5.1.A. SR 05-16-2005
Item # S.I.A.
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, Finance and Administrative Services Director
DATE: May 16, 2005
SUBJECT: Consider Resolution Providing for the Issuance and Sale of $1 ,085,000
General Obligation Improvement Bonds, Series 2005A, Pledging
Special Assessments for the Security Thereof and Levying a Tax for
the Payment Thereof and Resolution Providing for the Issuance and
Sale of $1 ,695,000 General Obligation Sewer Revenue Refunding
Bonds, Series 2005B and Pledging Net Revenues for the Security
Thereof
Attached are resolutions authorizing the issuance of $1,085,000 in improvement bonds to fund the
2005 Street Rehabilitation Project and $1,695,000 General Obligation Sewer Revenue Bonds to
refund the 1996A sewer bonds. Representatives of Ehlers and Associates will be present on Monday
to present the results of the bond sale.
Action Requested
City Council is asked to consider the results of the sale and approve the resolution providing for the
issuance and sale of $1,085,000 General Obligation Improvement Bonds, Series 2005A, pledging
special assessments for the security thereof and levying a tax for the payment thereof and approve
the resolution providing for the issuance and sale of $1,695,000 General Obligation Sewer Revenue
Refunding Bonds, Series 2005B, and pledging net revenues for the security thereof.
S:\Council\Lori\2005\Series 2005A & 2005B Bond Sales. doc
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: MAY 16, 2005
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Elk River, Sherburne County, Minnesota, was dilly held at the City Hall on
May 16,2005, at 7:30 P.M., for the purpose, in part, of authorizing the issuance and awarding
the sale of$1,085,000 General Obligation Improvement Bonds, Series 2005A.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION NO. 05-
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF $1,085,000 GENERAL OBLIGATION IMPROVEMENT
BONDS, SERIES 2005A, PLEDGING SPECIAL
ASSESSMENTS FOR THE SECURITY THEREOF AND
LEVYING A TAX FOR THE PAYMENT THEREOF
A. WHEREAS, the City Council of the City of Elk River, Minnesota (the "City"),
has heretofore determined and declared that it is necessary and expedient to issue $1,085,000
General Obligation Improvement Bonds, Series 2005A (the "Bonds" or individually, a "Bond"),
pursuant to Minnesota Statutes, Chapters 429 and 475, to finance various water line, water main
and storm water infrastructure improvements for the 2005 Street Reconstruction Project (the
"Improvements"); and
B. WHEREAS, the Improvements and all their components have been ordered prior
to the date hereof, after a hearing thereon for which notice was given describing the
Improvements or all their components by general nature, estimated cost, and area to be assessed;
and
C. WHEREAS, the City has retained Ehlers & Associates, Inc., in Roseville,
Minnesota ("Ehlers"), as its independent financial advisor for the sale of the Bonds and was
therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been
solicited by Ehlers; and
D. WHEREAS, the proposals set forth on Exhibit A attached hereto were received
by the Clerk, or designee, at the offices of Ehlers at 12:00 noon this same day pursuant to the
Terms of Proposal established for the Bonds; and
E. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
Minnesota, as follows:
1. Acceptance of Proposal. The proposal of
(the "Purchaser"), to purchase the Bonds in accordance with the
Terms of Proposal, at the rates of interest hereinafter set forth, and to pay therefor the sum of
$ , plus interest accrued to settlement, is hereby found, determined and declared
to be the most favorable proposal received and is hereby accepted, and the Bonds are hereby
awarded to the Purchaser. The Finance Director is directed to retain the deposit of the Purchaser
and to forthwith return to the unsuccessful bidders their good faith checks or drafts.
2. Bond Terms.
(a) Original Issue Date: Denominations: Maturities: Term Bond Option. The Bonds
shall be dated June 14,2005, as the date of original issue, shall be issued forthwith on or after
such date in fully registered form, shall be numbered from R-l upward in the denomination of
$5,000 each or in any integral multiple thereof of a single maturity (the "Authorized
Denominations") and shall mature on February 1 in the years and amounts as follows:
Year Amount Year Amount
2007 $95,000 2012 $110,000
2008 95,000 2013 115,000
2009 100,000 2014 120,000
2010 100,000 2015 120,000
2011 105,000 2016 125,000
As may be requested by the Purchaser, one or more term Bonds may be issued having
mandatory sinking fund redemption and final maturity amounts conforming to the foregoing
principal repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
(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 or 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 paragraphs 5 and 10 Authorized Denominations
for any Bond shall be deemed to be limited during the Book Entry Only Period to the
outstanding principal amount of that Bond.
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(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar (as hereinafter defined) 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 fmancial
institution for which the Depository holds Bonds as securities depository (the
"Participant") or 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 (B) the delivery to any Participant, any 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 Holder 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 the Holder or the Holders of the Bonds as shown on the 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 subj ect to the transfer provisions in paragraph 10 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 City, as the case may be, to the Depository as provided in the Letter of
Representations to the Depository required by the Depository as a condition to its acting
as book-entry Depository for the Bonds (said Letter of Representations, together with any
3
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, collectively hereinafter referred to as 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 procedures 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 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 of such special record date to the extent possible.
(ix) Any successor Bond Registrar in its written acceptance of its duties under
this Resolution and any paying agencylbond registrar agreement, shall agree to take 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 Bonds for a Bond of a lesser denomination as provided in paragraph 5
hereof, 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 Onlv 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 may terminate the
services of the Depository with respect to the Bond if it 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 or the Beneficial Owners.
(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 or the Beneficial Owners of the
Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds
shall no longer be registered as being registered in the bond register in the name of the
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ec f/aIriu Llf. 57 II! /oC;-
lien 5/,
City of Elk River, MN
Results of Bond Sale
May 16, 2005
$1,070,000 General Obligation Improvement Refunding Bonds,
Series 2005A
Low Bidder
True Interest Cost
United Bankers' Bank
Bloomington, Minnesota
3.5368%
Number of Bids
Rating
4
Range of Bids
Total Debt Service
A1 Moody's Investors Services
(Upgraded from A2)
3.5368% - 3.7269%
Principal Amount
Discount Allowance
True Interest Cost
Coupon Rates
I nterest Cost
Proiected 5/2
$1,085,000
$13,562.50
3.9916%
3.05% - 4.10%
$262,558.72
Results of Sale
Variance
$1,070,000
$8,560
3.5287%
2.75% - 3.70%
$227,384.32
-$15,000
-$5,002.50
-0.4628 %
-$35,174.40
Closi ng Date
Council Action
June 14,2005
Award the bid of United Bankers' Bank and Adopt the Resolution
Providing for the Issuance and Sale of $1 ,070,000 General
Obligation Improvement Refunding Bonds, Series 2005A,
Attachments
. Bid Tabulation
. Final Debt Service
BID TABULATION
$1,085,000* General Obligation Improvement Bonds, Series 2005A
CITY OF ELK RIVER, MINNESOTA
SALE: May 16, 2005
AWARD: UNITED BANKERS' BANK
RATING: Moody's Investors Service, Inc. "A 1"
NAME OF BIDDER
MATURITY RATE REOFFERING
(February 1) YIELD
PRICE
B81: 4.35%
NET TRUE
INTEREST INTEREST
COST RATE
UNITED BANKERS' BANK
Bloomington, Minnesota
First National Bank of Elk River
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
PIPERJAFFRAY & CO.
