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5.2a ERMUSR 04-13-2021PRELIMINARY OFFICIAL STATEMENT DATEDMARCH 30, 2021 NEWISSUEMoody’sRating: Requested NOT BANK QUALIFIED In the opinion of Kennedy & Graven, Chartered, Bond Counsel for the Series 2021B Bonds, based on present federal and Minnesota laws, regulations, rulings and decisions isdiction in (which excludes any pending legislation which may have a retroactive effect), and assuming compliance with certain covenants, interest to be paid on the Series 2021B Bonds is excluded from gross income for federal income tax purposes and, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven, Charteredregarding other state or federal tax consequences caused by the receipt or accrual of interest on the Series 2021B Bonds or arising with respect to ownership of the Series 2021B Bonds. The Series 2021B Bonds will not be designated as "qualified tax-exempt obligations" for purposes of Section265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. See "TAX EXEMPTION" and "OTHER FEDERAL AND STATE TAX CONSIDERATIONS" herein. $12,620,000* City of Elk River, Minnesota Electric Revenue Bonds, Series 2021B underwriting information is subject to completion (Book Entry Only) Dated Date: Date of DeliveryInterest Due: Each February 1 and August 1, commencingFebruary 1, 2022 The Series 2021B Bonds (as defined herein)will mature August 1 in the years and amounts* as follows: 2022$290,0002028$355,0002034$390,0002040$435,0002046$500,000 2023$345,0002029$360,0002035$395,0002041$445,0002047$510,000 2024$345,0002030$365,0002036$400,0002042$455,0002048$520,000 2025$350,0002031$370,0002037$410,0002043$465,0002049$535,000 on of an offer to buy, nor shall there be any sale of these securities in any jur 2026$350,0002032$375,0002038$420,0002044$475,0002050$550,000 any such jurisdiction. 2027$355,0002033$380,0002039$425,0002045$485,0002051$565,000 The City may elect on August1, 2031 and on any day thereafter, to redeem the Series 2021B Bonds due on or after August1, 2032at a price of par plus accrued interest. to be final as of the date hereof; however, the pricing and Proposals for the Series 2021B Bondsmay contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to thedate of redemption scheduled to conform to therespectivematurity schedule set forth above. The Series 2021B Bonds will be special obligations of the City of Elk River, Minnesota (the “City”) payable solely from net revenues of the electric system of the Elk River Municipal Utilities Commission (the “Commission”) and shall not constitute a debt for which the full faith and credit or taxing powers of the City will be pledged. The proceeds of the Series 2021B Bonds, will be used to finance the construction of a field house facility to house service trucks, inventory and offices. Proposals shall be for not less than $12,418,080plus accrued interest, if any, on the total principal amount of the Series 2021B Bonds. Proposals shall specify rates in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the proposal must be 98.0% or greater. Following receipt of proposals, a good faith deposit will be required to be delivered to the Cityby the lowest bidder as described in the “Terms of Proposal” herein. Award of the Series 2021B Bonds will be made on the basis of True Interest Cost (TIC). tatement is deemed by the City and the Commission The Series 2021B Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede& Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Series 2021BBonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Series 2021B Bonds purchased. (See “Book Entry System” herein.) U.S. Bank National Association, Saint Paul, Minnesota will serve as registrar (the “Registrar”) for the Series 2021B Bonds. The Series 2021B Bondswill be available for delivery at DTC on or about May13, 2021. PROPOSALS RECEIVED: Tuesday, April 13, 2021 until 10:30 A.M., Central Time CONSIDERATION OF AWARD: Commission meeting commencing at 3:30 P.M., Central Time on Tuesday, April 13, 2021 Further information may be obtained from Baker Tilly Municipal Advisors, LLC, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887 (651)223-3000. The information contained in this Preliminary Official Sor amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitatiwhich such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of * Preliminary; subject to change. 257 CITY OF ELK RIVER, MINNESOTA CITY COUNCIL John DietzMayor Garrett ChristiansonCouncil Member, Ward 1 Matthew WestgaardCouncil Member, Ward 2 Michael BeyerCouncil Member, Ward 3 Jennifer WagnerCouncil Member, Ward 4 CITY ADMINISTRATOR Calvin Portner FINANCE DIRECTOR Lori Ziemer ELK RIVER MUNICIPAL UTILITIES COMMISSION John DietzChair Paul BellCommissioner Al NadeauCommissioner Mary StewartCommissioner MatthewWestgaardCommissioner GENERAL MANAGER Theresa Slominski FINANCE MANAGER Melissa Karpinski MUNICIPAL ADVISOR Baker Tilly Municipal Advisors, LLC Saint Paul, Minnesota BOND COUNSEL Kennedy & Graven, Chartered Minneapolis, Minnesota 258 For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the Cityor the Commissionfrom time to time, may be treated as a Preliminary Official Statement with respect to the Series 2021B Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the Cityor the Commission. By awarding the Series 2021B Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the Commissionagrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Series 2021B Bonds are awarded copies of the Final Official Statement in the amount specified in the Termsof Proposal. No dealer, broker, salesman or other person has been authorized by the Cityor the Commissionto give any information or to make any representations with respect to the Series 2021B Bonds, other than as contained in the PreliminaryOfficial Statementor the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Cityor the Commission. Certain information contained in the Preliminary Official Statement or the Final Official Statementmay have been obtained from sources other than records of the Cityor the Commissionand, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE PRELIMINARY OFFICIAL STATEMENTANDTHE FINAL OFFICIAL STATEMENTARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE PRELIMINARY OFFICIAL STATEMENT NORTHEFINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITYOR THE COMMISSION SINCE THERESPECTIVEDATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. Any CUSIP numbers for the Series 2021B Bonds included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Series 2021B Bonds are assigned by an organization unaffiliated with the Cityor the Commission.Neither the Citynor the Commissionis responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Series 2021B Bonds or as set forth in the Final Official Statement. No assurance can be givenby the Cityor the Commissionthat the CUSIP numbers for the Series 2021B Bonds will remain the same after thedelivery of the Final Official Statement or thedate of issuance and delivery of the Series 2021B Bonds. 259 TABLE OF CONTENTS Page(s) Terms of Proposal .............................................................................................................................. i-v Introductory Statement ....................................................................................................................... 1 Concurrent Financing ......................................................................................................................... 2 Continuing Disclosure ....................................................................................................................... 2 The Bonds .......................................................................................................................................... 3 Risk Factors ....................................................................................................................................... 5 Authority and Purpose ....................................................................................................................... 11 Sources and Uses of Funds ................................................................................................................ 11 Security and Financing ...................................................................................................................... 11 Elk River Municipal Utilities ............................................................................................................. 14 The Electric System ........................................................................................................................... 14 Utility Financial Statements ............................................................................................................... 17 Debt Service and Coverage Calculation ............................................................................................ 21 Utility Revenue Debt ......................................................................................................................... 21 Future Financing ................................................................................................................................ 23 Litigation ............................................................................................................................................ 23 Legality .............................................................................................................................................. 23 Tax Exemption ................................................................................................................................... 23 Other Federal and State Tax Considerations ...................................................................................... 25 Bank-Qualified Tax-Exempt Obligations .......................................................................................... 25 Rating ................................................................................................................................................. 26 Municipal Advisor ............................................................................................................................. 26 Certification ....................................................................................................................................... 27 General Information Concerning the City ......................................................................................... 28 Proposed Form of Legal Opinion ............................................................................................ Appendix I Continuing Disclosure Undertaking ......................................................................................... Appendix II Excerpt ofthe City’s 2019 Comprehensive Annual Financial Report .................................... Appendix III Excerpt of the Utility’s 2019 Annual Financial Report ........................................................... Appendix IV 260 THE CITYHAS AUTHORIZED BAKER TILLY MUNICIPAL ADVISORS, LLC TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $12,620,000* CITY OF ELK RIVER, MINNESOTA ELECTRIC REVENUE BONDS, SERIES 2021B (BOOK ENTRY ONLY) Proposals for the above-referenced Bonds (the “Series 2021B Bonds”) will be received by the City of Elk River, Minnesota(the “City”) on Tuesday, April 13, 2021(the “Sale Date”) until 10:30 A.M., Central Time (the “Sale Time”)at the offices of Baker Tilly Municipal Advisors, LLC (“Baker Tilly MA”), 380Jackson Street, Suite300, Saint Paul, Minnesota, 55101, after which time proposals will be opened and tabulated. Consideration for award of the Series 2021B Bondswill be by the Utilities Commission (the “Commission”)at its meeting commencing at 3:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Baker Tilly MA will assume no liability for the inability of a bidderor its proposalto reach Baker Tilly MA prior to the Sale Time, and neither the Citynor Baker Tilly MA shall be responsible for any failure, misdirection or error in the means of transmission selected by any bidder. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the Cityto purchase the Series 2021B Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Completed, signed proposals may be submittedto Baker Tilly MAby email to bondservice@bakertilly.com or by fax (651) 223-3046, and must be received prior to the Sale Time. OR ® (b) Electronic Bidding. Proposals may also be received via PARITY. For purposes of theelectronic ® bidding process, the time as maintained by PARITYshall constitute the official time with respect to all ® . Each bidder shall be solely responsible for making necessary proposals submitted to PARITY ® arrangements to access PARITYfor purposes of submitting its electronic proposal in a timely manner and ® in compliance with the requirements of the Terms of Proposal. Neither the City, its agents, nor PARITY shall have any duty or Bondto undertake registration to bid for any prospective bidder or to provide or ® ensure electronic access to any qualified prospective bidder, and neither the City, its agents, nor PARITY shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or ® . have any liability for any delays or interruptions of or any damages caused by the services of PARITY ® solely as a communication mechanism to conduct the electronic The Cityis using the services of PARITY ® is not an agent of the City. bidding for the Series 2021B Bonds, and PARITY ® , this Terms of If any provisions of this Terms of Proposal conflict with information provided by PARITY ® , including any feecharged, may be obtained Proposal shall control. Further information about PARITY from: ®nd , 1359 Broadway, 2 Floor, New York, New York 10018 PARITY Customer Support: (212) 849-5000 * Preliminary; subject to change. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2021 Baker Tilly Municipal Advisors, LLC. - i - 261 DETAILS OF THE SERIES 2021B BONDS The Series 2021B Bondswill be dated as of the date of deliveryand will bear interest payable on February1 and August 1 of each year, commencing February 1, 2022. Interest will be computed on the basis of a 360- day year of twelve 30-day months. The Series 2021B Bonds will matureAugust 1in the years and amounts*as follows: 2022$290,0002028$355,0002034$390,0002040$435,0002046$500,000 2023$345,0002029$360,0002035$395,0002041$445,0002047$510,000 2024$345,0002030$365,0002036$400,0002042$455,0002048$520,000 2025$350,0002031$370,0002037$410,0002043$465,0002049$535,000 2026$350,0002032$375,0002038$420,0002044$475,0002050$550,000 2027$355,0002033$380,0002039$425,0002045$485,0002051$565,000 * The Cityreserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2021B Bondsor the amount of any maturity or maturities in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2021B Bondsas that of the original proposal. Gross spread for this purpose is the differential between the price paid to the Cityfor the new issue and the prices at which the proposal indicates the securities will be initially offered to the investing public. Proposals for the Series 2021B Bondsmay contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Series 2021B Bondswill be issued by means of a book entry system with no physical distribution of Series 2021B Bondsmade to the public. The Series 2021B Bondswill be issued in fully registered form and one Bond, representing the aggregate principal amount of the Series 2021B Bondsmaturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Series 2021B Bonds. Individual purchases of the Series 2021B Bondsmay be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2021B Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The lowest bidder (the “Purchaser”), as a condition of delivery of the Series 2021B Bonds, will be required to deposit the Series 2021B Bonds with DTC. REGISTRAR U.S. Bank National Association will serve as registrar for the Series 2021B Bonds which shall be subject to applicable regulations of the Securities and Exchange Commission. