5.1. & 5.2. SR 11-10-2003Item 5.1.-5.2.
MEMORANDUM
TO:
Mayor and City Council
FROM:
Lori Johnson, Finance Director
DATE:
November I 0, 2003
SUBJECT:
Consider Resolution for the Issuance and Sale of the City's $ 1,275,000
General Obligation Improvement Bonds, Series 2003A and Consider
Resolution Awarding the Sale of the City's General Obligation Water
Revenue Bond Series 2003B and Providing for Their Issuance
Bids are being received on Monday, November 10 for the bond issues as stated above. Sid Inman of
Ehlers and Associates will be present at Monday night's meeting to present the sale results. As you
may recall, the 2002A issue finances the 2003 Street Rehabilitation, 2002 Zane Street, and Boston
and Concord improvement projects. The 2003B bonds finance water improvements as well as
refunding several water bonds.
The city had a rating conference with Moody's on November 4, and Moody's has affirmed the city's
A2 rating stating that the city had good reserve levels and sound plans in place to deal with state
budget cuts. The issue of concern was the city's high debt burden. This debt burden includes direct
debt, meaning the city's own debt, and overlapping debt, meaning the debt of other taxing
jurisdictions such as the county or the school district. In this case, the overlapping debt from the
school district was of most concern to Moody's, and, of course, this is something over which the
city has no control. In all, Moody's was very pleased with the city's financial condition. An A2 rating
is very good for a city of our size. Most cities in the A1 rating are larger cities with tax bases of
several billion dollars so it may take a while for the city to meet the criteria of an A1 rating.
Attached is additional information from Moody's regarding the rating assigned to the city.
Action Requested
The City Council is asked to take action on the results of the bond sales as presented at the meeting
by considering the resolutions for issuance and sale of the city's ~1,275,000 General Obligation
Improvement Bond Series 2003A and the sale of the city's General Obligation Water Revenue Bond
Series 2003B and providing for their issuance.
S:~Council~Lori~2OO3~generalobligationbonds.doc
Johnson, Lori
From:
Sent:
To:
Subject:
Moody's Investors Service [epi@moodys.com]
Wednesday, November 05, 2003 3:58 PM
Ijohnson@ci.elk-river. mn.us
Elk River (City of) MN
MOODY'S ASSIGNS A2 TO THE CITY OF ELK RIVER'S (MN) $3,295,000 G.O. BONDS, SERIES 2003A,
2003B
A2 RATING AFFIRMATION AFFECTS $21.7 MILLION IN OUTSTANDING PARITY DEBT, INCLUDING CURRENT
ISSUE
Elk River (City of) MN
Municipality
Minnesota
Moody's Rating
Issue
Rating
General Obligation Improvement Bonds, Series 2003A A2
Sale Amount $1,275,000
Expected Sale Date 11/10/03
Rating Description General Obligation, Unlimited Tax
General Obligation Water Revenue Bonds, Series 2003B A2
Sale Amount $2,020,000
Expected Sale Date 11/10/03
Rating Description General Obligation, Unlimited Tax
NEW YORK, November 5, 2003 -- Moody's has assigned an A2 the City of Elk River's (MN)
$1,275,000 General Obligation Improvement Bonds, Series 2003A and $2,020,000 General
Obligation Water Revenue Bonds, Series 2003B. Both bonds are secured by the city's general
obligation unlimited tax pledge. Proceeds from the Series 2003A will be used to finance
various public improvements within the city. Proceeds from the Series 2003B will be used
(1) to finance various water system improvements within the city, (2) to refund the Series
1993B for a net present value savings of $10,651 or 2.2% of refunded par, and
(3) to refund the Series 1994D for a net present value savings of $27,869 or 5.3% of
refunded par. The A2 rating is based on the city's diversifying and growing tax base with
a significant commercial/industrial sector and favorable location near the twin cities
metro area, strong financial position with modest dependence on state aid, and high yet
manageable debt burden supported by special assessments.
DIVERSIFYING AND GROWING TAX BASE WITH A SIGNIFICANT COMMERCIAL/INDUSTRIAL SECTOR AND
FAVORABLE LOCATION NEAR THE TWIN CITIES METRO AREA
The city's tax base benefits from its favorable location near the high growth corridor
between Minneapolis (rated Aal) / St. Paul (rated Aa2) metro area and St. Cloud (rated
Al). The tax base has grown at an average rate of 12.9% over the last five years
reflecting a growing population which has increased 64.2% since 1990. Full value per
capita is a healthy $70,227. Housing development, which has averaged approximately 200 new
homes per year over the last five years, is expected to continue at a similar rate.
Building permits were valued at $76,825,608 as of October 31, 2003 for calendar year 2003
compared to $58,892,695 for the entire calendar year 2002. Additionally, Moody's expects
the tax base to continue to grow as the city undergoes significant development in its 8
active Tax Increment Districts (TIDs), which contain a Wal-Mart, Home Depot, Menard's,
Target, and a business park among other entities. This growth is expected to be aided by
the possible future development of a commuter rail system connecting the metro area to St.
Cloud. With a station planned for Elk River, the commuting time to the metro area would be
approximately 45 minutes and the station would be multi-modal, offering both rail and bus
services. Wealth and housing values are above the state levels and ample employment
1
opportunities are reflected in low Sherburne County unemployment rate of 4.2% in August
2003.
STRONG FINANCIAL POSITION WITH MODEST DEPENDENCE ON STATE AID
Moody's believes the city will maintain a well-managed financial position given
historically conservative budgeting practices, which have resulted in the maintenance of
healthy reserves. Following three consecutive years of operating surpluses, the General
Fund balanced increased from $2.7 million, or 44.6% of General Fund revenues, for FY 2000
to $3.2 million, or 45.1%, for FY 2002. The Debt Service Fund cash is ample at $4.7
million or approximately 1 3/4 years of debt service expenditures for FY 2002. The city is
anticipating reductions in state aid of $644,000 for FY 2003 and 2004. In FY 2003, city
officials have implemented a hiring freeze, reduced personnel, and made across the
department miscellaneous cuts. Cost savings from these measures along with higher than
expected revenues from building permits will sufficiently offset the reduction for FY 2003
and a $175,000 surplus is expected. In FY 2004, the city intends to implement the same
plan but will levy back 60% of the state aid loss, the maximum allowed. Balanced
operations or a modest surplus is anticipated for FY 2004. Favorably, state aid accounted
for only 16.8% of the city operating revenues for FY 2002. The city's modest dependence on
state aid mitigates the impact of current and future reductions due to budget shortfalls
at the state level. Moody's believes that strong management practices and healthy fund
balances will ensure stable financial operations going forward.
HIGH YET MANAGEABLE DEBT BURDEN HEAVILY SUPPORTED BY SPECIAL ASSESSMENTS
Moody's expects the city's high debt burden to remain manageable due to anticipated future
tax base growth, support from non-levy sources, and rapid principal amortization. The
city's overall debt burden is high at 9.0% and is mostly attributable to overlapping debt
from Elk River I.S.D. 728. Favorably, the city's direct debt burden is moderate at 2.9%.
Similar to many rapidly developing cities, a significant portion of the city's debt,
approximately 49%, is backed by special assessments on affected property, which eases the
burden on the general tax levy. Principal amortization is rapid with 70.3% of debt retired
within 10 years. The city plans to issue $400,000 in Equipment Certificates in FY 2004.
KEY STATISTICS:
2000 population (census): 16,447
2002 full value: $1.2 billion
Full value per capita: $70,227
1999 Median family income: $65,471 (115.1% of state)
1999 Per capita income: $21,808 (04.0% of state)
2000 Median housing value: $144,800 (118.3% of state)
Sherburne County unemployment (August 2003): 4.2% (3.9% of state}
Overall debt burden: 9.0%
Direct debt burden: 2.9%
Amortization of principal (10 years): 70.3%
FY 2002 General Fund balance: $3.2 million (45.1% of General Fund revenues)
Post sale parity debt: $21.7 million, including current this issue
ANALYSTS:
John Crawford, Analyst, Public Finance Group, Moody's Investors Service Jonathan North,
Backup Analyst, Public Finance Group, Moody's Investors Service
CONTACTS:
Journalists: (212) 553-0376
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
ELK RIVER, 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 Elk River High School Small Theater on November 10, 2003,
commencing at 6:30 P.M., C.T., in part for the purpose of considering the sale of the City's
$1,275,000 General Obligation Improvement Bonds, Series 2003A.
The following Councilmembers were present:
and the following were absent:
Councilmember
introduced the following Resolution and moved its adoption:
A RESOLUTION PROVIDING FOR THE
ISSUANCE AND SALE OF THE CITY'S
$1,275,000 GENERAL OBLIGATION
IMPROVEMENT BONDS, SERIES 2003A
The motion for the adoption of the foregoing resolution was duly seconded by Councilmember
, and upon vote being taken thereon the following voted in favor thereof:
And the following voted against the same:
Whereupon said resolution ~vas declared duly passed and adopted.
S:~ADMIN\Rcsolutions\2003 Resolufions\Unapproved\Bondl.DOC
RESOLUTION NO.
RESOLUTION PROVIDING FOR THE
ISSUANCE AND SALE OF THE CITY'S
$1,275,000 GENERAL OBLIGATION IMPROVEMENT
BONDS, SERIES 2003A
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
l. Recitals. It is hereby determined:
(a) That the following assessable public improvements (the "Improvements")
have been duly ordered by the City and have been constructed by the City or will be
constructed under contracts which the City has or will let therefor, all pursuant to and in
accordance with the applicable provisions of Minnesota Statutes, Chapter 429:
Zane Avenue, Boston/Concord Streets and 2003
Pavement Rehabilitation Improvement Projects:
Net Project Costs $1,231,087
Bond Discount 15,300
Issuance Costs 26,000
Rounding 2,613
Net Bond Issue
$1,275,000
(b) That is it necessary and expedient to the sound financial management of the
affairs of the City that the City issue its bonds pursuant to Minnesota Statutes, Chapters 429
and 475, to provide financing for the Improvements.
(c) The Improvements and all their components have by requisite Council vote
been ordered on or prior to the date hereof, after a hearing thereon (except where not
required by law) for which mailed and published notice was duly given as required by law
describing the Improvements and all their components by general nature, estimated cost,
and area to be assessed.
(d) The Council desires that the Bonds be issued initially in "Book Entry Only
Form" (as hereinafter described).
2. Acceptance of Offer; Book Entry. Bonds.
(a) The offer of (the "Purchaser") to
purchase the City's $1,275,000 General Obligation Improvement Bonds, Series 2003A (the
"Bonds"), at the rates of interest and upon the other terms set forth in this Resolution, and
to pay therefor the sm of $. plus interest accrued to settlement, is
hereby accepted.
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(b) Book Entry Only System. The Depository Trust Company, a limited
purpose trust company organized under the laws of the State of New York, or any of its
successors to its functions hereunder (the "Depository"), will act as securities depository for
the Bonds, and to this end:
(i) The Bonds shall be initially issued and, so long as they remain in
book entry form only (the "Book Entry Only Period"), shall at all times be in the
form of a separate single fully registered Bond for each maturity of the Bonds; and
for purposes of complying with this requirement under paragraph 11 of this
Resolution, authorized denominations for each maturity of Bonds shall be deemed to
be limited during the Book Entry Only Period to the outstanding principal amount
of that maturity. While in such book entry form, the Bonds are sometimes
hereinafter referred to as being in "Book Entry Only Form."