Minneapolis, Minnesota
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2.750%
2.900%
3.000%
3.100%
3.200%
3.300%
3.400%
3.500%
3.600%
3.700%
3.000%
3.000%
3.250%
3.250%
3.375%
3.500%
3.625%
3.750%
3.875%
4.000%
2.750%
2.900%
3.000%
3.100%
3.200%
3.300%
3.400%
3.500%
3.600%
3.700%
$1,076,320.00 $245,275.10 3.5368%
$1,085,897.15 $252,158.92 3.6132%
*Subsequent to bid opening the issue size was decreased to $1,070,000 with the 2007 maturity increased $5,000 to $100,000, the 2008
maturity increased $5,000 to $100,000, the 2009 maturity increased $5,000 to $105,000, the 2010 maturity increased $5,000 to $105,000,
the 2012 maturity decreased $5,000 to $105,000, the 2013 maturity decreased $5,000 to $110,000, the 2014 maturity decreased $10,000
to $110,000, the 2015 maturity decreased $5,000 to $115,000, and the 2016 maturity decreased $10,000 to $115,000 in maturity value.
Adjusted Price - $1,061,440.00
Adjusted Net Interest Cost - $235,944.32
Adjusted TIC - 3.5287%
e
EHLERS
& ASSOCIATES INC
,
; ,t
,
3060 Centre Pointe Drive, Roseville, MN 55113
651.697.8500 fax 651.697.8555 www.ehlers-inc.com
Offices in Rosevilfe, MN Brookfield, WI and Lisle, IL
City of Elk River, MN
2005 Street Rehabilitation
G.O. Improvement Bonds, Series 2005A Assessment Revenue
Par Amount of Bonds 1,070,000 2005 Street Rehab
Prepaid Special Assessments 91,200 Assessment Amt 364,800
Elk River Municipal Utilities 182,725 Rate 5.00%
Total Sources 1,343,925 Start Year (Collection) 2006
Term 10
Total Underwriter's Discount (1.250%) 8,560 Calculation Method EqualPrin
Costs of Issuance 17,665
Deposit to Capitalized Interest (CIF) Fund 21,984
Deposit to Project Construction Fund 1,293,400
Rounding Amount 2,315
Total Uses 1,343,925
Levy Payment Capitalized Net P&I Total
Year Date Principal Rate Interest Interest P&I +5.00% Principal Interest Assessmt Levy
6/14/2005
2/1/2006 21,980 (21,980)
2005 2/1/2007 100,000 2.75% 34,865 134,865 141,608 (36,480) (18,240) (54,720) 86,888
2006 2/1/2008 100,000 2.90% 32,115 132,115 138,721 (36,480) (16,416) (52,896) 85,825
2007 2/1/2009 105,000 3.00% 29,215 134,215 140,926 (36,480) (14,592) (51,072) 89,854
2008 2/112010 105,000 3.10% 26,065 131,065 137,618 (36,480) (12,768) (49,248) 88,370
2009 2/112011 105,000 3.20% 22,810 127,810 134,201 (36,480) (10,944) (47,424) 86,777
2010 2/1/2012 105,000 3.30% 19,450 124,450 130,673 (36,480) (9,120) (45,600) 85,073
2011 2/1/2013 110,000 3.40% 15,985 125,985 132,284 (36,480) (7,296) (43,776) 88,508
2012 2/1/2014 110,000 3.50% 12,245 122,245 128,357 (36,480) (5,472) (41,952) 86,405
2013 2/1/2015 115,000 3.60% 8,395 123,395 129,565 (36,480) (3,648) (40,128) 89,437
2014 2/1/2016 115,000 3.70% 4,255 119,255 125,218 (36,480) (1,824) (38,304) 86,914
1,070,000 227,380 1,275,400 1,339,170 (364,800) (100,320) (465,120) 874,050
Prepared by Ehlers & Associates, Inc.
5/16/2005
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 10 hereof, the Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of
paragraph 10 hereof.
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. Purpose. The 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 Bonds. Work on the
Improvements shall proceed with due diligence to completion. The City covenants that it shall
do all things and perform all acts required of it to assure that work on the Improvements
proceeds with due diligence to completion and that any and all permits and studies required
under law for the Improvements are obtained.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing February 1,2006,
calculated on the basis of a 360-day year 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
2007 % 2012 %
2008 2013
2009 2014
2010 2015
2011 2016
5. Redemption. All Bonds maturing on February 1,2013, and thereafter, shall be
subject to redemption and prepayment at the option ofthe City on February 1,2012 and on any
date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of
the Bonds subject to prepayment. Ifredemption is in part, the selection of the amounts and
maturities of the Bonds to be prepaid shall be at the discretion of the City. 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. Mailed notice of redemption shall be given to the
paying agent and to each affected registered holder of the Bonds at least thirty (30) days prior to
the date fixed for redemption.
5
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 having a common
maturity date a distinctive 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 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 and Bond Registrar duly executed by the Holder thereof or the Holder's attorney dilly
authorized in writing) and the City shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any Authorized Denomination or
Denominations, as requested by the Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
6. Bond Registrar. U.S. Bank National Association, in S1. Paul, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall do so unless and until a successor Bond Registrar is dilly 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
dilly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or
record holders) 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, shall be in
substantially the following form:
6
UNITED STATES OF AMERICA
STATE OF MINNESOTA
SHERBURNE COUNTY
CITY OF ELK RIVER
R-
$
GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2005A
INTEREST
RATE
MATURITY
DATE
DATE OF
ORIGINAL ISSUE
CUSIP
%
FEBRUARY 1,
JUNE 14, 2005
REGISTERED OWNER:
CEDE & CO.
PRINCIP AL AMOUNT:
DOLLARS
THE CITY OF ELK RIVER, SHERBURNE COUNTY, MINNESOTA (the "Issuer"),
certifies that it is indebted and for value received promises to pay to the registered owner
specified above, or registered assigns, unless called for earlier redemption, in the manner
hereinafter set forth, the principal amount specified above, on the maturity date specified above,
and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an
"Interest Payment Date"), commencing February 1, 2006, at the rate per annum specified above
(calculated on the basis ofa 360-day year 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 U.S. Bank National Association, in St.