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The Citymay elect on August1, 2031, and on any day thereafter, to redeem Series 2021B Bondsdue on or after August 1, 2032. Redemption may be in whole or in part and if in part at the option of the Cityand in such manner as the Cityshall determine. If less than all Series 2021B Bondsof a maturity are called for redemption, the Citywill notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptions shall be at a price of par plus accrued interest. - ii - 262 SECURITY AND PURPOSE The Series 2021B Bondswill be special obligations of the Citypayable solely from net revenues of the electric system of the Commissionand shall not constitute a debt for which the full faith and credit or taxing powers of the Citywill be pledged. The proceedsof the Series 2021B Bondswill be used to finance the construction of a field house facility to house service trucks, inventory, and offices. NOT BANK QUALIFIED TAX-EXEMPT BONDS The City will not designate the Series 2021B Bondsas qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. BIDDING PARAMETERS Proposals shall be for not less than $12,418,080 plus accrued interest, if any, on the total principal amount of the Series 2021B Bonds. No proposalcan be withdrawn or amended after the time set for receiving proposals on the Sale Date unless the meeting of the Cityscheduled for award of the Series 2021B Bonds is adjourned, recessed, or continued to another date without award of the Series 2021B Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the proposal must be 98.0% or greater. Series 2021B Bondsof the same maturity shall bear a single rate fromthe date of the Series 2021B Bondsto the date of maturity. No conditional proposals will be accepted. ESTABLISHMENT OF ISSUE PRICE In order to provide the Citywith information necessary for compliance with Section 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (collectively, the “Code”), the Purchaser will be required to assist the Cityin establishing the issue price of the Series 2021B Bondsand shall complete, execute, and deliver to the Cityprior to the closing date, a written certification in a form acceptable to the Purchaser, the City, and Bond Counsel (the “Issue Price Certificate”) containing the following for each maturity of the Series 2021B Bonds(and, if different interest rates apply within a maturity, to each separate CUSIP number within that maturity): (i) the interest rate; (ii) the reasonably expected initial offering price to the “public” (as said term is defined in Treasury Regulation Section 1.148-1(f) (the “Regulation”)) or the sale price; and (iii) pricing wires or equivalent communications supporting such offering or sale price. Any action to be taken or documentation to be received by the City pursuant hereto may be taken or received on behalf of the City by Baker Tilly MA. The Cityintends that the sale of the Series 2021B Bondspursuant to this Terms of Proposal shall constitute a “competitive sale” as defined in the Regulation based on the following: !! (i) the Cityshall cause this Terms of Proposal to be disseminated to potential bidders in a manner that is reasonably designed to reach potential bidders; (ii) all bidders shall have an equal opportunity to submit a bid; (iii) the Cityreasonably expects that it will receive bids from at least three bidders that have established industry reputations for underwriting municipal bonds such as the Series 2021B Bonds; and (iv) the Cityanticipates awarding the sale of the Series 2021B Bondsto the bidder who provides a proposal with the lowest true interest cost, as set forth in this Terms of Proposal (See “AWARD” herein). Any bid submitted pursuant to this Terms of Proposal shall be considered a firm offer for the purchase of the Series 2021B Bonds, as specified in the proposal. The Purchaser shall constitute an “underwriter” as said term is defined in the Regulation. By submitting its proposal, the Purchaser confirms that it shall require any agreement among underwriters, a selling group agreement, or other agreement to which it is a party relating to the initial sale of the Series 2021B Bonds, to include provisions requiring compliance with the provisions of the Code and the Regulation regarding the initial sale of the Series 2021B Bonds. - iii - 263 If all of the requirementsof a “competitive sale” are not satisfied, the Cityshall advise the Purchaser of such fact prior to the time of award of the sale of the Series 2021B Bondsto the Purchaser. In such event, any proposal submitted will not be subject to cancellation or withdrawal.Within twenty-four (24) hours of the notice of award of the sale of the Series 2021B Bonds, the Purchaser shall advise the Cityand Baker Tilly MA if 10% of any maturity of the Series 2021B Bonds(and, if different interest rates apply within a maturity, to each separate CUSIP number within that maturity) has been sold to the public and the price at which it was sold. The Citywill treat such sale price as the “issue price” for such maturity, applied on a maturity-by-maturity basis. The Citywill not require the Purchaser to comply with that portion of the Regulation commonly described as the “hold-the-offering-price” requirement for the remaining maturities, but the Purchaser may elect such option. If the Purchaser exercises such option, the Citywill apply the initial offering price to the public provided in the proposal as the issue price for such maturities. If the Purchaser does not exercise that option, it shall thereafter promptly provide the Cityand Baker Tilly MA the prices at which 10% of such maturities are sold to the public; provided such determination shall be made and the Cityand Baker Tilly MA notified of such prices whether or not the closing date has occurred, until the 10% test has been satisfied as to each maturity of the Series 2021B Bondsor until all of the Series 2021B Bonds of a maturity have been sold. GOOD FAITH DEPOSIT To have its proposal considered for award, the Purchaser is required to submit a good faith deposit via wire transfer to the City in the amount of $126,200 (the “Deposit”) no later than 1:30 P.M., Central Timeon the Sale Date. The Purchaser shall be solely responsible for the timely delivery of its Deposit, and neither the City nor Baker Tilly MAhave any liability for delays in the receiptof the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. A Deposit will be considered timely delivered to the Cityupon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Baker Tilly MA following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the Purchaserwill be retained by the Cityand no interest will accrue to the Purchaser. The amount of the Depositwill be deducted at settlement from the purchase price. In the event the Purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Series 2021B Bondswill be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Citywill reserve the right to: (i)waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2021B Bonds, (ii)reject all proposals without cause, and (iii)reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION The Cityhas not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2021B Bonds. If the Series 2021B Bondsqualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The Cityspecifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2021B Bondsshall - iv - 264 not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2021B Bonds. CUSIP NUMBERS If the Series 2021B Bondsqualify for the assignment of CUSIP numbers such numbers will be printed on the Series 2021B Bonds; however, neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the Purchaser to accept delivery of the Series 2021B Bonds. Baker Tilly MA will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. SETTLEMENT On or about May13, 2021,the Series 2021B Bonds will be delivered without cost to the Purchaser through DTC in New York, New York. Delivery will be subject to receipt by the Purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Series 2021B Bondsshall be made in federal, or equivalent, funds that shall be received at the offices of the Cityor its designee not later than 12:00Noon, CentralTime. Unless compliance with the terms of payment for the Series 2021B Bonds has been made impossible by action of the City, or its agents, the Purchaser shall be liable to the Cityfor any loss suffered by the Cityby reason of the Purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule15c2-12(b)(5), the Citywill undertake, pursuant to the resolution awarding sale of the Series 2021B Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The Purchaser's obligation to purchase the Series 2021B Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Series 2021B Bonds. OFFICIAL STATEMENT The Cityhas authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2021B Bonds, and said Preliminary Official Statement has been deemed final by the Cityas of the date thereof within the meaning of Rule15c2-12 of the Securities and Exchange Commission. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223-3000, or by email bondservice@bakertilly.com.The Preliminary Official Statement will also be made available at https://connect.bakertilly.com/bond-sales- calendar. A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the maturity dates, principal amounts, and interest rates of the Series 2021B Bonds, together with any other information required by law. By awarding the Series 2021B Bondsto the Purchaser, the Cityagrees that, no more than seven business days after the date of such award, it shall provide to the Purchaser an electronic copyof the Final Official Statement. The Citydesignates the Purchaser as its agent for purposes of distributing the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees that if its proposal is accepted bythe City, (i)it shall accept designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt of the Final Official Statement by each such syndicate member. Dated March 9, 2021BY ORDEROF THEELK RIVER MUNICIPAL UTILITIES COMMISSION /s/ Melissa Karpinski Finance Manager - v - 265 OFFICIAL STATEMENT $12,620,000* CITY OF ELK RIVER, MINNESOTA ELECTRIC REVENUE BONDS, SERIES 2021B (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT General This Official Statement contains certain information relating to the City of Elk River, Minnesota (the “City”); the Elk River Municipal Utilities (the “Utility”); the Elk River Municipal Utilities Commission (the “Commission”); and the issuance of $12,620,000* Electric Revenue Bonds, Series 2021B (the “Series 2021B Bonds”). The Series 2021B Bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 453;aresolution adopted by the Commission onMarch 9, 2021authorizing the issuance of the Bonds; and a resolution adopted by the City on March 15, 2021 (the “City Resolution”) approving the issuance of the Bonds and authorizing certain action to be taken by the Commission with respect to the issuance of the Bonds. The Commission has been given authority by the City, pursuant to the City Resolution,to adopt the resolution awarding the sale oftheBonds. On April 13, 2021, the Commission will receive proposals to purchase the Bonds. If a proposal for the Bonds is acceptable, the Commission will adopt aresolution (the “Awarding Resolution”) authorizing the issuance of theBonds, establishing the terms of the Bonds, and awarding the sale of the Bonds. The Series 2021B Bonds are special obligations of the City payable solely from Net Revenues (as defined herein) of the City’s electric system (the “Electric System”) operated by the Commission. The Series 2021B Bonds are being issued on a parity with the City’s Electric Revenue Bonds, Series 2018A (the “Series 2018A Bonds”), City’s Electric Revenue Bonds, Series 2016A (the “Series 2016A Bonds”) and Electric Revenue Refunding Bonds, Series 2016B (the “Series 2016B Bonds” and, together with the Series 2016A Bonds and Series 2018A Bonds,the “Outstanding Bonds”). The Outstanding Bonds and the Series 2021B Series 2021B Bonds are collectively referred to as the “Parity Bonds.” See “UTILITY REVENUE DEBT” herein. Inquiries regarding the Utility may be directed to Ms. Melissa Karpinski, Finance Manager, Elk River Municipal Utilities, 13069Orono Parkway, Elk River, Minnesota 55330-0490, by telephoning (763) 635- 1322, or by emailing mkarpinski@ermumn.com. Inquiries regarding the City may be directed to Ms. Lori Ziemer, Finance Director, City of Elk River, 13065 Orono Parkway, Elk River, Minnesota 55330-0490, by telephoning (763) 635-1022, or by emailing lziemer@elkrivermn.gov. Inquiries may also be made to Baker Tilly Municipal Advisors, LLC, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887, by telephoning (651) 223-3000, or by emailing bondservice@bakertilly.com * Preliminary; subject to change. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2021 Baker Tilly Municipal Advisors, LLC. - 1 - 266 Potential Impacts Resulting from Coronavirus (COVID-19) On March 11, 2020, the World Health Organization proclaimed the Coronavirus (COVID-19) to be a pandemic. In an effort to lessen the risk of transmission of COVID-19, the United States government, state governments, local governments and private industrieshave taken measures to limit social interactions in an effort to limit the spread of COVID-19, affecting business activities and impacting global, state and local commerce and financial markets. The emergence of COVID-19 and the spread thereof is an emerging and evolving issue. As the federal, state, and local governments, including the City, continue efforts to contain and limit the spread COVID-19 disease, future tax and other revenue collections may deviate from historical or anticipated collections andmay have an adverse impact on the financial position and operations of the City and its ability to fund debt obligations, including the Series 2021A Bonds in accordance with its terms. The City is not able to predict and makes no representations as to the economic impact of the COVID-19 pandemic on the City or its financial position. CONCURRENT FINANCING By means of a separate Official Statement dated March 30, 2021, the Cityis offering for sale its $5,225,000* General Obligation Capital Improvement Plan and Equipment Bonds, Series 2021A (the “Series 2021A Bonds”) on April 19, 2021. The Series 2021A Bonds are being issued to finance (i) construction of various improvements identified in the City’s 2020-2025 Capital Improvement Plan adopted November 2, 2020, and (ii) the purchase of capital equipment. The Series 2021A Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes.Settlement of said bonds is expected to take place on or about May 20, 2021.The Series 2021A Bonds and the Series2021BBonds are collectively referred to herein as the “Bonds.” CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2-12 (the “Rule”), pursuant to the Award Resolutions and Continuing Disclosure Certificateto be executed on behalf of the City and the Commission on or before closing, the City and the Commission haveand will covenant (the “Undertaking”) for the benefit of holders or beneficial owners of the Series 2021B Bonds to provide certain financial information and operating data relating to the Cityand the Commissionto the Municipal Securities Rulemaking Board annually, and to provide notices of the occurrence of certain events enumerated in the Rule to the Municipal Securities Rulemaking Board and to any state information depository. The specific nature of the Undertakings, as well as the information to be contained in the annual report or the notices of material events, is set forth in the Undertakings in substantially the form attached hereto as Appendix II, subject to such modifications thereof or additions thereto as: (i) consistent with requirements under the Rule, (ii)required by the purchaser of the Series 2021B Bonds from the City, and (iii)acceptable to the Mayor and City Clerk of the City, and the President and Secretary of the Commission. Except to the extent the following deficiencies are deemed to be material, the Cityand the Commission believe they havecomplied for the past five years in all material respects with the terms of its previous continuing disclosure undertakings entered into pursuant to the Rule. In reviewing its past disclosure practices, the City notes the following: Prior continuing disclosure undertakings entered into by the City included language stating that the City’s audited financial statements would be filed “as soon as available.” Although the City did not always file “as soon as available,” the audited financial statements were timely filed within the required twelve (12) month timeframe as provided for in each undertaking. * Preliminary; subject to change. - 2 - 267 A failure by the City to comply with the Undertaking will not constitute an event of default on the Series 2021B Bonds (although holders or other beneficial owners of the Series 2021B Bonds will have the sole remedy of bringing an action for specific performance). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Series 2021B Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of theSeries 2021B Bonds and their market price. THE SERIES 2021B BONDS General Description The Series 2021B Bonds are dated as of the date of delivery and will mature annually on August 1 as set forth on the front cover of this Official Statement. The Series 2021B Bonds are issued in book entry form. Interest on the Series 2021B Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2022. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Interest will be computed on thebasis of a 360-day year of twelve 30-day months. Principal of and interest on the Series 2021B Bonds will be paid as described in the section herein entitled “Book Entry System.” U.S. Bank National Association, Saint Paul, Minnesota will serve as Registrar for the Series 2021B Bonds, and the City will pay for registrar services. Redemption Provisions Mailed notice of redemption shall be given to the registered owner(s) of the Series 2021B Bonds in accordance with the requirements of DTC which currently requires no less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Failure to give such written notice to any registered owner of the Series 2021B Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Series 2021B Bonds. All Series 2021B Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Optional Redemption The City may elect on August 1, 2031 and on any day thereafter, to redeem Series 2021B Bonds due on or after August 1, 2032. