every particular, without
alteration or any change whatever.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a fmancial institution that is a member of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program
("SEMP"), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP") or other
such "signature guarantee program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of
1934, as amended.
The Registrar will not effect transfer of this Bond unless the information concerning the
assignee requested below is provided.
Name and Address:
(Include information for all joint owners if this
Bond is held by joint account.)
Please insert social security or other
identifying number of assignee
398249v1 JSB EL185-17 9
PROVISIONS AS TO REGISTRATION
The ownership of the principal of and interest on the within Bond has been registered on the
books of the Registrar in the name of the person last noted below.
Date of Registration Registered Owner Signature of Re ig stray
Cede & Co.
Federal ID #13-2555119
3.02. Approvinggal Opinion. The Administrator of the City is authorized and directed
to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered,
Minneapolis, Minnesota, which is to be complete except as to dating thereof and cause the opinion
to be printed on or accompany each Bond.
Section 4. Bonds; Security; Escrow.
4.01. Funds and Accounts. For the convenience and proper administration of the moneys
to be borrowed and repaid on the Bonds and the Refunded Bonds, and to provide adequate and
specific security for the Purchaser and holders from time to time of the Bonds and Refunded Bonds,
there is hereby created a special fund to be designated the General Obligation Improvement
Refunding Bonds, Series 2012B Fund (the "Fund") to be administered and maintained by the
Finance Director as a bookkeeping account separate and apart from all other funds maintained in the
official financial records of the City. The Fund will be maintained in the manner herein specified
until all of the Refunded Bonds have been paid and until all of the Bonds and the interest thereon
will have been fully paid. There will be maintained in the Fund two separate accounts, to be
designated the Escrow Account and Debt Service Account.
(a) Escrow Account. The Escrow Account will be maintained as an Escrow
Account (the "Escrow Account") with U.S. Bank National Association in St. Paul,
Minnesota, which is a suitable financial institution within the State, whose deposits are
insured by the Federal Deposit Insurance Corporation, whose combined capital and surplus
is not less than $500,000 and said financial institution is hereby designated escrow agent
(the "Escrow Agent") for the Escrow Account. All proceeds of the sale of the Bonds (less
amounts deposited in the Debt Service Account under Section 4.01(b)) will be received by
the Escrow Agent and applied to fund the Escrow Account or used to pay costs of issuance.
Proceeds of the Bonds not used to pay costs of issuance or fund the Escrow Account will be
returned to the City for deposit into the Debt Service Account. All investment earnings on
the Escrow Account are hereby irrevocably pledged and appropriated thereto. The Escrow
Account will be invested in securities maturing or callable at the option of the holder on
such dates and bearing interest at such rates as will be required to provide sufficient funds,
together with any cash or other funds retained in the Escrow Account, to pay when due the
interest to accrue on each Bond to and including February 1, 2013 (the "Redemption Date"),
and to pay on the Redemption Date the principal amount of each of the Refunded Bonds.
From the Escrow Account there will be paid (i) all interest paid on, or to be paid on, or to
398249v1 JSB ELI85-17 1
accrue on, the Bonds to and including the Redemption Date, and (ii) the principal of the
Refunded Bonds due by reason of redemption on the Redemption Date. The Escrow
Account will be irrevocably appropriated to the payment of the principal of and interest on
the Bonds until the proceeds of the Bonds therein are applied to prepayment of the Refunded
Bonds. The moneys in the Escrow Account will be used solely for the purposes herein set
forth and for no other purpose, except that any surplus in the Escrow Account may be
remitted to the City, all in accordance with the Escrow Agreement (hereafter defined) by
and between the City and the Escrow Agent. Any moneys remitted to the City upon
termination of the Escrow Agreement will be deposited in the Debt Service Account.
(b) Debt Service Account. To the Debt Service Account there is hereby pledged
and irrevocably appropriated and there will be credited: (i) any balance remitted to the City
upon the termination of the Escrow Agreement; (ii) any balance remaining on February 2,
2013, in the Debt Service Fund created by the City Council resolution authorizing the
issuance and sale of the Refunded Bonds (the "Prior Resolution") including any uncollected
special assessments heretofore pledged to the payment of the Refunded Bonds; (iii) any
collections of all taxes herein levied for the payment of the Bonds and interest thereon; (iv)
all investment earnings on funds in the Debt Service Account; (v) accrued interest (if any)
received upon delivery of the Bonds, and any other proceeds of the Bonds to the extent not
required to fund the Escrow Account; (vi) proceeds of the sale of the Bonds in the amount of
$ ;and (vii) any and all other moneys which are properly available and are
appropriated by the City Council to the Debt Service Account. The amount of any surplus
remaining in the Debt Service Account when the Bonds and interest thereon are paid will be
used as provided in Section 475.61, Subdivision 4 of the Act.
4.02. Findings. It is hereby found and determined that based upon information presently
available from the City's fmancial advisers, the issuance of the Bonds will result in a reduction of
debt service cost to the City on the Refunded Bonds, such that the present value of such debt service
or interest cost savings (the "Reduction") is at least 3.00% of the debt service on the Refunded
Bonds. The Reduction, after the inclusion of all authorized expenses of refunding in the
computation of the effective interest rate on the Bonds, is adequate to authorize the issuance of the
Bonds as provided by Minnesota Statutes, Section 475.67, Subdivisions 12 and 13.