Paul, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent
duly appointed by the Issuer. 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 Issuer 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 be payable to the person who is the Holder 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 Bondholders 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. So long as this Bond is registered in the name of the Depository or its Nominee as
provided in the Resolution hereinafter described, and as those terms are defined therein, payment
of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be
made as provided in Letter of Representations, as defined in the Resolution, and surrender of this
Bond shall not be required for payment of the redemption price upon a partial redemption of this
7
Bond. Until termination of the book-entry only system pursuant to the Resolution, Bonds may
only be registered in the name of the Depository or its Nominee.
Redemption. All Bonds of this issue (the "Bonds") maturing on February 1,2013, and
thereafter, shall be subject to redemption and prepayment at the option of the City on February 1,
2012, and on any date thereafter at a price of par plus accrued interest. Redemption may be in
whole or in part of the Bonds subj ect to prepayment; if redemption is in part, the selection of the
amounts and maturities of the Bonds to be prepaid shall be at the discretion of the Issuer. 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. Mailed notice of redemption shall be given to the
paying agent and to each affected Holder of the Bonds at least thirty (30) days prior to the date
fixed for redemption.
Selection of Bonds for Redemption: Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive 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 the 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 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
Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's attorney dilly
authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any Authorized Denomination or
Denominations, as requested by the 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$1,085,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate, denomination and redemption privilege, 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 May 16, 2005 (the "Resolution"), for the purpose of providing money to
fmance the construction of various improvements within the jurisdiction of the Issuer. This
Bond is payable out of the General Obligation Improvement Bonds, Series 2005A Fund of the
Issuer. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the
prompt and full payment of its principal, premium, if any, and interest when the same become
due, the fullfaith and credit and taxing powers of the Issuer have been and are hereby
irrevocably pledged.
Denominations: Exchange: Resolution. The Bonds are issuable solely in fully registered
form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully
8
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 Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer 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 Issuer 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 Issuer 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.
Qualified Tax-Exempt Obligation. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b )(3) of the Internal Revenue
Code of 1986, as amended.
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 happen 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 debts of the Issuer outstanding on the date of original issue hereof
and the date of its issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
9
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, Minneso~ 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, the corporate seal of the Issuer having been intentionally
omitted as permitted by law.
Date of Registration:
Registrable by: U.S. BANK NATIONAL
ASSOCIATION
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described in the
Resolution mentioned
Within.
Payable at:
U.S. BANK NATIONAL
ASSOCIATION
CITY OF ELK RIVER, SHERBURNE COUNTY,
MINNESOTA
U.S. Bank National Association
St. Paul, Minneso~
Bond Registrar
/s/ Facsimile
Mayor
By
Authorized Signature
/s/ Facsimile
City Administrator
10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be 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)
(Minor)
Uniform Transfers to Minors Act
under the
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and does
hereby irrevocably constitute and appoint 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 or by a brokerage firm
having a membership in one of the major stock exchanges or any other "Eligible Guarantor
Institution" asdefmedin 17CFR240.17 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.)
11
8. Execution: Temporary Bonds. The Bonds shall be printed (or, at the request of
the Purchaser, typewritten) and 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 (or, at the request of the Purchaser, photocopied) facsimile;
and provided further that both of such signatures may be printed (or, at the request of the
Purchaser, photocopied) 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 officer, the
Bonds may be signed by the manual or facsimile signature of an officer who may act on behalf
of the absent or disabled officer. In case either the 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, the signature Qr facsimile shall nevertheless be valid and sufficient for all purposes, the
same as if the officer 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
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 canceled.
9. 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
the Bond, substantially in the form hereinabove set forth, shall 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 June 14,2005. 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 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 9) 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 Holder, 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
13
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
Holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City.
All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
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 Holder thereof or his, her or its 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. The Clerk is hereby authorized
to negotiate and execute the terms of said agreement.
11. 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.
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 who is the Holder thereof
as of the Regular Record Date, and shall be payable to the person who is the Holder thereof 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 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 premium, if any, and interest (subject to the payment
provisions in paragraph 12) 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.
14
14. Delivery: Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Finance Director 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. There is hereby created a special fund to be designated the
"General Obligation Improvement Bonds, Series 2005A Fund" (the "Fund") to be administered
and maintained by the Finance Director as a bookkeeping account separate and apart from all
other funds maintained in the official fmancial records of the City. The Fund shall be maintained
in the manner herein specified until all of the Bonds and the interest thereon have been fully
paid. There shall be maintained in the Fund the following separate accounts:
(a) Construction Account. To the Construction Account there shall be credited the
proceeds of the sale of the Bonds, less any accrued interest received thereon, and less any
amount paid for the Bonds in excess of the minimum bid, and less capitalized interest in the
amount of$ (together with interest earnings thereon and subject to such other
adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or
before February 1,2006), 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 Construction Account there shall be paid all costs and expenses of making the Improvements
listed in paragraph 16, 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.
Moneys in the Construction 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 herein levied or covenanted to be levied; and provided
further that ifupon completion of the Improvements there shall remain any unexpended balance
in the Construction Account, the balance (other than any special assessments) shall be transferred
by the City Council to the Debt Service Account or the fund of any other improvement instituted
pursuant to Minnesota Statutes, Chapter 429, and provided further that any special assessments
credited to the Construction 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.
(b) Debt Service Account. There are hereby irrevocably appropriated and pledged to,
and there shall be credited to, the Debt Service Account: (i) all collections of special
assessments herein covenanted to be levied with respect to the Improvements and either initially
credited to the Construction 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; (ii) any accrued interest received upon delivery
of the Bonds; (iii) all funds paid for the Bonds in excess ofthe minimum bid; (iv) capitalized
interest in the amount of $ (together with interest earnings thereon and subject to such
other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds
on or before February 1, 2006; (v) any collections of all taxes hereafter levied for the payment of
the Bonds and interest thereon; (vi) all funds remaining in the Construction Account after
completion of the Improvements and payment of the costs thereof, not so transferred to the
account of another improvement; (vii) all investment earnings on funds held in the Debt Service
1768527vl
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Account; and (viii) any and all other moneys which are properly available and are appropriated
by the governing body of the City 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.
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 5% of the proceeds of the Bonds or $100,000. To this
effect, any proceeds of the Bonds and any sums from time to time held in the Construction
Account or Debt Service Account (or any other City account which will be used to pay principal
or interest to become due on the bonds payable therefrom) 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 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
Internal Revenue Code of 1986, as amended (the "Code").
