RES 05-072
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EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
ELK RIVER, MINNESOTA
HELD: June 20, 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 in the City Hall on
June 20, 2005, commencing at 6:30 P.M., for the purpose, in part, of awarding the sale of the
$1,200,000 Liquor Store Revenue Bonds, Series 2005C.
The following members were present:
and the following were absent:
Member Farber introduced the following Resolution and moved its adoption:
RESOLUTION NO. 05-72
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF THE CITY'S $1,200,000 LIQUOR STORE REVENUE
BONDS, SERIES 2005C; FIXING ITS FORM AND
SPECIFICATIONS; DIRECTING ITS EXECUTION AND
DELIVERY; AND PROVIDING FOR ITS PAYMENT
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
1. Recitals. It is hereby determined:
() The City currently owns and operates a municipal liquor store (the
"Existing Liquor Store"), which is in operation and for which the City issued its Liquor
Store Revenue Bonds, Series .1997 A. Excess funds on hand in the City's Liquor Store
Fund were used to payoff the Series 1997A Bonds on June 15,2005. The City has
heretofore determined to acquire, construct, equip, furnish, operate, and maintain an
additional municipal liquor store (the "Liquor Store" and together with the Existing
Liquor Store, herein referred to as the "Municipal Liquor Stores"), and the costs of
completing (including furniture, fixtures, and equipment) and financing the Liquor Store
are currently estimated to be $1,750,000.
( ) The City is authorized to acquire and better the Liquor Store and to
finance the same through the issuance of the City's liquor store revenue bonds pursuant to
applicable law, including without limitation Minnesota Statutes, Section 426.19, and the
Council hereby finds that it is necessary and expedient to the sound financial
management of the City that the City do so.
( ) The City presently has no other outstanding bonds, warrants, certificates
or other obligations or evidences of indebtedness of money borrowed for or on account of
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the Municipal Liquor Stores or indebtedness for which any of the revenues of the
Municipal Liquor Stores have been appropriated or pledged.
2. Acceptance of Offer. First National Bank Elk River and The Bank of Elk River
(collectively, the "Purchaser") have offered to purchase the City's $1,200,000 Liquor Store
Revenue Bonds, Series 2005C (the "Bonds") at a price of par ($1,200,000), the Bonds to be
subject to the terms and conditions herein provided. The Purchaser has in that connection
submitted to the Council for its consideration a certain Bond Purchase Agreement, and the
Council hereby approves and accepts said Agreement and authorizes the Mayor and City
Administrator to execute the same at such time and with such amendments thereto as they may
deem desirable, as evidenced by their execution and delivery thereof.
3. Authorization for Issuance. The City shall forthwith issue the Bonds. The Bonds
shall provide funds to finance the Liquor Store, the total cost of which is estimated to be at least
equal to the amount of the Bonds. Work on the Liquor Store shall proceed with due diligence to
completion.
The Bonds shall be two in number (numbered R-1 and R-2, respectively), each in the
denomination of $600,000, and shall be identical except for the name of the registered owners
thereof, being the two purchasing banks, respectively, mentioned in paragraph 2 hereof. The
Bonds shall be dated as of the date of delivery thereof to the Purchaser, which shall be July 1,
2005, or as soon thereafter as settlement can be arranged with the Purchaser, shall be a fully
registered bond without interest coupons and shall mature and bear interest and be payable as
provided in the form of the Bonds set out in paragraph 5 of this Resolution. The Bond shall be
subject to redemption in whole or in part at the option of the City at any time, in inverse order of
the principal maturities thereof, upon prior written notice to the Registered Owner thereof, at par
plus accrued interest to the date of redemption. Interest on the Bonds shall be calculated on the
basis of a 360-day year consisting of 12 months of 30 days each
4. Bond Registrar. Both principal of and interest on the Bonds shall be payable by
the City Finance Director, who shall also act as registrar and transfer agent (the "Bond
Registrar") for the Bonds.
