07-082 RES• EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: October 15, 2007
Pursuant to due call and notice thereof, a regular or special meeting of the City Council of
the City of Elk River, Minnesota, .was duly held at the City Hall on October 15, 2007, at 6:30 P.M.
The following members were present:
Mayor Rlinzing, Councilmembers Zerwas, Gumphrey, Motin and Farber
and the following were absent: None
Member Motin introduced the following resolution and moved its adoption:
RESOLUTION 07- 82
RESOLUTION AUTHORIZING A CONTINUING DISCLOSURE UNDERTAKING
WITH REGARD TO THE ISSUANCE OF $ 10,000,000 GENERAL OBLIGATION
BONDS, SERIES 2007 OF THE ECONOMIC DEVELOPMENT AUTHORITY FOR
THE CITY OF ELK RIVER, MINNESOTA
A. WHEREAS, the Economic Development Authority for the City of Elk River,
Minnesota, a body corporate and politic (the "Authority"), will provide for the acquisition and
betterment of a recreational facility (the "Project") to be leased to the YMCA; and
B. WHEREAS, at the request of the Authority, on October 15, 2007, the Council
adopted and approved Ordinance No. 13(the "Ordinance"), authorizing the issuance of general
obligation bonds of the City by the Authority in an aggregate principal amount not exceeding
$10,000,000. The Ordinance was duly adopted, after following all applicable procedures in relation
to its approval prescribed by the laws of the State of Minnesota. The Ordinance has not been
repealed, suspended or amended and remains in full force and effect on the date hereof. In order to
finance the Project, the Authority will issue its $10,000,000 aggregate principal amount of General
Obligation Bonds, Series 2007, dated November 8, 2007 (the "Bonds"), pursuant to a resolution
adopted by the Board of Commissioners of the Authority on October 15, 2007 (the "Resolution");
and the Bonds are hereby found and determined by the Council to be within the authorization and
limits prescribed by the Ordinance.
C. WHEREAS, the Authority is the issuer of the Bonds, however, the City is an
obligated person under the provisions of Rule 15c2-12 (the "Rule") promulgated by the Securities
and Exchange Commission pursuant to the Securities and Exchange Act of 1934, as amended, and
the City is therefore subject to continuing disclosure requirements under the Rule and accordingly,
the City hereby agrees to enter into a Continuing Disclosure Undertaking (the "Continuing
Disclosure Undertaking").
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
• Minnesota, as follows:
• 1. Continuing Disclosure. The City is the sole obligated person with respect to the
Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 {the "Rule"),
promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended, and the Continuing Disclosure Undertaking to:
(a) provide or cause to be provided to each nationally recognized municipal securities
information repository ("NRMSIR") and to the appropriate state information depository ("SID"), if
any, for the State of Minnesota, in each case as designated by the Commission in accordance with
the Rule, certain annual financial information and operating data in accordance with the Continuing
Disclosure Undertaking.
(b) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the
Municipal Securities Rulemaking Board ("MSRB") and (ii) the SID, notice of the occurrence of
certain material events with respect to the Bonds in accordance with the Continuing Disclosure
Undertaking.
(c) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the
MSRB and (ii) the SID, notice of a failure by the City to provide the annual financial information
with respect to the City described in the Continuing Disclosure Undertaking.
(d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph
and in the Continuing Disclosure Undertaking are intended to be for the benefit of the holders and
any other beneficial owners of the Bonds and shall be enforceable on behalf of such holders and
• beneficial owners; provided that the right to enforce the provisions of these covenants shall be
limited to a right to obtain specific enforcement of the City's obligations under the covenants.
The Mayor and Administrator, or any other officer of the City authorized to act in their
place (the "Officers") are hereby authorized and directed to execute on behalf of the City the
Undertaking in substantially the form on file with the Administrator, subject to such modifications
thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required
by the Purchaser of the Bonds and (iii) acceptable to the Officers.