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all the Series 2021B Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to beredeemed. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptionsshall be at a price of par plus accrued interest. Book Entry System The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Series 2021B Bonds. The Series 2021B Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Series 2021B Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. - 3 - 268 DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Series 2021B Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2021B Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2021B Bond(“Beneficial Owner”) is in turn to berecorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2021B Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2021B Bonds, except in the event that use of the book- entry systemfor the Series 2021B Bonds is discontinued. To facilitate subsequent transfers, all Series 2021B Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2021B Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2021B Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2021B Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2021B Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2021B Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2021B Bond documents. For example, Beneficial Owners of the Series 2021B Bonds may wish to ascertain that the nominee holding the Series 2021B Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2021B Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. - 4 - 269 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2021B Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Cityas soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2021B Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2021B Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Cityor its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Cityor its agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2021B Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The Citymay decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Citybelieves to be reliable, but the Citytakes no responsibility for the accuracy thereof. RISK FACTORS INVESTORS SHOULD BE AWARE THAT INVESTMENT IN THE SERIES 2021B BONDS MAY ENTAIL SOME DEGREE OF RISK. EACH PROSPECTIVE INVESTOR IN THE SERIES 2021B BONDS IS ENCOURAGED TO READ THIS OFFICIAL STATEMENT IN ITS ENTIRETY. PARTICULAR ATTENTION SHOULD BE GIVEN TO THE FACTORS DESCRIBED BELOW WHICH, AMONG OTHERS, COULD AFFECT THE PAYMENT OF PRINCIPAL AND INTEREST ON THE SERIES 2021B BONDS AND WHICH COULD ALSO AFFECT THE MARKET PRICE OF THE SERIES 2021B BONDS TO AN EXTENT THAT CANNOT BE DETERMINED. THIS DISCUSSION OF RISK FACTORS IS NOT, AND IS NOT INTENDED TO BE, EXHAUSTIVE. Limited Obligation The obligation of the City to pay the principal of and interest on the Parity Bonds is a limited obligation. The full faith and credit and taxing powers of the City are not pledged to pay the principal and interest on the Parity Bonds and the City has notpledged ad valorem property taxes to pay the principal and interest on the Parity Bonds. As further described elsewhere herein, the principal of and interest on the Parity Bonds is payable solely from Net Revenues of the Utility (as defined under “SECURITY AND FINANCING” herein). While it is believed that revenues of the Utility will be sufficient to pay operating and maintenance expenses of the Utility as well as the principal of and interest on the Series 2021B Bonds when due, a number of factors described below may affect the receipt of sufficient revenues from the Utility for such purposes, which may impair the ability of the City to make timely principal and interest payments on the Parity Bonds. - 5 - 270 General Factors that May Affect Sufficiency of Revenues As stated above, the City is obligated to pay the principal of and interest on the Series 2021B Bonds solely from Net Revenues of the Utility. A number of factors may have an adverse effect on the receipt of revenues in an amount sufficient to pay operating and maintenance expenses of the Utility as well as the principal and interest on the Parity Bonds. These include potential adverse changes in the economic condition of the City, including potential decreases in population that may arise from decisions by employers located in and around the City to relocate their operations elsewhere; and potential unemployment at a level that would preclude residents of the City from paying sufficient user fees in order to support the operations of the Utility and the payment of principal and interest on the Parity Bonds. The loss of any of the major electric or water users would also have an adverse effect on the revenues of the Utility. Unforeseen Problems with the Utility Payment of the principal of and interest on the Parity Bonds is dependent to a considerable degree upon the continued operation of the Utility for the purposes for which they were designed. While the City believes that the Utility has been designed and constructed in such a manner as to permit their continued operation without requiring unreasonable costs for maintenance or repairs and has provided under the terms of the Awarding Resolution for the creation and maintenance of funds in amounts which the City believes to be sufficient to provide for the necessary repairs and maintenance of the Utility, there can be no assurance that such amounts will, in fact, be sufficient to assure the ongoing operation of the Utility. Although the Utility iscovered by policies of insurance as otherwise described herein, casualties and other occurrences may result in damage to the Utility, which may not be covered by the net proceeds of any insurance award. Any material interruption of the operation of the Utility may have an adverse effect on the ability of the City to collect fees from users of the Utility and could, in turn, have a materially adverse effect on the ability of the Utility to make timely payments of principal and interest on the Series 2021B Bonds. The Electric Utility Industry Generally The electric utility industry has been, and in the future will be, affected by a number of factors which could impact the financial condition and competitiveness of electric utilities, such as the Utility. Such factors include, among others: (i) effects of compliance with changing environmental, safety, licensing, regulatory and legislative requirements; (ii) changes resulting from conservation and demand-side management programs on the timing and use of electric energy; (iii) other federal and state legislative changes; (iv) effects of competition from other electric utilities (including increased competition resulting from mergers, acquisitions, and “strategic alliances” of competing electric (and gas) utilities and from competitors offering less expensive electricity from much greater distances transmitted over an interconnected system, and new methods of producing low cost electricity; (v) increased competition from independent power producers, marketers and brokers; (vi) “self-generation” by certain industrial and commercial customers; (vii) issues relating to the ability to issue tax-exempt obligations; (viii)severe restrictions on the ability to sell to nongovernmental entities electricity from generation projects financed with outstanding tax-exempt obligations; (ix) changes from projected future load requirements; (x)increases in costs; (xi) shifts in the availability and relative costs of different fuels; and (xii)global warming and the future legislation and regulations that target contributions made by coal-fired and other fossil-fueled generating units. Any of these factors and the factors discussed herein (as well as other factors) could have an effect on the financial condition of the Utility. The Utility and other electric utilities are subject to various federal and state laws requiring compliance with environmental rules and regulations. In addition, the Utility is also subject to various federal and state laws relating to its facilities as well as various federal and state laws which affect the construction and operation of its facilities. - 6 - 271 Energy Policy Act of 1992 The Energy Policy Act of 1992 (the “Energy Policy Act of 1992”) made fundamental changes in the federal regulation of the electric utility industry, particularly in the area of transmission access under Sections 211, 212, and 213 of the Federal Power Act. The purpose of these changes, in part, was to bring about increased competition. While the Utility could contest before the Federal Energy Regulatory Commission (“FERC”) or in federal court any application under Sections 211, 212 and 213 of the Federal Power Act on jurisdictional, procedural or substantive grounds, those Sections of the Federal Power Act provided the FERC with the authority, upon application by an electric utility, federal power marketing agency, or any person generating electricity for sale or resale, to require a transmitting utility such as the Utility to provide transmission services to the applicant at rates, charges, terms and conditions set by FERC based on standards and provisions in the Federal Power Act. However, the Energy Policy Act of 1992 specifically denied the FERC the authority to mandate “retail wheeling,” under which a retail customer of one utility could obtain power from another utility or non-utility power generator. On April 24, 1996, the FERC issued two final rules. The final rules effected significant changes in the regulation of transmission services provided by public utilities (as defined in the Federal Power Act) that own, operate or control interstate transmission facilities and which are subject to the FERC jurisdiction over wholesale contracts, rates and services (“jurisdictional utilities”). The Utility is not a public utility, as defined by the Federal Power Act, and is not a jurisdictional utility under the Federal Power Act for its sales or generation of power. One of the final rules, Order No. 888, (i) requires the provision of open access transmission services on a nondiscriminatory basis by all jurisdictional utilities by requiring all such utilities to file tariffs that offer other entities seeking to effect wholesale power transactions the same transmission services they provide themselves, under comparable terms and conditions, and (ii)may require a non-jurisdictional utility, such as the Utility, that purchases transmission services from a jurisdictional utility under an open access tariff and that owns or controls transmission facilities to, in turn, provide open access service to the jurisdictional utility under terms that are comparable to the service that the non-jurisdictional utility provides itself. This is referred to as the reciprocity requirement. Order No.888 also includes provisions which, in effect, would permit jurisdictional utilities to recover under certain conditions so-called “stranded costs” for generating and other facilities from wholesale customers of a utility which use open access transmission service to purchase from other power suppliers. The other final rule, Order No. 889, (i) implements standards of conduct for jurisdictional utilities that offer open access transmission services to ensure that transmission owners and their affiliates do not have an unfair competitive advantage in using transmission to sell power, and (ii)requires those jurisdictional utilities to establish or use an electronic “Open Access Same-time Information System” (“OASIS”) to share transmission-related information (including information about available capacity) on the Internet, and to require that those jurisdictional utilities also obtain information about their transmission systems for their own wholesale power transactions, such as available capacity, in the same way that their competitors do through the OASIS. In 2007, the FERC issued Order No. 890 which, as modified and clarified on rehearing, updated Order Nos. 888 and 889. Order 890 did not substantially change the requirements or jurisdictional reach of those orders with respect to the Utility. The Utility, as a non-jurisdictional utility, is not directly subject to Order No. 888, 889,and 890. Therefore at this time, the Utility is unable to predict what effect, if any these rules will have on the Utility. Energy Policy Act of 2005 The EnergyPolicy Act of 2005 (the “2005 Act”) made additional changes to the federal regulation of the electric utility industry, some of which affect the Utility. - 7 - 272 The 2005 Act required the creation of an electric reliability organization that has authority to establish and enforce mandatory reliability standards on a nation-wide basis. The electric reliability organization is subject to FERC’s oversight. FERC approved the North American Electric Reliability Council (“NERC”) as the electric reliability organization and has approved nation-wide reliability standards. FERC has also approved NERC’s delegation of certain functions to regional reliability organizations, including the Midwest Reliability Organization (“MRO”). The standards that are administered by NERC and the MRO apply to all users, owners, and operators of the bulk power system including the Utility. The 2005 Act requires the Department of Energy to designate national interest electric transmission corridors, where constraints or congestion adversely affect consumers. FERC may authorize the siting of transmission facilities within those corridors if the states have failed to act. The courts held that FERC may act when a state, rather than failing to act, has denied an application for siting. It is anticipated that FERC will continue to assert broad authority to authorize the siting of transmission facilities and that Congress might act expressly to expend FERC’s authority. The 2005 Act requires price transparency and prohibits market manipulationfor all wholesale markets. The requirements apply to all entities that participate in those markets, including the Utility. Retail Electric Service Territories The State of Minnesota (the “State”) presently prohibits other electric utilities from serving areas within a municipality which are presently receiving retail electric service from a municipal utility. The State permits municipal utilities to expand their retail electric services to additional areas located within the municipalities’ boundaries, including areas added by way of annexation. When municipal utilities expand their retail electric service territory, they are required to pay compensation to anyother displaced electric utility. The compensation due to such displaced utilities is determined by the courts, utility regulatory commissions, or by mutual agreement between the two parties. State Regulatory Initiatives On May 21, 2001, the Minnesota Legislature passed the Minnesota Energy Security and Reliability Act (the “Act”) which was signed by the Governor into law on May 29, 2001 and became Chapter 212 of Laws of Minnesota 2001. Although the Act constituted the most extensive re-write of theState’s law on energy policy in 25 years, the focus was primarily on promoting conservation and renewables rather than on creating a more effective process for securing needed transmission and generation facilities. In part, to address the issue of the need for substantial new investment in transmission, the Minnesota Legislature also passed the Omnibus Energy Bill, Laws of Minnesota 2005, Chapter 97 (the “Omnibus Energy Bill”), codified in Minnesota Statutes Chapter 216B, as amended, whose provisions took effect August 1, 2005. The following discussion of some major provisions that affect municipal utilities is a summary and is qualified in its entirety by reference to the Act and the Omnibus Energy Bill. Distributed Generation. The Omnibus Energy Billestablishes the terms and conditions that govern the interconnection and parallel operation of on-site distributed generation. The Public Utility Commission of the State of Minnesota (the “PUC”) has established generic standards for utility tariffs providing for the standardized interconnection of facilities and reasonable interconnection agreements. Municipal utilities and cooperatives must adopt tariffs of their own, which must address the same issues as those addressed by the PUC. The Act requires all utilities to keep records of applications for interconnections and to annually report interconnection activity to the Commissioner of the Minnesota Department of Commerce (the “DOC”). Renewables.Renewables are generally defined as solar, wind, or hydroelectric facilities; however, the Omnibus Energy Bill allows for biogas projects to be eligible for the renewal energy production incentive and promotes the use of soy-diesel and hydrogen as energysources. The Act, amended in 2010, allows for all utilities to offer its customers one or more options to secure electric energy from renewables or high efficiency, - 8 - 273 low emissions distributed generation such as fuel cells and micro-turbines fueled