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a
bond register maintained by the Bond Registrar appointed pursuant to paragraph 7
of this Resolution in the name of CEDE & CO., as the nominee (it or any nominee
of the existing or a successor Depository, the "Nominee").
(iii) With respect to the Bonds, neither the City nor the Bond Registrar
shall have any responsibility or obligation to any broker, dealer, bank, or any other
financial institution for which the Depository holds Bonds as securities depository
(the "Participant") or to the person for which a Participant holds an interest in the
Bonds shown on the books and records of the Participant (the "Beneficial Owner").
Without limiting the immediately preceding sentence, neither the City, nor the Bond
Registrar, shall have any such responsibility or obligation with respect to (A) the
accuracy of the records of the Depository, the Nominee or any Participant with
respect to any ownership interest in the Bonds, or 03) the delivery to any Participant,
any Beneficial Owner or any other person, other than the Depository, of any notice
with respect to the Bonds, including any notice of redemption, or (C) the payment to
any Participant, any Beneficial Owner or any other person, other than the
Depository, of any amount with respect to the principal of or premium, if any, or
interest on the Bonds, or (D) the consent given or other action taken by the
Depository as the registered owner of any Bonds (the "Holder"). For purposes of
securing the vote or consent of any Holder under this Resolution, the City may,
however, rely upon an omnibus proxy under which the Depository assigns its
consenting or voting rights to certain Participants to whose accounts the Bonds are
credited on the record date identified in a listing attached to the omnibus proxy.
(iv) The City and the Bond Registrar may treat as and deem the
Depository to be the absolute owner of the Bonds for the purpose of payment of the
principal of and premium, if any, and interest on the Bonds, for the purpose of
giving notices of redemption and other matters with respect to the Bonds, for the
purpose of obtaining any consent or other action to be taken by Holders for the
purpose of registering transfers with respect to such Bonds, and for all purpose
whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of
and premium, if any, and interest on the Bonds only to or upon the Holder or the
Holders of the Bonds, as shown on the Bond Registrar's bond register, and all such
S:\ADMiN~Resolutions\2003 Resolutions\UnapprovedNBondl.DOC 3
payments shall be valid and effective to fully satisfy and discharge the City's
obligations with respect to the principal of and premium, if any, and interest on the
Bonds to the extent of the sum or sums so paid.
(v) Upon delivery by the Depository to the Bond Registrar of written
notice to the effect that the Depository has determined to substitute a new Nominee
in place of the existing Nominee, and subject to the transfer provisions in paragraph
11 hereof, references to the Nominee hereunder shall refer to such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, all
payments with respect to the principal of and premium, if any, and interest on such
Bond and all notices with respect to such Bond shall be made and given,
respectively, by the Bond Registrar or the City, as the case may be, to the Depository
as provided in the Blanket Letter of Representations required by the Depository as a
condition to its acting as book-entry Depository for the Bonds (said Blanket Letter
of Representations, together with any replacement thereof or amendment or
substitute thereto, including any standard procedures or policies referenced therein
or applicable thereto respecting the procedures and other matters relating to the
Depository's role as book-entry Depository for the Bonds, are collectively
hereinafter referred to as the "Blanket Letter of Representations").
(vii) All transfers of beneficial ownership interests in each Bond issued in
book-entry form shall be limited in principal amount to authorized denominations
and shall be effected by the Depository with the Participants for recording and
transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be
provided to the Holders pursuant to this Resolution by the City or the Bond
Registrar with respect to any consent or other action to be taken by Holders, the
Depository shall consider the date of receipt of notice requesting such consent or
other action as the record date for such consent or other action; provided, that the
City or the Bond Registrar may establish a special record date for such consent or
other action. The City or the Bond Registrar shall, to the extent possible, give the
Depository notice of such special record date not less than 15 calendar days in
advance thereof to the extent possible.
(ix) Any successor Bond Registrar, in its written acceptance of its duties
under this Resolution and any paying agency registrar agreement, shall agree to take
any actions necessary from time to time to comply with the requirements of the
Blanket Letter of Representations.
(c) Termination of Book-Entry Only System. Discontinuance of a particular
Depository's services and termination of the book-entry only system may be effected as
follows:
(i) The Depository may determine to discontinue providing its services
with respect to the Bonds at any time by giving written notice to the City and
discharging its responsibilities with respect thereto under applicable law. The City
S:~ADMIN~Resolutions~2003 Resolutions\Unapproved~Bondl.DOC 4
may terminate the services of the Depository with respect to the Bonds if the City
determines that the Depository is no longer able to carry out its functions as
securities depository or the continuation of the system of book-entry txansfers
through the Depository is not in the best interests of the City.
(ii) Upon termination of the services of the Depository as provided in
the preceding paragraph, and if no substitute securities depository is willing to
undertake the functions of the Depository hereunder can be found which, in the
opinion of the City, is willing and able to assume such functions upon reasonable or
customary terms, or if the City determines that it is in the best interests of the City
that the Beneficial Owners be issued certificates for the Bonds, the Bonds shah no
longer be registered in the name of the Nominee, but may be registered in whatever
name or names the Holder of the Bonds shall designate at that time, in accordance
with paragraph 11 hereof. To the extent that the Beneficial Owners are designated
as the transferee by the Holders, in accordance with paragraph 11 hereof, the Bonds
will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions
of paragraph 11 hereof.
(d) Blanket Issuer Letter of Representations. The City's execution of the City
the Blanket Issuer Letter of Representations (the "Letter of Representations") in
substantially the form on file in the offices of the City is hereby ratified and approved. The
provisions in the Letter of Representations are incorporated herein by reference and made
fully a part of this Resolution to the same extent as if set forth in full herein, and if and to
the extent that any provisions of this Resolution are inconsistent or in conflict with the
provisions of the Letter of Representations, the provisions in the Letter of Representations
shall control.
3. Tide; Original Issue Date; Denominations; Maturities. The Bonds shall be
tided "General Obligation Improvement Bonds, Series 2003A," shall be dated December 9, 2003, as
the date of original issue and shall be issued forthwith on or after such date as fully registered bonds.
The Bonds shall be numbered from R-1 upward in the denomination of $5,000 each or in any
integral multiple thereof of a single maturity. The Bonds shall mature on February 1 in the years and
amounts as follows:
Years Amounts Years Amounts
2005 $185,000 2010 $95,000
2006 230,000 2011 90,000
2007 230,000 2012 95,000
2008 100,000 2013 95,000
2009 95,000 2014 60,000
As may be permitted in the offering of the Bonds and as may be requested by the
Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and
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final maturity amounts conforming to the foregoing principal repayment schedule, and
corresponding additions or other changes may be made to the form of the Bonds.
4. Purpose. The Bonds shah provide funds to finance the Improvements. The
total cost of the Improvements, which shall include all costs enumerated in Minnesota Statutes,
Section 475.65, is estimated to be at least equal to the amount of the Bonds. Work on the
Improvements shall proceed with due diligence to completion.
5. Interest. The Bonds shall bear interest payable semiannually on February 1
and August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2004,
calculated on the basis of a 360-day year consisting of twelve 30-day months, at the respective rates
per annum set forth opposite the maturity years, as follows:
Maturity Interest Maturity Interest
Year Rate Year Rate
2005 % 2010
2006 2011
2007 2012
2008 2013
2009 2014
6. Redemption. All Bonds maturing after February 1,2011, shall be subject to
redemption and prepayment at the option of the City on said date and on any date thereafter at a
price of par plus accrued interest to date of redemption. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the City shall determine the amount of
Bonds of each maturity to be prepaid; and if only part of the Bonds having a common maturity date
are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond
Registrar. Bonds or portions thereof called for redemption shall be due and payable on the
redemption date, and interest thereon shall cease to accrue from and after the redemption date.
Published notice of redemption shall in each case be given if and to the extent required by applicable
law, and mailed notice of redemption shall be given to the paying agent and to each affected
registered owner of the Bonds.
To effect a partial redemption of Bonds having a common maturity date, the Bond
Registrar, prior to giving notice of redemption, shall assign to each Bond of that maturity a
distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shah
then select by lot, using such method of selection as it shah deem proper in its discretion, from the
numbers so assigned to such Bonds, as many numbers as, at $5,000 for each number, shall equal the
principal amount of such Bonds to be redeemed. The Bonds to be redeemed shah be the Bonds to
~vhich were assigned numbers so selected; provided, however, that only so much of the principal
amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal
$5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it
shall be surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written
instrument of transfer in form satisfactory to the City or Bond Registrar duly executed by the
registered o,vner thereof or by the registered owner's attorney, duly authorized in writing) and the
City shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the
registered owner of such Bond, without service charge, a new Bond or Bonds of the same series
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having the same stated maturity and interest rate and of any authorized denomination or
denominations, as requested by such registered owner, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
7. Bond Registrar. , in
, is appointed to act as bond registrar and transfer agent with respect to the
Bonds (the "Bond Registrar"), and shah do so unless and until a successor Bond Registrar is duly
appointed, all pursuant to any contract the City and Bond Registrar shall execute which is consistent
herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying
agent is duly appointed. The principal of and interest on the Bonds shall be paid to the registered
owners (or record owners) of the Bonds in the manner set forth in the form of Bond and paragraph
13 of this Resolution.
8. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shall be in
substantially the following form:
S:~ADMIN\Resolutions~2003 Resolutions\Unapproved~Bondl.DOC 7
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELI( RIVER
R- $
GENERAL OBLIGATION IMPROVEMENT
BOND, SERIES 2003A
INTEREST MATURITY DATE OF
RATE DATE ORIGINAL ISSUE CUSIP
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
The City of Elk River, Sherburne County, Minnesota (the "City"), hereby
ackno~vledges itself to be indebted and, for value received, promises to pay to the registered owner
specified above, or registered assigns, in the manner hereinafter set forth, the principal amount
specified above on the maturity date specified above, unless duly called for earlier redemption, and
to pay interest thereon semiannually on February 1 and August I of each year (each, an "Interest
Payment Date"), commencing August 1, 2004, at the rate per annum specified above (calculated on
the basis of a 360-day year consisting of twelve 30-day months) until the principal sum is paid or has
been provided for. This Bond will bear interest from the most recent Interest Payment Date to
which interest has been paid or, if no interest has been paid, from the date of original issue hereof.
The principal of and premium, if any, on this Bond are payable upon presentation and surrender
hereof at the principal office of
(the "Bond Registrar"), acting as paying agent, or at the principal office of any
successor paying agent duly appointed by the City. Interest on this Bond will be paid on each
Interest Payment Date by check or draft mailed to the person in whose name this Bond is registered
(the "Registered Owner") on the registration books of the City maintained by the Bond Registrar
and at the address appearing thereon at the close of business on the fifteenth day of the calendar
month preceding such Interest Payment Date (the "Regular Record Date"). Any interest not so
timely paid shall cease to be payable to the person who is the Registered Owner hereof as of the
Regular Record Date, and shall be payable to the person who is the Registered Owner hereof at the
close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever
money becomes available for payment of the defaulted interest. Notice of the Special Record Date
shall be given to Registered Owners not less than ten days prior to the Special Record Date. The
principal of and premium, if any, and interest on this Bond are payable in lawful money of the
United States of America.
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REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL
FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened and
to be performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed in regular and due form, time and manner as required by law, and that this
Bond, together with all other indebtedness of the City outstanding on the date of original issue
hereof and the date of its actual issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
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 signatures of its
Mayor and its City Administrator; has caused the corporate seal of the City to be intentionally
omitted herefrom, as permitted by law; and has caused this Bond to be executed manually by the
Bond Registrar, acting as the City's duly appointed authenticating agent for the Bonds.