4.03. Investment of Funds. Moneys in the Debt Service Account will be used solely to
pay the principal of and interest on the Bonds or any other bonds hereafter issued and made payable
from the Fund. No portion of the proceeds of the Bonds will be used directly or indirectly to
acquire higher yielding investments or to replace funds which were used directly or indirectly to
acquire higher yielding investments, except (i) for a reasonable temporary period until such
proceeds are needed for the purpose for which the Bonds were issued, and (ii) in addition to the
above, in an amount not greater than the lesser of 5% of the proceeds of the Bonds or $100,000. To
this effect, any proceeds of the Bonds and any sums from time to time held in the Fund (or any other
City account which will be used to pay principal and interest to become due on the Bonds) in excess
of amounts which under the applicable federal arbitrage regulations may be invested without regard
as to yield will not be invested at a yield in excess of the applicable yield restrictions imposed by the
arbitrage regulations on such investments after taking into account any applicable temporary periods
or minor portion made available under the federal arbitrage regulations. In addition, the proceeds of
398249v1 JSB EL185-17 11
the Bonds and money in the Fund will not be invested in obligations or deposits issued by,
guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the
extent that such investment would cause the Bonds to be federally guaranteed within the meaning of
Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code").
4.04. General Obligation Pledge. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers
of the City will be and are hereby irrevocably pledged. If the balance in the Escrow Account or
Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds and
any other bonds .payable therefrom, the deficiency will be promptly paid out of monies in the
general fund of the City which are available for such purpose, and such general fund may be
reimbursed with or without interest from the Escrow Account or Debt Service Account when a
sufficient balance is available therein. To the extent that it shall ever by necessary to provide full
and timely payment of the debt service on the Bonds, the City shall, pursuant to the authority
therefore described in this paragraph, levy an ad valorem tax on all taxable property within the City
sufficient for such purposes.
4.05. Pledge of Tax Lew. To provide moneys for payment of an interest on the Bonds
there is hereby levied upon all taxable property in the City a direct annual irrepealable ad
valorem tax (the "Taxes") upon all of the taxable property in the City, which will be spread upon
the tax rolls and collected with and as part of other general taxes of the City. The taxes will be
credited to the Debt Service Fund above provided and will be in the years and amounts as
follows (year stated being year of collection):
Year Levy
(See EXHIBIT B)
4.06. Cancellation of Prior Lew . It is hereby determined that upon the deposit of moneys.
in the Escrow Account that an irrevocable appropriation to the debt service fund for the Refunded
Bonds maturing after the Redemption Date will have been made within the meaning of Section
475.61, subdivision 3 of the Act and the Finance Director of the City is hereby authorized and
directed to certify such fact to and request the County Auditor of Sherburne County to cancel any
and all tax levies for taxes payable in 2013 and thereafter made by the resolution authorizing the
issuance of the Refunded Bonds.
4.07. Filing. The City Administrator is authorized and directed to file a certified copy of
this resolution with the County Auditor of Sherburne County and to obtain the certificate required
by Section 475.63 of the Act and the tax levy required by law has been made.
398249v1 JSB EL185-17 12
Section 5. Refunding• Findings; Redemption of Refunded Bonds.
5.01. Deposit of Funds. As of the date of delivery of and payment for the Bonds proceeds
of the Bonds, plus accrued interest on the Bonds less necessary expenses of the issuance of the
Bonds (the "Proceeds"), are hereby pledged and appropriated and will be deposited in the Escrow
Account. Proceeds of the Bonds in excess of amount needed to fund the Escrow Account and pay
costs of issuance are appropriated to the Debt Service Account in accordance with Section 4.01(b).
5.02. Payment of Bonds and Refunded Bonds. It is hereby found and determined that
money available and appropriated to the Escrow Account will be sufficient, together with the
permitted earnings on the investment of the Escrow Account, to pay principal of and interest on the
Bonds through the Redemption Date, and to pay at maturity or redemption all of the principal of and
redemption premium (if any) on the Refunded Bonds maturing after the Redemption Date.
5.03. Permitted Investments. Securities purchased from the monies in the Escrow
Account will be limited to securities specified in Section 475.67, Subdivision 8 of the Act. The
Escrow Agent, as agent for the City is hereby authorized and directed to purchase for and on behalf
of the City and in its name, appropriate securities to fund the Escrow Account. Upon the issuance
and delivery of the Bonds, the securities so purchased will be deposited with the Escrow Agent and
held pursuant to the terms of the Escrow Agreement and the Resolution.
5.04. Notice of Redemption. The Refunded Bonds maturing on February 1, 2014 and
thereafter will be redeemed and prepaid on the Redemption Date. The Refunded Bonds will be
redeemed and prepaid in accordance .with their terms and in accordance with the terms and
conditions set forth in the form of Notice of Call for Redemption attached to the Escrow Agreement
(defined below) as EXHIBIT C which terms and conditions are hereby approved and incorporated
herein by reference. The .Registrar for the Refunded Bonds is authorized and directed to send a
copy of the Notice of Redemption to the registered holder of the Refunded Bonds.
5.05. Escrow Agreement. On or prior to the delivery of the Refunding Bonds, the Mayor
and Administrator are hereby authorized and directed to execute on behalf of the City an escrow
agreement (the "Escrow Agreement") with the Escrow Agent in substantially the form now on file
with the City Finance Director. All essential terms and conditions of the Escrow Agreement
including payment by the City of reasonable charges for the services of the Escrow Agent, are
hereby approved and adopted and made a part of this resolution, and the City covenants that it will
promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent.
Section 6. Authentication of Transcript.
6.01. City Proceedings and Records. The officers of the City are authorized and directed
to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of
proceedings and records of the City relating to the Bonds and to the financial condition and affairs
of the City, and such other certificates, affidavits and transcripts as may be required to show the
facts within their knowledge or as shown by the books and records in their custody and under their
control, relating to the validity and marketability of the Bonds, and such instruments, including any
heretofore furnished, will be deemed representations of the City as to the facts stated therein.