2. Furnishing of Certificates and Proceedings. The Mayor, Administrator and other
officers of the City are authorized and directed to prepare and furnish to the purchaser of the Bonds
and bond counsel, certified copies of all proceedings and records of the City relating to the Bonds,
and such other affidavits and certificates as may be required to show the facts relating to the legality
of the Bonds as such facts appear from the books and records in the officers' custody and control or
as otherwise known to them; and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall constitute representations of the City as to the truth of all statements
contained therein.
The motion for the adoption of the foregoing resolution was duly seconded by member
Farber ,and upon vote being taken thereon the following voted in favor thereof:
Mayor Klinzing, Councilmembers Zerwas, Gumphrey, Motin, and Faber
and the following voted against the same:
. None
whereupon the resolution was declared duly passed and adopted.
RESOLUTION 07-82
EXTRACT OF MINUTES OF A MEETING OF THE
BOARD OF COMMISSIONERS OF THE
ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER,
MINNESOTA
HELD: OCTOBER 15, 2007
Pursuant to due call and notice thereof, a special meeting of the Board of Commissioners
of the Economic Development Authority for the City of Elk River, Sherburne County,
Minnesota, was duly held at the City Hall, in the City of Elk River on October 15, 2007 at 6:30
P.M. for the purpose of awarding the sale of $10,000,000 General Obligation Bonds, Series 2007
of the Authority.
The following members were present: Jeff Gongoll, Pat Dwyer, Larry Farber, Stephanie
Klinzing, Paul Motin, Dan Treite and Nick Zerwas;
and the following were absent: none.
Member Dwyer introduced the following resolution and moved its adoption:
RESOLUTION ACCEPTING OFFER ON THE SALE OF $10,000,000
GENERAL OBLIGATION BONDS, SERIES 2007, PROVIDING FOR THEIR ISSUANCE
AND LEVYING A TAX FOR THE PAYMENT THEREOF
A. WHEREAS, the Board of Commissioners of the Economic Development
Authority for the City of Elk River, Minnesota (the "Authority"), has heretofore determined that
it is necessary and expedient to issue its $10,000,000 General Obligation Bonds, Series 2007 (the
"Bonds") pursuant to Minnesota Statutes, Sections 469.102 and Chapter 475 to provide funds to
finance the acquisition and betterment of a recreational facility within the City (the "Project");
and
B. WHEREAS, the City of Elk River, Minnesota (the "City") has, by its Ordinance
No. 07-13 adopted on October 15, 2007 (the "Ordinance") in accordance with Minnesota
Statutes, Section 469.060, consented to the pledge of its full faith, credit and resources to the
payment of the Bonds; and
G WHEREAS, offers to purchase the Bonds were solicited on behalf of the
Authority by Ehlers and Associates, Inc.; and
D. WHEREAS, it is in the best interests of the Authority that the Bonds be issued in
book-entry form as hereinafter provided; and
E. WHEREAS, the following offers were received, opened and recorded at the
offices of Ehlers and Associates, Inc. ("Ehlers") at 12:00 noon this same day:
Bidder Interest Rate Net Interest Cost
(See attached)
2084694x1
BID TABULATION
$10,000,000 General Obligation Bonds, Series 2007
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, MINNESOTA
SALE: October 15, 2007
AWARD: J.P. MORGAN SECURITIES, INC.
RATING: MBIA Insured (Moody's Investors Service, Inc. "Aaa")'' BBI: 4.48%
UNDERLYING RATING: Moody's Investors Service, lnc. "Aa3"
NET TRUE
NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST
(February 1) YIELD COST RATE
J.P. MORGAN SECURITIES, INC.
New York, New York
STIFEL, NICOLAUS & CO., INC.
Minneapolis, Minnesota
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029'
2030**
2031 "`~
2032*"*
2033""
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
3.800%
3.800%
3.800%
3.850%
3.900%
3.950%
4.000%
4.050%
4.050%
4.100%
4.125%
4.150%
4.200%
4.250%
4.250%
4.300%
4.300%
4.300%
3.850%
3.850%
3.850%
3.900%
3.950%
4.000%
4.000%
4.050%
4.100%
4.100%
4.125%
4.150%
4.150%
4.200%
4.250%
4.250%
4.300%
4.300%
3.770% $9,951,404.15 $7,475,970.74 4.1780%
3.800%
3.820%
3.850%
3.900%
3.950%
4.000%
4.050%
4.070%
4.100%
4.125%
4:150%
4.200%
4.280%
4.280%
4.320%
4.320%
4.320%
MBIA insurance purchased by J.P. Morgan Securities, Inc.
