07-048 RES
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EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: MAY 7, 2007
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Elk River, Sherburne County, Minnesota, was duly held at the City Hall on May 7,
2007, at 7:30 P.M., for the purpose, in part, of awarding the sale of a $300,500 General
Obligation Equipment Certificate, Series 2007B.
The following members were present: Mayor Klinzing, Councilmembers
Farber, Motin, and Zerwas
and the following were absent: Councilmember Gumphrey
Member Farber
introduced the following resolution and moved its adoption:
RESOLUTION NO. 07--.!!JL
RESOLUTION A WARDING THE SALE OF A $300,500 GENERAL OBLIGATION
EQUIPMENT CERTIFICATE, SERIES 2007B; FIXING ITS FORM AND SPECIFICATIONS;
DIRECTING ITS EXECUTION AND DELIVERY; AND PROVIDING FOR ITS PAYMENT
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
I. It is hereby determined:
(a) It is necessary and expedient to issue a $300,500 General Obligation
Equipment Certificate, Series 2007B (the "Certificate") pursuant to Minnesota Statutes,
Section 412.301, to finance the costs of the acquisition of certain items of capital (the
"Equipment");
(b) the Equipment has an expected useful life at least as long as the final
maturity of the Certificate, and the $300,500 amount of the Certificate does not exceed
0.25% ofthe market value of the taxable property in the City ($1,786,411,900 x 0.25% is
$4,466,030); and
(c) the City is authorized to issue the Certificates pursuant to Minnesota
Statutes, Section 475.60, Subdivision 2(1), in such manner and on such terms and
conditions as determined by the City Council.
2. The City shall forthwith issue and sell the Certificate which shall be issued as a
single, fully registered obligation without interest coupons, shall mature, bear interest and be
subject to redemption as provided in the form of the Certificate.
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3. The offer of The Bank of Elk River, in Elk River, Minnesota (the "Purchaser"), to
purchase the Certificate is hereby accepted, such offer being to purchase the Certificate at a price
of par ($300,500), the Certificate to be subject to the terms and conditions provided herein.
4. Principal and interest shall be payable by the Finance Director.
5. The Certificate shall be substantially the following form:
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
No. R-1
$300,500
GENERAL OBLIGATION EQUIPMENT CERTIFICATE, SERIES 2007B
THE CITY OF ELK RIVER, SHERBURNE COUNTY, MINNESOTA (the "City"),
acknowledges itself to be indebted and, for value received, hereby promises to pay to The Bank
of Elk River, or its registered assigns (the "Registered Owner"), the Principal Sum of THREE
HUNDRED THOUSAND FIVE HUNDRED DOLLARS ($300,500) on February I in the years
and principal amounts, respectively, as follows:
e Year Principal Amount
2008 $100,166.67
2009 100,166.67
2010 100,166.67
or on any earlier date on which the principal amounts of this Certificate may be and shall have
been duly called for prepayment, and to pay interest to the Registered Owner from the date
hereof on the principal amounts hereof until the same are paid at the rate of five and twenty
hundredths percent (5.20%) per annum, interest to maturity being payable on February 1, 2008,
and on each February 1 and August 1 thereafter (the "Interest Payment Dates"). Interest shall be
calculated on the basis of a 360-day year consisting of twelve months of thirty days each. The
Finance Director will pay the interest due on this Certificate on each Interest Payment Date by
mailing or deli vering a check or draft made payable to the person that was the Registered Owner
at the end of the day preceding such Interest Payment Date. Both principal of and interest on this
Certificate are payable in any coin or currency of the United States of America which on the date
of payment is legal tender for public and private debts. At the time of final payment of all
principal of and interest on this Certificate, the Registered Owner shall surrender this Certificate
to the Finance Director.
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This Certificate is subject to prepayment at the option of the City at any time, in whole or
in part, at par plus accrued interest to the date of prepayment, upon prior written notice to the
Registered Owner.