398249v1 JSB EL185-17 13
6..02. Certificate as to Official Statement. The Mayor and Administrator are hereby
authorized and directed to certify that they have examined the Official Statement prepared and
circulated in connection with the issuance and sale of the Bonds and that to the best of their
knowledge and belief the Official Statement is a complete and accurate representation of the facts
and representations made therein as of the date of the Official Statement.
6.03. Payment of Costs of Issuance. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to K1einBank,
Minneapolis, Minnesota on the closing date for further distribution as directed by the City's
financial adviser, Ehlers & Associates, Inc.
Section 7. Tax Covenant.
7.01. Tax Exempt Bonds. The City covenants and agrees with the holders from time to
time of the Bonds that it will not take or permit to be taken by any of its officers, employees or
agents any action which would cause the interest on the Bonds to become subject to taxation under
the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations
promulgated thereunder, in effect at the time of such actions, and that it will take or cause its
officers, employees or agents to take, all affirmative action within its power that may be necessary
to ensure that such interest will not become subject to taxation under the Code and applicable
Treasury Regulations, as presently existing or as hereafter amended and made applicable to the
Bonds.
7.02. Rebate. The City will comply with requirements necessary under the Code to
establish and maintain the exclusion from gross income of the interest on the Bonds under Section
103 of the Code, including without limitation requirements relating to temporary periods for
investments, limitations on amounts invested at a yield greater than the yield on the Bonds and the
rebate of excess investment earnings to the United States.
7.03. Not Private Activi Bonds. The City further covenants not to use the proceeds of
the Bonds or to cause or permit the facilities fmanced by the Refunded Bonds or any of them to be
used, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of
Sections 103 and 141 through 150 of the Code.
Without limitation of the foregoing, the City shall not enter into any lease, use agreement,
management or operation contract or other agreement respecting the facilities financed by the
Refunded Bonds or any portion thereof which would adversely affect the exemption from federal
income tax of the interest on the Bonds, taking into account and observing the requirements of
Revenue Procedure 97-13 of the Internal Revenue Service and any similar or other applicable.
revenue procedures or guidelines relating to management contracts and service contracts involving
facilities financed with tax-exempt obligations.
7.04. Qualified Tax Exempt Obli ag tion. In order to qualify the Bonds as "qualified tax-
exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City makes the
following factual statements and representations:
398249v1 JSB EL185-17 14
(a) the Bonds are not "private activity bonds" as defined in Section 141 of the
Code;
(b) the City hereby designates the Bonds as "qualified tax-exempt obligations"
for purposes of Section 265(b)(3) of the Code;
(c) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds, that are not qualified 501(c)(3) bonds) which will be issued by the
City (and all subordinate entities of the City) during calendar year 2012 will not exceed
$10,000,000; and
(d) not more than $10,000,000 of obligations issued by the City during calendar
year 2012 have been designated for purposes of Section 265(b)(3) of the Code; and
(e) the Bonds are not issued as part of an issue with an aggregate face amount in
excess of $10,000,000.
7.05 Procedural Requirements. The City will use its best efforts to comply with any
federal procedural requirements which may apply in order to effectuate the designations made by
this section.
Section 8. Book-Entry System• Limited Obligation of City.
8.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten
or printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon
initial issuance, the ownership of each such Bond will be registered in the registration books kept by
the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New
York, New York, and its successors and assigns ("DTC"). Except as provided in this section, all of
the outstanding Bonds will be registered in the registration books kept by the Registrar in the name
of Cede & Co., as nominee of DTC.
8.02. Participants. With respect to Bonds registered in the registration books kept by the
Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying
Agent will have no responsibility or obligation to any broker dealers, banks and other fmancial
institutions from time to time for which DTC holds Bonds as securities depository
(the "Participants") or to any other person on behalf of which a Participant holds an interest in the
Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy
of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the
Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of
Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the
Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other
person, other than a registered owner of Bonds, of any amount with respect to principal of,
premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat
and consider the person in whose name each Bond is registered in the registration books kept by the
Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal,
premium and interest with respect to such Bond, for the purpose of registering transfers with respect
398249v1 JSB EL185-17 15
to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if
any, and interest on the Bonds only to or on the order of the respective registered owners, as shown
in the registration books kept by the Registrar, and all such payments will be valid and effectual to
fully satisfy and discharge the City's obligations with respect to payment of principal of, premium,
if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a
registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a
certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the
Finance Director of a written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC;
and upon receipt of such a notice, the Finance Director will promptly deliver a copy of the same to
the Registrar and Paying Agent.
8.03. Representation Letter. The City has heretofore executed and delivered to DTC a
Blanket Issuer Letter of Representations (the "Representation Letter") which will govern payment
of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds.
Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will
agree to take all action necessary for all representations of the City in the Representation letter with
respect to the Registrar and Paying Agent, respectively, to be complied with at all times.
8.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the
City Council, determines that it is in the best interests of the persons having beneficial interest, in
the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC
will notify the Participants, of the availability through DTC of Bond certificates. In such event the
City will issue, transfer and exchange Bond certificates as requested by DTC and any other
registered owners in accordance with the provisions of this Resolution. DTC may determine to
discontinue providing its services with respect to the Bonds at any time by giving notice to the City
and discharging its responsibilities with respect thereto under applicable law. In such event, if no
successor securities depository is appointed, the City will issue and the Registrar will authenticate
Bond certificates in accordance with this resolution and the provisions hereof will apply to the
transfer, exchange and method of payment thereof.
8.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to
the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC,
payments with respect to principal of, premium, if any, and interest on the Bond and notices with
respect to the Bond will be made and given, respectively in the manner provided in DTC's
Operational Arrangements, as set forth in the Representation Letter.