"*$1,345,000 Term Bond due 2030 with mandatory redemption in 2029
"*"$2,265,000 Term Bond due 2033 with mandatory redemption in 2031-2032
$9,944,499.28 $7,479,194.16 4.1835%
E H L E R S 3060 Centre Pointe Drive, Roseville, MN 55113
651.697.8500 fax 651.697.8555 www.ehlers-inc.com
& ASSOCIATES I N C Offices in Roseville. MN Brookfield. WI and Lisle. IL
$10;000,000 General Obligation Bonds, Series 2007
Economic Development Authority of the City of Elk River, Minnesota
Page 3
NET TRUE
NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST
(February 1) YIELD COST RATE
GRIFFIN, KUBIK, STEPHENS & THOMPSON,
INC.
Chicago, Illinois
STEPHENS INC.
Little Rock, Arkansa
CRONIN & COMPANY, INC.
Minneapolis, Minnesota
UBS INVESTMENT BANK
Dallas, Texas
CITIGROUPGLOBAL MARKETS, INC.
Chicago, Illinois
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
3.800%
3.800%
3.800%
3.800%
3.900%-
3.900%
4.000%
4.000%
4.000%
4.100%
4.125%
4.125%
4.125%
4.200%
4.300%
4.300%
4.300%
4.300%
4.000%
4.000%
4.000%
4.000%
4.000%
4.000%
4.000%
4.100%
4.10.0%
4.150%
4.150%
4.200%
4.250%
4.300%
4.300%
4.300%
4.350%
4.350%
4.000%
4.000%
4.000%
4.000%
4.000°f~
4.000%
4.000%
4.050%
4.100%
4.100%
4.150%
4.200%
4.300%
4.300%
4.350%
4.350%
4.350%
4.350%
$9,901,000.00 $7,501,126.66 4.2045%
$9,936,917.65 $7,589,448.04 4.2479%
$9,930,089.85 $7,610,046.31 4.2603%
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the
Economic Development Authority for the City of Elk River, Minnesota, as follows:
1. Acceptance of Offer. The offer of J.P. Moran Securities, Inc., New York, New
York (the "Purchaser"), to purchase the Bonds in accordance with the terms of proposal, at the
rates of interest hereinafter set forth, and to pay therefor the sum of $9,951,404.15, plus interest
accrued to settlement, is hereby found, determined and declared to be the most favorable offer
received and is hereby accepted, and the Bonds are hereby awarded to the Purchaser. The
Executive Director is directed to retain the deposit of the Purchaser and to forthwith return to the
bidders any good faith checks or drafts.
2. (a) Terms of Bonds; Original Issue Date; Denominations; Maturities; Term
Bond Options. The Bonds shall be dated November 8, 2007, as the date of original issue, shall
be issued forthwith on or after such date in fully registered form, shall be numbered from R-1
upward in the denomination of $5,000 each or in any integral multiple thereof of a single
maturity and shall mature on February 1 in the years and amounts as follows:
Year Amount Year Amount
2016 $380,000 2025 $550,000
2017 395,000 2026 575,000
2018 410,000 2027 600,000
2019 430,000 2028 625,000
2020 445,000 2029 655,000
2021 465,000 2030 690,000
2022 485,000 2031 720,000
2023 505,000 2032 755,000
2024 525,000 2033 790,000
For the purpose of complying with Minnesota Statutes, Sections 469.102 and 475.54,
subdivision 1, the maturity schedule for the Bonds has been combined with the maturity schedule
of the $645,000 G.O. Equipment Certificates, Series 2005D, $437,000 G.O. Equipment
Certificates, Series 2006B, $3,220,000 G.O. Capital Improvement Bonds, Series 2006C and the
$300,000 G.O. Equipment Certificates, Series 2007B, as permitted by Minnesota Statutes,
Section 475.54, subdivision 2.