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This Certificate is issued pursuant to and in full conformity with the Constitution and
laws ofthe State of Minnesota for the purpose of providing funds to finance costs of acquiring
certain items of capital equipment of the City. This Certificate constitutes a general obligation of
the City, and to provide moneys for the prompt and full payment of the principal hereof and the
interest thereon, as the same become due, the full faith and credit and taxing powers ofthe City
have been and are hereby irrevocably pledged.
This Certificate may be assigned but upon such assignment the assignor shall promptly
give written notice thereof to the City at the office of the Finance Director, and the assignee shall
surrender this Certificate to the Finance Director either in exchange for a new fully registered
Certificate or for transfer of this Certificate on the registration records. Each such assignee shall
take this Certificate subject to this condition. The City shall treat the Registered Owner as the
absolute owner of this Certificate for purposes of paying the principal of and interest on this
Certificate and for all other purposes whatsoever.
This Certificate has not been designated by the City as a "qualified tax-exempt
obligation" for purposes of Section 265(b )(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be performed precedent to and in the issuance of this Certificate have been done, have
happened, and have been performed in regular and due form, time, and manner as required by
law; and that this Certificate, together with all other indebtedness of the City outstanding on the
date hereof, does not cause the indebtedness of the City to exceed any constitutional or statutory
limitation thereon.
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, Minnesota, by its
City Council, has caused this Certificate to be executed by the manual signatures of its Mayor
and Administrator; has caused the official seal of the City to be impressed upon this Certificate;
and has caused this Certificate to be dated June I, 2007.
Administrator
Mayor
(SEAL)
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CERTIFICATE OF REGISTRATION
It is hereby certified that the foregoing Certificate was as of the latest date specified
below registered in the name of the last Registered Owner noted below and that, at the request of
said Registered Owner of this Certificate, the undersigned Finance Director has as of said
applicable date registered the Certificate as to principal and interest in the name of such
Registered Owner, as indicated in the registration blank below, on the books kept by the
undersigned for such purposes.
NA..1\1E OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF
FINANCE DIRECTOR
The Bank of Elk River
June 1, 2007
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REGISTER OF PARTIAL PAYMENTS
The installment of principal amount of the attached Certificate has been prepaid on the
dates and in the amounts noted below:
DATE
A.MOlJNT
SIGNATURE OF
REGISTERED OWNER
SIGNATURE OF
FINANCE DIRECTOR
If a notation is made on this register, such notation has the effect stated in the attached
Certificate. Partial payments do not require the presentation ofthe attached Certificate to the
Finance Director and a Registered Owner could fail to note the partial payment here.
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6. The Finance Director shall obtain a copy of the proposed approving legal opinion
ofbond counsel for the Certificate, Briggs and Morgan, Professional Association, St. Paul,
Minnesota, and shall cause such opinion to be filed in the offices of the City.
7. The Certificate shall be executed on behalf of the City by the manual signatures of
the Mayor and the Administrator and shall be duly registered by the manual signature of the
Finance Director as Registrar. The official seal of the City shall be impressed upon the
Certificate. The Certificate, when fully executed and sealed, shall be delivered by the Finance
Director to the Purchaser upon receipt of the purchase price thereof, and the Purchaser shall not
be obligated to see to the proper application thereof.
8. The proceeds of the Certificate shall be deposited in and expended from a
separate capital account or subaccount of the City to provide financing for the Equipment. The
Finance Director shall establish and maintain a separate debt service account or subaccount (the
"Debt Service Account") for the payment of the Certificate. The Debt Service Account shall be
maintained to pay the debt service on the Certificate and any additional obligations of the City
which may hereafter be made payable therefrom.
9. The Debt Service Account shall be held in trust by the City for the benefit of the
Registered Owner from time to time ofthe Certificate, as hereinafter provided. Until the
principal of and interest on the Certificate are paid, or until the Certificate is otherwise
discharged as hereinafter provided, there shall be credited to and maintained in the Debt Service
Account: (a) the proceeds of the general ad valorem taxes levied by the City for the purpose of
paying the principal of and interest on the Certificate, including the taxes levied in 2006 for
collection in 2007, in anticipation of the issuance of the Certificate; and (b) any other funds
which are properly available and are appropriated by the Council to the Debt Service Account.