by renewable fuels. The DOC Commissioner must certify the applicable power source as renewable. Electric utilities unable to supply their customers with the renewable option must provide an explanation to the PUC. The Omnibus Energy Bill makes a number of changes designed to promote the use of renewable resources, which include expediting regulatory approval of transmission projects related to renewable generation, establishing a framework for a (non-binding) wind energy tariff for community-based energy for development projects, requiring utility participation in a wind integration study, requiring the adjustment of power purchase agreements to account for production tax payments, and requiring a study of the use of bio-diesel fuel to heat homes. The 2005 Minnesota Legislature authorized a study to determine if the State could reliably and cost-effectively integrate a Renewable Energy Standard (“RES”) mandate. This study was delivered late in 2006 and the 2007 Minnesota Legislature, acting on the strength of the study results, passed into law the Net Generation Energy Act (“NGEA”), Laws of Minnesota 2007, Chapter 3, which will require 25% renewable electric generation by the year 2025, with intervening steps to reach the standard. Consumer Protection. Changes were made to the list of concerns that a municipal or an electric cooperative must address before disconnecting a residential customer for non-payment during the winter heating season. The Act also requires all utilities to offer a payment agreement toresidential customers for past due bills or for making up undercharges, if the undercharge is caused through no fault of the customer. If a utility has more than 3,000 customers, it must provide budget billing for residential customers. Conservation Improvement Program (“CIP”). In 2007, the State established new conservation of energy policy that sets CIP goals for all energy utilities in the Stateto reduce energy consumption by 1.5% per year. While not a mandate with penalties, this new law will guide the expansion of utility incentives to drive energy efficiency at the consumer level. The 1.5% is an annual target and shouldn’t be viewed cumulatively. NGEA also increases mandatory CIP expenditures from 1% to 1.5% of gross revenues. CIP progress reports submitted to DOC, Division of Energy Resources, have received favorable response. The Omnibus Energy Bill.The Omnibus Energy Bill makes several other major changes to the statutory and regulatory scheme that governs the operation of electric utilities. The Omnibus Energy Bill allows investor-owned utilities (“IOUs”), with the approval of the PUC, to include in their rates the cost of new transmission improvements without going through an expensive general rate case. This authority will provide greater incentive to IOUs to make needed improvements to their transmission systems. The Omnibus Energy Bill modifies several State approval processes involving the construction of large power plants and transmission lines. It transfers the authority for routing transmission lines and siting power plants from the Environmental Quality Board to the PUC, thereby centralizing the need certification and the siting processes in one agency. The law eliminates the limits involved in the need certification and siting processes, provides added criteria to analyze the need for transmission projects, and eliminates the deadline imposed on the PUC for need certification decisions. It is not possible to predict whether the Minnesota State Legislature or Congress will enact further legislation restructuring the electric utility industry or what the substance of any such legislation would be or what the effect might be upon the Utility. Environmental Matters The Utility’s generation operations are subject to continuing environmental regulation by the U.S. Environmental Protection Agency (the “EPA”), the Minnesota Pollution Control Agency (the “MPCA”) and other regulatory agencies and are in compliance with all regulations. Federal, state and local standards and rules which regulate the environmental impact of generation and transmission facilities used by the Utility are subject to change. These changes may arise from continuing legislative, regulatory and judicial action regarding such standards and rules. Consequently, there is no assurance that the asset in operation or contemplated will remain subject to the regulations currently in effect, will always be in compliance with future regulations, or will always be able to obtain all required - 9 - 274 operating permits. An inability to comply with environmental standards could result in a reduced operating level or the complete shutdown of individual electric generating units not in compliance. Federal legislation and EPA rule-making have had a significant effect on electric utilities. The Clean Air Act Amendments (“CAA”) established requirements to obtain operating permits for an affected facility which set forth emissions limits and other requirements, including monitoring, record keeping and reporting. The CAA also established a regulatory program to address the effects of acid rain and impose restrictions on sulfur dioxide (SO2) and nitrogen oxide (NOx). The EPA has introduced or proposed in recent years various rules to reduce NOx and SO2 emissions on a regional level to achieve ambient air quality standards, reduce hazardous air pollutants from power plants, to reduce regional haze and to regulate the disposal and management of coal combustion by-products. The CAA also requires that the EPA establish National Ambient Air Quality Standards and the regulation of greenhouse gases. Revisions to the Clean Water Act Section 316 (a) and (b) may have an impact on the electric utility industry, but the cost at this time is impossible to estimate. The Clean Water Act, Endangered Species Act, and Resource Conservation and Recovery Act currently are scheduled for reauthorization by Congress. The impact of this legislation on the electric utility industry is uncertain; however, no new programs related to the electric utility industry are expected. A number of electrical industry and other studies have been conducted regarding the potential long-term health effects resulting from exposure to electromagnetic fields (“EMF”) created by transmission and distribution lines and equipment. At this time, any relationship between EMF and certain adverse health effects remains inconclusive; however, electric utilities have been experiencing challenges in various forms claimingfinancial damages associated with electric equipment and EMF. At this time, it is not possible to predict the extent of the cost, if any, and other impacts which the EMF concern may have on electric utilities, including the Utility. Up to this point there have been no claims against the Utility related to EMF exposure. Litigation claiming personal or property injury arising from alleged stray voltage has resulted in some damage awards against some electric utilities (other than the Utility). In 1993, the Minnesota Legislature extended service requirements governing grounding and stray voltage to electric utilities that provide or furnish retail electric service to agricultural customers in Minnesota. It cannot be predicted at this time whether such legislation or litigation may affect the operations and costs of the Utility. The Utility cannot predict at this time whether any additional legislation or rules will be enacted which will affect the Utility’s operations, and if such laws or rules are enacted, what the costs to the Utility might be in the future because of such action. Secondary Markets and Prices Neither the City nor the Commission will be obligated to repurchase any of the Series 2021B Bonds, and no representation is made concerning the existence of any secondary market for the Series 2021B Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2021B Bonds and no assurance can be given that the initial offering prices for theSeries 2021B Bonds will continue for any period of time. - 10 - 275 AUTHORITY AND PURPOSE The Series 2021B Bonds are being issued pursuant to Minnesota Statutes, Chapters 475 and 453, the City Resolution, and the Awarding Resolution. The proceeds of the Series 2021B Bonds will be used to finance the construction of a field house facility to accommodate service trucks, inventory and offices. SOURCES AND USES OF FUNDS The composition of the Series 2021B Bonds is estimated to beas follows: Sources of Funds: Principal Amount $12,620,000 Total Sources of Funds $12,620,000 Uses of Funds: Deposit to Project Fund$11,812,500 Deposit to Reserve Account 535,661 Allowance for Discount Bidding 201,920 Costs of Issuance69,919 Total Uses of Funds $12,620,000 SECURITY AND FINANCING The Series 2021B Bonds are special limited obligations of the City payable, together with the Outstanding Bonds, solely from Net Revenues of the Electric System. Net Revenues of the Electric System are defined as Gross Revenues less Operating Expenses. Operating Expenses are defined as the current expenses of operation, maintenance and minor or current repair of the Electric System for any specified period. Operating Expenses include, without limitation, administrativeexpenses of the Commission relating to the Electric System, franchise fees, premiums for insurance relating to the Electric System, and amounts necessary to accumulate and maintain the Operating Reserve Requirement. Operating Expenses do not include depreciation, amortization, or interest expense. Gross Revenues are defined as all revenues and receipts from rates, fees, charges, and rentals imposed by the Commission for the availability, benefit, use and products of the Electric System or any part thereof, and any penalties and interest thereon, and income from the investment thereof. Gross Revenues do not include amounts received from the sale of property which is part of the Electric System or amounts borrowed with respect to the Electric System. The Series 2021B Bonds have a first charge and lien on the Net Revenues of the Electric System and are issued on a parity with the Outstanding Bonds. Rate Covenant The Commission has pledged to establish user rates and charges for the Electric System sothat annual Net Revenues shall not be less than 110% of the annual debt service on the Parity Bonds and any additional parity bonds in each fiscal year. The City and the Commission covenant: to charge reasonable and just rates; to maintain the ElectricSystem in efficient operating condition; to keep proper books and records; to have an annual audit prepared by an independent auditor in accordance with generally accepted accounting principles; to maintain proper billing procedures; to carry insurance; and not to dispose of the Electric System until all Parity Bonds are paid in full or otherwise discharged. - 11 - 276 Funds and Accounts The following summary of certain covenants in the Awarding Resolution are not to be considered a full statement of the provisionsof the Awarding Resolution and are qualified by reference to the Awarding Resolution. The Awarding Resolution will provide for the continuation of the Electric Fund (the“Fund”) established under prior resolutions of the Commission and the accounts therein. All Gross Revenues of the Electric System are irrevocably pledged and appropriated and shall be credited to the Operating Account of the Fund as received. Within the Fund, the accounts discussed below will be maintained, and Gross Revenues received in the Fund shall be apportioned to the said accounts as described below. Project Accountinto which there shall be paid the proceeds from the sale of the Series 2021B Bonds,plus available City funds,less the proceeds of the Series 2021B Bonds deposited into the Reserve Account, and less any accrued interest paid by the Purchaser of the Series 2021B Bondsand other amounts deposited into the Debt Service Accountas determined by the Finance Manager of the Commission. Operating Accountinto which all Gross Revenues are received. There shall be paid from the Operating Account when due all reasonable, necessary, and current Operating Expenses of the Electric System. All money on hand in the Operating Account as of the first day of each month in excessof the sum of (i)Operating Expenses then due and payable and to become due and payable during such calendar month, plus (ii) the Operating Reserve Requirement, shall constitute Net Revenues and shall be credited to other accounts in the Electric Fund. Debt Service Accountinto which is deposited any accrued interest paid by the Purchaser of the Series 2021B Bondsand other amounts deposited into the Debt Service Accountas determined by the Finance Manager of the Commission. There shall also be credited to the Debt Service Account, out of the Net Revenues on hand in the Operating Account, an amount equal to not less than 1/6 of the interest due within the next six months and 1/12 of the principal due within the next twelve months on all Parity Series 2021B Bonds; provided that the Commission shall be entitled to reduce a monthly apportionment by the amount of any surplus previously credited and then on hand in the Debt Service Account. Money on hand in the Debt Service Account shall be disbursed only to pay principal of and interest on the Parity Bonds when due; provided that on any date when the amount then on hand in the Debt Service Account, plus the amount in the Reserve Account allocable to a series of bonds, is sufficient with other money available for the purpose to pay or discharge all bonds of that series and the interest accrued thereon in full, it may be used for that purpose. If any payment of principal of or interest on the Parity Bonds becomes due when money in the Debt Service Account is temporarily insufficient, an amount equal to such deficiency shall be transferred from the Reserve Account or the Repair and Replacement Account, in that order. Reserve Accountin which the Commission will maintain the amount of the Reserve Requirement, which is an amount equal to the least of (i) 10% of the original principal amount of the Parity Bonds and any Additional Bonds; (ii) the maximum amount of principal and interest payable during the then current fiscal year or any future fiscal year on all Parity Bonds and Additional Bonds determined as of the date of issuance of each series of bonds; or (iii) 125% of the average annual principal and interest payable on all Parity Bonds and Additional Bonds determined as of the date of issuance ofeach series of bonds. Approximately $535,661 will be deposited into the Reserve Account upon delivery of the Series 2021B Bonds. If the balance in the Reserve Account is ever less than the applicable Reserve Requirement, as of the first day of each month all Net Revenues in the Operating Account remaining after the required credit to the Debt Service Account shall be credited to theReserve Account until the balance therein equals the Reserve Requirement. If the balance in the Reserve Account has not been restored to the Reserve Requirement from transfers of Net Revenues within six months of the deficiency, the Commission shall transfer to the Reserve Account, from the Repair and Replacement Account, an amount sufficient to restore the balance to the Reserve Requirement. - 12 - 277 Repair and Replacement Accountinto which shall be credited from the Operating Account such portion of the Net Revenues in excess of the current requirements of the Debt Service Account and the Reserve Account (“Surplus Revenues”) as the Commission shall determine to be required for replacement or renewal of worn out, obsolete, or damaged properties and equipmentof the Electric System. Money in the Repair and Replacement Account shall be used only for the purposes above stated or, if so directed by the Commission, to pay Operating Expenses, to redeem bonds which are subject to redemption according to their terms, to pay principal or interest when due as required by the Awarding Resolution, to restore a deficiency in the Reserve Account, or to pay the cost of improvements to the Electric System; provided that, in the event additional improvements or additions to the Electric System are financed other than from bonds payable from the Debt Service Account, Surplus Revenues from time to time received may be segregated and paid into one or more separate and additional accounts for the repayment of such indebtedness andinterest thereon, in advance of payments required to be made in to the Repair and Replacement Account. Net Revenues in excess of those required for the foregoing purpose may be used for any proper purpose. Additional Parity Bonds Additional obligations may be issued on a parity of lien with the Series 2021B Bonds and the Outstanding Bonds so long as the Net Revenues of the Electric System for the audited fiscal year immediately preceding the issuance of such Additional Bonds, adjusted as described below, are not less than 125% of the average annual principal and interest due on all Outstanding Bonds and the Additional Bonds to be issued, during the remaining term of the Outstanding Bonds. For purposes of the coverage test set forth above, the Net Revenues for the last audited fiscal year