As may be requested by the Purchaser, one or more term Bonds may be issued having
mandatory sinking fund redemption and final maturity amounts conforming to the foregoing
principal repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
(b) Book Entr~Only System. The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York or any of its successors or its
successors to its functions hereunder (the "Depository") will act as securities depository for the
Bonds, and to this end:
2084694v1 2
(i) The Bonds shall be initially issued and, so long as they remain in book
entry form only (the "Book Entry Only Period"), shall at all times be in the form of a
separate single fully registered Bond for each maturity of the Bonds; and for purposes of
complying with this requirement under paragraphs 5 (with respect to redemption) and 10
(with respect to registration, transfer and exchange) Authorized Denominations for any
Bond shall be deemed to be limited during the Book Entry Only Period to the outstanding
principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar in the name of CEDE & CO., as the nominee
(it or any nominee of the existing or a successor Depository, the "Nominee").
(iii) With respect to the Bonds neither the Authority nor the Bond Registrar
shall have any responsibility or obligation to any broker, dealer, bank, or any other
financial institution for which the Depository holds Bonds as securities depository (the
"Participant") or the person for which a Participant holds an interest in the Bonds shown
on the books and records of the Participant (the "Beneficial Owner"). Without limiting
the immediately preceding sentence, neither the Authority, nor the Bond Registrar, shall
have any such responsibility or obligation with respect to (A) the accuracy of the records
of the Depository, the Nominee or any Participant with respect to any ownership interest
in the Bonds, or (B) the delivery to any Participant, any Owner or any other person, other
than the Depository, of any notice with respect to the Bonds, including any notice of
redemption, or (C) the payment to any Participant, any Beneficial Owner or any other
person, other than the Depository, of any amount with respect to the principal of or
premium, if any, or interest on the Bonds, or (D) the consent given or other action taken
by the Depository as the Registered Holder of any Bonds (the "Holder"). For purposes of
securing the vote or consent of any Holder under this Resolution, the Authority may,
however, rely upon an omnibus proxy under which the Depository assigns its consenting
or voting rights to certain Participants to whose accounts the Bonds are credited on the
record date identified in a listing .attached to the omnibus proxy.
(iv) The Authority and the Bond Registrar may treat as and deem the
Depository to be the absolute owner of the Bonds for the purpose of payment of the
principal of and premium, if any, and interest on the Bonds, for the purpose of giving
notices of redemption and other matters with respect to the Bonds, for the purpose of
obtaining any consent or other action to be taken by Holders for the purpose of
registering transfers with respect to such Bonds, and for all purposes whatsoever. The
Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any,
and interest on the Bonds only to the Holder or the Holders of the Bonds as shown on the
bond register, and all such payments shall be valid and effective to fully satisfy and
discharge the Authority's obligations with respect to the principal of and premium, if any,
and interest on the Bonds to the extent of the sum or sums so paid.
(v) Upon delivery by the Depository to the Bond Registrar of written notice to
the effect that the Depository has determined to substitute a new Nominee in place of the
existing Nominee, and subject to the transfer provisions in paragraph 10 (with respect to
20sa694v1 3
registration, transfer and exchange) references to the Nominee hereunder shall refer to
such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, all payments
with respect to the principal of and premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and given, respectively, by the Bond
Registrar or Authority, as the case maybe, to the Depository as provided in the Letter of
Representations to the Depository required by the Depository as a condition to its acting
as book-entry Depository for the Bonds (said Letter of Representations, together with any
replacement thereof or amendment or substitute thereto, including any standard
procedures or policies referenced therein or applicable thereto respecting the procedures
and other matters relating to the Depository's role as book-entry Depository for the
Bonds, collectively hereinafter referred to as the "Letter of Representations").