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Date of Registration: Registrable by:
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described m the
Resolution mentioned
within.
Payable at:
CITY OF ELK RIVER,
SHERBURNE COUNTY,
MINNESOTA
Mayor
Bond Reds=ar
City Administrator
By
Authorized Signature
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Redemption. All Bonds of this issue maturing after February 1,2011, are subject to
redemption and prepayment at the option of the City on said date and on any date thereafter at a
price of par plus accrued interest to date of redemption. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the City shall determine the amount of
Bonds of each maturity to be prepaid; and if only part of the Bonds having a common maturity date
are called for prepayment, the Bonds of that maturity to be prepaid shall be chosen by lot by the
Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the
redemption date, and interest thereon shall cease to accrue from and after the redemption date.
Published notice of redemption shall in each case be given if and to the extent required by applicable
law, and mailed notice of redemption shall be given to the paying agent and to each affected
registered owner of the Bonds.
To effect a partial redemption of Bonds having a common maturity date, the Bond
Registrar, prior to giving notice of redemption, shah assign to each Bond of that maturity a
distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shah
then select by lot, using such method of selection as it shah deem proper in its discretion, from the
numbers so assigned to such Bonds, as many numbers as, at $5,000 for each number, shah equal the
principal amount of such Bonds to be redeemed. The Bonds to be redeemed shah be the Bonds to
which were assigned numbers so selected; provided, however, that only so much of the principal
amount of each such Bond of a denomination of more than $5,000 shah be redeemed as shah equal
$5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it
shall be surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written
instrument of transfer in form satisfactory to the City or Bond Registrar duly executed by the
registered o~vner thereof or by the registered owner's attorney, duly authorized in writing) and the
City shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the
registered owner of such Bond, without service charge, a new Bond or Bonds of the same series
having the same stated maturity and interest rate and of any authorized denomination or
denominations, as requested by such registered owner, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total
principal amount of $1,275,000, all of like date of original issue and tenor, except as to registration
number, maturity, interest rate, denomination and redemption privilege, which Bond has been issued
pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and
pursuant to a resolution adopted by the City Council on November 10, 2003 (the "Resolution"), for
the purpose of providing money to finance certain costs of assessable public improvements within
the City. This Bond constitutes a general obligation of the City, and to provide moneys for the
prompt and full payment of its principal, premium, if any, and interest when the same become due,
the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged.
Each capitalized term which is used but not otherwise de£med in this Bond shall have the meaning
given to that term in the Resolution.
[For Bonds in Book Entry Only Form, the following paragraph shall be added, and this
Bond form (1) may be rearranged so that the signature blocks hereof appear at the end of
the main text of this form or (2) may otherwise be amended to conform to book entry
requirements and the Blanket Letter of Representations.]
S:~ADMIN~ResolutionsN2003 Resolutions~Unapproved\Bondl.DOC 1 1
Book Entry, Only Form; Blanket Letter of Representations. Pursuant to the
Resolution, the Bonds may be issued in Book Entry Only Form, and during any period in which
Bonds are in such form, the provisions applicable to the Bonds pursuant to the Blanket Letter of
Representations shall apply, not~vithstandmg any contrary or inconsistent provision herein or in the
Resolution.
Denominations; Exchange; Resolution. The Bonds are issuable solely as fully
registered bonds in the denominations of $5,000 and integral multiples thereof of a single maturity
and are exchangeable for fully registered bonds of other authorized denominations in equal
aggregate principal amounts at the principal office of the Bond Registrar, but only in the manner and
subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution
for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file
in the principal office of the Bond Registrar.
Transfer. This Bond is transferable by the Registered Owner in person or by the
Registered Owner's attorney duly authorized in writing at the principal office of the Bond Registrar
upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and
conditions provided in the Resolution and to reasonable regulations of the City contained in any
agreement with the Bond Registrar. Thereupon the City shall execute and the Bond Registrar shall
authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the
name of the transferee (but not registered in blank or to "bearer" or similar designation), of an
authorized denomination or denominations, in aggregate principal amount equal to the principal
amount of this Bond, of the same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection ~vith the transfer or
exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Registered Owners. The City and Bond Registrar may treat the person
in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the City nor the Bond
Registrar shall be affected by notice to the contrary.
Authentication. This Bond shall not be valid or become obligatory for any purpose
or be entitled to any security unless the Certificate of Authentication hereon shall have been
executed by the Bond Registrar.
Designation of Bonds as Oualified Tax-Exempt Obligations. The Bonds have been
designated by the city as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
S:\ADMIN~Resolutions\2003 Resolutions~Unapproved\Bondl.DOC 12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond,
shah he construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UTMA - as custodian for
(Cust)
under the
(State)
Trans£ers to Minors Act
(Minor)
Uniform
Additional abbreviations may also be used
though not in the above list.
S:~ADMIN~Rcsolutions~2003 Resolufons\Unapprovcd~Bondl.DOC 13
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and does hereby
irrevocably constitute and appoint as attorney to transfer the Bond on the
books kept for the registration thereof, 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 ~vithin Bond
in every particular, without alteration or any change whatever.
Signature Guaranteed:
Signature(s) must be guaranteed by a national bank or trust company, by a brokerage firm having a
membership in one of the major stock exchanges or by any other "Eligible Guarantor Institution" as
defined in 17 CFR 240.17 Ad-15(a)(2).
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address:
(Include information for all joint owners if the
Bond is held by joint account.)
S:\ADMIN\Resolutions~2003 Resolutions\Unapproved\Bondl.DOC 14
9. Execution; Temporary Bonds. The Bonds shall be executed on behalf of the
City by the signatures of its Mayor and City Administrator and be sealed with the seal of the City;
provided, however, that the seal of the City may be a printed facsimile; and provided further that
both of such signatures may be printed facsimiles and the corporate seal may be omitted on the
Bonds as permitted by law. In the event of disability or resignation or other absence of either such
officer, the Bonds may be signed by the manual or facsimile signature of that officer who may act on
behalf of such absent or disabled officer. In case either such officer whose signature or facsimile of
whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the
Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the
same as if he or she had remained in office until delivery. The City may elect to deliver, in lieu of
printed definitive bonds, one or more typewritten temporary bonds in substantially the form set
forth above, with such changes as may be necessary to reflect more than one maturity in a single
temporary bond. Such temporary bonds shall, upon the printing of the definitive bonds and the
execution thereof, be exchanged therefor and cancelled.
10. Authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this Resolution unless a Certificate of Authentication on
such Bond, substantially in the form hereinabove set forth, shal/have been duly executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds
need not be signed by the same person. The Bond Registrar shall authenticate the signatures of
officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and
by inserting as the date of registration in the space provided the date on which the Bond is
authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond
Registrar shall insert as a date of registration the date of original issue, which date is December 9,
2003. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that
it has been authenticated and delivered under this Resolution.
11. Registration; Transfer; Exchange. The City will cause to be kept at the
principal office of the Bond Registrar a bond register in which, subject to such reasonable
regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration
of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein
provided.
Upon surrender for transfer of any Bond at the principal office of the Bond
Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the
date of registration (as provided in paragraph 10) of, and deliver, in the name of the designated
transferee or transferees, one or more new Bonds of any authorized denomination or denominations
of a like aggregate principal amount, having the same stated maturity and interest rate, as requested
by the transferor; provided, however, that no Bond may be registered in blank or in the name of
"bearer" or similar designation.
At the option of the registered owner thereof, Bonds may be exchanged for Bonds
of any authorized denomination or denominations of a like aggregate principal amount and stated
maturity, upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar.
Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the
Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the
registered owner making the exchange is entitled to receive.
S:~ADMIN~Resolufions~2003 Resolutions~Unapproved\Bondl.DOC 15
All Bonds surrendered upon any exchange or transfer provided for in this Resolution
shah be promptly cancelled by the Bond Registrar and thereafter disposed of as directed by the City.
All Bonds delivered in exchange for or upon transfer of Bonds shah be valid
obligations of the City evidencing the same debt, and entitled to the same benefits under this
Resolution, as the Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly
endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond
Registrar, duly executed by the registered owner thereof or the registered owner's attorney duly
authorized in writing.
The Bond Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the City contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close
its transfer books between record dates and payment dates.
12. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of
or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Bond.
13. Interest Payment; Record Date. Interest on any Bond shall be paid on each
Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered
on the registration books of the City maintained by the Bond Registrar and at the address appearing
thereon at the close of business on the fifteenth (15th) day of the calendar month preceding such
Interest Payment Date (the "Regular Record Date"). Any such interest not so timely paid shall cease
to be payable to the person who is the registered owner thereof as of the Regular Record Date, and
shall be payable to the person who is the registered owner thereof at the close of business on a date
(the "Special Record Date") fnced by the Bond Registrar whenever money becomes available for
payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond
Registrar to the registered owners not less than ten (10) days prior to the Special Record Date.
14. Treatment of Registered Owner. The City and Bond Registrar may treat the
person in whose name any Bond is registered as the owner of such Bond for the purpose of
receiving payment of principal of and premium, if any, and interest (subject to the payment
provisions in paragraph 13 above) on, such Bond and for all other purposes whatsoever whether or
not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by
notice to the contrary.
15. Delivery; Application of Proceeds. The Bonds when so prepared and
executed shall be delivered by the City to the Purchaser upon receipt of the purchase price, and the
Purchaser shall not be obliged to see to the proper application thereof.
16. Fund and Accounts. There is hereby created a special fund of the City
designated the "$1,275,000 General Obligation Improvement Bonds, Series 2003A Fund" (the
S:~&DMIN~Resolufions\2003 Resolutions\ Unapproved~Bondl.DOC 16
"Fund") to be held and administered by the City as a bookkeeping account separate and apart from
all other funds maintained in the official financial records of the City. The Fund shall continue to be
maintained in the manner herein specified until all of the Bonds herein authorized and all other
bonds payable from said Fund and the interest thereon have been fully paid. There shall be
maintained in the Fund two (2) separate accounts, to be designated the "Capital Account" and
"Debt Service Accotint", respectively.
(i) Capital Account. To the Capital Account there shall be credited the
proceeds of the sale of the Bonds, less any amounts thereof deposited into the Debt
Service Account pursuant to paragraph 16(ii) below, plus any special assessments
levied with respect to the Improvements and collected prior to completion of the
Improvements and payment of the costs thereof. From the Capital Account there
shall be paid all costs and expenses of making the Improvements, including the cost
of any construction contracts heretofore let and all other costs incurred and to be
incurred of the kind authorized in Minnesota Statutes, Section 475.65; and the
moneys in said account shall be used for no other purpose except as otherwise
provided by law; provided that the proceeds of the Bonds may also be used to the
extent necessary to pay interest on the Bonds due prior to the anticipated date of
commencement of the collection of taxes or special assessments levied or
covenanted to be levied; and provided further that if upon completion of the
Improvements there shall remain any unexpended balance in the Capital Account,
the balance (other than any special assessments) may be transferred by the Council to
the fund of any other improvement instituted pursuant to Minnesota Statutes,
Chapter 429; and provided further that any special assessments credited to the
Capital Account shall only be applied towards payment of the costs of the
Improvements upon adoption of a resolution by the City Council determining that
the application of the special assessments for such purpose will not cause the City to
no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1.