immediately preceding the issuance of such Additional Bonds may be adjusted for such fiscal year as follows: (i) the Gross Revenues for such audited fiscal year may be increased to reflect the Gross Revenues which would have been received had any rate increase placed in effect after the commencement of the audited fiscal year been in effect for the entire audited fiscal year; and (ii) by including the additional revenues reasonably determined by the Commission to be likely to result from the acquisition and construction of the facilities to be financed by such Additional Bonds, provided that the debt service on the proposed Additional Bonds is funded until the estimated date of completion of such facilities. The Commission also reserves the right to cause the issuance of Additional Bonds if and to the extent needed to refund maturing Series 2021B Bonds payable from the Debt Service Account in case the money on hand therein is insufficient to pay thesame at maturity, which refunding revenue bonds may be on a parity with the Outstanding Bonds, but shall mature subsequent to all Outstanding Bonds which are not to be refunded by such Additional Bonds. The Commission also reserves the right to cause theissuance of Additional Bonds payable on a parity as to both principal and interest with the Outstanding Bonds to refund bonds if the maximum amount of principal and interest payable on the Outstanding Bonds and such Additional Bonds in the then current orany future calendar year is not increased by more than 5.00%. - 13 - 278 ELK RIVER MUNICIPAL UTILITIES Organization The control, management and operation of the electric and water systems of the Elk River Municipal Utilities (the “Utility”) is under the direction of the Elk River Municipal Utilities Commission (the “Commission”). The fourCommissionmembers are appointed by the Mayor, with City Council confirmation, and serve three-year overlapping terms. The Commission has complete authority to establish rates and charges for the Utility. The present members of the Commission are: Expiration of Term John DietzChairFebruary 28, 2022 Paul BellCommissionerFebruary 29, 2024 Al NadeauCommissionerFebruary 28, 2023 Mary StewartCommissionerFebruary 28, 2022 Matthew WestgaardCommissionerFebruary 28, 2023 Management Ms.Theresa Slominski serves as the General Manager of the Utility and as Secretary to the Commission, and has been with the Utility since December 2004. Ms.Melissa Karpinskiserves as the Finance Manager, and has been with the Utility since August 2016. Mr. Tom Geiser serves as the Operations Directorof the Utility.Mr. Chris Sumstadserves as the Superintendent of the Electric Department, Mr. Dave Ninow serves as the Superintendent of the Water Department, and Mr. Mike Tietz serves as the Superintendent of the Technical Services Department.The Utility employs a staff of 46. THE ELECTRIC SYSTEM The Utility provides power to the cities of Elk River, Otsego, and Dayton and surrounding rural areas. The Utility purchases all of its power, and generates a small portion of power for sale through purchase power agreements. The Utility distributes electricity at not-for-profit rates as a public service similar to other public services such as the police department, schools, fire department, and local library. The Utility is community-based, which means that utility revenues stay close to home to keep the local economy strong, promote business participation, and ensure response to community needs. The tradition of local ownership and local decisions results in lower electricity rates for the customers. The Utility serves the interests of the community and plans to remain the first choice for electricity in the future. Electric Generating Facilities YearNameplate Unit No.ModelInstalledType of FuelkW RatingDependable kW 1Worthington1948Diesel600660 2Worthington1948Diesel600500 3Cooper1962Gas/Diesel3,0003,300 4Worthington1972Gas/Diesel5,0005,700 53Caterpillars2002Landfill Gas (LFG)2,4002,400 61 Caterpillar2006Landfill Gas (LFG)800800 - 14 - 279 Ten Largest Electric Customers Minnesota Statute 13.685 considers data on customers of municipal electric utilities as private data and will no longer be disclosed. Therefore, the following information is presented without revealing customer names. Percent of CustomerkWh Sold Total Revenue Total Sales Customer 155,713,600 $ 4,639,319 12% Customer 226,472,000 2,277,648 6 Customer 35,294,000 557,167 1 Customer 44,199,200 417,466 1 Customer 54,160,640 366,777 1 Customer 64,045,500 366,483 1 Customer 73,484,000 339,336 1 Customer 83,059,000 278,598 1 Customer 93,055,000 286,943 1 Customer 10 3,030,800 296,801 1 $9,826,538 26% Electricity Purchased and Purchased Cost kWh Purchased YearPurchasedCost 2020 337,016,741 $24,240,439 2019 336,570,637 24,851,301 2018 339,917,944 26,710,514 2017 320,349,631 25,402,576 2016 311,990,595 23,991,069 2015 294,441,957 22,034,307 Sales History Number of MeterskWh Total Yearin Service SoldBilling 2020 12,365 324,469,638 $37,714,965 2019 12,244 325,981,176 37,640,985 2018 11,983 331,124,011 39,039,573 2017 11,448 313,952,561 36,458,061 2016 10,816 305,337,641 34,569,098 2015 10,499 282,265,268 32,704,279 - 15 - 280 Meter Connections YearResidentialCommercialIndustrialTotal 2020 10,775 1,355 23512,365 2019 10,663 1,348 23312,244 2018 10,422 1,333 22811,983 2017 9,900 1,328 22011,448 2016 9,371 1,235 21010,816 2015 9,205 1,105 18910,499 Peak Demand YearMWSeason 2020 70.3 Summer 2019 71.9 Summer 2018 67.0 Summer 2017 64.7 Summer 2016 64.2 Summer 2015 55.8 Summer Electric Rates and Charges The following electric rates and charges became effective January 1, 2021. Residential Electric Rates Basic Monthly Charge$13.50 June-October Usage$0.1270 per kWh November-May Usage$0.1160 per kWh Off Peak Rates Energy Storage $0.0463 per kWh per month Dual Fuel $0.0602 per kWh per month Commercial/Industrial Non-Demand Customers (Demand in kW less than 50kW) Basic Monthly Charge $30.00 June-October Usage$0.1230 per kWh November-May Usage$0.1030 per kWh - 16 - 281 The minimum bill for non-demand customers is the basic monthly charge plus $1.00 per kW per month of excess transformer capacity requested by the customer. A power factor of 95% must be maintained or a penalty may be assessed. Demand Customers (Demand in kW greater than 50kW) Basic Monthly Charge$75.00 Energy Charge $0.0651 per kWh June-October Demand Charge $15.50 per kW November-May Demand Charge $11.50 per kW The minimum bill for demand customers is the greater of the maximum billing demand during the previous twelve months times 3% of the demand charge, or the actual demand multiplied by the demand charge; plus $1.00 per kW per month of excess transformer capacity requested by the customer. A power factor of 95% must be maintained or a penalty may be assessed. Large Industrial Demand Customers (Demand in MW greater than 1MW) Basic Monthly Charge$100.00 Energy Charge $0.0644 per kWh June-October Demand Charge $15.00 per kW November-May Demand Charge $11.00 per kW The minimum bill for demand customers is the greater of the maximum billing demand during the previous twelve months times 3% of the demand charge, or the actual demand multiplied by the demand charge; plus $1.00 per kW per month of excess transformer capacity requested by the customer. A power factor of 95% must be maintained or a penalty may be assessed. UTILITY FINANCIAL STATEMENTS The tables on the following pages provide the Utility’s Statement of Net Position; Statement of Revenues, Expenses and Changes in Fund Net Position; and Statement of Cash Flows of the Electric System for the years ended December31, 2015through 2019. The financial statement information was taken from the City’s audited comprehensive annual financial reports and should be read in conjunction with the City’s 2019Comprehensive Annual Financial Report, an excerpt of which is provided as AppendixIII of this Official Statement. (The City’s Comprehensive Annual Financial Report for fiscal year ended December31, 2020 is not yet available.) Please also reference the Utility’s Annual Financial Report for fiscal year ended December31, 2019, an excerpt of which is included as Appendix IV of this Official Statement.(The Utility’s Annual Financial Report for fiscal year ended December 31, 2020 is not yet available.) - 17 - 282 CITY OF ELK RIVER, MINNESOTA Elk River Municipal Utilities - Electric System Statement of Net Position For Fiscal Years Ended December 31 20152016201720182019 ASSETS Current Assets Cash and Investments$ 12,685,126$ 13,683,031$ 12,806,032$ 14,018,088$ 14,881,922 Restricted Cash and Investments490,500997,660997,6601,261,3591,261,359 Receivables: Interest2,4454,5506,6681,0176,891 Accounts2,664,4942,733,2043,331,2901,805,0452,386,589 Due from Other Funds-10,41610,87513,3927,402 Inventories991,563793,380949,694804,935981,962 Prepaid Items178,779197,439192,083174,285154,832 Total Current Assets$ 17,012,907$ 18,419,680$ 18,294,302$ 18,078,121$ 19,680,957 Noncurrent Assets Capital Assets: Nondepreciable$ 391,068$ 10,173,274$ 11,566,928$ 687,465$ 1,196,620 Depreciable48,706,99351,422,77953,775,60179,817,63782,024,495 Less: Accumulated Depreciation(21,846,450)(23,639,805)(25,640,860)(27,925,917)(30,444,533) Net Capital Assets$ 27,251,611$ 37,956,248$ 39,701,669$ 52,579,185$ 52,776,582 Total Noncurrent Assets$ 27,251,611$ 37,956,248$ 39,701,669$ 52,579,185$ 52,776,582 TOTAL ASSETS$ 44,264,518$ 56,375,928$ 57,995,971$ 70,657,306$ 72,457,539 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows - pensions$ 272,949$ 1,485,023$ 881,867$ 523,614$ 244,246 Deferred Charge on Refunding47,35541,21634,53227,84821,164 Total Deferred Outflow of Resources$ 320,304$ 1,526,239$ 916,399$ 551,462$ 265,410 LIABILITIES Current Liabilities Accounts and Contracts Payable$ 2,857,622$ 3,407,185$ 3,098,700$ 3,161,658$ 3,205,772 Salaries Payable78,030100,644101,571116,750138,648 Due to Other Governments140,014113,078163,029149,807159,286 Due to Other Funds649,413755,539790,458794,213862,386 Unearned Revenue-875--3,000 Accrued Interest49,892155,971137,744234,920282,496 Customer deposits payable--869,401946,460884,299 Compensated Absences Payable (Current)153,002156,874150,335169,375358,161 Notes Payable (Current)194,307195,216198,252200,916203,952 Bonds Payable (Current)692,000706,000720,000940,000924,000 Total Current Liabilities$ 4,814,280$ 5,591,382$ 6,229,490$ 6,714,099$ 7,022,000 Noncurrent Liabilities Compensated Absences Payable$ 130,528$ 152,133$ 142,346$ 172,831$ - Net Other Postemployment Benefits Obligation63,04170,54577,14382,413174,950 Net Pension Liability2,243,1153,749,4232,890,6012,430,3592,456,809 Notes Payable1,214,0611,018,860820,608619,692415,740 Bonds Payable3,024,37512,380,21811,609,42221,055,88120,080,411 Total Noncurrent Liabilities$ 6,675,120$ 17,371,179$ 15,540,120$ 24,361,176$ 23,127,910 TOTAL LIABILITIES$ 11,489,400$ 22,962,561$ 21,769,610$ 31,075,275$ 30,149,910 DEFERRED INFLOWS OF RESOURCES Deferred Pension Resources$ 459,746$ 415,506$ 651,486$ 681,694$ 520,934 NET POSITION Invested in Capital Assets (Net of Related Debt)$ 22,174,223$ 23,697,170$ 26,387,919$ 29,790,544$ 31,173,643 Restricted for Debt Service490,500997,660997,6601,261,3591,261,359 Unrestricted9,970,9539,829,2709,105,6958,399,8969,617,103 TOTAL NET POSITION$ 32,635,676$ 34,524,100$ 36,491,274$ 39,451,799$ 42,052,105 - 18 - 283 CITY OF ELK RIVER, MINNESOTA Elk River Municipal Utilities - Electric System Statement of Revenues, Expenses, and Changes in Net Position For Fiscal Years ended December 31 20152016201720182019 OPERATING REVENUES User Charges$ 32,951,267$ 34,746,670$ 36,458,061$ 39,039,573$ 37,640,985 Delinquency Collections238,339253,137242,739199,753254,553 Other(642,384)(535,411)(579,976)(459,421)199,095 Total Operating Revenues$ 32,547,222$ 34,464,396$ 36,120,824$ 38,779,905$ 38,094,633 OPERATING EXPENSES Personal Services$ 2,344,264$ 2,853,048$ 2,712,070$ 2,615,460$ 3,199,774 Supplies197,014110,343106,500124,830131,546 Purchased Power22,034,30723,991,06925,402,57626,710,51424,851,301 Other Service Charges3,398,2102,867,0463,126,3903,453,2533,516,207 Depreciation1,922,3592,005,0932,046,9352,297,3492,856,258 Total Operating Expense$ 29,896,154$ 31,826,599$ 33,394,471$ 35,201,406$ 34,555,086 OPERATING INCOME (LOSS)$ 2,651,068$ 2,637,797$ 2,726,353$ 3,578,499$ 3,539,547 NONOPERATING REVENUES (EXPENSES) Interest Income$ 95,533$ 90,804$ 79,543$ 330,110$ 159,014 Miscellaneous Revenue283,987281,702344,558371,303568,635 Interest Expense(116,676)(198,194)(294,219)(478,814)(643,159) Bond Issuance Costs-(85,195)--- Grants--209,051-- Gain (Loss) on Sale of Capital Assets8,899(80,126)15,152(4,963)(2,050) Total Nonoperating Revenues (Expenses)$ 271,743$ 8,991$ 354,085$ 217,636$ 82,440 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$ 2,922,811$ 2,646,788$ 3,080,438$ 3,796,135$ 3,621,987 Capital Contributions----10,000 Transfers In---352,104125,764 Transfers Out(824,743)(1,089,287)(1,113,264)(1,187,714)(1,157,445) CHANGE IN NET POSITION$ 2,098,068$ 1,557,501$ 1,967,174$ 2,960,525$ 2,600,306 Special Item-330,923--- CHANGE IN NET POSITION AFTER SPECIAL ITEM$ -$ 1,888,424$ -$ -$ - TOTAL NET POSITION (JANUARY 1)$ 32,969,053*$ 32,635,676$ 34,524,100$ 36,491,274$ 39,451,799 PRIOR PERIOD ADJUSTMENTS(2,431,445)---- TOTAL NET POSITION, RESTATED (JANUARY 1)$ 30,537,608$ -$ -$ - TOTAL NET POSITION (DECEMBER 31)$ 32,635,676$ 34,524,100$ 36,491,274$ 39,451,799$ 42,052,105 * As restated. - 19 - 284 CITY OF ELK RIVER, MINNESOTA Elk River Municipal Utilities - Electric System Statement of Cash Flows For Fiscal Years Ended December 31 20152016201720182019 CASH FLOWS FROM OPERATING ACTIVITIES Receipts From Customers and Users$ 32,460,951$ 34,621,945$ 35,680,481$ 40,429,994$ 37,495,498 Other Operating Cash Receipts326,880288,497332,851387,970515,237 Payments to Suppliers(25,682,803)(27,213,605)(28,749,027)(30,616,974)(29,007,568) Payments to Employees(2,003,949)(2,243,498)(2,473,566)(2,326,410)(2,618,202) Net Cash Provided by Operating Activities$ 5,101,079$ 5,453,339$ 4,790,739$ 7,874,580$ 6,384,965 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to Other Funds$ (824,743)$ (1,089,287)$ (1,113,264)$ (1,187,714)$ (1,157,445) Decrease (Increase) in Due From Other Funds-(396)(459)(2,517)5,900 Increase (Decrease) in Due to Other Funds45,62396,10634,9193,75568,173 Sale of Business Line-330,923--- Net Cash Provided (Used) by Noncapital Financing Activities$ (779,120)$ (662,654)$ (1,078,804)$ (1,186,476)$ (1,083,372) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of Capital Assets$ (2,345,925)$ (12,422,917)$ (3,423,737)$ (14,657,362)$ (2,824,703) Proceeds From Sale of Capital Assets8,89944,21815,15216,00015,000 Principal Paid on Capital Debt(672,000)(2,227,000)(706,000)(720,000)(940,000) Proceeds of Bonds Issued, Net of Issuance Costs and Premium on Bonds-11,545,329-10,338,289- Interest Paid on Capital Debt(136,360)(119,657)(356,558)(326,785)(640,370) Principal Paid on Promissory Note(191,508)(194,292)(195,216)(198,252)(200,916) Net Cash Provided (Used) by Capital and Related Financing Activities$ (3,336,894)$ (3,374,319)$ (4,666,359)$ (5,548,110)$ (4,590,989) CASH FLOWS FROM INVESTING ACTIVITIES Interest Received93,45188,69977,425335,761153,140 Net Increase (Decrease) in Cash and Cash Equivalents$ 1,078,516$ 1,505,065$ (876,999)$ 1,475,755$ 863,744 Cash and Cash Equivalents (January 1)$ 12,097,110$ 13,175,626$ 14,680,691$ 13,803,692$ 15,279,447 Cash and Cash Equivalents (December 31)$ 13,175,626$ 14,680,691$ 13,803,692$ 15,279,447$ 16,143,191 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and Investments$ 12,685,126$ 13,683,031$ 12,806,032$ 14,018,088$ 14,881,922 Restricted Cash and Investments490,500997,660997,6601,261,3591,261,359 Total Cash and Cash Equivalents$ 13,175,626$ 14,680,691$ 13,803,692$ 15,279,447$ 16,143,281 Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities Operating Income (Loss)$ 2,651,068$ 2,637,797$ 2,726,353$ 3,578,499$ 3,539,547 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Other Revenue Related to Operations283,987283,665344,558371,303568,635 Bad Debt Expense----11,828 Depreciation Expense1,922,3592,005,0932,046,9352,297,3492,856,258 (Increase) Decrease in Assets: Accounts Receivable(63,678)(71,825)(598,086)1,526,245(541,177) Due From Other Governments25,832---(53,398) Special assessments receivable----1,203 Inventories(12,434)198,183(156,314)144,759(177,027) Prepaid Items(3,092)(18,660)5,35617,79819,453 Deferred pension resources(272,949)(1,212,074)603,156358,253279,368 Increase (Decrease) In: Accounts Payable281,355(95,736)401,348(123,403)(66,123) Salaries Payable(72,884)22,61492715,17921,898 Net other postemployment benefits liability----92,537 Unearned Revenue-875(875)77,0593,000 Due to Other Governments10,716(26,936)49,951(13,222)9,479 Deposits Payable-235,294-- Customer deposits payable----(62,161) OPEB Liability8,1097,5046,5985,270- Compensated Absences Payable71,27425,477(16,326)49,52515,955 Net pension liability459,746(44,240)235,980(460,242)26,450 Deferred Inflows - Pensions(188,330)1,506,308(858,822)30,208(160,760) Net Cash Provided by Operating Activities$ 5,101,079$ 5,453,339$ 4,790,739$ 7,874,580$ 6,384,965 Noncash Capital and Related Financing Activities Amortization of Bond Premium$ 17,181$ -$ 