5. Form of Bond. Each of the Bonds shall be substantially the following form:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
R-
$600,000
LIQUOR STORE REVENUE BOND,
SERIES 2005C
THE CITY OF ELK RIVER, SHERBURNE COUNTY, MINNESOTA (the "City"), for
value received, hereby promises to pay, but only from the sources and as hereinafter provided, to
, or assigns duly registered on the Bond Register
(the "Owner") maintained by the City Finance Director, the principal sum of SIX HUNDRED
THOUSAND ($600,000) on February 1 in the years and principal amounts, respectively, as
follows:
Year Principal Amount
2007 $ 25,000
2008 37,500
2009 47,500
. 2010 50,000
2011 75,000
2012 80,000
2013 87,500
2014 97,500
2015 100,000
or on any earlier date on which the principal amounts of this Bond may be and shall have been
duly called for prepayment, and to pay interest to the Owner from the date hereof on the
principal amounts hereof until the same are paid at the rate of four and one half percent (4.50%)
per annum, interest to maturity payable on February 1,2006, and on each February 1 and
August 1 thereafter. Interest shall be calculated on the basis of a 360-day year consisting of 12
months of 30 days each. Both principal of and interest on this Bond are payable in any coin or
currency of the United States of America which on the date of payment is legal tender for public
and private debts. At the time of final payment of all principal of and interest on this Bond, the
Owner shall surrender this Bond to the City Finance Director.
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Manner of Payment. The principal of and interest on this Bond are payable when due by
check or draft mailed, transferred by wire or otherwise delivered by or on behalf of the City
Finance Director to the person that was the Owner hereof as of the end ofthe day, whether or not
a business day, immediately preceding the applicable payment due date; provided that if the City
shall be in default in payment of interest due on said date, whenever money becomes available
for payment of such defaulted interest, the City Finance Director shall establish a special record
date with respect to the payment thereof and shall mail written notice of the special record date
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not less than fifteen (15) days prior to such date to the Owner of the Bond as of the close of
business ofthe City on the fifth (5th) business day of the City preceding such mailing, and the
Owner as of the special record date shall be entitled to receive the payment of such defaulted
interest. .
Issuance: Purpose: Special Revenue Obligation. This Bond is one of an issue of two
Bonds having an aggregate principal amount of$I,200,000, both Bonds being of like date, tenor,
principal amount, interest rate, and principal payment schedule. The Bonds are issued under and
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, the governing body of the City, on June 20,
2005 (the "Resolution"), for the purpose of providing money to finance the acquisition and
betterment of a municipal liquor store to be owned and operated by the City (the "Project"). The
principal of and interest on the Bonds are payable solely and exclusively from the Net Revenues
ofthe municipal liquor stores owned by the City (as said Net Revenues are defined in the
Resolution) and from such other funds, if any, as may become available to pay debt service on
the Bonds pursuant to the Resolution. This Bond is not a general obligation of the City.
Reference is made to the Resolution for a fuller statement of the sources of revenue which are or
may become available to pay the principal of and interest on the Bonds, of the additional
provisions respecting the security of the Bonds, and of the conditions upon which the City may
issue other bonds or obligations on a parity with the Bonds.
Optional Redemption. The principal amounts of this Bond are subject to prepayment, at
par plus accrued interest, without penalty at the option of the City, in whole but not in part, on
July 1,2012, and on any date thereafter upon 15 days' prior written notice to the Owner.
Transfer. This Bond is transferable, as provided in the Resolution, upon the Bond
Register kept by the City Finance Director at City Hall upon surrender of this Bond, together
with a written instrument of transfer duly executed by the Owner or the Owner's attorney duly
authorized in writing, and thereupon a new, fully registered Bond in the same aggregate principal
amount shall be issued to the transferee in exchange therefor (or the transfer shall be duly
recorded on the Bond Register and the Certificate of Registration section hereof), upon the
payment of charges and satisfaction of applicable conditions, if any, as therein prescribed;
provided that such transfer may occur only with respect to the entire Bond and all of the
remaining principal amount hereof. The City may treat and consider the person in whose name
this Bond is registered as the absolute Owner hereof for the purpose of receiving payment of or
on account of the principal of and interest on this Bond (except for the payment of interest to the
Owner as of a special record date) and for all other purposes whatsoever.