(vii) All transfers of beneficial ownership interests in each Bond issued in
book-entry form shall be limited in principal amount to Authorized Denominations and
shall be effected by procedures by the Depository with the Participants for recording and
transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be provided to
the Holders pursuant to this Resolution by the Authority or Bond Registrar with respect
to any consent or other action to be taken by Holders, the Depository shall consider the
date of receipt of notice requesting such consent or other action as the record date for
such consent or other action; provided, that the Authority or the Bond Registrar may
establish a special record date for such consent or other action. The Authority or the
Bond Registrar shall, to the extent possible, give the Depository notice of such special
record date not less than fifteen calendar days in advance of such special record date.
(ix) Any successor Bond Registrar in its written acceptance of its duties under
this Resolution and any paying agency/bond registrar agreement, shall agree. to take any
actions necessary from time to time to comply with the requirements of the Letter of
Representations.
(x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of
surrendering the Bonds for a Bond of a lesser denomination as provided in paragraph 5
(with respect to redemption), make a notation of the reduction in principal amount on the
panel provided on the Bond stating the amount so redeemed.
(c) Termination of Book-Entr~Only System. Discontinuance of a particular
Depository's services and termination of the book-entry only system maybe effected as follows:
(i) The Depository may determine to discontinue providing its services with
respect to the Bonds at any time by giving written notice to the Authority and discharging
its responsibilities with respect thereto under applicable law. The Authority may
terminate the services of the Depository with respect to the Bonds if it determines that the
Depository is no longer able to carry out its functions as securities depository or the
2084694v1 4
continuation of the system of book-entry transfers through the Depository is not in the
best interests of the Authority or the Beneficial Owners.
(ii) Upon termination of the services of the Depository as provided in the
preceding paragraph, and if no substitute securities depository willing to undertake the
functions of the Depository hereunder can be found which, in the opinion of the
Authority, is willing and able to assume such functions upon reasonable or customary
terms, or if the Authority determines that it is in the best interests of the Authority or the
Beneficial Owners of the Bonds that the Beneficial Owners be able to obtain certificates
for the Bonds, the Bonds shall no longer be registered as being registered in the bond
register in the name of the Nominee, but maybe registered in whatever name or names
the Holder of the Bonds shall designate at that time, in accordance with paragraph 10
hereof (with respect to registration, transfer and exchange). To the extent that the
Beneficial Owners are designated as the transferee by the Holders, in accordance with
paragraph 10 (with respect to registration, transfer and exchange), the Bonds will be
delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of
paragraph 10 (with respect to registration, transfer and exchange).
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. P ose. The Bonds shall provide funds to finance the Project. The total cost of
the Project, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is
estimated to be at least equal to the amount of the Bonds. Work on the Project shall proceed
with due diligence to completion.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2008,
calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per
annum set forth opposite the maturity years as follows:
Maturity Maturity
Year Interest Rate Year Interest Rate
2016 3.800% 2025 4.100%
2017 3.800% 2026 4.125%
2018 3.800% 2027 4.150%
2019 3.850% 2028 4.200%
2020 3.900% 2029 4.280%
.2021 3.950% 2030 4.280%
2022 4.000% 2031 4.320%
2023 4.050% 2032 4.320%
2024 4.050% 2033 4.320%
zosa69a~i 5
5. Redemption. All Bonds maturing on February 1, 2018, and thereafter shall be
subject to redemption. and prepayment at the option of the Authority on February 1, 2017, and on
any date thereafter at a price of par plus accrued interest. Redemption maybe in whole or in part
of the Bonds subject to prepayment. If redemption is in part, the maturities and the principal
amounts within each maturity to be redeemed shall be determined by the Authority; and if only
part of the Bonds having a common maturity date are called for prepayment, the specific Bonds
to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for
redemption shall be due and payable on the redemption date, and interest thereon shall cease to
accrue from and after the redemption date. Mailed notice of redemption shall be given to the
paying agent and to each affected registered holder of the Bonds.