50,796$ 48,645$ 51,471 Amortization of Deferred Charges on Refunding6,472-6,6846,6846,684 Book Value of Disposed Capital Assets----337,641 Capital Assets Purchased on Account--570,725757,087867,324 Contribution of Capital Assets--209,051352,104125,764 Contribution of Grants----10,000 Disposal of Capital Assets---757,087- Loss on disposal of capital assets---(20,961)(17,050) - 20 - 285 DEBT SERVICE AND COVERAGE CALCULATION Elk River Municipal Utilities -Electric Fund Net Revenues Available For Debt Service Fiscal Years Ended December 31, 2017, 2018and 2019 December 31, 2017December 31, 2018December 31, 2019 Operating Revenue$ 36,120,824 $ 38,779,905 $ 38,094,633 Operating Expense(33,394,471)(35,201,406)(34,555,086) Net Operating Income (Loss)$ 2,726,353 $ 3,578,499 $ 3,539,547 Add Back Depreciation 2,046,935 2,297,349 2,856,258 Add Other Income 424,101 701,413 727,649 Available for Debt Service$ 5,197,389 $ 6,577,261 $ 7,123,454 Average Annual Debt Service *$1,431,663 Coverage4.98 * Includes average annual debt service for the Series 2021B Bonds and the ParityBonds. Sources: The Utility’s Annual Financial Reports for the fiscal years ended December31,2017, 2018, and 2019. UTILITY REVENUE DEBT Est. Principal Date Original Final Outstanding of Issue Amount Purpose MaturityAs of 5-13-21 7-14-16 $9,755,000 Electric Revenue2-1-2036 $ 8,465,000 7-14-16 1,370,000 Electric Revenue Refunding 2-1-2022 240,000 9-26-18 10,000,000 Electric Revenue8-1-2048 9,600,000 5-13-21 12,620,000 Electric Revenue (the Series 2021B Bonds) 8-1-2051 12,620,000 Total $30,925,000 - 21 - 286 Estimated Calendar Year Debt Service Payments Including the Series 2021B Bonds Utility Revenue Debt Principal (a) YearPrincipal& Interest 2021 (at 5-13) $ 185,000 $ 490,091 2022 1,190,000 2,063,298 2023 1,025,000 1,817,684 2024 1,050,000 1,816,161 2025 1,080,000 1,818,516 2026 1,110,000 1,822,341 2027 1,140,000 1,827,316 2028 1,160,000 1,821,149 2029 1,185,000 1,820,599 2030 1,220,000 1,828,090 2031 1,245,000 1,823,181 2032 1,275,000 1,821,034 2033 1,310,000 1,821,702 2034 1,345,000 1,819,546 2035 1,385,000 1,820,131 2036 1,430,000 1,824,076 2037 775,000 1,136,876 2038 800,000 1,138,871 2039 820,000 1,135,061 2040 845,000 1,137,524 2041 870,000 1,139,039 2042 895,000 1,139,596 2043 920,000 1,138,731 2044 945,000 1,137,111 2045 970,000 1,134,149 2046 1,005,000 1,140,413 2047 1,035,000 1,140,606 2048 1,060,000 1,133,825 2049 535,000 576,250 2050 550,000 577,875 2051 565,000 579,125 (b) Total$30,925,000 $43,439,967 (a)Includes estimated debt service on the Series 2021B Bonds. (b) 33.5% of this debt will be retired within ten years. - 22 - 287 FUTURE FINANCING In addition to theissue discussed in the “Concurrent Financing” section herein, the City anticipates issuing approximately $1,800,000 of general obligation water utility revenue bonds within the next 90 days. LITIGATION Neither the Citynor the Commissionareaware of any threatened or pending litigation affecting the validity of the Series 2021B Bonds or the City's ability to meet its financial obligations. LEGALITY The Series 2021B Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Official Statement and will express no opinion with respect thereto. A legal opinionin substantially the form set out in Appendix I herein will be delivered at closing. TAX EXEMPTION At closing Kennedy & Graven, Chartered, of Minneapolis, Minnesota, Bond Counsel for the Series 2021B Bonds, will render an opinion that, at the time of their issuance and delivery to the original purchaser, under present federal and State of Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), the interest on the Series 2021B Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven, Charteredregarding other federal or state tax consequences caused by the receipt or accrual of interest on theSeries 2021B Bonds or arising with respect to ownership of the Series 2021B Bonds. Preservation of the exclusion of interest on the Series 2021B Bonds from federal gross income and state gross and taxable net income, however, depends upon compliance by the City with all requirements of the Internal Revenue Code of 1986, as amended, (the “Code”) that must be satisfied subsequent to the issuance of the Series 2021B Bonds in order that interest thereon be (or continue to be) excluded from federal gross income and state gross and taxable net income. The City will covenant to comply with requirements necessary under the Code to establish and maintain the Series 2021B Bonds as tax-exempt under Section103 thereof, including without limitation, requirements relating to temporary periods for investments and limitations on amounts invested at ayield greater than the yield on the Series 2021B Bonds. - 23 - 288 Original Issue Premium Certain maturities of the Series 2021B Bonds (the “Premium Bonds”) may be sold to the public at an amount in excess of their stated redemption price at maturity. Such excess of the purchase price of such Premium Bonds over the stated redemption price at maturity constitutes original issue premium with respect to such Premium Bonds. A purchaser of a Premium Bond must amortize any original issue premium over the term of such Premium Bond using constant yield principles, based on the purchaser’s yield to maturity. As original issue premium is amortized, the purchaser’s basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase in the gain (or adecrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Premium Bonds at a premium, whether at the time of initial issuance or subsequent thereto, should consult with their own tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Premium Bonds. Original Issue Discount Certain maturities of the Series 2021B Bonds (the “Discount Bonds”) may be sold at a discount from the principal amount payable on such Discount Bonds at maturity. The difference between the price at which a substantial amount of the Discount Bonds of a given maturity is first sold to the public (the “Issue Price”) and the principal amount payable at maturity constitutes “original issue discount” under the Code. The amount of original issue discount that accrues to a holder of a Discount Bond under section 1288 of the Code is excluded from federal gross income to the same extent that stated interest on such Discount Bond would be so excluded. The amount of the original issue discount that accrues with respect to a Discount Bond under section 1288 is added to the owner’s federal tax basis in determining gain or loss upon disposition of such Discount Bond (whether by sale, exchange, redemption or payment at maturity). Interest in the form of original issue discount accrues under section 1288 pursuant to a constant yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of original issue discount that accrues for any particular semiannual accrual period generally is equal to the excess of (1) the product of(a) one-half of the yield on such Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Bonds, over (2) the amount of stated interest actually payable. For purposes of the preceding sentence, the adjusted issue price is determined by adding to the Issue Price for such Bonds the original issue discount that is treated as having accrued during all prior semiannual accrual periods. If a Discount Bond is sold or otherwise disposed of between semiannual compoundingdates, then the original issue discount that would have accrued for that semiannual accrual period for federal income tax purposes is allocated ratably to the days in such accrual period. If a Discount Bond is purchased at a price that exceeds the sum ofthe Issue Price plus accrued interest and accrued original issue discount, the amount of original issue discount that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of such Bond. No opinion is expressed as to state and local income tax treatment of original issue discount. It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual, and may be deemed to accrue differently than under federal law. Holders of Discount Bonds should consult their tax advisors with respect to the computation and accrual of original issue discount for federal income tax purposes and with respect to the state and local tax consequences of owning such Discount Bonds. - 24 - 289 OTHER FEDERAL AND STATE TAX CONSIDERATIONS Propertyand Casualty Insurance Companies Property and casualty insurance companies are required to reduce the amount of their loss reserve deduction by the applicable percentage of the amount of tax-exempt interest received or accrued during the taxable year on certain obligations, including interest on the Series 2021B Bonds. Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including “net investment income.” Net investment income includes tax-exempt interest such as interest on the Series 2021B Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax imposed by Section 884 of the Code. A branch's earnings and profits may include tax-exempt municipal bond interest, such as interest on the Series 2021B Bonds. Passive Investment Income of S Corporations Passive investment income, including interest on the Series 2021B Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than a certain percentage of the gross receipts of such Scorporation is passive investment income. General The preceding is not a comprehensive list of all federal or State tax consequences which may arise from the receipt or accrual of interest on the Series 2021B Bonds. The receipt or accrual of interest on the Series 2021B Bonds may otherwise affect the federal income tax (or Minnesota income tax orfranchise tax) liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Series 2021B Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Series 2021B Bonds. NOTBANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The Series 2021B Bonds will not be designated as “qualified tax-exempt obligations” for purposes of Section265(b)(3) of the Code, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. Financial institutions are not generally entitled to a deduction for interest expenses allocable to the owners of tax-exempt obligations purchased after August 7, 1986. - 25 - 290 RATING Application for a rating of the Series 2021B Bondshas been made to Moody’s Investors Service (“Moody’s”), 7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York. If arating isassigned,itwill reflect only the opinion of Moody’s.Any explanation of the significance of the rating may be obtained only from Moody’s. There is no assurance that a rating, if assigned, will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of Moody’s, circumstances so warrant. A revision, suspension or withdrawal of aratingmay have an adverse effect on the market price of the Series 2021B Bonds. MUNICIPAL ADVISOR The City has retained Baker Tilly Municipal Advisors, LLC as municipal advisor in connection with certain aspects of the issuance of the Series 2021B Bonds (the “Municipal Advisor” or “BTMA”). BTMA is a registered municipal advisor and a wholly-owned subsidiary of Baker Tilly US, LLP (“BTUS”), an accounting firm and has been retained by the City to provide certain financial advisory services including, among other things, preparation of the deemed “nearly final” Preliminary Official Statement and the Final Official Statement (the “Official Statements”).The information contained in the Official Statements has been compiled from records and other materials provided by City officials and other sources deemed to be reliable. The Municipal Advisor has not and will not independently verify the completeness and accuracy of the information contained in the Official Statements. The Municipal Advisor’s duties, responsibilities and fees arise solely as Municipal Advisor to the City and they have no secondary obligations or other responsibility. Municipal Advisor Registration: BTMA is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board.As such, BTMA is providing certain specific municipal advisory services to the City, but is neither a placement agent to the City nor a broker/dealer and cannot participate in the underwriting of the Series 2021B Bonds. The offer and sale of the Series 2021B Bonds shall be made by the City, in the sole discretion of the City, and under its control and supervision. The City has agreed that BTMA does not undertake to sell or attempt to sell the Series 2021B Bonds, and will take no part in the sale thereof. Other Financial Industry Activities and Affiliations: BTUS is an advisory, tax and assurance firm headquartered in Chicago, Illinois. BTUS and its affiliated entities, have operations in North America, South America, Europe, Asia and Australia. BTUS is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 47 territories, with 33,600 professionals. Baker Tilly Investment Services, LLC (“BTIS”) is registered as an investment adviser with the Securities and Exchange Commission (“SEC”) under the Federal Investment Advisers Act of 1940.BTIS provides discretionary and non-discretionary investment management services to government and municipal entities.BTIS may provide advisoryservices to the clients of BTMA. - 26 - 291 Baker Tilly Capital, LLC (“BTC”), a wholly owned subsidiary of BTUS, is a limited purpose broker/dealer registered with the SEC and member of the Financial Industry Regulatory Authority (“FINRA”). BTC provides merger & acquisition, capital sourcing and corporate finance advisory services.BTC may provide transaction advisory services to clients of BTMA. Baker Tilly Financial, LLC (“BTF”), a wholly owned subsidiary of BTUS, is an investment adviser registered with the SEC. BTF provides both discretionary and non-discretionary portfolio management, , consulting and retirement plan management services to individuals and retirement plans. BTF may provide advisory services to the clients of BTMA. BTMA has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker-dealer, investment company, other investment adviser or financial planner, bank, law firm or other financial entity. CERTIFICATION The City and the Commission have authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of theSeries 2021BBonds and a Final Official Statement following award of the Series 2021B Bonds. The Purchaser will be furnished with a certificate signed by the appropriate officers of the Citystating that the Cityexamined each document and that, as of the respective date of each document and the date of such certificate, each document did not and does not contain any untrue statement of material fact or omit to state a material fact necessary, in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been IntentionallyLeft Blank) - 27 - 292 GENERAL INFORMATION CONCERNING THE CITY The Series 2021BBonds are special obligations of the City payable solely from net revenues of the City’s electric system and shall not constitute a debt for which the full faith and credit or taxing powers of the City will be pledged. The following information concerningthe City is provided for informational purposes only and not as a representation of security for the Series 2021B Bonds. General Information The City is the Sherburne County seat and is located approximately 30 miles northwest of the Minneapolis/SaintPaulmetropolitan area. The City encompasses an area of approximately 43.75square miles (28,000 acres). Population The City’s population trend is shown below. Percent Population Change 2019 U.S. Census Estimate 25,213 9.7% 2010 U.S. Census 22,974 39.7 2000 U.S. Census 16,447 47.6 1990 U.S. Census 11,143 64.2 1980 U.S. Census 6,785 -- Sources:United States Census Bureau, http://www.census.gov/. The City’s approximate population by age group for the past five years is as follows: Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2020/21 6,613 5,229 10,274 3,258 2019/20 6,581 5,197 10,233 3,154 2018/19 6,531 5,213 10,094 3,083 2017/18 6,500 5,194 10,145 3,011 2016/17 6,367 5,111 9,845 2,860 Sources:Environics Analytics, Claritas, Inc. and The Nielsen Company. Transportation U.S. Highways 10 and 169, State Highway 101, and Interstate 94 run through and/or adjacent to the City. City residents are served by the Anoka County/Blaine Airport, St. Cloud Regional Airport, and the Minneapolis/Saint Paul Regional Airport. Rail service is provided by Burlington Northern Santa Fe Railroad and the Northstar Commuter Rail, which has a station located in the City and provides a convenient connection to downtown Minneapolis and other communities throughout the region. Bus services are provided to City residents by Northstar Link Commuter Bus, Speco Charter Services, Vision of Elk River, and TriCAP. The Sherburne County Veteran’s Office also coordinates a transportation program, Sherburne County VA Medical Center Transportation, which provides veterans transportation to the Minneapolis and St. Cloud VA Medical Centers free of charge. - 28 - 293 Major Employers Approximate Number Employer Product/Service of Employees Independent School District No. 728 (Elk River) Education 2,100 Sherburne County County government 697 Guardian Angels Care CenterSkilled nursing facility374 Wal-Mart Stores, Inc.Retail store354 Coborn’s (Elk River/Big Lake/Princeton) Grocery store 265 Great River Energy Electric power distributor210 Cornerstone Auto Group Automobile Dealership200 Sportech, Inc. Thermoformed plastic products 185 Menards Retail home improvement173 Emerson Processing Management (Tescom Corporation) Pressure control devices/industrial valves 170 City of Elk RiverCity government 149 First National Financial ServicesFinancial services142 Morrell CompaniesFreight trucking112 Avalon Home Care Home health110 E&O Tools & Plastics, Inc. Plastic injection molding manufacturer110 Cretex, Inc Precast concrete products109 The Bank of Elk River Financial services107 Metal CraftSurgical & medical instruments105 Cub Foods Grocery store 100 Home DepotLumber and home improvement100 Alltool Pinnacle Design & ManufacturingMetal stampings99 Source:This does not purport to be a comprehensive list and is based on a November 2020 telephone survey of individual employers and Sherburne County, https://www.co.sherburne.mn.us/246/Major-Industries- Employers. Some employers do not respond to inquiries. Labor Force Data Annual Average January 2017 2018 2019 2020 2021 Labor Force: Sherburne County 51,363 51,700 52,364 51,780 51,168 State of Minnesota 3,057,358 3,071,433 3,109,647 3,094,701 2,985,747 Unemployment Rate: Sherburne County 3.7% 3.2% 3.6% 5.8% 5.9% State of Minnesota 3.4 2.93.26.25.1 Source:Minnesota Department of Employment and Economic Development, https://apps.deed.state.mn.us/lmi/laus/. 