The aforesaid funds, when deposited in the Debt Service Account, shall be used only and
exclusively for, and are hereby pledged to, the payment of the principal of and interest on the
Certificate, when due, and such other obligations ofthe City as may be made payable therefrom.
If any payment of principal or interest shall become due when there are not sufficient funds in
the Debt Service Account to pay the same, the Finance Director shall pay such principal or
interest from the general fund or other available fund of the City, and such fund shall be
reimbursed for such advances from the proceeds of the ad valorem taxes levied for such purpose,
when collected.
10. The full faith and credit and taxing powers of the City are hereby pledged to the
payment of the principal of and interest on the Certificate, and in the event of any current or
anticipated deficiency of funds in the Debt Service Account of amounts needed to make any such
payment, when due, the City Council shall levy ad valorem taxes on all taxable property in the
City in the amount of such deficiency.
11. To provide moneys for payment of the principal of and interest on the Certificate
there is hereby levied upon all of the taxable property in the City a direct annual ad valorem tax
which shall be spread upon the tax rolls and collected with and as part of other general property
taxes in the City for the years and in the amounts as follows:
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Year of
Tax Levv
Year of
Tax Collection
Amount
2007
2008
2008
2009
$116,113
110,644
The foregoing tax levies shall be irrepealable so long as the Certificate is outstanding and
unpaid, provided that the City reserves the right and power to reduce the levies in the manner and
to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3.
In addition, the City has heretofore levied in the year 2006 for collection in the year
2007, a direct ad valorem tax in the amount of $120,000, which shall be spread upon the tax rolls
and collected with and as part of other general property taxes in the City.
12. It is hereby determined that the funds available to the Debt Service Account
pursuant to this Resolution (including from the ad valorem tax levies herein and heretofore made
and other funds appropriated by the council for payment of debt service on the Certificate) will
be in amounts not less than five percent in excess of the amount needed to meet, when due, the
principal of and interest on the Certificate.
13. The Finance Director is directed to file a certified copy of this Resolution with the
County Auditor of Sherburne County, Minnesota, together with such other information as the
County Auditor shall require, and to obtain the County Auditor's Certificate that the Bonds have
been entered in the County Auditor's Bond Register and the tax levy required by law has been
made.
14. The officers of the City are hereby authorized and directed to prepare and furnish
upon request to the Purchaser and to the attorneys approving the Certificate, certified copies of
proceedings and records of the City relating to the Certificate and to the financial condition and
affairs of the City, and to furnish such other certificates, affidavits, and transcripts as may be
required to show facts within their know ledge or as shown by the books and records in their
custody and under their control relating to the validity and marketability of the Certificate, and
such instruments, including any heretofore furnished, shall be deemed representations of the City
as to the facts stated therein.
15. The City covenants and agrees with the Registered Owner from time to time of
the Certificate that the City will not take or permit to be taken by any of its officers, employees,
or agents any action which would cause the interest on the Certificate to become generally
subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations issued thereunder, as now existing or as hereafter amended or proposed and in effect
at the time of such action, and that the City will take, or it will cause to be taken, all affirmative
actions within its power which may be necessary to insure that such interest will not become
subject to income taxation under the Code.
Without limitation of the foregoing, the City shall not enter into any lease, use agreement,
management or operation contract or other agreement respecting the Equipment or any portion
thereof which would adversely affect the exemption from federal income tax of the interest on
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the Certificate, taking into account and observing the requirements of Revenue Procedure 97-13
of the Internal Revenue Service and any similar or other applicable revenue procedures or
guidelines relating to leases, management contracts and service contracts involving facilities
financed with tax-exempt obligations.