Qualified Tax-Exempt Obligation. The Bonds have been designated by the City as a
"qualified tax-exempt obligations" within the meaning of and pursuant to Section 265(b)(3) of
the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, to have happened and to be performed precedent to and in the execution
and delivery of this Bond do exist, have happened and have been performed in due form, time
and manner, as required by law, and that the issuance of the Bonds, together with all other
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indebtedness of the City, does not exceed or violate any constitutional or statutory limitation of
indebtedness.
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, Minnesota, by the
City Council, has caused this Bond to be executed by the manual signatures of its Mayor and
City Administrator; and has caused the official seal of the City to be impressed upon this Bond;
and has caused this Bond to be dated July 1,2005.
x X X do not sign
City Administrator
X X X do not sign
Mayor
(SEAL)
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CERTIFICATE OF REGISTRATION
It is hereby certified that the foregoing Bond was as of the latest date specified below
registered in the name of the last registered Owner noted below and that, at the request of said
registered Owner of this Bond, the undersigned City Finance Director has as of said applicable
date registered the Bond as to principal and interest in the name of such registered Owner, as
indicated in the registration blank below, on the books kept by the undersigned for such
purposes.
NAME OF
REGISTERED OWNER
DATE OF
REGISTRA nON
SIGNATURE OF CITY
FINANCE DIRECTOR
, 2005
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REGISTER OF PARTIAL PAYMENTS
The installment of principal amount of the attached Bond has been prepaid on the dates
and in the amounts noted below:
DATE
AMOUNT
SIGNATURE OF
REGISTERED OWNER
SIGNATURE OF CITY
FINANCE DIRECTOR
If a notation is made on this register, such notation has the effect stated in the attached
Bond. Partial payments do not require the presentation of the attached Bond to the City Finance
Director, and a Registered Owner could fail to note the partial payment here.
(End of Form of Bond)
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6. Delivery; Application of Proceeds; Legal Opinion. The Bonds, when prepared
and executed as hereinafter described, shall be delivered by the City Finance Director to the
Purchasers upon receipt of the purchase price and the Purchasers shall not be obligated to see to
the proper application thereof. The City Finance Director shall obtain a copy of the proposed
approving legal opinion of bond counsel for the Bonds, Briggs and Morgan, Professional
Association St. Paul, Minnesota, and shall cause such opinion to be filed in the offices of the
City.
7. Execution. The Bonds shall be executed on behalf of the City by the manual
signatures of Mayor and City Administrator and shall be duly registered by the manual signature
of the City Finance Director as Bond Registrar. The official seal ofthe City shall be impressed
on the Bonds. The Bonds, when fully executed and sealed, shall be delivered by the City
Finance Director to the Purchaser, and the Purchaser shall not be obligated to see to the proper
application of the proceeds thereof.
8. Fund and Accounts. In order to provide for the proper administration of all funds
which are derived from the operation of the Municipal the Liquor Stores, the City Finance
Director has heretofore established and shall continue to maintain a Liquor Store Fund (the
"Fund") which shall remain a separate fund of the City subject to the following separate
accounting:
( ) Project Account. To the Project Account within the Liquor Store Fund
there shall be deposited the proceeds from the sale of the Bonds. From the Project
Account shall be paid all costs ofthe Project including legal, engineering, financing and
other such expenses incidental thereto. The City hereby covenants to complete the
Liquor Store and hereby appropriates such other funds of the City as may be necessary to
do so, because the proceeds of the Bonds are insufficient for that purpose. Any balance
remaining in the Project Account after the payment of such costs shall be transferred to
the Operation and Maintenance Account described below.
() Operation and Maintenance Account. To the Operation and Maintenance
Account within the Liquor Store Fund shall be paid all revenues and receipts from the
operation of the Liquor Store, including all revenues derived from the operation of the
Existing Liquor Store (collectively, the "Gross Revenues"). From this account there shall
be paid all, but only, current expenses ofthe Municipal Liquor Stores. Current expenses
shall include the reasonable and necessary costs of administering, operating, maintaining
and insuring the Municipal Liquor Stores, the cost of salaries, wages, merchandise sold
and other similar items, costs of materials and supplies, necessary legal, engineering and
auditing services, and all other items which, by sound accounting practices constitute
normal, reasonable and current costs of operation and maintenance, but excluding any
allowance for depreciation, extraordinary repairs and payments into the Debt Service
Account. All money remaining in the Operation and Maintenance Account, after paying
or providing for the foregoing items, shall constitute and are referred to in this resolution
as "Net Revenues."