16. Assessments. It is hereby determined that no less than 20% of the cost to the City
of each Improvement financed hereunder within the meaning of Minnesota Statutes, Section
475.58, Subdivision 1(3), shall be paid by special assessments to be levied against every
assessable lot, piece and parcel ofland benefitted by any of the Improvements. The City hereby
covenants and agrees that it will let all construction contracts not heretofore let within one year
after ordering each Improvement financed hereunder unless the resolution ordering the
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 fmal and valid levy of such special assessments, and in the
event that any such assessment be at any time held invalid with 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 City Councilor 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 City
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. The special
assessments have heretofore been authorized. Subject to such adjustments as are required by the
conditions in existence at the time the assessments are levied, it is hereby determined that the
assessments shall be payable in equal, consecutive, annual installments, with general taxes for
the years shown below and with interest on the declining balance of all such assessments at the
rates per annum not less than the rate per annum set forth opposite the collection years specified
below:
1 768527vl
16
Improvement Designation
Amount
Levy
Years
Collection
Years Rate
2005 Street Reconstruction Project
$
%
At the time the assessments are in fact levied the City Council shall, 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.
17. Tax Levy: Coverage Test. To provide moneys for payment of the principal 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 Levy
Year of Tax Collection
Amount
See Attached Levy Schedule
The tax levies are such that if collected in full they, together with estimated collections of
special assessments and other revenues herein pledged for the payment of the Bonds, will
produce at least 5% in excess of the amount needed to meet when due the principal and interest
payments on the Bonds. The 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.
18. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with
respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The City may also discharge its obligations with respect to any prepayable Bonds called
for redemption on any date when they are prepayable according to their terms, by depositing
with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. The City may also at any time
discharge its obligations with respect to any Bonds, subject to the provisions of law now or
hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a
suitable banking institution qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if
notice of redemption as herein required has been duly provided for, to such earlier redemption
date.
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19. Compliance With Reimbursement Bond Regulations. The provisions of this
paragraph are intended to establish and provide for the City's compliance with United States
Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the
"reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the
City to reimburse itself for any expenditure which the City paid or will have paid prior to the
Closing Date (a "Reimbursement Expenditure").
The City hereby certifies and/or covenants as follows:
( a) Not later than 60 days after the date of payment of a Reimbursement Expenditure,
the City (or person designated to do so on behalf of the City) has made or will
have made a written declaration of the City's official intent (a "Declaration")
which effectively (i) states the City's reasonable expectation to reimburse itself for
the payment of the Reimbursement Expenditure out of the proceeds of a
subsequent borrowing; (ii) gives a general and functional description of the
property, project or program to which the Declaration relates and for which the
Reimbursement Expenditure is paid, or identifies a specific fund or account of the
City and the general functional purpose thereof from which the Reimbursement
Expenditure was to be paid (collectively the "Project"); and (iii) states the
maximum principal amount of debt expected to be issued by the City for the
purpose of fmancing the Project; provided, however, that no such Declaration
shall necessarily have been made with respect to: (i) "preliminary expenditures"
for the Project, defmed in the Reimbursement Regulations to include engineering
or architectural, surveying and soil testing expenses and similar prefatory costs,
which in the aggregate do not exceed 20% of the "issue price" of the Bonds, and
(ii) a de minimis amount of Reimbursement Expenditures not in excess of the
lesser of$100,000 or 5% of-the proceeds of the Bonds.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of
the Bonds or any of the other types of expenditures described in Section 1.150-
2( d)(3) of the Reimbursement Regulations.
(c) The "reimbursement allocation" described in the Reimbursement Regulations for
each Reimbursement Expenditure shall and will be made forthwith following (but
not prior to) the issuance of the Bonds and in all events within the period ending
on the date which is the later of three years after payment of the Reimbursement
Expenditure or one year after the date on which the Project to which the
Reimbursement Expenditure relates is first placed in service.
(d) Each such reimbursement allocation will be made in a writing that evidences the
City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if
made within 30 days after the Bonds are issued, shall be treated as made on the
day the Bonds are issued.
Provided, however, that the City may take action contrary to any of the foregoing covenants in
this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that
such action will not impair the tax-exempt status of the Bonds.
1768527vl
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20. Continuing Disclosure. The City is the sole obligated person with respect to the
Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"),
promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the
"Undertaking") hereinafter described to:
(a) Provide or cause to be provided to each nationally recognized municipal securities
information repository ("NRMSIR") and to the appropriate state information depository ("SID"),
if any, for the State of Minnesota, in each case as designated by the Commission in accordance
with the Rule, certain annual financial information and operating data in accordance with the
Undertaking. The City reserves the right to modify from time to time the terms of the
Undertaking as provided therein.
(b) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the
Municipal Securities Rulemaking Board ("MSRB") and (ii) the SID, notice of the occurrence of
certain material events with respect to the Bonds in accordance with the Undertaking.
(c) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the
MSRB and (ii) the SID, notice of a failure by the City to provide the annual financial information
with respect to the City described in the Undertaking.
(d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph
and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be
enforceable on behalf of such Holders; provided that the right to enforce the provisions of these
covenants shall be limited to a right to obtain specific enforcement of the City's obligations under
the covenants.
The Mayor and City Administrator of the City, or any other officer of the City authorized
to act in their place (the "Officers") are hereby authorized and directed to execute on behalf of
the City the Undertaking in substantially the form presented to the City Council subject to such
modifications thereof or additions thereto as are (i) consistent with the requirements under the
Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.
21. General Obligation Pledge. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. Ifthe 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 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 available therein.
22. Certificate of Registration. A certified copy of this resolution is hereby directed
to be filed with the County Auditor of Sherburne County, together with such other information as
the County Auditor shall require, and there shall be obtained from the County Auditor a
certificate that the Bonds have been entered in the Bond Register and that the tax levy required
by law has been made.
1 768527vl
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23. 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.
24. Negative Covenant as to Use of Bond Proceeds and Improvements. The City
hereby covenants not to use the proceeds of the Bonds or to use the Improvements, or to cause or
permit them to be used, or to enter into any deferred payment arrangements for the cost of the
Improvements, in such a manner as to cause the Bonds to be "private activity bonds" within the
meaning of Sections 103 and 141 through 150 of the Code.
25. 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
(a) requirements relating to temporary periods for investments, (b) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (c) 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 qualifying for the exception to the federal arbitrage rebate requirements
for governmental units issuing $5,000,000 or less of bonds, the City hereby finds, determines and
declares that (a) the Bonds are issued by a governmental unit with general taxing powers, (b) no
Bond is a private activity bond, (c) 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 (d) the aggregate face amount of all tax
exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities
thereof, and all entities treated as one issuer with the City) during the calendar year in which the
Bonds are issued and outstanding at one time is not reasonably expected to exceed $5,000,000,
all within the meaning of Section 148(f)(4)(D) of the Code.