398249v1 JSB EL185-17 1C
Section 9. Continuing Disclosure.
9.01. City Compliance with Provisions of Continuing Disclosure Certificate. The City
hereby covenants and agrees that it will comply with and carry out all of the provisions of the
Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution,
failure of the City to comply with the Continuing Disclosure Certificate is not to be considered
an event of default with respect to the Bonds; however, any Bondholder may take such actions as
may be necessary and appropriate, including seeking mandate or specific performance by court
order, to cause the City to comply with its obligations under this section.
9.02. Execution of Continuing_ Disclosure Certificate. "Continuing Disclosure
Certificate" means that certain Continuing Disclosure Certificate hereby authorized to executed
by the Mayor and Administrator as it may be amended from time to time in accordance with the
terms thereof.
Section 10. Defeasance.
10.01. Defeasance. When all Bonds and all interest thereon, have been discharged as
provided in this section, all pledges, covenants and other rights granted by this resolution to the
holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the
prompt and full payment of the principal of and interest on the Bonds will remain in full force and
effect. The City may discharge all Bonds which are due on any date by depositing with the
Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should
not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum
sufficient for the payment thereof in full with interest accrued to the date of such deposit.
(The remainder of this page is intentionally left blank.)
398249v1JSB EL185-17 1 7
The motion for the adoption of the foregoing resolution was duly seconded by Member
and upon vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted this 21St day of February, 2012.
John J. Dietz, Mayor
ATTEST:
Tina Allard, City Clerk
398249v1 JSB EL185-17 1 g
EXHIBIT A
PROPOSALS
398249v1 JSB EL185-17 A-1
EXHIBIT B
TAX LEVY SCHEDULE
yE~ * TAX LEVY
* Year tax levy collected.
398249v1 JSB EL185-17 B_1
REFUNDING ESCROW AGREEMENT
General Obligation Improvement Bonds, Series 2007C
THIS AGREEMENT, made pursuant to Minnesota Statutes, Section 475.67, Subdivision
13 (the "Act") and executed by and between the City of Elk River, Sherburne County, Minnesota
(the "City"), and U.S. Bank National Association, St. Paul, Minnesota, a banking corporation
whose deposits are insured by the Federal Deposit Insurance Corporation and whose capital and
surplus is not less than $500,000 (the "Escrow Agent"):
WITNESSETH: That the parties hereto recite and, in consideration of the mutual
covenants. contained herein, covenant and agree as follows:
1. The City, in accordance with a resolution adopted by its governing body on
February 21, 2012, entitled "Resolution Awarding the Sale of $1,595,000 General Obligation
Improvement Refunding Bonds, Series 2012B; Fixing Their Form and Specifications; Directing
Their Execution and Delivery; Providing for Their Payment; Providing for the Escrowing and
Investment of the Proceeds Thereof; and Providing for the Redemption of Bonds Refunded
Thereby" (the "Resolution"), a certified copy~of which has been filed with the Escrow Agent, has
provided for the refunding of the City's $3,090,000 General Obligation Improvement Bonds,
Series 2007C, dated June 26, 2007, of which $1,540,000 in principal amount is subject to
redemption and prepayment on February 1, 2013 (the "Refunded Bonds"), by the issuance and
sale of refunding obligations, designated as "General Obligation Improvement Refunding Bonds,
Series 2012B" (the "Refunding Bonds").
2. The City has also, in accordance with the Resolution, issued and sold the
Refunding Bonds in the principal amount of $1,595,000, and has simultaneously invested the
proceeds of the Refunding Bonds [together with original issue premium in the amount of
$ ,and $ from the debt service account for the Refunded Bonds, less
underwriter's discount of $ and less $ to be deposited in the Debt
Service Account as a rounding amount] (i) in the amount of $ in securities
which are general obligations of the United States, securities whose principal and interest
payments are guaranteed by the United States, and securities issued by agencies of the United
States (collectively, the "Federal Securities"), as described in the Escrow Verification Report
which is attached hereto, marked Exhibit A and made a part hereof and has irrevocably
deposited all such securities with the Escrow Agent on the date of this Agreement, (ii) in the
amount of $ as an initial cash deposit, and (iii) in the amount of $ to be applied
by Escrow Agent to payment of costs of issuance as specified in paragraph 3 hereof. It is
understood and agreed that the dates and amounts of payments of principal and interest due on
the securities so deposited are as indicated in Exhibit A, and that the principal and interest
payments due on such securities together with the initial cash deposit are such as to provide the
funds required to pay all interest payable on the Refunding Bonds to the date on which any of the
398278v1 JSB EL185-17
Refunded Bonds have been directed to be prepaid, as stated in the Resolution and to pay the
redemption price of the Refunded Bonds on such date.
3. The Escrow Agent acknowledges receipt of the deposits described in paragraph 2
hereof and agrees that it will hold such amounts in a special escrow account (the "Escrow
Account") created by the Resolution in the name of the City, and will collect and receive on
behalf of the City all payments of principal and interest on any investment of such amounts and
securities and will remit from the Escrow Account (i) to the paying agent (the "Paying Agent")
for the Refunding Bonds the funds required from time to time for the payment of interest on the
Refunding Bonds to the date of the redemption of the Refunded Bonds which is February 1,
2013 (the "Redemption Date"); and (ii) to the Paying Agent for the Refunded Bonds the funds
needed for the redemption and prepayment of the outstanding principal amount of the Refunded
Bonds on the Redemption Date. After provision for payment of all remaining Refunded Bonds,
the Escrow Agent will remit any remaining funds in the Escrow Account to the City. Of the
amounts deposited with the Escrow Agent, the sum of $ shall be used by the Escrow
Agent for the payment and disbursement of the costs of issuance of the Refunding Bonds as set
forth in Exhibit B attached hereto.