(ii) Debt Service Account. There are hereby irrevocably appropriated
and pledged to, and there shall be credited to, the Debt Service Account: (a) all
collections of special assessments herein covenanted to be levied with respect to the
Improvements and either imtially credited to the Capital Account and not already
spent as permitted above and required to pay any principal and interest due on the
Bonds or collected subsequent to the completion of the Improvements and payment
of the costs thereof; (b) $. of the proceeds of the Bonds, to be used to
pay the interest first corning due thereon; (c) any collections of all taxes herein or
hereafter levied for the payment of the Bonds and interest thereon; (d) all funds
remaining in the Capital Account after completion of the Improvements and
payment of the costs thereof, not so transferred to the account of another
improvement; (e) all investment earnings on funds held in the Debt Service Account;
and (f) any and all other moneys which are properly available and are appropriated by
the Council to the Debt Service Account. The Debt Service Account shall be used
solely to pay the principal and interest and any premiums for redemption of the
Bonds and any other general obligation bonds of the City hereafter issued by the City
and made payable from said account as provided by law.
S: ~AD MIN \Resolutions~2003 Resolutions ~UnapprovedNBondl.DOC 17
No portion of the proceeds of the Bonds shall 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 (1) for a reasonable temporary period until such
proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the
above in an amount not greater than the lesser of five percent (5%) of the "Sale Proceeds" of the
Bonds (being the "issue price" of the Bonds less accrued interest). To this effect, any proceeds of
the Bonds and any sums from time to time held in the Capital Account or Debt Service Account in
excess of amounts which under then-applicable federal arbitrage regulations may be invested
~vithout regard to yield shall not be invested at a yield in excess of the applicable yield restrictions
imposed by said arbitrage regulations on such investments after taking into account any applicable
"temporary periods" or "minor portion" made available under the federal arbitrage regulations.
Money in the Fund shall 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 federal Internal Revenue Code of 1986, as amended (the "Code").
17. Assessments. It is hereby determined that no less than twenty percent (20%)
of the cost to the City of the Improvements financed hereunder within the meaning of Minnesota
Statutes, Section 475.58, Subdivision 1 (3), shall be paid by special assessments heretofore levied or
to be levied hereafter against every assessable lot, piece and parcel of land benefitted by any of the
Improvements. The City hereby covenants and agrees that it will let all construction contracts not
heretofore let within one (1) year after ordering each Improvements financed hereunder unless the
resolution ordering said Improvement specifies a different time limit for the letting of construction
contracts. The City hereby further covenants and agrees that it will do and perform as soon as they
may be done, all acts and things necessary for the final and valid levy of such special assessments,
and in the event that any such assessment be at any time held invalid xvith respect to any lot, piece or
parcel of land due to any error, defect, or irregularity in any action or proceedings taken or to be
taken by the City or the Council or any of the City officers or employees, either in the making of the
assessments or in the performance of any condition precedent thereto, the City and the Council will
forthwith do all further acts and take all further proceedings as may be required by law to make the
assessments a valid and binding lien upon such property.
At the time all of the assessments are in fact levied the Council shaH, based on the
then-current estimated collections of the assessments, make any adjustments in any ad valorem taxes
required to be levied in order to assure that the City continues to be in compliance with Minnesota
Statutes, Section 475.61, Subdivision 1.
1 $. Tax Levies. To provide moneys for payment of the principal of and interest
on the Bonds, there is hereby levied upon all of the taxable property in the City a direct annual ad
valorem tax which shall be spread upon the tax rolls and collected with and as part of other general
property taxes in the City for the years and in the amounts as follows:
Year of Tax Year of Tax
Levy Collection Amount
2004 2005
2005 2006
2006 2007
S:~ADMIN\Resolutions\2003 Resolutions\Unapproved\Bondl.DOC 18
2007 2008
2008 2009
2009 2010
2010 2011
2011 2012
2012 2013
The foregoing respective tax levies shall be irrepealable so long as any of the Bonds
are outstanding and unpaid, provided that the City reserves the right and power to reduce the levies
in the manner and to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3.
19. 105% Debt Service Coverage. It is hereby determined and reasonably
anticipated that the estimated collections of special assessments relating to the Improvements and
the other revenues available to the Debt Service Account will produce at least 5% in excess of the
amount needed to meet, when due, the principal of and interest on the Bonds. The City shall cause
to be filed a certified copy of this Resolution with the County Auditor of Sherburne County and to
obtain the certificate of said official required by Minnesota Statutes, Section 475.63.
20. General Obligation Pledge. The full faith and credit and taxing powers of
the City are hereby pledged to the payment of the principal of and interest on the Bonds, and in the
event of any current or anticipated deficiency of funds in the Debt Service Account of amounts
needed to make any such payment, when due, the Council shall levy ad valorem taxes on all taxable
property in the City in the amount of such deficiency. If the balance in the 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 shall be promptly paid out of any other funds of the City ~vhich are
available for such purpose, and such other funds may be reimbursed with or without interest from
the Debt Service Account when a sufficient balance is available therein.
21. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the
issuance of the Bonds, certified copies of all proceedings and records of the City relating to the
Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Bonds as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
22. Negative Covenant as to Use of Improvements. The City hereby covenants
not to use the Improvements or to cause or permit the Improvements to be used, or to enter into
any deferred payment arrangements for the cost of the Improvements, in such a manner as (or to
take any action or permit any other circumstance to exist or any action to be taken, the effect to
which would be) to cause the Bonds to be "private activity bonds" within the meaning of Sections
103 and 141 through 150 of the Code. In particular, but without limitation, the City covenants to
forebear the implementation, effectuation or enforcement of any and all contracts or other
agreements respecting the Improvements or any property benefitted thereby or assessed with
respect thereto, which it may now or in the future have with developers, contractors, owners or any
other person or parties to the extent that such implementation, effectuation or enforcement would
(individually or in the aggregate) cause the Bonds to become such "private activity bonds," and to
S:\ADMIN\Rcsolutions\2003 Resolutions\Unapprovcd\Bondl.DOC 19
said limited extent the City would and hereby does (solely for the benefit of the owners of the
Bonds) disavow any and all such provisions, entitlements and enforcements which would or could
become so offending.
Without limitation of the foregoing, the City does not currently have and shall not
enter into any lease, use agreement, management or operation contract or other agreement
respecting the Improvements which would adversely affect the exemption from federal income tax
of the interest of the Bonds, taking into account and observing the requirements of Revenue
Procedure 97-13 of the Internal Revenue Service and any similar or other apphcable revenue
procedures or guidelines relating to leases, management contracts and service contracts involving
facilities financed with tax-exempt obligations.
23. Tax-Exempt Status of the Bonds; Rebate. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross income
under Section 103 of the Code of the interest on the Bonds, including without limitation (1)
requirements relating to temporary periods for investments, (2) limitations on amounts invested at a
yield greater than the yield on the Bonds, and (3) the rebate of excess investment earnings to the
United States if the Bonds (together with other obligations reasonably expected to be issued and
outstanding at one time in this calendar year) exceed the small-issuer exception amount of
$5,000,000. For purposes of quahfying for the small issuer exception to the federal arbitrage rebate
requirements, the City hereby finds, determines and declares that (1) the Bonds are issued by a
governmental unit with general taxing powers, (2) no Bond is a private activity bond, (3) ninety-five
percent (95%) or more of the net proceeds of the Bonds are to be used for local governmental
activities of the City (or of a governmental unit the jurisdiction of which is entirely within the
jurisdiction of the City), and (4) the aggregate face amount of an tax-exempt obligations (other than
private activity bonds) issued by the City (and all entities subordinate to, or treated as one issuer
with, the City) during the 2003 calendar year is not reasonably expected to exceed $5,000,000, all
within the meaning of Section 148(f)(4)(D) of the Code.
24. Designation of Qualified Tax-Exempt Obligations. The City hereby
designates the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)
of the Code and hereby determines that:
(a) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds, treating qualified 501 (0(3) bonds as not being private activity bonds)
which will be issued by the City (and all entities subordinate to, or treated as one issuer with,
the City) during calendar year 2003 will not exceed $10,000,000; and
(b) not more than $10,000,000 of obligations issued or to be issued by the City
during calendar year 2003 have been designated for purposes of Section 265(b)(3) of the
Code.
The City shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this paragraph.
25. Defeasance. When any obligation of a Bond has been discharged as
provided in this paragraph, all pledges, covenants and other rights granted by this Resolution to the
registered owner of that Bond (with respect to the obligation thereof so defeased) shall, to the extent
S:~ADMIN~Resolutions~2003 Resolutions~Unapprovcd~Bondl.DOC 20
permitted by law, cease. The City may at any dine discharge any or all of such obligation(s) with
respect to any Bond, subject to the provisions of law now or hereafter authorizing or regulating such
action, by depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow
agent for this purpose, cash or securities which are backed by the full faith and credit of the United
States of America, bearing interest payable at such times and at such rates and maturing on such
dates and in such amounts as shall be required and sufficient, subject to sale and/or reinvestment in
like securities, to pay said obligation(s), which may include any interest payment on such Bond
and/or principal amount due thereon at a stated maturity (or if irrevocable provision shall have been
made for permitted prior redemption of such principal amount, at such earlier redemption date).
26. Compliance With Reimbursement Bond Regulations. With respect to the
Improvements, the City has complied and will continue to comply with the "Reimbursement
Regulations" provided in United States Treasury Regulations Section 1.150-2. In particular, except
where the following may not be required by said Regulations (e.g., with respect to certain
"preliminary expenditures"), to the extent that any of the proceeds of the Bonds will be used to
reimburse the City for a cost of the Improvements theretofore paid and temporarily £manced by the
City out of other City funds, prior to the initial payment thereof (or within applicable time limits
thereafter) the City has made or will have made a duly qualifying statement of its official intent to
bond for such costs (and the City will also make the written "reimbursement allocation" required by
the Reimbursement Regulations); otherwise, the proceeds of the Bonds are to be used for initial
payment, and not for such reimbursement, of costs of the Improvements.
27. Continuing Disclosure Undertaking. The Council hereby acknowledges that
the Bonds are subject to continuing disclosure requirements under Rule 15c2-12(b)(5) (the "Rule")
of the Securities and Exchange Commission. Consequently, on the date of actual issuance and
delivery of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking (the
"Undertaking") whereunder the City will covenant to provide, or cause to be provided, annual
financial information, including audited financial statements of the City, and notices of certain
material events, as specified in the Undertaking. The proposed form of the Undertaking which has
been submitted to the City for the Council's consideration is hereby approved, and the officers of
the City are hereby authozized to execute and deliver that Undertaking in the proposed form or in
such final form thereof reflecting such modifications thereof as are consistent with the Rule,
requested by the original purchaser of the Bonds and acceptable to the City officials who shall
execute the Undertaking (which consent shall be conclusively evidenced by their execution and
delivery thereof). The Undertaking, as so executed and delivered by the City, shall be as much a part
of this Resolution as if set forth in full herein and shall be for the benefit of the owners from time to
time of the Bonds.
28. Severability. If any section, paragraph or provision of this Resolution shall
be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such
section, paragraph or provision shall not affect any of the remaining provisions of this Resolution.
29. Headings. Headings in this Resolution are included for convenience of
reference only and shall not limit or define the meaning of any provision hereof.
Adopted on November 10, 2003, by the Elk River City Council.