26. Designation of Qualified Tax-Exempt Obligations. In order to qualify the Bonds
as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the
Code;
(c) the City hereby designates the Bonds as "qualified tax-exempt
obligations" for purposes of Section 265(b)(3) of the Code;
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(d) 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 treated as one issuer with the
City, and all subordinate entities whose obligations are treated as issued by the City)
during this calendar year 2005 will not exceed $10,000,000; and
(e) not more than $10,000,000 of 09ligations issued by the City during this
calendar year 2005. 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.
27. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to U. S. Trust Company
N .A., Greenwich, Connecticut on the closing date for further distribution as directed by the
City's fmancial advisor, Ehlers.
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.ofthe remaining provisions of this resolution.
29. 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.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was. declared duly passed and adopted.
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21
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
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 the minutes of a meeting of the City Council, duly called and held on
the date therein indicated, insofar as such minutes relate to providing for the issuance and the
sale of$1,085,000 General Obligation Improvement Bonds, Series 2005A.
WIlNESS my hand on May _, 2005.
City Clerk
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EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
ELK RIVER, MINNESOTA
HELD: May 16, 2005
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Elk River, Sherburne County, Minnesota, was duly held at the City Hall on
May 16,2005, at 6:30 P.M., for the purpose, in part, of authorizing the issuance and awarding
the sale of$I,695,000 General Obligation Sewer Revenue Refunding Bonds, Series 2005B.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION NO. 05-
-
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF $1,695,000 GENERAL OBLIGATION SEWER REVENUE
REFUNDING BONDS, SERIES 2005B AND PLEDGING NET
REVENUES FOR THE SECURITY THEREOF
A. WHEREAS, the City Council of the City of Elk River, Minnesota (the "City"),
owns and operates a municipal wastewater treatment system and utility as a separate revenue
producing public utility (the "System"); and the net revenues of the System are pledged to all or
a portion of the payment of the City's outstanding (i) $1,080,000 original principal amount
General Obligation Storm Sewer Revenue Bonds, Series 1994C, dated June 1, 1994; and (ii)
$2,655,000 original principal amount General Obligation Sewer Revenue Bonds, Series 1996A,
dated July 1, 1996 (collectively, the "Outstanding Bonds"); and
B. WHEREAS, the $2,655,000 original principal amount General Obligation Sewer
Revenue Bonds, Series 1996A, dated July 1, 1996 (the "Prior Bonds"), were heretofore issued
pursuant to the resolution ofthe City Council adopted on June 3, 1996 (the "Prior Resolution"),
for the purpose of providing money to finance the construction of improvements to the System
(the "Project"); and
C. WHEREAS, $1,630,000 in principal amount of the Prior Bonds which mature on
and after February 1,2007, are subject to redemption and prepayment at the option of the City on
February 1,2006, and on any interest payment date thereafter at a price of par plus accrued
interest, as provided in the Prior Resolution; and
D. WHEREAS, the refunding of the callable Prior Bonds is consistent with the
covenants made with the holders thereof and is necessary and desirable for the reduction of debt
service cost to the City; and
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E. WHEREAS, the City Council deems it desirable and in the best interests of the
City to issue $1,695,000 General Obligation Sewer Revenue Refunding Bonds, Series 2005B
(the "Bonds"), pursuant to Minnesota Statutes, Chapter 475.67, subdivision 13, to provide funds
for a crossover refunding, on February 1,2006 (the "Refunding"), of the callable Prior Bonds
which mature on and after February 1,2007 (the "Refunded Bonds"), in accordance with the
Prior Resolution; and
F. WHEREAS, the City has retained EWers & Associates, Inc., in Roseville,
Minnesota ("EWers"), as its independent financial advisor for the sale of the Bonds and was
therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been
solicited by EWers; and
G. WHEREAS, the proposals set forth on Exhibit A attached hereto were received
by the Administrator, or designee, at the offices of Ehlers at 10:00 a.m. this same day pursuant to
the Terms of Proposal established for the Bonds; and
H. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
Minnesota, as follows:
1. Acceptance of Offer. The offer of (the
"Purchaser"), to purchase $1,695,000 General Obligation Sewer Revenue Refunding Bonds,
Series 2005B (the "Bonds" or individually a "Bond"), at the rates of interest hereinafter set forth,
and to pay therefor the sum of $ , plus any interest accrued to settlement, is
hereby accepted.
2. Bond Terms.
(a) Original Issue Date~ Denominations~ Maturities~ Term Bond Option. The Bonds
shall be dated June 14,2005, as the date of original issue, shall be issued forthwith on or after
such date in fully registered form, shall be numbered from R-l upward in the denomination of
$5,000 each or in any integral multiple thereof of a single maturity (the "Authorized
Denominations") and shall mature on February 1 in the years and amounts as follows:
Year Amount Year Amount
2007 $ 2012 $
2008 2013
2009 2014
2010 2015
2011 2016
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
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repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
(b) Book Entry Onlv 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 or 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 paragraphs 5 and 10 Authorized Denominations
for any Bond shall be deemed to be limited during the Book Entry Only Period to the
outstanding principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar (as hereinafter defined) 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 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 (B) the delivery to any Participant, any Owner or any other person, other than
the Depository, of any notice with respectto 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 Holder 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 the Holder and the Holders of the Bonds as shown on the bond register,
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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 in paragraph 10 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 City, as the case may be, to the Depository as provided in the Letter of
Representations to the Depository required by the Depository as a condition to its acting
as book-entry Depository for the Bonds (said 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, collectively hereinafter referred to as 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 procedures 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 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 of such special record date to the extent possible.
(ix) Any successor Bond Registrar in its written acceptance of its duties under
this Resolution and any paying agency/bond registrar agreement, shall agree to take any
actions necessary from time to timeto comply with the requirements of the 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 may terminate the
services of the Depository with respect to the Bond if it determines that the Depository is
no longer able to carry out its functions as securities depository or the continuation of the
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system of book-entry transfers through the Depository is not in the best interests of the
City or the Beneficial Owners.
(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 or the Beneficial Owners of the
Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds
shall no longer be registered as being registered in the bond register 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 10 hereof. To the extent that
the Beneficial Owners are designated as the transferee by the Holders, in accordance with
paragraph 10, the Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (d) shall limit or restrict the provisions of
paragraph 10.