() Debt Service Account. To the Debt Service Account within the Liquor Store Fund there shall be credited such amounts of Net Revenues as shall be necessary
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from time to time to make full and timely payment of the debt service on the Bonds, and
said funds, when deposited into the Debt Service Account, are irrevocably pledged for
such purposes.
() Excess Net Revenues. Net Revenues in excess of those required for the
foregoing purposes may be used for any proper purpose of the City, including without
limitation capital and other costs of the Municipal Liquor Stores operation.
Any proceeds of the Bonds and any sums from time to time held in the Debt Service
Account 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 Liquor Store 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 or any other bonds payable from
the Debt Service Account to be "federally guaranteed" within the meaning of Section 149(b) of
the Internal Revenue Code of 1986, as amended (the "Code").
9. Covenants as to Maintenance. Rates and Charges. Sale. Insurance. Etc. The City
hereby certifies and represents to, and covenants and agrees with, the Owners from time to time
of the Bonds as follows:
( ) The City will complete and continue its ownership and operation of the
Municipal Liquor Stores as revenue producing facilities and convenience, in the manner
authorized and subject to the restrictions imposed by Minnesota Statutes, the laws of the
State of Minnesota, including Minnesota Statutes, Section 340A.60 1, relating to elections
on the licensing of intoxicating liquors. The City will maintain the Municipal Liquor
Stores, their furnishings, equipment and merchandise in good condition, and free from all
liens, provided that purchase money liens may be created on merchandise acquired for
resale, or such merchandise may be acquired subject to liens existing at the time of
acquisition. It should be noted that Minnesota Statutes, Section 426.20, would require
the City Council to hold a public hearing as a condition to appropriating City funds, other
than revenues of the Municipal Liquor Stores, to cover any shortfall of revenues
necessary for operation costs, but this provision shall not apply to appropriations which
may need to be made by the City in order to complete the Liquor Store and any other
expenses expressly excepted by the foregoing Section of the Minnesota Statutes. It
should also be noted that Minnesota Statues, Section 340A.602, requires that if the
Municipal Liquor Stores operate at a loss for any two out of any three consecutive years,
the City Council is required to conduct a public hearing on the question of whether or not
the City should submit to voter referendum the question of the City's continued operation
of the Municipal Liquor Stores; alternatively, a 5% voter petition may also call a
referendum on that question in those circumstances.
( ) If any properties constituting capital assets of the Municipal Liquor Stores
shall be sold and disposed of, it shall be only at their fair market value, and the proceeds
of such sale or disposition shall be used either to produce other capital assets for the
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Municipal Liquor Stores or deposited into the Operation and Maintenance Account. No
such sale or sales shall be made at times or prices such as to imperil the prompt and full
payment of the Bonds.
( ) The City will procure and keep in force insurance on the Municipal Liquor
Stores and the equipment and furnishings thereof and all stocks of merchandise,
protecting against loss or damage by fire, tornado, windstorm, flood, theft and all other
causes customarily insured against for like properties. In the event of loss covered by
said insurance policies or bonds, the proceeds shall be used to repair or restore the
damage or to retire bonds payable from the revenues of the Municipal Liquor Stores.
( ) The City will further keep in force a liability insurance policy (covering its
operation of the Municipal Liquor Stores). Said policy shall specifically provide for the
payment by the insurance company on behalf of the insured of all sums which the City
shall be obligated to pay by reason of liability imposed upon it by law for injuries or
damage to persons, other than employees, including liability imposed by reason of
Minnesota Statutes, Section 340A.801. The City shall annually provide to each
bondholder certificates or other suitable documentary proofs showing that the insurance
coverages specified in (c) and (d) of this paragraph 9 are being maintained.
( ) The City will cause proper and adequate books and records of account to
be kept separate from all other records of the City, reflecting all receipts and
disbursements relating to the Municipal Liquor Stores and their operation. All of said
books and records shall be open to inspection and copying at all reasonable times by the
Owners of the Bonds, and the City will, without cost, furnish copies of any portions
thereof reasonably requested by any bondholder. The City will cause annual operating
statements to be prepared and an independent audit of the books of the Municipal Liquor
Stores to be made by a competent public accountant, and will furnish a copy thereof
without cost to each bondholder.