4. In order to insure continuing compliance with the Internal Revenue Code of 1986,
as amended, and regulations promulgated thereunder (collectively, .the "Code"), the Escrow
Agent agrees that it will not reinvest any cash received in payment of the principal of and interest
on the Federal Securities held in the Escrow Account. This prohibition on reinvestment shall
continue unless and until an opinion is received by Escrow Agent from nationally recognized
bond counsel that reinvestments, as specified in said opinion, may be made in a manner
consistent with the Code. Reinvestment, if any, of amounts in the Escrow Account made
pursuant to this paragraph may be made only in securities described in Minnesota Statutes,
Section 475.67, Subdivision 8 which mature prior to the next date on which either principal or
interest on the Refunded Bonds is payable.
5. Escrow Agent expressly waives any lien upon or claim against the moneys and
investments in the Escrow Account.
6. If at any time it shall appear to the Escrow Agent that the money in the Escrow
Account allocable for such use hereunder will not be sufficient to make any interest payment due
to the holders of any of the Refunding Bonds, or principal payment due to the holders. of any of
the Refunded Bonds, the Escrow Agent shall immediately notify the .City. The City thereupon
shall forthwith deposit in Escrow Account from funds on hand and legally available to it such
additional funds as may be required to meet fully the amount to become due and payable. The
City acknowledges its obligation to levy ad valorem taxes on all taxable property in the City to
the extent required to produce moneys necessary for this purpose. The City and Escrow Agent
acknowledge receipt of a verification report from certified public
accountants, dated , 2012, which is attached hereto, marked Exhibit A and made a
part hereof, to the effect that such cash and securities are sufficient to comply with the
requirements of the Act.
398278v1 JSB EL185-17 2
7. The City will not repeal or amend the Resolution which calls the Refunded Bonds
for redemption on their Redemption Dates. The Escrow Agent shall cause the Notice of Call for
redemption attached hereto as Exhibit C to be mailed not more than 60 days prior to the
Redemption Date to the paying agent for the Refunded Bonds for the purpose of giving notice
not less than 30 days prior to the Redemption Date to the registered owners of the Refunded
Bonds to be redeemed, at their addresses appearing in the bond register and also to the bank at
which the principal and interest on the Refunded Bonds are then payable.
8. On or before March 1, 2013, and on or before the first day of each month
thereafter until termination of the Escrow Account, the Escrow Agent shall submit to the City a
report covering all money it shall have received and all payments it shall have made or caused to
be made hereunder during the preceding month. Such report shall also list all obligations held in
the Escrow Account and the amount of money on hand in the Escrow Account on the first day of
each month.
9. It is recognized and agreed that title to the cash and securities, if any, held in the
Escrow Account from time to time shall remain vested in the City but subject always to the prior
charge and lien thereon of this Agreement and the use thereof required to be made by this
Agreement. The Escrow Agent shall hold all such money and obligations in a special trust fund
and account separate and wholly segregated from all other funds and securities of the Escrow
Agent, and shall never commingle such money or securities with other money or securities;
provided, however, that nothing herein contained shall be construed to require the Escrow Agent
to keep the identical monies, or any part thereof, received for the Escrow Account on hand, but
moneys of an equal amount (except to the extent such are represented by investments permitted
under this Agreement) shall always be maintained on hand as funds held by the Escrow Agent as
trustee, belonging to the City, and a special account shall at all times be maintained on the books
of the Escrow Agent, together with such investments. In the event of the Escrow Agent's failure
to account for any- money or obligations held by it in the Escrow Account, such money and
obligations shall be and remain the property of the City, and if for any reason such money or
obligations cannot be identified, all other assets of the Escrow Agent shall be impressed with a
trust for the amount thereof, and the City shall be entitled to a preferred claim upon such assets.
It is understood and agreed that the responsibility of the Escrow Agent under this Agreement is
limited to the safekeeping and segregation of the funds and securities deposited with it in the
Escrow Account, and the collection of and. accounting for the principal and interest payable with
respect thereto.
10. This Agreement is made by the City for the benefit of the holders of the Refunded
Bonds, and is not revocable by the City, and the funds and securities deposited in the Escrow
Account and all income therefrom have been irrevocably appropriated for the payment of the
callable principal amount of the Refunded Bonds at the Redemption Date and interest on the
Refunding Bonds to the Redemption Date in accordance with this Agreement.
11. This Agreement shall be binding upon and shall inure to the benefit of the City
and the Escrow Agent and their respective successors and assigns. In addition, this Agreement
shall constitute a third party beneficiary contract for the benefit of the holders of the Refunded
398278v1 JSB EL185-17 3
Bonds and said third party beneficiaries shall be entitled to enforce performance and observance
by the City and the Escrow Agent of the respective agreements and covenants herein contained
as fully and completely as if said third party beneficiaries were parties hereto. Any bank into
which the Escrow Agent may be merged or with which it may be consolidated or any bank
resulting from any merger or consolidation to which it shall be a party or any bank to which it
may sell or transfer all or substantially all of its corporate trust business shall, if the City
approves, be the successor agent without the execution of any document or the performance of
any further act.