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. Purpose: Refunding Findings. The Bonds (together with other available funds, if
any, appropriated in paragraph 15) shall provide funds to finance the Refunding. It is hereby
found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section
475.67, subdivision 13, shall result in a reduction of the present value (as of the crossover date)
of the dollar amount of the debt service to the City from a total dollar amount of
$ for the Prior Bonds to a total dollar amount of $ for the Bonds,
computed in accordance with the provisions of Minnesota Statutes, Section 475.67, subdivision
12. The dollar amount of such present value of the debt service for the Bonds is lower by at least
three percent (3.00%) than the dollar amount of such present value of the debt service for the
Prior Bonds as required in Minnesota Statutes, Section 475.67, subdivision 12.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing February 1,2006,
calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per
annum set forth opposite the maturity years as follows:
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Maturity Interest Maturity Interest
Year Rate Year Rate
2007 % 2012 %
2008 2013
2009 2014
2010 2015
2011 2016
5. Redemption. All Bonds maturing on February 1,2015, and thereafter, shall be
subject to redemption and prepayment at the option of the City on February 1,2014, and on any
date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of
the Bonds subject to prepayment. If redemption is in part, the selection of the amounts and
maturities to be prepaid shall be at the discretion of the City; 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. Mailed notice of redemption shall be given to the paying agent and to each
affected registered holder of the Bonds at least thirty days prior to the date fixed for redemption.
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 having a common
maturity date a distinctive 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 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 and Bond Registrar duly executed by the holder thereof or the Holder's attorney duly
authorized in writing) and the City shall execute (if necessary) 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.
6. Bond Registrar. U.S. Bank National Association, in St. Paul, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall 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. Principal and interest on the Bonds shall be paid to the registered holders (or
record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12 of this
resolution.
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
SHERBURNE COUNTY
CITY OF ELK RIVER
R-
$
GENERAL OBLIGATION SEWER REVENUE REFUNDING
BOND, SERIES 2005B
INTEREST RATE MATURITY DATE
DATE OF ORIGINAL ISSUE
CUSIP
%
FEBRUARY 1,_
JUNE 14, 2005
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CEDE & CO.
DOLLARS
THE CITY OF ELK RIVER, SHERBURNE COUNTY, MINNESOTA (the "Issuer"),
certifies that it is 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 called for prepayment, and to pay
interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest
Payment Date"), commencing February 1,2006, at the rate per annum specified above
(calculated on the basis ofa 360-day year of twelve 30-day months) until the principal sum is
paid or has been provided for. This Bond will bear interest fromthe 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 U.S. Bank National Association, in St.
Paul, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent
duly appointed by the Issuer. 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 Issuer 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 be payable to the person who is the Holder 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 Bondholders not less than ten days prior to the Special Record Date. The principal of and
premium, ifany, and interest on this Bond are payable in lawful money of the United States of
America. So long as this Bond is registered in the name of the Depository or its Nominee as
provided in the Resolution hereinafter described, and as those terms are defined therein, payment
of principal of, premium, ifany, and interest on this Bond and notice with respect thereto shall be
made as provided in the Letter of Representations, as defmed in the Resolution, and surrender of
this Bond shall not be required for payment of the redemption price upon a partial redemption of
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this Bond. Until termination of the book-entry only system pursuant to the Resolution, Bonds
may only be registered in the name of the Depository or its Nominee.
Redemption. All Bonds of this issue (the "Bonds") maturing on February 1,2015, and
thereafter, are subject to redemption and prepayment at the option of the Issuer on February 1,
2014, and on any date thereafter at a price of par plus accrued interest. Redemption may be in
whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the
amounts and maturities to be prepaid shall be at the discretion of the City; 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. Mailed notice of redemption shall be given to the
paying agent and to each affected Holder of the Bonds at least thirty (30) days prior to the date
fixed for redemption.
Selection of Bonds for Redemption: Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive 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 shall 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 $5,000 for each number assigned to it and so
selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar
(with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form
satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's
attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond
Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a
new Bond or Bonds of the same series having the same stated maturity and interest rate and of
any Authorized Denomination or Denominations, as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the principal of the
Bond so surrendered.
Issuance: Purpose: General Obligation. This Bond is one of an issue in the total principal
amount of$I,695,000, all of like date of original issue and tenor, except as to number, maturity,
iilterest rate, redemption provision and denomination, 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 May 16,2005 (the "Resolution"), for the purpose of providing money for a
crossover refunding on February 1,2006, of the General Obligation Sewer Revenue Bonds,
Series 1996A, dated July 1, 1996, which mature on and after February 1,2007. This Bond is
payable out of the Escrow Account and the General Obligation Sewer Revenue Refunding
Bonds, Series 2005B Fund of the Issuer. This Bond constitutes a general obligation of the
Issuer, 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 Issuer
have been and are hereby irrevocably pledged.
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Denominations: Exchange: Resolution. The Bonds are issuable solely in fully registered
form in Authorized Denominations (as defmed in the Resolution) 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 Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer 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 Issuer 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 Issuer 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.
~ualified Tax-Exempt Obligation. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b )(3) of the Internal Revenue
Code of 1986, as amended.
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 happen 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, that the
Issuer has covenanted and agreed with the Holders of the Bonds that it will impose and collect
charges for the service, use and availability of the municipal wastewater treatment system and
utility (the "System") at the times and in amounts necessary to produce net revenues, together
with other sums pledged to the payment of the adequate to pay all principal and interest when
due on the Bonds; and that the Issuer will levy a direct, annual, irrepealable ad valorem tax upon
all of the taxable property of the Issuer, withoutlimitation as to rate or amount, for the years and
in amounts sufficientto pay the principal and interest on the Bonds as they respectively become
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due, if the net revenues from the System, and any other sums irrevocably appropriated to the
Debt Service Account are insufficient therefor and that this Bond, together with all other debts of
the Issuer outstanding on the date of original issue hereof and the date of its 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, the corporate seal of the Issuer having been intentionally
omitted as permitted by law.
Date of Registration:
Registrable by: U.S. BANK NATIONAL
ASSOCIATION
Payable at:
U.S. BANK NATIONAL
ASSOCIATION
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bonds is one of the
Bonds described in the
Resolution mentioned
within.
CITY OF ELK RIVER,
SHERBURNE COUNTY, MINNESOTA
/s/ Facsimile
Mayor
U.S. BANK NATIONAL
ASSOCIATION
St. Paul, Minnesota
Bond Registrar
/s/ Facsimile
City Administrator
By:
Authorized Signature
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be 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
IT TEN - as joint tenants with right of survivorship
and not as tenants in common
UTMA - as custodian for
(Cust)
under the
(Minor)
Uniform Transfers to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond
and does hereby irrevocably constitute and appoint 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 or by a brokerage firm
having a membership in one of the major stock exchanges or 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.)