() The Gross and Net Revenues of the Municipal Liquor Stores will be used
and applied only as prescribed in this Resolution. The City will at all times maintain
operating policies concerning the purchase and sale of merchandise and do and perform
all other acts and things necessary to assure that the Net Revenues will be at least
sufficient to pay the principal and interest on the Bonds.
( ) Each and all of the foregoing provisions of this Resolution which in any
way tend to secure or assure prompt and full payment of the principal of and interest on
the Bonds will be promptly and faithfully performed and carried out by the City and its
officers and agents.
10. Additional Bonds. The City reserves the right to issue additional bonds payable
from the Debt Service Account and secured by the covenants set forth in this Resolution on the
terms and conditions specified in this paragraph.
() Purpose of Bonds: Net Revenues. Additional bonds may be issued only to
finance the acquisition and betterment of improvements or additions to the Municipal
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Liquor Stores, including necessary maintenance equipment, or to refund bonds issued for
such purposes. All revenues derived from any such improvements or additions shall be
Net Revenues of the Municipal Liquor Stores and subject to the provisions of paragraph
8.
( ) Parity Lien Bonds. Such additional bonds may be made payable from the
Debt Service Account and the Net Revenues pledged thereto on a parity as to both
principal and interest with all other bonds payable therefrom only if:
(0) in the last complete fiscal year of the City immediately preceding
the issuance ofthe bonds, the amount of Net Revenues was: (A) equal to not less
than 125% of the total amount of principal and interest to become due in any
future fiscal year on all outstanding bonds payable from the Debt Service Account
and all additional bonds to be issued, but excluding any bonds to be refunded by
such additional bonds; and (B) sufficient to pay when due all costs and expenses
payable from the Operation and Maintenance Account in such last complete fiscal
year; provided that for purposes of this paragraph the Net Revenues for any fiscal
year may be increased to reflect any increase in the rates and charges which have
been put into effect prior to the issuance of any additional bonds but were not in
effect for all of such last complete fiscal year; and
(0) the bonds are not made subject to redemption on a date prior to any
outstanding bonds payable from the Debt Service Account or, if the bonds are
refunding bonds, on a date prior to the one which the refunded bonds were subject
to redemption;
(0) in the case of refunding bonds, if an escrow fund is to be
established, the City obtains a report of an independent certified public accountant
that the moneys and securities on hand in the escrow account are sufficient to pay
the applicable debt service obligations of the refunded bonds on their stated
maturity dates and/or any date on which such obligations have been or are to be
called for prior redemption and prepayment; and the City obtains an opinion of
nationally recognized bond counsel stating that the issuance of the additional
bonds will not cause the interest on any bonds payable from the Debt Service
Account to be includible in gross income for federal tax purposes; and
(0) the City is not in default under this Resolution or any other
resolution authorizing the issuance of any outstanding bonds payable from the
Debt Service Account.
11. Subordinate Lien Bonds. Except as provided in paragraph 10, all additional
bonds shall be payable from the Net Revenues after the requirements of paragraph 8 are met, and
such additional bonds described in this paragraph shall be wholly junior and subordinate to the
pledge and appropriation of such Net Revenues to the Bonds.
12. Debt Service Coverage. It is hereby determined and reasonably anticipated that
the estimated collections of the revenues available to the Debt Service Account will produce at
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least 5% in excess of the amount needed to meet, when due, the principal of and interest on the
Bonds.
13. 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.
14. Tax-Exempt Bond Covenants. The City covenants and agrees with the Owners
from time to time of the Bonds that the City will not use the proceeds of the Bonds or the
Project, or cause or permit the same to be used, in such a manner, and will not take or permit to
be taken by any of its officers, employees, or agents any action, which would (a) cause the
interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as
amended (the "Code"), or (b) cause the Bonds to be "private activity bonds" within the meaning
of Sections 103 and 141 through 150 of the Code, and regulations issued thereunder, as now
existing or as hereafter amended or proposed and in effect at the time of such action, and that the
City will take, or it will cause to be taken, all affirmative actions within its power which may be
necessary to insure that such interest will not become subject to income taxation and that the
Bonds will not be private activity bonds under the Code.