2020 data are preliminary. - 29 - 294 Retail Sales and Effective Buying Income (EBI) City of Elk River Data Year/Total RetailTotalMedian Report Year Sales ($000) EBI ($000) Household EBI 2020/21 $508,576 $725,138 $72,858 2019/20 559,875 782,088 78.326 2018/19 515,409 743,125 75,458 2017/18 494,983 691,908 70,030 2016/17 637,893 697,764 68,376 Sherburne County Data Year/Total RetailTotalMedian Report Year Sales ($000) EBI ($000) Household EBI 2020/21 $1,144,821 $2,691,916 $70,612 2019/20 1,242,464 2,955,197 75,680 2018/19 1,188,828 2,748,858 82,687 2017/18 1,063,365 2,519,649 67,255 2016/17 1,101,277 2,502,175 66,377 The 2020/21 Median Household EBI for the State of Minnesota was $62,120. The 2020/21 Median Household EBI for the United States was $56,093. Sources:Environics Analytics, Claritas, Inc. and The Nielsen Company. Building Permits New Single New Total Value Family Residential Commercial/Industrial (All Permits) Year Number Value Number Value 2021 (to 1-31) 5 $1,282,687 0 $-0- $13,272,340 2020 116 24,771,221 1 2,098,800 67,780,871 2019 117 29,667,252 5 28,650,994 70,313,307 2018 152 37,723,512 5 7,545,450 66,048,488 2017 113 23,851,938 8 53,925,200 106,982,873 2016 73 15,808,688 4 667,171 51,368,317 2015 74 15,941,551 8 16,299,690 57,694,602 2014 68 13,792,869 7 6,988,939 49,037,206 2013 82 15,182,066 2 4,225,000 38,440,129 2012 36 6,588,264 3 1,936,650 25,585,264 2011 11 2,264,011 0 -0- 20,719,402 Source:City of Elk River. - 30 - 295 Recent Development Recent development in 2020 has consisted mainly of residential development: Mulvaney Point Townhomes are nearly complete. The development includes four duplex townhomes and will be rented as market rate units. Infrastructure construction of Riverplace Second Addition, a 40 parcel single-family residential subdivision on Lake Orono, was completed in 2020 and home construction has begun. The sixth addition of Miske Meadows finished construction during the summer of 2020. The 45- parcel subdivision was the latest addition to the City’s largest subdivision, which is nearing completion of the 280+ approved preliminary plat. Most of the lots are under contract with national builders. The Seventh Addition of Miske Meadows will begin construction this spring. The subdivision includes 44 single-family lots and finished homes are expected to sell for $350k to $450k. Elk Ridge Estates, a 23-lot single-family subdivision, has been approved and will begin construction this spring. Prestigious Woodland Hills Fifth Addition has been platted and the 31-lot single-family subdivision will begin construction this spring. CommonBond Communities started construction of their 60-unit affordable housing project located in the Elk Ridge Center retail development along Highway 169. Tall Pines Second Addition will begin construction of their 28-unit detached townhome development later this spring. Two model homes are currently under construction. Commercial/Industrial development: Copart of Connecticut constructed phase one of their damaged vehicle sale/auction operation in the southeast corner of the City. Phase one is 20 acres and began with four employees. The second phase, which has been approved by the City Council allows forfull buildout at nearly 45 acres and 14 full-time employees. Shoot Steel began construction of a 20,000 SF light manufacturing facility on a vacant city-owned lot in our business park. Planet fitness completed their remodel of a 23,000 SF retail space to establish a new fitness facility in the Elk Park Center retail development. Aegir Brewing is remodeling an existing office building to facilitate an expansion of their brewing/taproom operation. Sportech, a leading manufacturer of cab components for utility task vehicles, has submitted an application for a 91,000 sf expansion totheir existing facility which is expected to add 55 new jobs. - 31 - 296 Financial Institutions* The following full service banks are located in the City: Deposits as of December 31, 2020 The Bank of Elk River $583,201,000 The First National Bank of Elk River361,412,000 Total$944,613,000 In addition, branch offices of MidwestOneBank; Pine River State Bank; TCF National Bank; U.S. Bank National Association; and Wells Fargo Bank, National Association are located throughout the City. * This does not purport to be a comprehensive list. Source:Federal Deposit Insurance Corporation, https://www.fdic.gov/. Health Care Services The following is a summary of health care facilities located in the City: FacilityLocation No. of Beds Guardian Angels Care Center (Nursing Home) City of Elk River 120 Source:Minnesota Department of Health, http://www.health.state.mn.us/. Education Public Education The following district serves the residents of the City: 2019/20* DistrictLocationGradesEnrollment I.S.D. No. 728 (Elk River) City of Elk River K-12 13,921 Spectrum High School (Charter) City of Elk River 6-12 786 * 2020/21 enrollment figures are not yet available. Source:Minnesota Department of Education, http://education.state.mn.us/mde/index.html. - 32 - 297 Non-Public Education City residents are also served by the following private schools: 2019/20* SchoolLocationGradesEnrollment St. Andrew’s Catholic School City of Elk River K-5 116 St. John’s Lutheran City of Elk River K-8 83 Mary Queen of Peace Catholic SchoolCity of Elk River K-5 43 Solid Rock Christian Academy City of Elk River K-12 17 * 2020/21 enrollment figures are not yet available. Source:The City and Minnesota Department of Education, http://education.state.mn.us/mde/index.html. Post-Secondary Education City residents have access to various colleges and universities located throughout the Minneapolis/Saint Paul metropolitan area approximately 30 miles southeast of the City. In addition, higher education opportunities are available at SaintCloud Technical and Community College and Saint Cloud State University in the City of Saint Cloud, Minnesota, located approximately 40 miles northwest of the City. Governmental Organization and Services The City of Elk River was organized as a municipality in 1977 and is a statutory city. The City’s governing body is the City Council, comprised of the Mayor and four Council members. The Mayor serves a four- year term of office; Council members are elected by ward to serve overlapping four-year terms. The following individuals comprise the current City Council: Expiration of Term John Dietz MayorDecember 31, 2022 Garrett ChristiansonCouncil Member, Ward 1 December 31, 2022 Matthew WestgaardCouncil Member, Ward 2 December 31, 2024 Michael BeyerCouncil Member, Ward 3December 31, 2024 Jennifer Wagner Council Member, Ward 4 December 31, 2022 The daily administration of City operations is the responsibility of the City Administrator, Calvin Portner, who has served in this position since October 2011. Ms.Lori Ziemer is the City’s Finance Director and has served in this position since May 2016. The City has 149 employees. Services In addition to providing general governmental services, the City provides a full range of other services, including (but not limited to) police and fire protection, building and other safety inspections, planning and zoning, economic development, environmental services, parks and recreation, library, street, snow removal, and infrastructure maintenance and repair. The City recently completed construction on a community event center that consists of two ice sheets, a turf fieldhouse, the senior activity center, event and meeting space, and a café. The City also provides municipal water, sewer, storm water, garbage, and electric services, and operates two off-sale liquor stores. - 33 - 298 Funds on Hand(as of January 31, 2021) General Fund $ 8,129,009 Special Revenue Funds 4,152,449 Debt Service Funds 8,450,856 Capital Project Funds 33,335,370 Enterprise Fund 13,061,145 Agency Funds ___519,745 Total Cash and Investments $67,648,574 Investments The City has a formal investment policy and all investments are made in accordance with Minnesota Statutes. The primary objectives of the City’s investment policy, in priority order, include safety, liquidity, return on investment, and maintaining the public’s trust. Permitted investments include repurchase agreements, United States securities (excluding high-risk mortgage-backed securities), the Minnesota Joint Powers Investment Trust, State and local securities, commercial paper, and time deposits. Guaranteed investment contracts and reverse repurchase agreements have specifically been excluded from the City’s investment policy. As per the City's investment policy, the Finance Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. As of January 31, 2021, the City had investments totaling $67,231,022 (includes money market funds). Labor Contracts The status of labor contracts in City is as follows: No. of Expiration Date Bargaining Unit Employees of Current Contract LELS, Local 231 (Police)24December 31, 2022 LELS, Local 271 (Police Sergeants)7 December 31, 2021 IUOE, Local 49* 22 December 31, 2021 Subtotal 53 Non-unionized employees 96 Total employees149 * Labor contract for street, park, and building maintenance employees. - 34 - 299 Employee Pensions All full-time employees and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF)and the Public Employees Police and Fire Fund (PEPFF),which are cost-sharing multiple-employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All new members must participate in the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by PEPFF. PERA provides retirement and disability benefits to its members, and to survivors upon death of eligible members. Benefits are established by State statute; vest after three years of service; and are based on a member’s highest average salary for any five successive years of allowable service, age, and a formula multiplier based on years of credit at termination of service. The City’s contributions to TRA and GERF are represented in the District’s Comprehensive Annual Financial Reports. Three Council members of the City are covered by the Public Employees Defined ContributionPlan (PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax- qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until the time of withdrawal. Plan benefits depend solely on the amounts contributed to the plan plus investment earnings less administrative expenses. An eligible elected official who chooses to participate in the plan contributes 5% of their salary, which is matched by the elected official’s employer. For salaried employees, employer contributions are determined by the employer and must be a fixed percentage of salary. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. PERA receives 2% of employer contributions and 0.25% of the assets in each member’s account annually for administering the plan. The City’s contributions to PEDCP are represented in the District’s Comprehensive Annual Financial Reports. The Elk River Fire Relief Association (the “Association”) is the administrator of a single employer public employee defined benefit retirement system established to provide benefits for members of the Elk River Fire Department (the “Fire Department”). The Association maintains a separate special fund to accumulate assets to fund the retirement benefits earned by the Fire Department’s membership. Funding for the Association is derived primarily from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter509 of Minnesota Statutes 1980). Funds are also derived from investment income. The financial requirements of the special fund are determined in accordance with Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual installments. The Association is comprised of volunteers and, therefore, members do not have any contribution requirements, but theCity has voluntarily contributed $30,000 for the past five years in addition to contributions made by the State of Minnesota. For more information regarding the liability of the City with respect to its employees, please reference “Note 9, Defined Pension Plans –State-Wide,” “Note 10, Defined Contribution Plan,” “Note 11, Defined Benefit Pension Plans – Fire Relief Association,” and “Required Supplementary Information” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2020 is not yet available.) GASB 68 The Government Accounting Standards Board (GASB) issued Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68) and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment to GASB 68, which revised existing standards for measuring and reporting pension liabilities for pension plans provided to City employees and require recognition of a liability equal to the City’s proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan's fiduciary net - 35 - 300 position. The City’s proportionate shares of the pension costs and the District’s net pension liability for GERF and TRA are represented in the City’s Comprehensive Annual Financial Report. For more information regarding GASB 68 with respect to the City, please reference please reference “Note9, Defined Pension Plans –State-Wide” and “Required Supplementary Information” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019, an excerpt of which is included as Appendix IV of this Official Statement.(The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2020 is not yet available.) Additional and detailed information about GERF’s net position is available in a separately-issued PERA financial report, which may be obtained at www.mnpera.org; by writing to PERA at 60 Empire Drive #200, Saint Paul, Minnesota, 55103-2088; or by calling 1-800-652-9026. Sources: City’s Comprehensive Annual Financial Reports. Other Post-Employment Benefits The Government Accounting Standards Board (GASB) has issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75), establishing new accounting and financial reporting requirements related to post-employment healthcare and other non-pension benefits (referred to as Other Postemployment Benefits or “OPEB”). The City provides other postemployment health insurance benefits for retired employees through two defined benefit plans: Municipal Retirees Health Plan (MRHP), a single-employer plan, and Utilities Retirees Health Plan (URHP), a multi-employer plan. Each plan provides benefits for eligible retirees and their dependents through the City’s group health insurance plans, which cover both active and retired members. Since the premium is a blended rate determined on the active and retiree population, the retirees are receiving an implicit rate subsidy. The MRHP and URHP do not issue publicly available financial reports. The following employees were covered by the benefit terms as of December 31, 2019: MRHPURHP Active plan members 12439 Active Plan Members Waiving Coverage 29 9 Inactive members receiving benefits 11 0 Inactive members waiving benefits 0 0 Total plan members 164 48 The City’s (MRHP) total OPEB liability was measured as of January 1, 2019, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of January 1, 2019. The Utilities (URHP) total OPEB liability was measured as of December 31, 2019, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of January 1, 2019. Components of the City’s OPEB liability and related ratios are represented in the District’s Comprehensive Annual Financial Report. For more information regarding GASB 75 with respect to the City and the Utilities, please reference “Note12, Post Employment Benefits Other Than Pensions” “and “Required Supplementary Information” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019, an excerpt of which is included as Appendix IV of this Official Statement.