S:NADMIN~Resolutions\2003 Resolutions\Unapproved\Bondl.DOC 21
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF ELK RIVER,
MINNESOTA, THIS l0TM DAY OF NOVEMBER 2003.
Stephanie Klinzing, Mayor
ATTEST:
Joan Schmidt, City Clerk
S:\ADMIN\Resolutions~2003 Resolutions\Unapproved\Bondl.DOC 22
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
SS
I, the undersigned, being the duly qualified and acting City Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing
extract of minutes with the original minutes of a meeting of the City Council duly called and held on
the date therein indicated, which are on file and of record in my office, and the same is a full, true
and complete transcript therefrom insofar as the same relates to awarding the sale of the City's
$1,275,000 General Obligation Improvement Bonds, Series 2003A.
WITNESS my hand as such City Clerk and the official seal of the City this __
., 20O3.
day of
(SEAL)
Joan Schmidt, City Clerk
S:\ADMINXResolutionsN2003 ResolutionsNUnapprovedNBondl.DOC
EXTRACT OF I¥11NUTES OF A t'IEETING OF THE
CITY COUNCIL OF THE CITY OF
ELK RIVER, MINNESOTA
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Elk
River, Minnesota, was duly called and held at the Elk River High School Small Theater on
November 10, 2003, beginning at approximately 6:30 P.M., C.T., for the purpose in part of
considering the sale of the City's General Obligation Water Revenue Bonds, Series 2003B.
The following Councilmembers were present:
and the following were absent:
Councilmember
introduced the following Resolution and moved its adoption:
RESOLUTION AWARDING THE SALE OF THE
CITY'S GENERAL OBLIGATION
WATER REVENUE BONDS, SERIES 2003B
AND PROVIDING FOR THEIR ISSUANCE
The motion for the adoption of the foregoing resolution was duly seconded by Councilmember
, 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.
S:\ADMIN ~Resolutions~2003 Resolutions~ Unapproved~Bond2.DOC
RESOLUTION NO.
RESOLUTION AWARDING THE SALE OF THE
CITY'S GENERAL OBLIGATION
WATER REVENUE BONDS, SERIES 2003B
AND PROVIDING FOR THEIR ISSUANCE
WHEREAS, the Council believes it to be in the City's best interest to consider a refunding
of (1) the City's General Obligation Permanent Improvement Revolving Fund Bonds, Series 1993B,
dated October 1, 1993, which included a portion of the bonds of said issue designated as the "Series
1993B Water Revenue Bonds" (said portion being hereinafter referred to as the "1993 Bonds")
issued in the original principal amount of $1,125,000, and (2) the city's General Obligation Water
Revenue Bonds, Series 1994D, dated December 1, 1994 (the "1994 Bonds"), issued in the original
principal amount of $1,010,000, and the 1993 Bonds and the 1994 Bonds are sometimes collectively
referred to herein as the "Prior Bonds"; and
WHEREAS, the outstanding Prior Bonds which mature after February 1, 2004, being in the
aggregate principal amount of $985,000, are subject to prepayment on said date at the option of the
City at the redemption price of par plus accrued interest; and
WHEREAS, the above-described refunding of the callable Prior Bonds is consistent with
covenants made with the holders thereof and is necessary and desirable for and will result in the
reduction of debt service cost to the City; and
WHEREAS, the improvements (the "Improvements") to the City's municipal water system
and utility consisting of certain watermain improvements and a new well (#8) have been or will be
duly ordered by the City and have been constructed by the City or will be constructed under
contracts which the City has or will let therefor, all pursuant to and in accordance with the
applicable provisions of Minnesota Statutes, Section 444.075, the total costs thereof being estimated
as follows:
Project Costs
Allowance for Discount
Costs of Issuance
Rounding
$975,000
12,060
13,754
4,186
$1,005,000
WHEREAS, it is necessary and expedient to the sound financial management of the affairs
of the City that the City issue $1,005,000 of its bonds (the "Nonrefundmg Bonds") pursuant to
Minnesota Statutes, Chapter 475 and Section 444.075, to provide financing for the Improvements;
and
WHEREAS, it is necessary and expedient to issue the City's General Obligation Water
Revenue Bonds, Series 2003B (the "Bonds"), to provide moneys (together with other funds available
for such purpose) for a current refunding of the callable Prior Bonds (which Prior Bonds to be
S:~ADMIN ~Resoluhons~2003 Resolu6ons~ Unapproved~Bond2.DOC
refunded are referred to herein as the "Refunded Bonds") and to finance the Improvements,
respectively:
NOW, THEREFORE, BE IT RESOLVED by the City Council (the "Council") of the
City of Elk River, Minnesota (the "City"), as follows:
1. Acceptance of Offer.
(a) The offer of (the "Purchaser"),
to purchase the City's General Obhgation Water Revenue Bonds, Series 2003B (the "Bonds",
or individually a "Bond"), at the rates of interest and upon the other terms set forth in this
Resolution, and to pay therefor the sum of $ plus interest accrued to
settlement, is hereby accepted.
(b) Book Entry. Only System. The Depository Trust Company, in New York,
New York, pursuant to a certain Blanket Issuer Letter of Representations to be executed by
the City and accepted by said Trust Company (as the same may be supplemented or
superseded, and including all provisions thereof and rules, procedures or practices
referenced therein, the "Letter of Representations"), or any of its successors to its functions
hereunder (the "Depository"), will act as securities depository for the Bonds, and to this end:
(i) The Bonds shall be initially issued and, so long as they remain in
book entry form only (the "Book Entry Only Period"), shall at all times be in the
form of a separate single fully registered Bond for each maturity of the Bonds; and
authorized denominations for each maturity of Bonds shah be deemed to be limited
during the Book Entry Only Period to the outstanding principal amount of that
maturity. While in such book entry form, the Bonds are sometimes hereinafter
referred to as being in "Book Entry Only Form."
(ii) Upon initial issuance, ownership of the Bonds shah be registered in a
bond register maintained by the Bond Registrar described in this Resolution in the
name of CEDE & CO., as the nominee (it or any nominee of the existing or a
successor Depository, the "Nominee").
(iii) With respect to the Bonds, neither the City nor the Bond Registrar
shah have any responsibility or obligation to any broker, dealer, bank, or any other
financial institution for which the Depository holds Bonds as securities depository
(the "Participant") or to the person for ~vhich a Participant holds an interest in the
Bonds shown on the books and records of the Participant (the "Beneficial Owner").
Without limiting the immediately preceding sentence, neither the City, nor the Bond
Registrar, shall have any such responsibility or obhgation with respect to (A) the
accuracy of the records of the Depository, the Nominee or any Participant with
respect to any ownership interest in the Bonds, or 03) the delivery to any Participant,
any Beneficial Owner or any other person, other than the Depository, of any notice
with respect to the Bonds, including any notice of redemption, or (C) the payment to
any Participant, any Beneficial Owner or any other person, other than the
Depository, of any amount with respect to the principal of or premium, if any, or
interest on the Bonds, or OD) the consent given or other action taken by the
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Depository as the registered owner of any Bonds (the "Holder"). For purposes of
securing the vote or consent of any Holder under this Resolution, the City may,
however, rely upon an omnibus proxy under which the Depository assigns its
consenting or voting rights to certain Participants to whose accounts the Bonds are
credited on the record date identified in a listing attached to the omnibus proxy.
(iv) The City and the Bond Registrar may treat as and deem the
Depository to be the absolute owner of the Bonds for the purpose of payment of the
principal of and premium, if any, and interest on the Bonds, for the purpose of
giving notices of redemption and other matters with respect to the Bonds, for the
purpose of obtaining any consent or other action to be taken by Holders for the
purpose of registering transfers with respect to such Bonds, and for all purpose
whatsoever. The Bond Registrar, as paying agent hereunder, shah pay aH principal of
and premium, if any, and interest on the Bonds only to or upon the Holder or the
Holders of the Bonds, as shown on the Bond Registrar's bond register, and all such
payments shall be valid and effective to fully satisfy and discharge the City's
obligations with respect to the principal of and premium, if any, and interest on the
Bonds to the extent of the sum or sums so paid.
(v) Upon delivery by the Depository to the Bond Registrar of written
notice to the effect that the Depository has determined to substitute a new Nominee
in place of the existing Nominee, and subject to the transfer provisions applicable to
the Bonds, references to the Nominee hereunder shah refer to such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, all
payments xvith respect to the principal of and premium, if any, and interest on such
Bond and all notices with respect to such Bond shall be made and given,
respectively, by the Bond Registrar or the City, as the case may be, to the Depository
as provided in the Letter of Representations.
(vii) All transfers of beneficial ownership interests in each Bond issued in
book-entry form shall be limited in principal amount to authorized denominations
and shall be effected by the Depository with the Participants for recording and
transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be
provided to the Holders pursuant to this Resolution by the City or the Bond
Registrar with respect to any consent or other action to be taken by Holders, the
Depository shah consider the date of receipt of notice requesting such consent or
other action as the record date for such consent or other action; provided, that the
City or the Bond Registrar may estabhsh a special record date for such consent or
other action. The City or the Bond Registrar shall, to the extent possible, give the
Depository notice of such special record date not less than 15 calendar days in
advance thereof to the extent possible.
(ix) Any successor Bond Registrar, in its written acceptance of its duties
under this Resolution and any paying agency registrar agreement, shall agree to take
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any actions necessary from time to time to comply with the requirements of the
Letter of Representations.
(x) In the case of a partial prepayment of a Bond, the Holder may, in lieu
of surrendering the Bond for a Bond of a lesser denomination, make a notation of
the reduction in principal amount on the panel provided on the Bond stating the
amount so redeemed.
(c) Termination of Book-Entry Only System. Discontinuance of the
Depository's services and termination of the book-entry only system may be effected as
follows:
(i) The Depository may determine to discontinue providing its services
with respect to the Bonds at any time by giving written notice to the City and
discharging its responsibilities with respect thereto under applicable law. The City
may terminate the services of the Depository with respect to the Bonds if the City
determines that the Depository is no longer able to carry out its functions as
securities depository or the continuation of the system of book-entry transfers
through the Depository is not in the best interests of the City.
(ii) Upon termination of the services of the Depository as provided in
the preceding paragraph, and if no substitute securities depository is willing to
undertake the functions of the Depository hereunder can be found which, in the
opinion of the City, is willing and able to assume such functions upon reasonable or
customary terms, or if the City determines that it is in the best interests of the City
that the Beneficial Owners be issued certificates for the Bonds, the Bonds shall no
longer be registered in the name of the Nominee, but may be registered in whatever
name or names the Holder of the Bonds shall designate at that time, in accordance
with paragraph 11 hereof. To the extent that the Beneficial Owners are designated
as the transferee by the Holders, the Bonds will be delivered to the Beneficial
Owners.
(d) Letter of Representations. The provisions in the Letter of Representations
(the City's execution and delivery of which being hereby ratified and confirmed) are
incorporated herein by reference and made fully a part of this Resolution to the same extent
as if set forth in full herein, and if and to the extent that any provisions of this Resolution or
the Bonds are inconsistent or in conflict with the provisions of the Letter of
Representations, the provisions in the Letter of Representations shall control.
2. Tide; Original Issue Date; Maturities; Denominations. The Bonds shall be tided
"General Obligation Water Revenue Bonds, Series 2003B," shall be dated December 9, 2003, as the
date of original issue, and shall be issued forthwith on or after such date as fully registered bonds.