In particular, but without limitation, the City covenants to forebear the implementation,
effectuation or enforcement of any and all contracts or other agreements respecting the Project,
or any property benefitted thereby or assessed with respect thereto, which the City may now or in
the future have with users, managers, developers, contractors, owners or any other person or
parties to the extent that such implementation, effectuation or enforcement would (individually
or in the aggregate) cause the Bonds to become such a "private activity bonds," and to said
limited extent the City would and hereby does (solely for the benefit of the Owners of the Bonds)
disavow any and all such provisions, entitlements and enforcements which would or could
become so offending.
Without limitation of the foregoing, the City shall not enter into any lease, use agreement,
management or operation contract or other agreement respecting the Project which would
adversely affect the exemption from federal income tax of the interest on the Bonds, taking into
account and observing the requirements of Revenue Procedure 97-13 of the Internal Revenue
Service and any similar or other applicable revenue procedures or guidelines relating to leases,
management contracts and service contracts involving facilities financed with tax-exempt
obligations.
15. Tax Exempt Status of the Bonds: Rebate. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(1) requirements relating to temporary periods for investments, (2) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment
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earnings to the United States ifthe 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 small issuer exception to the federal
arbitrage rebate requirements, the City hereby finds, determines and declares that the aggregate
face amount of all tax -exempt bonds (other than private activity bonds) issued by the City (and
all subordinate entities of 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.
16. Designation ofOualified Tax-Exempt Obligations. The City hereby designates
the Bonds as a "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the
Code, the City hereby represents that:
() the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds, treating qualified 501(c)(3) bonds as not being private activity
bonds) which will be issued by the City (and all entities subordinate to, or treated as one
issuer with, the City) during calendar year 2005 will not exceed $10,000,000; and
( ) not more than $10,000,000 of obligations issued or to be issued by the
City during 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.
17. Defeasance. When any obligation of the Bonds have been discharged as provided
in this paragraph, all pledges, covenants and other rights granted by this Resolution to the
registered owner of the Bonds (with respect to the obligation thereof so defeased) shall, to the
extent permitted by law, cease. The City may at any time discharge any or all of such
obligation(s) with respect to the Bonds, subject to the provisions oflaw now or hereafter
authorizing or regulating such action, by depositing irrevocably in escrow, with a suitable
institution qualified by law as an escrow agent for this purpose, cash or securities which are
backed by the full faith and credit of the United States of America, bearing interest payable at
such times and at such rates and maturing on such dates and in such amounts as shall be required
and sufficient, subject to sale and/or reinvestment in like securities, to pay said obligation(s),
which may include any interest payment on such Bonds and/or principal amount due thereon at a
stated maturity (or if irrevocable provision shall have been made for permitted prior redemption
of such principal amount, at such earlier redemption date).
18. Compliance With Reimbursement Bonds Regulations. With respect to the Liquor
Store, the City has complied and will continue to comply with the "Reimbursement Regulations"
provided in United States Treasury Regulations Section 1.150-2. In particular, except where the
following may not be required by said Regulations (e.g., with respect to certain "preliminary
expenditures"), to the extent that any of the proceeds of the Bonds will be used to reimburse the
City for a cost of the Liquor Store theretofore paid and temporarily financed by the City out of
other City funds, prior to the initial payment thereof (or within applicable time limits thereafter)
the City has made or will have made a duly qualifying statement of its official intent to bond for
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such costs, and will thereafter comply with the requirements of the Reimbursement Regulations
(e.g., the requirements applicable to the reimbursement allocation thereunder); otherwise, the
proceeds of the Bonds are to be used for initial payment, and not for such reimbursement, of
costs of the Liquor Store.
19. 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.
20. Headings. Headings in this Resolution are included for convenience of reference
only 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
Gumphrey and, after a full discussion thereof and upon a vote being taken thereon, the following
voted in favor thereof:
Mayor Klinzing, Councilmembers Dietz, Farber, Gumphrey, and Motin
and the following voted against the same:
None
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 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 awarding the sale of $1,200,000
Liquor Store Revenue Bonds, Series 2005C.
WITNESS my hand on June 20, 2005.
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City(Clejk
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