(The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2020 is not yet available.) Sources: City’s Comprehensive Annual Financial Reports. - 36 - 301 APPENDIX I PROPOSED FORM OF LEGAL OPINION 150 South Fifth Street Offices in Minneapolis, MN 55402 Minneapolis (612) 337-9300 telephone (612) 337-9310 fax Saint Paul www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer St. Cloud $12,620,000* Electric Revenue Bonds, Series 2021B City of Elk River Elk River Municipal Utilities Commission We have acted as bond counsel in connection with the issuance by the City of Elk River, Minnesota, and the Elk River Municipal Utilities Commission (collectively, the “Issuer”), of Electric Revenue Bonds, Series 2021B (the “Bonds”), originally dated the date hereof, and issued in the original aggregate principal amount of $12,620,000*. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1.The Bonds have been duly authorized and executed and are valid and binding special revenue obligations of the Issuer, enforceable against the Issuer in accordance with their terms, except as such enforcement may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors’ rights. 2.As provided in a resolution adopted by the Municipal Utilities Commission on April 13, 2021, and a concurring resolution of the City Council on March 15, 2021, the Bonds constitute a first and prior parity lien upon the net revenues of the electricutility plant and system in accordance with and subject to the provisions of the resolutions. 3.Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that the Issuer complywith all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 4.The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors’ rights generally and by equitable principles, whether considered at law or in equity. I-1 302 We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated at Minneapolis, Minnesota, May __, 2021. I-2 303 APPENDIX II CONTINUING DISCLOSURE UNDERTAKING $12,620,000* Electric Revenue Bonds, Series 2021B City of Elk River Elk River Municipal Utilities Commission Sherburne County, Minnesota May __, 2021 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Elk River, Minnesota (the “City”) and the Elk River Municipal Utilities Commission (the “Commission”) in connection with the issuance by the City of its Electric Revenue Bonds, Series 2021B (the “Bonds”), in the original aggregate principal amount of $12,620,000*. The Bonds are being issued under the terms of a resolution adopted by the Commission on March 9, 2021 (the “Authorizing Resolution”), a resolution adopted by the City Council of the City on March 15, 2021 (the “Approving Resolution”), and a resolution adopted by the Commission on April 13, 2021 (the “Award Resolution”). The Bonds are being delivered to ____________, _______________ (the “Purchaser”) on the date hereof. Pursuant to the Award Resolution, the City and the Commission have covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The City and the Commission hereby covenant and agree as follows: Section 1.Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City and the Commission for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2.Definitions. In addition to the defined terms setforth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the City and Commission pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means annual financial statements of the City and the Commission, prepared in accordance with GAAP as prescribed by GASB. “Bonds” means the Electric Revenue Bonds, Series 2021B, issued by the City in the original aggregate principal amount of $12,620,000. “City” means the City of Elk River, Minnesota, which is the obligated person with respect to the Bonds. “Commission” means the Elk River Municipal Utilities Commission created by the City to exercise exclusive jurisdiction, control, and management of the municipal light, power, and electric operations of the City. “Disclosure Certificate” means this Continuing Disclosure Certificate. II-1 304 “Disclosure Covenants” means the continuing disclosure obligations of the City and the Commission under this Continuing Disclosure Certificate. “Disclosure Information” means the financial information and operating data referred to in Section 3(a) of this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. “Final Official Statement” means the deemed Final Official Statement dated _________________, 2021, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. “ Financial Obligation” means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a Financial Obligation as described in clause (a) or (b). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “FiscalYear” means the fiscal year of the Commission. “GAAP” means generally accepted accounting principles for governmental units as prescribed by GASB. “GASB” means the Governmental Accounting Standards Board. “Holder” means the person in whose name a Bond is registered or a beneficial owner of such a Bond. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1300 I Street NW, Suite 1000, Washington, DC 20005. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means ___________, __________________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means Securities and Exchange Commission, and any successor thereto. II-2 305 Section 3.Provision of Annual Financial Information and Audited Financial Statements. (a)Not later than 12 months after the end of the Fiscal Year of the Commission, commencing with the Fiscal Year ending December 31, 2020, the Commission shall provide to the Repository, on behalf of itself and the City, the following financial information and operating data (the “Disclosure Information”): (i)The Audited Financial Statements of the Commission for such Fiscal Year, certified as to accuracy and completeness in all material respects by the Finance Manager of the Commission (the “Finance Manager”); (ii)The Audited Financial Statements ofthe City for such Fiscal Year, certified as to accuracy and completeness in all material respects by the Finance Director of the City (the “Finance Director”); (iii) To the extent not included in the financial statements referred to in clauses (i) and (ii), information of the type set forth in Section 4 below, which information may be unaudited, but is to be certified as to accuracy and completeness in all material respects, with respect to information relating to the Commission, by the Finance Manager of the Commission to the knowledge of the Finance Manager and, with respect to information relating to the City, by the Finance Director of the City to the knowledge of the Finance Director, which certifications may be based on the reliability of information obtained from governmental or other third party sources. The Annual Report and Disclosure Information may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4of this Certificate; provided that the Audited Financial Statements of the Commission and the Audited Financial Statements of the City may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. Any or all of the Disclosure Information may be incorporated, if it is updated as required by the Disclosure Covenants, by reference from other documents, including official statements of debt issues of the City, the Commission, or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Commission shall clearly identify each such other document so incorporated by reference. (b)If any part of the Disclosure Information can no longer be generated because the operations of the City or the Commission have materially changed or have been discontinued, such Disclosure Information need no longer be provided if the Commission includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City or Commission operations in respect of which data is not included in the Disclosure Information and the Commission determines that certain specified data regarding such replacement operations would be material, then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or the Disclosure Covenants are amended as permitted by this Certificate, then the Commission is to include in the next Disclosure Information to be delivered under the Disclosure Covenants, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (c)If the Commission is unable or fails to provide to the Repository an Annual Report and Disclosure Information by the daterequired in subsection (a), the Commission shall send a notice of that fact to the Repository and MSRB. (d)The Commission shall determine each year prior to the date for providing the Annual Report and Disclosure Information the name and address of each Repository. II-3 306 Section 4.Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1.Elk River Municipal Utilities 2.The Electric System 3.Utility Financial Statements 4.Debt Service and Coverage Calculation 5.Utility Revenue Debt In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Commission or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Commission shall clearly identify each such other document so incorporated by reference. Section 5.Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2.Non-payment related defaults, if material; 3.Unscheduled draws on debt service reserves reflecting financial difficulties; 4.Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6.Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB), or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9.Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; II-4 307 13.The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement toundertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14.Appointment of a successor or additional trustee or the change of name of a trustee, if material; 15.Incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and 16.Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties. (b)The Commission shall file a notice of such occurrence with the Repository or with the MSRB within 10 business days of the occurrence of the Material Event. (c)The Commission shall provide notice, in a timely manner to the Repository and the MSRB, of the occurrence of any of the following events or conditions: (i) the amendment or supplementing of the Disclosure Covenants in accordance with the terms of this Certificate, together with a copy of such amendment or supplement and any explanation provided by the Commissionunder the Disclosure Covenants; (ii) the termination of the obligations of the City and/or the Commission under the Disclosure Covenants in accordance with the terms of this Certificate; (iii) any change in the accounting principles under the terms of which the Audited Financial Statements of the City or the Commission constituting a portion of the Disclosure Information are prepared; and (iv) any change in the Fiscal Year of the City or the Commission. (d)Unless otherwise required by law and subject totechnical and economic feasibility, the Commission shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of such information. (e)The City shall provide notice, in a timely manner to the Repository and the MSRB, of the occurrence of any of the following events or conditions: (i) any amendment or supplement of the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Certificate, together with a copy of such amendment or supplement and any explanation provided by the City under the Disclosure Covenants; (ii) the termination of the obligations of the City under the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Certificate; (iii) anychange in the accounting principles under the terms of which the Audited Financial Statements constituting a portion of the Disclosure Information are prepared; and (iv) any change in the Fiscal Year of the City. (f)Unless otherwise required by law andsubject to technical and economic feasibility, the City shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the City's information. Section 6.EMMA.The SEC has designated EMMA as anationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Commission shall make all filings required under this Disclosure Certificate solely with EMMA. II-5 308 Section 7.Termination of Reporting Obligation. The Commission’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the redemption in full of all Bonds or payment in full of all Bonds. Section 8.Agent. The Commission may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9.Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Commission may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Commission delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which impose the continuing disclosure requirements of the Resolutions and the execution and delivery of this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery bythe Commission to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance with the Rule. Section 10.Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Commission from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Commission chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Commission shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11.Default. In the event of a failure of the Commission to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Commission to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Commission to comply with this Disclosure Certificate shall be an action to compel performance. Section 12.Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Commission, the Participating Underwriters, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. II-6 309 IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF ELK RIVER, MINNESOTA Mayor City Clerk ELK RIVER MUNICIPAL UTILITIES COMMISSION President Secretary II-7 310 APPENDIX III EXCERPT OFCITY’S2019 COMPREHENSIVE ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the City’s Comprehensive Annual Financial Report for fiscal year ended December31, 2019. (The City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2020 is not yet available.) The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. The City’sComprehensive Annual Financial Report for the year ending 2019 was awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of th the United States and Canada (GFOA). This was the 31consecutive year that the City has received this award. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. The Cityplans tosubmit its Comprehensive Annual Financial Report for the 2020 fiscal year to GFOA. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such Comprehensive Annual Financial Report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. III-1 311 III-2 312 III-3 313 III-4 314 III-5 315 III-6 316 III-7 317 III-8 318 III-9 319 III-10 320 III-11 321 III-12 322 III-13 323 III-14 324 III-15 325 III-16 326 III-17 327 III-18 328 III-19 329 III-20 330 III-21 331 III-22 332 III-23 333 III-24 334 III-25 335 III-26 336 III-27 337 III-28 338 III-29 339 III-30 340 III-31 341 III-32 342 III-33 343 III-34 344 III-35 345 III-36 346 III-37 347 III-38 348 III-39 349 III-40 350 III-41 351 III-42 352 III-43 353 III-44 354 III-45 355 III-46 356 III-47 357 III-48 358 APPENDIX IV EXCERPT OF THE UTILITY’S 2019ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the Utility’s Annual Financial Report for fiscal year ended December31, 2019. (The Utility’s Annual Financial Report for fiscal year ended December 31, 2020 is not yet available.)The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. IV-1 359 IV-2 360 IV-3 361 IV-4 362 IV-5 363 IV-6 364 IV-7 365 IV-8 366 IV-9 367 IV-10 368 IV-11 369 IV-12 370 IV-13 371 IV-14 372 IV-15 373 IV-16 374 IV-17 375 IV-18 376 IV-19 377 IV-20 378 IV-21 379 IV-22 380 IV-23 381 IV-24 382 IV-25 383 IV-26 384 IV-27 385 PROPOSAL SALE DATE: April 13, 2021 City of Elk River, Minnesota $12,620,000*Electric RevenueBonds, Series 2021B For the Series 2021B Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $12,418,080) plus accrued interest, if any, to the date of delivery. InterestDollarInterestDollar YearRate (%)Yield (%)PriceYearRate (%)Yield (%)Price 2022%%%2037%%% 2023%%%2038%%% 2024%%%2039%%% 2025%%%2040%%% 2026%%%2041%%% 2027%%%2042%%% 2028%%%2043%%% 2029%%%2044%%% 2030%%%2045%%% 2031%%%2046%%% 2032%%%2047%%% 2033%%%2048%%% 2034%%%2049%%% 2035%%%2050%%% 2036%%%2051%%% Designation of Term Maturities Years of Term Maturities In making this offer on the sale date ofApril 13, 2021we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement datedMarch 30, 2021, including the City’s right to modify the principal amount of the Series 2021B Bonds.(See “Terms of Proposal” herein.)In the event of failure to deliver these Series 2021B Bonds in accordance withsaid Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. By submitting this proposal, we confirm that we have an established industry reputation for underwriting municipal bonds suchas the Series 2021B Bonds. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST:$____________________________ TRUE INTEREST RATE:______________ % The Bidder will not will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ....................................................................................................................................................................................................... ........................................... The foregoing proposal has been accepted by the Commission. Attest: _______________________________ Date: ________________________________ * _______________________________ Preliminary; subject to change.Phone: 651-223-3000 Fax: 651-223-3046 Email: bondservice@bakertilly.com 386