12. The Escrow Agent may at any time resign and be discharged of its obligations
hereunder by giving to the Administrator of the City written notice of such resignation not less
than 60 days before the date when the same is to take effect, provided that the Escrow Agent
shall return to the County the pro rata portion of its fee which is allocable to the period of time
commencing on the effective date of such resignation. Such resignation shall take effect upon
the date specified in the notice, or upon the appointment and qualification of.a successor prior to
that date. In the event of such resignation, a successor shall promptly be appointed by the City,
and the Administrator of the City shall immediately give written notice thereof to the predecessor
escrow agent and publish the notice in the manner described in this paragraph 12. If, in a proper
case, no appointment of a successor agent is made within 45 days after the receipt by the City of
notice of such resignation, the Escrow Agent or the holder of any Refunded Bond may apply to
any court of competent jurisdiction to appoint a successor escrow agent, which appointment may
be made by the Court after such notice, if ariy, as the Court may prescribe. Any successor
escrow agent appointed hereunder shall execute,. acknowledge and deliver to its predecessor
escrow agent and to the City a written acceptance of such appointment, and shall thereupon
without any further act, deed or conveyance become fully vested with all moneys, properties,
duties and obligations of its predecessor, but the predecessor shall nevertheless pay over,
transfer, assign and deliver all moneys, securities or other property held by it to the successor
escrow agent, shall execute, acknowledge and deliver such instruments of conveyance and do
such other things as may reasonably be required to vest and confirm more fully and certainly in
the successor escrow agent all right, title and interest in and to any property held by it hereunder.
Any bank into which the Escrow Agent may be merged or with which it may be consolidated or
any bank resulting from any merger or consolidation to which it shall be a party or any bank to
which it may sell or transfer all or substantially all of its corporate trust business shall, if the City
approves, be the successor escrow agent without the execution of any document or .the
performance of any further act.
13. The Escrow Agent acknowledges receipt of the sum of $ as its full
compensation for its services to be performed under this Agreement.
14. The duties and obligations of the Agent shall be as prescribed by the provisions of
this Agreement and the Agent shall not be liable hereunder except for failure to perform its
duties and obligations as specifically set forth herein or to act in good faith in the performance
thereof and no implied duties or obligations shall be incurred by the Agent other than those
specified herein.
398278v1 JSB EL185-17 4
15. Any notice, authorization, request or demand required or permitted to be given in
accordance with the terms of this Agreement shall be in writing and sent by registered or
certified mail addressed:
If to the City: City of Elk River, Minnesota
13.065 Orono Parkway NW
Elk River, MN 55330
Attn: City Finance Director
If to the Escrow Agent:
U.S. Bank National Association
Corporate Trust Services
EP-MN-WS3C
60 Livingston Avenue, 3`d Floor
Saint Paul, Minnesota 55107
Attn: Corporate Trust Department
16. The exhibits which are a part of this Agreement are as follows:
Exhibit A
Exhibit B
Exhibit C
Escrow Verification Report
Costs of Issuance
Notice of Call for Redemption
398278v1 JSB EL185-17
IN WITNESS WHEREOF the parties hereto have caused this instrument to be duly
executed by their duly authorized officers, in counterparts, each of which is deemed to be an
original agreement, on this _ day of March, 2012.
CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
By
Its City Administrator
(Signature Page to the Refunding Escrow Agreement)
398278v1 JSB EL185-17 S-l
U.S. BANK NATIONAL ASSOCIATION
By
Its Corporate Trust Officer
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT:
To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify and record information that identifies each person
who opens an account. For anon-individual person such as a business entity, a charity, a Trust or
other legal entity we will ask -for documentation to verify its formation and existence as a legal
entity. We may also ask to see financial statements, licenses, and identification and authorization
documents from individuals claiming authority to represent the entity or other relevant
documentation.
(Signature Page to the Refunding Escrow Agreement)
398278v1 JSB EL185-17 S-2
EXHIBIT A
ESCROW VERIFICATION REPORT
398278v1 JSB EL185-17 A_1
EXHIBIT B
COSTS OF ISSUANCE
Bond Counsel
Rating Agency Fee
Registrar /Paying Agent
Escrow Agent
CPA Verification
Total
398278v1 JSB EL185-17 B_1
EXHIBIT C
NOTICE OF CALL FOR REDEMPTION
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2007C
CITY OF ELK RIVER
SHERBURNE COUNTY, MINNESOTA
NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Elk River,
Sherburne County, Minnesota, there have been called for redemption and prepayment on
February 1, 2013
all outstanding bonds of the City designated as General Obligation Improvement Bonds, Series
2007C, dated, June 26, 2007, having stated maturity dates of February 1 in the years 2014 through
2018, both inclusive, totaling $1,540,000 in principal amount, and with the following CUSIP
numbers:
Year of Maturity Amount
2014 $305,000
2015 305,000
2016 310,000
2017 310,000
2018 310,000
CUSIP
The bonds are being called at a price of par plus accrued interest to February 1, 2013, on
which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for
redemption are requested to present their bonds for payment at the main office of U.S. Bank
National Association, in .the City of St. Paul, Minnesota, on or before February 1, 2013, at the
following address:
If by mail:
U.S. Bank National Association
Corporate Trust Operations
60 Livingston Avenue
EP-MN-WS3C
St. Paul, MN 55107
If by hand:
U.S. Bank National Association
60 Livingston Avenue
3rd Floor -Bond Drop Window
St. Paul, MN 55107
Important Notice: In compliance with the Jobs and Growth Tax Relief Reconciliation Act
of 2003, federal backup withholding tax will be withheld at the applicable backup withholding rate
in effect at the time the payment by the redeeming institutions if they are not provided with your
social security number or federal employer identification number, properly certified. This
requirement is fulfilled by submitting a W-9 Form, which may be obtained at a bank or other
financial institution.
398278v1 JSB EL185-17 C_1
The Registrar will not be responsible for the selection or use of the CUSIP number, nor is
any representation made as to the correctness indicated in the Redemption Notice or on any Bond.