16. The City shall comply with requirements necessary under the Code to establish
and maintain the exclusion from gross income under Section 103 of the Code of the interest on
the Certificate, including without limitation: (a) requirements relating to temporary periods for
investments, (b) limitations on amounts invested at a yield greater than the yield on the
Certificate, and ( c) the rebate of excess investment earnings to the United States. The City
expects to satisfY the six-month expenditure exemption for gross proceeds of the Certificate as
provided in Section 1.148-7(c) of the Regulations. The Mayor and or Administrator are hereby
authorized and directed to make such elections as to arbitrage and rebate matters relating to the
Certificate as they deem necessary, appropriate or desirable in connection with the Certificate,
and all such elections shall be, and shall be deemed and treated as, elections of the City.
17. The City does not designate the Certificate as a "qualified tax-exempt obligation"
within the meaning of Section 265(b )(3) ofthe Code.
18. When the Certificate has been discharged as provided in this paragraph, all
pledges, covenants and other rights granted by this Resolution to the registered owner ofthe
Certificate (with respect to the obligation thereof so defeased) shall, to the extent permitted by
law, cease. The City may at any time discharge any or all of such obligation(s) with respect to
the Certificate, subject to the provisions oflaw now or hereafter authorizing or regnlating such
action, by depositing irrevocably in escrow, with a suitable institution qualified by law as an
escrow agent for this purpose, cash or securities which are backed by the full faith and credit of
the United States of America, bearing interest payable at such times and at such rates and
maturing on such dates and in such amounts as shall be required and sufficient, subject to sale
and/or reinvestment in like securities, to pay said obligation(s), which may include any interest
payment on such Certificate and/or principal amount due thereon at a stated maturity (or if
irrevocable provision shall have been made for permitted prior redemption of such principal
amount, at such earlier redemption date).
19. With respect to the Equipment, the City has complied and will continue to comply
with the "Reimbursement Regulations" provided in United States Treasury Regulations Section
1.150-2. In particular, except where the following may not be required by said Regulations (e.g.,
with respect to certain "preliminary expenditures"), to the extent that any of the proceeds of the
Certificate will be used to reimburse the City for a cost of the Equipment theretofore paid and
temporarily fmanced by the City out of other City funds, prior to the initial payment thereof (or
within applicable time limits thereafter) the City has made or will have made a duly qualifYing
statement of its official intent to bond for such costs; otherwise, the proceeds of the Certificate
are to be used for initial payment, and not for such reimbursement, of costs of the Equipment.
20. The Council hereby finds that the Certificate is exempt from continuing
disclosure requirements of Rule 15c2-12 of the Securities and Exchange Commission because
the Certificate is issued in the aggregate principal amount of less than $1,000,000.
Consequently, the City is not covenanting to provide and will not provide annual financial
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information, notices of certain material events or any other disclosure or information which
would otherwise be required by that Rule.
21. If any section, paragraph or provision of this resolution shall be held to be invalid
or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or
provision shall not affect any of the remaining provisions of this resolution.
The motion for the adoption of the foregoing resolution was duly seconded by member
Z erwas and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
Mayor Klinzing, Councilmembers Farber, Motin, and Zerwas
and the following voted against the same:
None
Whereupon the resolution was declared duly passed and adopted.
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13065 Orono Parkway
Elk River, MN 55330
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting City Clerk of the City of
Elk River, Minnesota, DO HEREBY CERTIFY that I have compared the attached and
foregoing extract of minutes with the original thereof on file in my office, and that the
same is a full, true and complete transcript ofthe minutes of the City Council, duly called
and held on the date therein indicated, insofar as such minutes relate to awarding the sale
of$300,500 General Obligation Equipment Certificates, Series 2007B.
WITNESS my hand and the seal of said City this 8'" day of May, 2007,/.. .
---1 / {lJ
~ L--../,I
Tina Allard, City Clerk
(SEAL)
Phone: 763.635.1000
Fax: 763.6351090
www.ci.elk-river.mn.lls