The Bonds shall be numbered from R-1 upward in the denomination of $5,000 each or in any
integral multiple thereof of a single maturity. The Bonds shall mature on February 1 in the
following years and amounts, respectively:
S:~ADMIN\Resolutions\2003 Rcsolufions~ Unapproved\Bond2.DOC
Year Amount Year Amount
2005 $ 2010
2006 2011
2007 2012
2008 2013
2009 2014
As may be permitted in the offering of the Bonds and 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 or other changes may be made to the form of the Bonds
The principal amounts of the Bonds are hereby allocated between the portion thereof issued
to refund the 1993 Bonds (the "1993 Refunding Bonds"), the portion thereof issued to refund the
1994 Bonds (the "1994 Refunding Bonds"), and the portion thereof issued to finance the
Improvements (the "Nonrefundmg Bonds"), respectively, as follows:
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Year
Amount
1993 1994 Nonre funding
Refunding Bonds Refunding Bonds Bonds
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
The 1993 Refunding Bonds and the 1994 Refunding Bonds are sometimes collectively
referred to in this Resolution as the "Refunding Bonds."
3. Purposes; Refunding Findings. The Refunding Bonds shah provide moneys for a
current refunding of the City's Refunded Bonds, which refunding shah forthwith occur on February
1, 2004, or on such subsequent date (the "Refunding Date") as shall be arranged by or on behalf of
the City Finance Director, but in all events not later than 90 days after the actual issuance and
delivery of the Bonds. It is hereby found, determined and declared that such refunding is necessary
or desirable for the reduction of debt service cost to the City and/or the adjustment of the
maturities of the Prior Bonds in relation to the sources for their repayment and will result in a
reduction of debt service cost to the City. All of the proceeds, including all investment earnings
thereon, of the Prior Bonds have heretofore been expended by the City for the uses and purposes
for which the City issued said Prior Bonds. The balance in the debt service account heretofore
established by the City for the payment of the principal of and interest on the 1993 Bonds has been
taken into account in appropriately sizing the 1993 Refunding Bonds, and some monies therein are
expected to be combined as of the Refunding Date, to the extent necessary, with the available
proceeds of the 1993 Refunding Bonds in order to obtain a sum sufficient to accomplish the
refunding of the 1993 Bonds and to pay the regularly scheduled debt service due on the 1993 Bonds
on said date; otherwise, the current and anticipated balances in said debt service account do not
exceed and are not expected to exceed the aggregate amount of regularly scheduled debt service on
the 1993 Bonds which is payable on or before the Refunding Date.
The balance in the debt service account heretofore established by the City for the payment
of the principal of and interest on the 1994 Bonds has been taken into account in appropriately
sizing the 1994 Refunding Bonds, and some monies therein are expected to be combined as of the
Refunding Date, to the extent necessary, with the available proceeds of the 1994 Refunding Bonds
in order to obtain a sum sufficient to accomplish the refunding of the 1994 Bonds and to pay the
regularly scheduled debt service due on the 1994 Bonds on said date; otherwise, the current and
anticipated balances in said debt service account do not exceed and are not expected to exceed the
S:~ADMIN ~Resolutions~2003 Resolutions N Unapproved~Bond2.D OC
aggregate amount of regularly scheduled debt service on the 1994 Bonds which is payable on or
before the Refunding Date.
The City has observed and complied with all of its obligations and covenants made by the
City in connection with the issuance of the Prior Bonds.
The Nonrefundmg Bonds shall provide funds to finance the Improvements. The total cost
of the Improvements, which shall include all costs enumerated in Minnesota Statutes, Section
475.65, is estimated to be at least equal to the amount of the Nonrefundmg Bonds. Work on the
Improvements shall proceed with due diligence to completion.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2004, calculated
on the basis of a 360-day year consisting of twelve 30-day months, at the respective rates per annum
set forth opposite the maturity years as follows:
Maturity Interest Maturity Interest
Year Rate Year Rate
2005 % 2010
2006 2011
2007 2012
2008 2013
2009 2014
5. Redemption. All Bonds maturing after February 1, 2011, shall be subject to
redemption and prepayment at the option of the City on said date and on any date thereafter at a
price of par plus accrued interest to date of redemption. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the City shall determine the amount of
Bonds of each maturity to be prepaid; and if only part of the Bonds having a common maturity date
are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond
Registrar. Bonds or portions thereof called for redemption shall be due and payable on the
redemption date, and interest thereon shah cease to accrue from and after the redemption date.
Published notice of redemption shall in each case be given if and to the extent required by applicable
law, and mailed notice of redemption shall be given to the paying agent and to each affected
registered owner of the Bonds.
To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar,
prior to giving notice of redemption, shall assign to each Bond of that maturity a distractive number
for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot,
using such method of selechon as it shall deem proper in its discretion, from the numbers so
assigned to such Bonds, as many numbers as, at $5,000 for each number, shall equal the principal
amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which
were assigned numbers so selected; provided, however, that only so much of the principal amount
of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000
for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be
surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written
instrument of transfer in form satisfactory to the City or Bond Registrar duly executed by the
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registered owner thereof or by the registered owner's attorney, duly authorized in writing) and the
City shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the
registered owner of such Bond, without service charge, a new Bond or Bonds of the same series
having the same stated maturity and interest rate and of any authorized denomination or
denominations, as requested by such registered owner, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
6. Bond Registrar. , in .,
., is appointed to act as bond registrar and transfer
agent with respect to the Bonds (as used in this Resolution, the "Bond Registrar"), and shall do so
unless and until a successor Bond Registrar is duly appointed, aH pursuant to any contract the City
and Bond Registrar shah execute which is consistent with this Resolution. The Bond Registrar shah
also serve as paying agent unless and until a successor paying agent is duly appointed. Principal of
and interest on the Bonds shall be paid to the registered owners of the Bonds in the manner set
forth in the form of Bond and paragraph 12 of this Resolution.
7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shah be in
substantially the following form:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
GENERAL OBLIGATION
WATER REVENUE BOND, SERIES 2003B
INTEREST MATURITY DATE OF
RATE DATE ORIGINAL ISSUE CUSIP
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
IQqOW ALL BY THESE PRESENTS that the City of Elk River, Sherburne County,
Minnesota (the "City"), acknowledges that it is indebted and, for value received, hereby promises to
pay to the registered owner specified above, or registered assigns, in the manner hereinafter set
forth, the principal amount specified above on the maturity date specified above, unless duly called
for prior redemption, and to pay interest thereon semiannually on February 1 and August 1 of each
year (each, an "Interest Payment Date"), commencing August 1, 2004, at the per annum rate of
interest specified above (calculated on the basis of a 360 day year consisting of twelve 30 day
months) until the principal sum is paid or has been provided for. This Bond will bear interest from
the most recent Interest Payment Date to which interest has been paid or, if no interest has been
paid, from the date of original issue hereof. The principal of this Bond is payable upon presentation
and surrender hereof at the principal office of
., in , (the "Bond Registrar"),
acting as paying agent, or any successor paying agent duly appointed by the City. Interest on this
Bond will be paid on each Interest Payment Date by check or draft mailed to the person in whose
name this Bond is registered (the "Holder" or "Bondholder") on the registration books of the City
maintained by the Bond Registrar and at the address appearing thereon at the close of business on
the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular
Record Date"). Any interest not so timely paid shall cease to be payable to the person who is the
Holder hereof as of the Regular Record Date and shall instead be payable to the person that is the
Holder hereof at the close of business on a date (the "Special Record Date") frxed by the Bond
Registrar whenever money becomes available for payment of the defaulted interest. Notice of the
Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record
Date. The principal of and interest on this Bond are payable in lawful money of the United States of
America.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL FOR
ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE.
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IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required
by the Constitution and laws of the State of Minnesota to be done, to have happened and to be
performed precedent to and in the issuance of this Bond have been done, have happened and have
been performed in regular and due form, time and manner as required by law, and that this Bond,
together with all other indebtedness of the City outstanding on the date of original issue hereof and
on the date of its actual issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
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 signatures of its Mayor
and City Administrator; has caused the official seal of the City to be intentionally omitted herefrom,
as permitted by law; and has caused this Bond to be executed manually by the Bond Registrar, acting
as the City's duly appointed authenticating agent for the Bonds.
Date of Registration:
Registrable by:
Bond Registrar's
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the Bonds
described in the Resolution
mentioned within.
Payable at:
CITY OF ELK RIVER,
SHERBURNE COUNTY, MINNESOTA
Bond Re~strar
By.
Authorized Signature
Mayor
City Administrator
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ON REVERSE OF BOND
Redemption. All Bonds of this issue maturing after February 1, 2011, are subject to
redemption and prepayment at the option of the City on said date and on any date thereafter at a
price of par plus accrued interest to date of redemption. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the City shall determine the amount of
Bonds of each maturity to be prepaid; and if only part of the Bonds having a common maturity date
are called for prepayment, the Bonds of that maturity to be prepaid shall be chosen by lot by the'
Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the
redemption date, and interest thereon shall cease to accrue from and after the redemption date.
Published notice of redemption shall in each case be given if and to the extent required by applicable
la,v, and mailed notice of redemption shall be given to the paying agent and to each affected
registered owner of the Bonds..
Selection of Bonds for Redemption; Partial Redemption. To effect a redemption of Bonds
having a common maturity date, the Bond Registrar shall assign to each Bond having a common
maturity date a distractive number for each $5,000 of the principal amount of such Bond. The Bond
Registrar shall then select by lot, using such method of selection as it shall deem proper in its
discretion, from the numbers assigned to the Bonds, as many numbers as, at $5,000 for each
number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be
redeemed shah be the Bonds to which were assigned numbers so selected; provided, however, that
only so much of the principal amount of such Bond of a denomination of more than $5,000 shall be
redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be
redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the City or Bond
Registrar so requires, a written instrument of transfer in form satisfactory to the City and Bond
Registrar duly executed by the Holder thereof or the Holder's attorney duly authorized in writing),
and the City shall execute and the Bond Registrar shall authenticate and deliver to the Holder of
such Bond, without service charge, a new Bond or Bonds of the same series having the same stated
maturity and interest rate and of any authorized denomination or denominations, as requested by
such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of
the principal of the Bond so surrendered.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal
amount of $ ., all of like date of original issue and tenor, except as to
registration number, maturity, interest rate, denomination, and redemption privilege, which Bonds
have been issued pursuant to and in full conformity with the Constitution and laws of the State of
Minnesota, including Minnesota Statutes, Section 475.67, and pursuant to a resolution adopted by
the City Council, the governing body of the City, on November 10, 2003 (the "Resolution"), for the
primary purpose of providing moneys, together with other available funds of the City, sufficient to
prepay certain prior general obligation bonds of the City and to finance certain improvements to the
City's municipal water system and utility. This Bond constitutes a general obligation of the City, and
to provide moneys for the prompt and full payment of the principal of and interest on all of the
Bonds, when the same become due, the full faith and credit and taxing powers of the City have been
and are hereby irrevocably pledged. Each capitalized term which is used but not othenvise de£med
in this Bond shall have the meaning given to that term in the Resolution.
[For Bonds in Book Entry Only Form, the following paragraph shall be added, and this
Bond form (1) may be rearranged so that the signature blocks hereof appear at the end of
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the main text of this form or (2) may otherwise be amended to conform to book entry
requirements and the Letter of Representations.]
Book Entry, Only Form; Letter of Representations. Pursuant to the Resolution, the Bonds
may be issued in Book Entry Only Form, and during any period in which Bonds are in such form,
the provisions applicable to the Bonds pursuant to the Letter of Representations (as defined in the
Resolution) shall apply, notwithstanding any contrary or inconsistent provision herein or in the
Resolution.