It is included solely for convenience of the Holders.
Additional information may be obtained from:
U.S. Bank National Association
Corporate Trust Division
Bondholder Relations (800) 934-6802
Dated: February 21, 2012
BY ORDER OF THE CITY COUNCIL
By /s/
City Administrator
City of Elk River, Minnesota
398278v1 1SB EL185-17 C_2
CC m alai j~a ~~~ ~S . 2 ,
Debt Issuance Services
February 21, 2012
Sale Report
City of E!k River, Minnesota
$1,525,000 General Obligation Capital
Improvement Refunding Bonds, Series 20126
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E H L E RS Minnesota phone 651-697-8500 3060 Centre Pointe ~e
LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122
Debt Issuance Services
City of Elk River, Minnesota
Results of Bond Sale -February 21, 2012
$1,525,000 General Obligation Capital Improvement Refunding
Bonds, Series 2012B
Purpose: To effect an advance crossover refunding of the 2014 through 2018
maturities of the City's $3,090,000 General Obligation Improvement Bonds,
Series 2007C, dated June 26, 2007.
Rating: Standard & Poor's Credit Markets "AA+"
Number of Bids: 6
LOW Bidder: Piper Jaffray & Co., Leawood, Kansas
True Interest Cost: 0.7876%
Interest Savings from Low Bid High Bid Low/High Bid
Lowest to Highest Bid: Difference
0.7866% 0.9422% $8,033
Summary of Results: Projected Results of Sale Difference
Principal Amount *: $1,515,000 $1,525,000 $10,000
Reoffering Premium: $0 $76,232 $76,232
Discount Allowance: $25,000 $6,481 -$18,519
True Interest Cost: 1.46% 0.7876% -0.67%
Cost of Issuance: $25,000 $26,380 $1,380
City Cash: $80,000 $0 -$80,000
Present Value Savings: $70,875 $110,855 $39,980
Savings Percentage: 4.30% 7.269% 2.973%
Closing Date: March 15, 2012
COUI'1Cii Action: A Resolution Awarding The Sale Of $1,525,000 General Obligation
Improvement Refunding Bonds, Series 2012B; Fixing Their Form And
Specifications; Directing Their Execution And Delivery;
Providing For Their Payment; And Providing For The Redemption Of
Bonds Refunded Thereby
Attachments: Bid Tabulation
• Updated Debt Service Schedules
• Bond Resolution (Distributed in Council Packets)
* The size of the bond issue changed from the presale amount due to a decision not to insert City cash to write down
the bonds. The amount of the sale was lower than the official statement amount due to lower costs and lower interest
rates on the bonds.
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E H L E R S Minnesota phone 651-697-8500 3060 Centre Pointe Dive
LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 55113-1122
BID TABULATION
$1,595,000* General Obligation Improvement Refunding Bonds, Series 20126
CITY OF ELK RIVER, MINNESOTA
SALE: February 21, 2012
AWARD: PIPER JAFFRAY & CO.
RATING: Standard & Poor's Credit Markets " AA+" BBI: 3.65%
NET TRUE
NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST
(February 1) YIELD COST RATE
PIPER JAFFRAY & CO. 2014 2.000% 0.400% $1,667,747.80 $49,453.31 0.7866%
Leawood, Kansas 2015 2.000% 0.500%
2016 2.000% 0.600%
2017 2.000% 0.700%
2018 2.000% 0.900%
FTN FINANCIAL CAPITAL MARKETS
Memphis, Tennessee
MORGAN KEEGAN
Memphis, Tennessee
BOSC, INC., A SUBSIDIARY OF BOK
FINANCIAL CORPORATION
Menomonee Falls, Wisconsin
UNITED BANKERS' BANK
2014
2015
2016
2017
2018
1.000%
1.000%
1.000%
1.000%
1.000%
$1,603,233.80 $52,866.76 0.8624%
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
1.000%
1.500%
2.000%
2.000%
2.000%
2.000%
2.000%
2.000%
2.000%
2.000%
BAIRD 2014 2.000%
Milwaukee, Wisconsin 2015 2.000%
2016 2.000%
2017 2.000%
2018 2.000%
UMB BANK, N.A. 2014 0.450%
Kansas City, Missouri 2015 0.550%
2016 0.700%
2017 0.900%
2018 1.100%
"Subsequent to bid opening the issue size was decreased to $1,525,000.