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PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
Date Amount Authorized Signature of Holder
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8. Execution~ Temporary Bonds. The Bonds shall be printed (or, at the request of
the Purchaser, typewritten) and 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 (or, at the request of the Purchaser, photocopied) facsimile;
and provided further that both of such signatures may be printed (or, at the request of the
Purchaser, photocopied) 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 officer, the
Bonds may be signed by the manual or facsimile signature of an officer who may act on behalf
of the absent or disabled officer. In case either officer whose signature or facsimile of whose
signature shall appear on the Bonds shall cease to be the officer before the delivery of the Bonds,
the signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as
if the officer 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 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
entitled to any security or benefit under this resolution unless a Certificate of Authentication on
the Bond, substantially in the form hereinabove set forth, shall 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 June 14,2005. The Certificate or 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 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 9) 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 Holder, 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
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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
Holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City.
All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
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 Holder thereof or the Holder'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. The Administrator is hereby
authorized to negotiate and execute the terms of said agreement.
11. 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.
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 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 who is the Holder thereof as of
the Regular Record Date, and shall be payable to the person who is the Holder thereof 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 by the Bond Registrar to the Holders not less than ten 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 premium, if any, and interest (subject to the payment
provisions in paragraph 12) 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.
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14. Delivery: Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Finance Director 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: Accounts and Subaccounts. For the convenience and proper administration
of the moneys to be borrowed and repaid on the Bonds, and to make adequate and specific
security to the Purchaser and holders from time to time of the Bonds, there is hereby created a
special fund to be designated the "General Obligation Sewer Revenue Refunding Bonds, Series
2005B Fund" (the "Fund") to be administered and maintained by the Finance Director as a
bookkeeping account separate and apart from all other funds maintained in the official financial
records of the City. The Fund shall be maintained in the manner herein specified until the Bonds
and the interest thereon shall have been fully paid. The Operation and Maintenance Account
heretofore established by the City shall continue to be maintained in the manner heretofore
provided by the City. All moneys remaining after paying or providing for the items set forth in
the resolution establishing the Operation and Maintenance Account shall constitute and are
referred to as "net revenues" until the Bonds and the Outstanding Bonds have been paid. There
shall be maintained in the Fund the following separate accounts to which shall be credited and
debited all net revenues of the System as hereinafter set forth. The City Finance Director and all
officials and employees concerned therewith shall establish and maintain financial records of the
receipts and disbursements of the System in accordance with this resolution. In such records
there shall be established and maintained the Escrow Account and the Debt Service Account, for
the purposes as follows:
(a) Escrow Account. The Escrow Account shall be maintained as an escrow account
with U.S. Bank National Association (the "Escrow Agent") in St. Paul, Minnesota, which is a
suitable financial institution within or without the State whose deposits are insured by the
Federal Deposit Insurance Corporation and whose combined capital and surplus is not less than
$500,000. All proceeds of the sale of the Bonds shall be received by the Escrow Agent and
applied to fund the Escrow Account or to pay costs of issuing the Bonds. Proceeds of the Bonds
not used to pay costs of issuance are hereby irrevocably pledged and appropriated to the Escrow
Account, together with all investment earnings thereon. The Escrow Account shall be invested
in securities maturing or callable at the option of the holder on such dates and bearing interest at
such rates as shall be required to prQvide sufficient funds, together with any cash or other funds
retained in the Escrow Account, (i) to pay when due the interest to accrue on the Bonds to and
including February 1,2006; and (ii) to pay when called for redemption on February 1,2006, the
. principal amount of the Prior Bonds. The Escrow Account shall be irrevocable appropriated to
the payment of (i) all interest on the Bonds to and including February 1,2006; and (ii) the
principal of the Prior Bonds due by reason of their call for redemption on February 1,2006. The
moneys in the Escrow Account shall be used solely for the purposes herein set forth and for no
other purpose, except that any surplus in the Escrow Account may be remitted to the City, all in
accordance with an agreement (the "Escrow Agreement") by and between the City and Escrow
Agent, a form of which agreement is on file in the office of the City Administrator. Any moneys
remitted to the City upon termination of the Escrow Agreement shall be deposited in the Debt
Service Account.
(b) Debt Service Account. To the Debt Service Account there is hereby pledged and
irrevocably appropriated and there shall be credited: (i) after the crossover date, the net revenues
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of the System not otherwise pledged and applied to the payment of other obligations of the City,
in an amount, together with other funds which may herein or hereafter from time to time be
irrevocably appropriated to the account sufficient to meet the requirements of Minnesota
Statutes, Section 475.61 for the payment of the principal and interest of the Bonds; (ii) any
collections of all taxes which may hereafter be levied in the event that the net revenues of the
System herein pledged to the payment of the principal and interest on the Bonds are insufficient
therefor; (iii) any balance remitted to the City upon termination of the Escrow Agreement; (iv)
any funds remaining after February 1,2006 in the Debt Service Account of the $2,655,000
General Obligation Sewer Revenue Bonds, Series 1996A Fund established by the Prior
Resolution for the Prior Bonds after the same have been paid and discharged; (v) all investment
earnings on funds in the Debt Service Account; and (vi) any and all other moneys which are
properly available and are appropriated by the governing body of the City to the Debt Service
Account. The amount of any surplus remaining in the Debt Service Account when the Bonds
and interest thereon are paid shall be used consistent with the Minnesota Statutes, Section
475.61, Subdivision 4.
The moneys in the Debt Service Account shall be used solely to pay the principal of and
interest on the Bonds or any other bonds hereafter issued and made payable from the Fund. No
portion of the proceeds of the Bonds 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 (i) for a reasonable temporary period until such proceeds are needed
for the purpose for which the Bonds were issued, and (ii) in addition to the above, in an amount
not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this
effect, any proceeds of the Bonds and any sums from time to time held in the Fund (or any other
City account which will be used to pay principal and interest to become due on the Bonds) in
excess of amounts which under the applicable federal arbitrage regulations may be invested
without regard as to yield shall not be invested 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 federal Internal Revenue
Code of 1986, as amended (the "Code").
16. Covenants Relating to the Bonds.
(a) Sufficiency of Net Revenues: Coverage Test. It is hereby found, determined and
declared that the net revenues of the System are sufficient in amount to pay when due the
principal of and interest on the Bonds and the Outstanding Bonds and a sum at least five percent
in excess thereof, and the net revenues of the System are hereby pledged on a parity with the
Outstanding Bonds for the payment of the Bonds and shall be applied for that purpose, but solely
to the extent required to meet the principal and interest requirements of the Bonds as the same.
become due.