Denominations; Exchange; Resolution. The Bonds are issuable solely as fully registered
bonds in the denominations of $5,000 and integral multiples thereof of a single maturity and are
exchangeable for fully registered Bonds of other authorized denominations of $5,000 and integral
multiples thereof of a single maturity and are exchangeable for fully registered Bonds of other
authorized denominations in equal aggregate principal amounts at the principal office of the Bond
Registrar, but only in the manner and subject to the limitations provided in the Resolution.
Reference is hereby made to the Resolution for a description of the rights and duties of the Bond
Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in person or by the Holder's attorney duly
authorized in writing at the principal office of the Bond Registrar upon presentation and surrender
hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and
to reasonable regulations of the City contained in any agreement with the Bond Registrar.
Thereupon the City shall execute, and the Bond Registrar shall authenticate and deliver, in exchange
for this Bond, one or more new fully registered Bonds in the name of the transferee (but not
registered in blank or to "bearer" or similar designation), of an authorized denomination or
denominations, in aggregate principal amount equal to the principal amount of this Bond, of the
same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection with the transfer or exchange of
this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Registered Owners. The City and Bond Registrar may treat the person in
xvhose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the City nor the Bond
Registrar shall be affected by notice to the contrary.
Authentication. This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security unless the Certificate of Authentication hereon shall have been manually
executed by the Bond Registrar.
Designation of Bond as Qualified Tax-Exempt Obligation. This Bond has been designated
by the City as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond,
construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UTMA - as custodian for
(Cust)
under the
(State)
Transfers to Minors Act
OVtmoO
Uniform
shall be
Additional abbreviations may also be used
though not in the above list.
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ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and does hereby
irrevocably constitute and appoint as attorney to
transfer the Bond on the books kept for the registration thereof, 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:
Signature(s) must be guaranteed by a national bank or trust company, by a brokerage fzrm having a
membership in one of the major stock exchanges or by any other "Eligible Guarantor Institution" as
defined in 17 CFR 240.17 Ad-15(a)(2).
The Bond Registrar will not effect transfer of this Bond unless the information concerning
the transferee requested below is provided.
Name and Ad&ess:
(Include information for all joint owners
if the Bond is held by joint account.)
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8. Execution; Temporary Bonds. The Bonds shall be executed on behalf of the City by
the signatures of its Mayor and City Administrator, and the official seal of the City may be omitted
from the Bonds, as permitted by law; provided that such signatures and said seal may be printed
facsimiles. In the event of disability or resignation or other absence of any such officer, the Bonds
may be signed by the manual or facsimile signature of that officer who may act on behalf of such
absent or disabled officer. In case any such officer whose signature or facsimile of whose signature
shall appear on the Bonds shall cease to be such officer before the delivery of the Bonds, such
signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he or
she had remained in office until delivery. The City may elect to deliver, in lieu of printed definitive
bonds, one or more typewritten temporary bonds in substantially the form set forth above, with
such changes as may be necessary to reflect more than one maturity in a single temporary bond.
Such temporary bonds may be executed with photocopied facsimile or manual signatures of the
Mayor and City Administrator. Such temporary bonds shall, upon the printing of the definitive
bonds and the execution thereof, be exchanged therefor and cancelled.
9. Authentication. No Bond shall be valid or obligatory for any purpose or be entided
to any security or benefit under this Resolution unless a Certificate of Authentication on such Bond,
substantially in the form hereinabove set forth, shall have been duly and manually executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds
need not be signed by the same person. The Bond Registrar shall authenticate the signatures of
officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and
by inserting as the date of registration in the space provided the date on which the Bond is
authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond
Registrar shall insert as a date of registration the date of original issue, which date is December 9,
2003. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that
it has been authenticated and delivered under this Resolution.
10. Registration; Transfer; Exchange. The City will cause to be kept at the principal
office of the Bon~ Registrar a bond register in ~vhich, subject to such reasonable regulations as the
Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the
registration of transfers of Bonds entitled to be registered or transferred as herein provided.
Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the
City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of
registration of (as provided in paragraph 9) and deliver, in the name of the designated transferee or
transferees, one or more new Bonds of any authorized denomination or denominations of a like
aggregate principal amount, having the same stated maturity and interest rate, as requested by the
transferor; provided, however, that no Bond may be registered in blank or in the name of "bearer"
or similar designation.
At the option of the registered owner, Bonds may be exchanged for Bonds of any
authorized denomination or denominations of a like aggregate principal amount and stated maturity,
upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar.
Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the
Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds ~vhich the
registered owner making the exchange is entitled to receive.
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All Bonds surrendered upon any exchange or transfer provided for in this Resolution shall
be promptly cancelled by the Bond Registrar and thereafter disposed of as directed by the City.
All Bonds delivered in exchange for or upon transfer of Bonds shah be valid obligations of
the City evidencing the same debt and entitled to the same benefits under this Resolution as the
Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly
executed by the registered owner thereof or the registered owner's attorney duly authorized in
~vritmg.
The Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of any Bond and any legal
or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the City contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close
its transfer books between record dates and payment dates.
11. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in
exchange for or in lieu of any other Bond shah carry ail the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any Bond shall be paid on each Interest
Payment Date by check or draft mailed to the person in whose name the Bond is registered (the
"Holder") on the registration books of the City maintained by the Bond Registrar and at the address
appearing thereon at the close of business on the fifteenth (15th) day of the calendar month next
preceding such Interest Payment Date (the "Regular Record Date"). Any such interest not so timely
paid shall cease to be payable to the person that is the Holder thereof as of the Regular Record Date
and shah be payable to the person that is the Holder thereof at the close of business on a date (the
"Special Record Date") fzxed by the Bond Registrar whenever money becomes available for payment
of the defaulted interest. Notice of the Special Record Date shah be given by the Bond Registrar to
the Holders not less than ten (10) days prior to the Special Record Date.
13. Treatment of Registered Owner. The City and Bond Registrar may treat the person
in whose name any Bond is registered as the owner of such Bond for the purpose of receiving
payment of principal of and interest (subject to the payment provisions in paragraph 12 above) on
such Bond and for all other purposes whatsoever, whether or not such Bond shall be overdue, and
neither the City nor the Bond Registrar shah be affected by notice to the contrary.
14. Delivery.; Application of Proceeds. The Bonds when so prepared and executed shall
be delivered by the City to the Purchaser upon receipt of the purchase price, and the Purchaser shall
not be obliged to see to the proper application thereof.
15. Fund and Accounts. For the convenience and proper administration of the moneys
to be borrowed and repaid on the Bonds, there is hereby created a special fund to be designated the
General Obligation Water Revenue Bonds, Series 2003B, Fund" (the "Fund") to be admimstered
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and maintained by the City as a bookkeeping account separate and apart from all other funds
maintained in the official financial records of the City. The Fund shall be maintained in the manner
herein specified until all of the Refunded Bonds and the Bonds herein authorized and the interest
thereon shall have been fully paid. There shall be maintained in the Fund three separate accounts, to
be designated the "Refunding Account," the "Capital Account" and the "Debt Service Account,"
respectively.
(i) Refunding Account. The proceeds of the sale of the Refunding
Bonds, less such proceeds of the Refunding Bonds as may be used to pay allocated
issuance expenses or hereinafter directed for deposit into the Debt Service Account,
plus any other available municipal funds ("Other Funds"), if any, as may be required
to adequately fund the Refunding Account to accomplish its purposes, together with
all investment earnings on funds held in the Refunding Account, are hereby pledged
and appropriated and shall be credited to the Refunding Account. The Refunding
Account may be invested only in securities maturing or callable on such dates and
bearing interest at such rates as shall be required to provide funds sufficient, together
with any cash or other funds retained in the Refunding Account, and together with
monies made available from the debt service account for the Prior Bonds, to pay all
principal and interest due on the Prior Bonds on the Refunding Date (as described in
paragraph 3 of this Resolution), whether due thereon by virtue of regularly scheduled
debt service or prior redemption. The moneys in the Refunding Account shall be
used solely for the purposes herein set forth and for no other purpose, except that
any surplus in the Refunding Account shall be remitted to the City. Such Other
Funds, if any, as may be required to fully fund the Refunding Account as described
above are hereby appropriated for said purpose.
(ii) Capital Account. To the Capital Account there shall be credited the
proceeds of the sale of the Nonrefundmg Bonds, less such amounts thereof as shall
be used to pay their allocated issuance expenses or deposited into the Debt Service
Account pursuant to paragraph 16(fii) below. From the Capital Account there shall
be paid all costs and expenses of making the Improvements, including the cost of
any construction contracts heretofore let, the costs of issuing the Nonrefundmg
Bonds and all other costs incurred and to be incurred of the kind authorized in
Minnesota Statutes, Section 475.65; and the moneys in said account shall be used for
no other purpose except as otherwise provided by law.
(iii) Debt Service Account. To the Debt Service Account there are
hereby pledged and irrevocably appropriated and there shah be credited: (1) all
accrued interest on the Bonds, which shall be used to pay the interest first coming
due thereon; (2) any balance remaining on the Refunding Date, after payment
thereon of all of the principal of and interest on all of the Prior Bonds, in the debt
service accounts created for and allocated to the Prior Bonds pursuant to the
Council's resolutions adopted in connection with the issuance of the Prior Bonds; (3)
the net revenues (as hereinafter defined, the "Net Revenues") of the City's municipal
water system and utility, but only in such amounts as shah be necessary, together
with other monies in the Debt Service Account and available for such purposes, to
pay, when due, the principal of and interest on the Bonds; (4) all collections of any
ad valorem taxes levied for the payment of the Bonds; (5) all investment earnings on
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funds held in the Debt Service Account; and (6) any amounts received by the City
upon termination of the Refunding Account. The foregoing funds are hereby
pledged to the Debt Service Account, but only in such amounts and at such times as
may be necessary, together with other available funds therein (and the same shall be
used solely), to pay the principal of and interest on the Bonds, when due.
As used in this Resolution, the term Net Revenues means the gross revenues derived
by the City from the operation of its municipal water system and utility, including all charges for
service, use, availability, and connection to said system, and all monies received from the sale of any
facilities or equipment of said system or any by-products thereof, less all normal, reasonable, or
current costs of owning, operating, and maintaining the system. If any payment of principal or
interest on the Bonds shall become due when there are not sufficient funds in the Debt Service
Account to pay the same, the City Finance Director shall pay such principal or interest from the
general fund or other available fund of the City, and such fund shall be reimbursed for such
advances from the proceeds of the Net Revenues or of any general ad valorem taxes hereafter levied
for such purpose, when collected. The City hereby covenants that it will impose and collect charges
for the service, use, and availability of and connection to the City's municipal water system and
utility at the times and in the amounts required to produce Net Revenues adequate, together with
other sources of funding available to the Debt Service Account, to pay all principal of and interest
on the Bonds, when due.
Nothing contained herein shall be deemed to preclude the City from making further
pledges and appropriations of the Net Revenues of the City's municipal water system and utility for
the payment of other or additional obligations of the City, provided that it has fzrst been determined
that the estimated Net Revenues will be sufficient, in addition to all other sources, for the payment
of the Bonds and such additional obligations, and any such pledge and appropriation of said Net
Revenues may be made superior or subordinate to, or on a parity with, the pledge and appropriation
herein. With respect to all currently outstanding obligations of the City which are payable from the
Net Revenues, the Council hereby determines that the estimated Net Revenues will be sufficient, in
addition to all other sources available for such purposes, for the payment of the Bonds and all such
other obligations.