Adjusted Price - $1,594,751.00
FREERS
LEADERS IN PUBLIC FINANCE
Adjusted Net Interest Cost - $47,521.22
$1,651,834.64 $54,399.53 0.8691
$1,659,774.55 $57,426.56 0.9162%
$1,659,541.05 $57,660.06 0.9201
$1,587,503.50 $57,486.44 0.9422%
Adjusted TIC - 0.7876%
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Minnesota phone 651-697-8500 3060 Centre Pointe Drive
Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville, MN 551 1 3-1 1 22
City of Elk River, Minnesota
$1,525,000 General Obligation Improvement Refunding Bonds, Series 20128
Crossover Refunding of
G.O. Improvement Bonds, Series 2007C
Sources & Uses
Dated 03/15/2012 I Delivered 03/15/2012
Sources Of Funds
Paz Amount of Bonds $1,525,000.00
Reoffering Premium 76,232.25
Total Sources $1,601,232.25
Uses Of Funds
__
Deposit to Crossover Escrow Fund 1,564,706.15
Costs of Issuance 26,380.00
Total Underwriter's Discount (0.425%) 6,481.25
Dcposit to Debt Service Fund (Rounding) 3,664.85
Total Uses $1,601,232.25
Series 20128 GO Imp Ref B i 09 xover Ser 07 53.09 GO ~ 2/'1712012 ~ 12:11 PM
LENDERS IN PUBLIC FINANCE 4
City of Elk River, Minnesota
$1,525,000 General Obligation Improvement Refunding Bonds, Series 2012B
Crossover Refunding of
G.O. Improvement Bonds, Series 2007C
Debt Service Schedule
Date Principal Coupon Interest Total P+I Fiscal Total
03!15/2012 - - - -
08/01/2012 - - 11,522.22 ] 1,522.22 -
02/Ol/2013 - - 15,250.00 15,250.00 26,772.22
08/01/2013 - - 15,250.00 15,250.00 -
02/Ol/2014 315,000.00 2.000% 15,250.00 330,250.00 345,500.00
08/01 /2014 - - 12,100.00 12,100.00 -
02/Ol/2015 310,000.00 2.000% 12,100.00 322,100.00 334,200.00
08/01/2015 - - 9,000.00 9,000.00 -
02/Ol/2016 305,000.00 2.000% 9,000.00 314,000.00 323,000.00
08/01/2016 - - 5,950.00 5,950.00 -
02/Ol/2017 300,000.00 2.000% 5,950.00 305,950.00 311,900.00
08/01!2017 - - 2,950.00 2,950.00 -
02/Ol/2018 295,000.00 2.000% 2,950.00 297,950.00 300,900.00
Total $1,525,000.00 - $117,272.22 $1,642,272.22 -
Yield Statistics
Bond Year Dollars $5,863.61
Average Life 3.845 Yeazs
Average Coupon 2.0000000%
Net Interest Cost (NIC) 0.8104429%
True Interest Cost (TIC) 0.7876542%
Bond Yield for Arbitrage Purposes 0.6784604%
All Inclusive Cost (AIC)
1.2380696%
IRS Form 8038
Net Interest Cost 0.6637704%
Weighted Average Maturity 3.861 Yeazs
Series 20128 GO Imp Ref B ~ 09 xover Ser 07 S3 09 GO ~ 2!21/2012 ~ 12:11 PM
FREERS
- --- ---
LEADERS IN PU9LIC FINANCE
City of Elk River, Minnesota
1,525,000 General Obligation Improvement Refunding Bonds, Series 2012B
Crossover Refunding of
G.O. Improvement Bonds, Series 2007C
Pricing Summary
Type of Maturity
Maturity Bond Coupon Yield Value Price Dollar Price
02101/20]4 Serial Coupon 2.0009b 0.400% 315,000.00 102.990% 324,418.50
02/01/2015 Serial Coupon 2.000% 0.500% 310,000.00 104.280% 323,268.00
02/01/2016 Serial Coupon 2.000% 0.600% 305,000.00 105.358% 321,341.90
02/01/2017 Serial Coupon 2.000% 0.700% 300,000.00 106.223% 318,669.00
02/01/2018 Serial Coupon 2.0003b 0.900°b 295,000.00 106.283% 313,534.$5
Total - • $].525,000.00 $1,601,232.25
Bid Information
Paz Amount of Bonds $],525,000.00
Reoffering Premium or (Discount) 76,232.25
Gross Production $1,601,232.25
Total Underwritefs Discount (0.425%) $(6,481.25)
Bid (104.574%) 1,594,751.00
Total Purchase Price $1,594,751.00
Bond Yeaz Dollars $5,863.61
Average Life 3.845 Years
Average Coupon 2.0000000%
Net Interest Cost (NIC) 0.8104429°10
True Interest Cost (TIC) 0.7876542%
Series 2012B GO Imp Ref B ~ 09 xover Ser 07 53.09 GO 1 2/21/2012 1 12:11 PM
` E_ _H_ L ER_S_
LEADERS IN PU6LIC FINANCE
6
City of Elk River, Minnesota
$1,525,000 General Obligation Improvement Refunding Bonds, Series 20126
Crossover Refunding of
G.O. Improvement Bonds, Series 2007C
Debt Service Comparison
Const Loan
Date Total P+I Pmt Existing D/S Net New D/S Old Net D/S Savings
02/01/2013 26,772.22 (1,566,772.22) 1,601,600.00 57,935.15 61,600.00 3,664.85
02/01/2014 345,500.00 - - 345,500.00 366,600.00 21,100.00
02/01/2015 334,200.00 - - 334,200.00 354,400.00 20,200.00
02/01/2016 323,000.00 - - 323,000.00 347,200.00 24,200.00
02/01/2017 311,900.00 - 311,900.00 334,800.00 22,900.00
02/01/2018 300,900.00 - - 300,900.00 322,400.00 21,500.00
Total $1,642,272.22 (1,566,772.22) $1,601,600.00 $1,673.435.15 $1,787,000.00 $113,564.85
PV Analysis Summary (Net to Net
Gross PV Debt Service Savings ..................... 107,]90.26
Net PV Cashflow Savings @ 0.67896(Bond Yield)..... 107,190.26
Contingency or Rounding Amount .................... 3,664.85
Net Present Value Benefit $ 110,855.11
Net PV Benefit / $1,681,770.13 PV Refunded Debt Service 6.592%
Net PV Benefit / $1,540,000 Refunded Principal... 7.198%
Net PV Benefit / $1,525,000 Refunding Principal.. 7.2699'0
Refunding Bond Information
Refunding Dated Date 3/15/2012
Refunding Delivery Date 3/15/2012
Series 20128 GO Imp Ref B ~ 09 xovar Ser 07 $3.09 GO ~ 2(21/2012 ~ 12:11 PM
E_H_ L_E_RS
LEADERS IN PUBLIC FINANCE