As used herein the term net revenues means the gross revenues derived by the City from
the operation of the System, including all charges for service, use, availability, and connection to
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the System, and all monies received from the sale of any facilities or equipment of the System or
any by-products thereof, less all normal, reasonable, or current costs of owning, operating, and
maintaining the System.
Nothing contained herein shall be deemed to preclude the City from making further
pledges and appropriations of the net revenues of the System for the payment of other or
additional obligations of the City, provided that it has first been determined by the City Council
that the estimated net revenues of the System 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 the net revenues may be made superior or subordinate to, or on a parity with the
pledge and appropriation herein.
(b) Pledge to Produce Revenues. The City hereby covenants and agrees with the
Holders of the Bonds that it will impose and collect charges for the service, use, availability and
connection to the System at the times and in the amounts required to produce net revenues
adequate to pay all principal and interest when due on the Bonds and the Outstanding Bonds.
(c) Excess Net Revenues. Net revenues of the System in excess of those required for
the foregoing may be used for any proper purpose.
(d) 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, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the net revenues of the
System appropriated and pledged to the payment of the principal and interest on the Bonds,
together with other funds irrevocably appropriated to the Escrow Account or the Debt Service
Account, shall at any time be insufficient to pay the principal and interest when due, the City
covenants and agrees to levy, without limitation as to rate or amount an ad valorem tax upon all
taxable property in the City sufficient to pay such principal and interest as it becomes due. If the
balance in the Escrow Account or Debt Service Account is ever insufficient to pay all principal
and interest then due on the Bonds payable therefrom, the deficiency shall be promptly paid out
of any other accounts of the City which are available for such purpose, and such other funds may
be reimbursed without interest from the Escrow Account or Debt Service Account when a
sufficient balance is available therein.
17. Refunding Requirements.
(a) On or prior to the delivery of the Bonds the Mayor and City Administrator shall,
and are hereby authorized and directed to, execute on behalf ofthe City the Escrow Agreement.
The Escrow Agreement is hereby approved and adopted and made a part of this resolution and
the City covenants that it will promptly enforce all provisions thereof in the event of default
thereunder by the Escrow Agent.
(b) Securities purchased from moneys in the Escrow Account shall be limited to
securities set forth in Minnesota Statutes, Section 475.67, Subdivision 8, and any amendments or
supplements thereto. Securities purchased from the Escrow Account shall be purchased
simultaneously with the delivery of the Bonds. The City has investigated the facts and hereby
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finds and determines that the Escrow Agent is a suitable financial institution to act as escrow
agent.
(c) The Prior Bonds which mature on or after February 1,2007 shall be redeemed
and prepaid on February 1,2006, in accordance with the terms and conditions set forth in the
Notice of Call for Redemption substantially in the form attached to the Escrow Agreement,
which terms and conditions are hereby approved and incorporated herein by reference. The
Notice of Call for Redemption shall be given pursuant to the Escrow Agreement. Failure to give
notice by mail to any registered owner, or any defect therein, will not affect the validity of any
proceedings for the redemption of the Prior Bonds.
(d) The Purchaser, as agent for the City, is hereby authorized and directed to purchase
on behalf of the City and in its name the appropriate United States Treasury Securities, State and
Local Government Series, and/or open market securities as provided in paragraph (c), from the
proceeds of the Bonds and, to the extent necessary, other available funds, all in accordance with
the provisions of this resolution and the Escrow Agreement and to execute all such documents
(including the appropriate subscription form) required to effect such purchase in accordance with
the applicable U.S. Treasury Regulations.
(e) Until retirement of the Prior Bonds, all provisions theretofore made for the
security thereof shall be observed by the City and all of its officers and agents.
18. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered Holders of the
Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with
respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The City may also discharge its obligations with respect to any prepayable Bonds called
for redemption on any date when they are prepayable according to their terms, by depositing
with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. The City may also at any time
discharge its obligations with respect to any Bonds, subject to the provisions oflaw now or
hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a
suitable banking institution qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity.
19. Certificates of Registration. A certified copy of this resolution is hereby directed
to be filed with the County Auditor of Sherburne County, Minnesota, together with such other
information as the County Auditor shall require, and there shall be obtained from the County
Auditor a certificate that the Bonds have been entered in the County Auditor's Bond Register.
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
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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.
21. Negative Covenant as to Use of Proceeds and Proiect. The City hereby covenants
not to use the proceeds of the Bonds or to use the Project, or to cause or permit them to be used,
or to enter into any deferred payment arrangements for the cost of the Project, in such a manner
as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141
through 150 of the Code.
22. 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
(a) requirements relating to temporary periods for investments, (b) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (c) 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 qualifying for the exception to the federal arbitrage rebate requirements
for governmental units issuing $5,000,000 or less of bonds, the City hereby finds, determines and
declares:
(a) the Bonds are issued by a governmental unit with general taxing powers;
(b) no Bond is a private activity bond;
(c) ninety-five percent 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
(d) the aggregate face amount of all tax-exempt bonds (other than private
activity bonds) issued by the City (and all subordinate entities thereof, and all entities
treated as one issuer with the City) during the calendar year in which the Bonds are
issued is not reasonably expected to exceed $5,000,000, all within the meaning of Section
148(f)(4)(D) of the Code.
Furthermore:
( e) each of the Prior Bonds was issued as part of an issue which was treated as
meeting the rebate requirements by reason of the exception for governmental units
issuing $5,000,000 or less of bonds;
(f) the average maturity of the Bonds does not exceed the remaining average
maturity of the Prior Bonds; and
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(g) no maturity of the Bonds has a maturity date which is later than the date
which is thirty years after the dates the Prior Bonds were issued.
23. Designation ofOualified Tax-Exempt Obligations. In order to qualify the Bonds
as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the
Code;
(c) the City hereby designates the Bonds as "qualified tax-exempt
obligations" for purposes of Section 265(b)(3) of the Code;
(d) 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 treated as one issuer with the
City, and all subordinate entities whose obligations are treated as issued by the City)
during this calendar year 2005 will not exceed $10,000,000; and
(e) not more than $10,000,000 of obligations issued by the City during this
calendar year 2005 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.
24. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to U. S. Trust Company
N.A., Greenwich, Connecticut on the closing date for further distribution as directed by the
City's fmancial advisor, Ehlers.
25. 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.
26. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or defme the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after a full discussion thereof and upon a vote being taken thereon,
the following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
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STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the dilly 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 the minutes of a meeting of the City Council dilly called and held on
the date therein indicated, insofar as such minutes relate to providing for the issuance and sale of
$1,695,000 General Obligation Sewer Revenue Refunding Bonds, Series 2005B.
WITNESS my hand on May _,2005.
City Clerk
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