No portion of the proceeds of the Bonds shall 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 for an available and reasonable "temporary period" until such proceeds
are needed for the purpose for which the Bonds were issued, and for any available "minor portion."
To this effect, any proceeds of the Bonds and any sums from time to time held in the Refunding
Account, the Capital Account and Debt Service Account (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
then-applicable federal arbitrage regulations may be invested without regard to yield shall 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 the
Bonds and money in the Fund shall 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, and regulations, rulings and decisions
thereunder (the "Code").
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16. Coverage Test; Certificate of Registration. It is hereby found and determined that
the Net Revenues pledged herein for the payment of the Bonds will be available in amounts
sufficient to produce at least five percent (5%) in excess of the amount needed to meet, when due,
the principal and interest payments on the Bonds.
The City shall file a certified copy of this Resolution with the office of the County Auditor
of Sherbume County and obtain the certificate of said office required by Minnesota Statutes, Section
475.63.
17. General Obligation Pledge. For the prompt and full payment of the principal of and
interest on the Bonds, as the same respectively become due, the full faith and credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the balance in the Debt Service
Account is ever insufficient to pay all principal and interest then due on the Bonds, the deficiency
shall be promptly paid out of any other funds of the City which are available for such purpose, and
such other funds may be reimbursed with or without interest from the Debt Service Account when
a sufficient balance is avaiable therein. To the extent that it shall ever be necessary to provide full
and timely payment of the debt service on the Bonds, the City shall levy an ad valorem tax upon all
taxable property within the City sufficient for such purposes.
18. Prior Bonds; Security. Until retirement and full payment of the Prior Bonds, all
provisions heretofore made for the security thereof shall be observed by the City.
19. Redemption of Refunded Bonds. The outstanding Prior Bonds maturing in 2005
and thereafter shall be redeemed and prepaid on the Refunding Date (as described in paragraph 3 of
this Resolution), and prior to said date, the paying agent/registrars for the Prior Bonds are hereby
authorized and directed to cause notice of said redemption to be published and to be given to the
owners of the Prior Bonds in such manner as may be required by law and by the terms of the Prior
Bonds.
20. Records and Certificates. The officers of the City are hereby authorized and directed
to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance
of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to
the financial condition and affairs of the City, and such other affidavits, certificates and information
as are required to show the facts relating to the Bonds as the same appear from the books and
records under their custody and control or as otherwise known to them, and all such certified
copies, certificates and affidavits, including any heretofore furnished, shall be deemed
representations of the City as to the facts recited therein.
21. Negative Covenant as to Use of Proceeds and Improvements. The City hereby
represents that it has not used, and hereby covenants that it will not use, and that it has not
permitted and will not permit any such uses, the proceeds of the Bonds, or the Improvements, or
the projects (the "Projects") financed by (or the proceeds of) the Prior Bonds in such a manner as to
cause the Bonds or the Prior Bonds to be "private activity bonds" under Sections 103 and 141
through 150 of the Code.
In particular, but without limitation, the City covenants to forebear the implementation,
effectuation or enforcement of any and all contracts or other agreements respecting the
Improvements, the Projects or any property benefitted thereby or assessed with respect thereto,
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which the City may now or in the future have with developers, contractors, owners or any other
person or parties to the extent that such implementation, effectuation or enforcement would
(individually or in the aggregate) cause the Bonds or the Prior Bonds to become such "private
activity bonds," and to said limited extent the City would and hereby does (solely for the benefit of
the o~vners of the Bonds) disavow any and all such provisions, entitlements and enforcements.
22. Tax-Exempt Status of the Bonds; Rebate. The City shah comply with requirements
necessary under the Code to establish and maintain the exclusion from gross income under Section
103 of the Code of the interest on the Bonds, including without limitation (1) requirements relating
to temporary periods for investments, (2) limitations on amounts invested at a yield greater than the
yield on the Bonds, and (3) the rebate of excess investment earnings to the United States and to the
extent applicable.
As indicated below, the 1993 Refunding Bonds and the Nonrefundmg Bonds (but not the
1994 Refunding Bonds) are being qualified under the small issuer exception to arbitrage rebate.
For purposes of qualifying the 1993 Refunding Bonds and the Nonrefundmg Bonds for the
small issuer exception to the federal arbitrage rebate requirements, the City hereby finds, determines
and declares that (1) the Bonds are issued by a governmental unit with general taxing powers, (2) no
Bond is a private activity bond, (3) ninety-five percent (95%) or more of the net proceeds of the
Bonds are to be used for local governmental activities of the City (or of a governmental unit the
jurisdiction of which is entirely within the jurisdiction of the City), and (4) the aggregate face amount
of an tax-exempt obligations (other than private activity bonds) issued by the City (and all entities
subordinate to, or treated as one issuer with, the City) during the 2003 calendar year is not
reasonably expected to exceed $5,000,000, all within the meaning of Section 148 (f) (4) 0D) of the
Code.
For purposes of substantiating the determination that the 1993 Refunding Bonds, being
refunding bonds, are eligible for exception from rebate pursuant to the above, in particular because
they meet the applicable requirements set out in Section 148 (f) (4) (D) (v) of the Code, the city hereby
represents and determines that (1) the 1993 Bonds were issued in 1993 by the City, which was at that
time and is now a governmental unit with general taxing powers; (2) the 1993 Bonds were not
private activity bonds under Sections 103 and 141 through 150 of the Code, and the City qualified
the 1993 Bonds within the "small-issuer" exception of Section 148 (f) (4) (D) of the Code; (3) 95% or
more of the net proceeds of the 1993 Bonds were used for local governmental activities of the City;
(4) the City, together with all issuers subordinate to or treated as one issuer with the City, did not
issue in excess of $5,000,000 of bonds (other than private activity bonds) during calendar year 1993;
(5) the average maturity date of the 1993 Refunding Bonds is not later than the average maturity date
of the 1993 Bonds being refunded thereby; and (6) none of the 1993 Refunding Bonds has a
maturity date which is later than 30 years after the date on which the 1993 Bonds were issued.
23. Designation of Qualified Tax-Exempt Obligations. The City hereby designates the
Bonds (and hereby treats $475,000 of the 1993 Refunding Bonds and $510,000 of the 1994
Refunding Bonds as "deemed designated" under Section 265(b)(3)(D)(ii) of the Code) as "qualified
tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code and further represents
that:
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(a) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds)
which will be issued by the City (and all entities subordinate to, or treated as one issuer with,
the City) during calendar year 2003 will not exceed $10,000,000; and
(b) not more than $10,000,000 of obligations issued or to be issued by the City
during calendar year 2003 have been designated for purposes of Section 265(b)(3) of the
Code.
The City shall use its best efforts to comply with any federal procedural requirements which may
apply in order to effectuate the designation made by this paragraph.
As indicated above, the City is treating a portion the principal amounts of the 1993
Refunding Bonds and the 1994 Refunding Bonds as "deemed designated" (but only to the extent
that the same do not exceed the respective principal amounts of the 1993 Bonds and the 1994
Bonds being currendy refunded thereby) pursuant to the advice of bond counsel and the provisions
of Section 265(b)(3)(D)(ii) of the Code by virtue of the facts (1) that the Prior Bonds were
designated by the City as qualified tax-exempt obligations pursuant to Section 265(b)(3) of the Code;
(2) that such portions of the Bonds, being current refunding obligations, are not taken into account
for purposes of the 2003 $10,000,000 limit, (3) the average maturity of the 1993 Refunding Bonds
and the 1994 Refunding Bonds is less than the average maturity of the 1993 Bonds and the 1994
Bonds being refunded thereby, respectively; and (4) that no Bond has a maturity date which is more
than 30 years after the date that the original qualified tax-exempt obligations (being the Prior Bonds)
were issued.
24. Compliance With Reimbursement Bond Regulations. With respect to the
Improvements, the City has complied and will continue to comply with the "Reimbursement
Regulations" provided in United States Treasury Regulations Section 1.150-2. In particular, except
where the following may not be required by said Regulations (e.g., with respect to certain
"preliminary expenditures"), to the extent that any of the proceeds of the Nonrefundmg Bonds will
be used to reimburse the City for a cost of the Improvements theretofore paid and temporarily
financed by the City out of other City funds, prior to the initial payment thereof (or within
applicable time limits thereafter) the City has made or will have made a duly qualifying statement of
its official intent to bond for such costs (and the City will also make the written "reimbursement
allocation" required by the Reimbursement Regulations); otherwise, the proceeds of the
Nonrefundmg Bonds are to be used for initial payment, and not for such reimbursement, of costs of
the Improvements.
25. Defeasance. When any obligation of a Bond has been discharged as provided in this
paragraph, all pledges, covenants and other rights granted by this Resolution to the registered owner
of that Bond (with respect to the obligation thereof so defeased) shall, to the extent permitted by
law, cease. The City may at any time discharge any or all of such obligation(s) with respect to any
Bond, subject to the provisions of law now or hereafter authorizing or regulating such action, by
depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow agent for
this purpose, cash or securities which are backed by the full faith and credit of the United States of
America, bearing interest payable at such times and at such rates and maturing on such dates and in
such amounts as shall be required and sufficient, subject to sale and/or reinvestment in like
securities, to pay said obligation(s), which may include any interest payment on such Bond and/or
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principal amount due thereon at a stated maturity (or if irrevocable provision shall have been made
for permitted prior redemption of such principal amount, at such earlier redemption date).
26. Continuing Disclosure Undertaking. The Council hereby acknowledges that the
Bonds are subject to continuing disclosure requirements under Rule 15c2-12(b)(5) (the "Rule") of
the Securities and Exchange Commission. Consequently, on the date of actual issuance and delivery
of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking (the
"Undertaking") whereunder the City will covenant to provide, or cause to be provided, annual
financial information, including audited financial statements of the City, and notices of certain
material events, as specified in the Undertaking. The proposed form of the Undertaking which has
been submitted to the City for the Council's consideration is hereby approved, and the officers of
the City are hereby authorized to execute and deliver that Undertaking in the proposed form or in
such final form thereof reflecting such modifications thereof as are consistent xvith the Rule,
requested by the original purchaser of the Bonds and acceptable to the City officials who shall
execute the Undertaking (which consent shall be conclusively evidenced by their execution and
delivery thereof). The Undertaking, as so executed and delivered by the City, shah be as much a part
of this Resolution as if set forth in full herein and shall be for the benefit of the owners from time to
time of the Bonds.
27. Severability. If any section, paragraph or provision of this Resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this Resolution.
28. Headings. Headings in this Resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
Adopted on November 10, 2003, by the Elk River City Council.
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PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF ELK RIVER,
MINNESOTA, THIS 10TM DAY OF NOVEMBER 2003.
Stephanie I~dinzing, Mayor
ATTEST:
Joan Schmidt, City Clerk
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STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
)
) ss
)
I, the undersigned, being the duly qualified and acting City Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and complete
transcript of an excerpt of the official minutes of a meeting of the City Council of said City, duly
called and regularly held on the date therein indicated, insofar as such minutes relate to authorizing
the issuance and awarding the sale of the City's General Obligation Water Revenue Bonds, Series
2003B.
WITNESS my hand as such City Clerk and the seal of said City this __
2003.
day of
Joan Schmidt, City Clerk
(SEAL)
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