To effect a partial redemption of Bonds having a common maturity date, the Bond
Registrar prior to giving notice of redemption shall assign to each Bond having a common
maturity date a distinctive number for each $5,000 of the principal amount of the Bond. The
Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in
its discretion, from the numbers so assigned to the Bonds, as many numbers as, at $5,000-for
each number, shall equal the principal amount of the Bonds to be redeemed. The Bonds to be
redeemed shall be the Bonds to which were assigned numbers so selected; provided, however,
that only so much of the principal amount of each Bond of a denomination of more than $5,000
shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a
Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the
Authority or Bond Registrar so requires, a written instrument of transfer in form satisfactory to
the Authority and Bond Registrar duly executed by the Holder thereof or the Holder's attorney
duly authorized in writing) and the Authority shall execute (if necessary) and the Bond Registrar
shall authenticate and deliver to the Holder, without service charge, a new Bond or Bonds having
the same stated maturity and interest rate and of any authorized denomination or denominations,
as requested by the Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Bond so surrendered.
6. Bond Reig strar. U.S. Bank National Association, in St. Paul, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all
pursuant to any contract the Authority and Bond Registrar shall execute which is consistent
herewith. The Bond Registrar shall also serve as paying agent unless and until a successor
paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the
.registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond
and paragraph 13.
7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shall be in
substantially the following form:
2084694x1 6
UNITED STATES OF AMERICA
STATE OF MINNESOTA
SHERBURNE COUNTY
ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER
R-
GENERAL OBLIGATION BOND, SERIES 2007
Interest Rate Maturity Date , Date Of Original Issue
NOVEMBER 8, 2007
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
CUSIP
The Economic Development Authority for the City of Elk River, Sherburne County,
Minnesota (the "Issuer"), certifies that it is indebted and for value received promises to pay to the
registered owner specified above, or registered assigns, in the manner hereinafter set forth, the
principal amount specified above, on the maturity date specified above, unless called for earlier
redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year
(each, an "Interest Payment Date"), commencing August 1, 2008, at the rate per annum specified
above (calculated on the basis of a 360-day year of twelve 30-day months) until the principal
sum is paid or has been provided for. This Bond will bear interest from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid, from the date of
original issue hereof. The principal of and premium, if any, on this Bond are payable upon
presentation and surrender hereof at the office of U.S. Bank National Association in St. Paul,
Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent duly
appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by
check or draft mailed to the person in whose name this Bond is registered .(the "Holder" or
"Bondholder") on the registration books of the Issuer maintained by the Bond Registrar and at
the address appearing thereon at the close of business on the fifteenth day of the calendar month
next preceding such Interest Payment Date (the "Regular Record Date"). Any interest not so
timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular
Record Date, and shall be payable to the person who is the Holder hereof at the close of business
on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes
available for payment of the defaulted interest. Notice of the Special Record Date shall be given
to Bondholders not less than ten days prior to the Special Record Date. The principal of and
premium, if any, and interest on this Bond are payable in lawful money of the United States of
America. So long as this Bond is registered in the name of the Depository or its Nominee as
provided in the Resolution hereinafter described and as those terms are defined therein, payment
of principal of and interest on this Bond and notice with respect thereto shall be made as
provided in the Letter of representations, as defined in the Resolution. Bonds may only be
registered in the name of the Depository or its Nominee.
2084694x1 7
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security unless the Certificate of Authentication hereon shall have been executed by the Bond
Registrar..
Optional Redemption. All Bonds of this issue (the "Bonds") maturing on February 1,
2018, and thereafter are subject to redemption and prepayment at the option of the Issuer on
February 1, 2017, and on any date thereafter at a price of par plus accrued interest. Redemption
maybe in whole or in part of the Bonds subject to prepayment.. If redemption is in part, the
maturities and the principal amounts within each maturity to be redeemed shall be determined by
the Issuer; and if only part of the Bonds having a common maturity date are called for
prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar.
Bonds or portions thereof called for redemption shall be due and payable on the redemption date,
and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each affected Holder of the Bonds.
Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption
of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a
common maturity date a distinctive number for each $5,000 of the principal amount of the Bond.
The Bond Registrar shall then select by lot, using such method of selection as it shall deem
proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at $5,000
for each number, shall equal the principal amount of the Bonds to be redeemed. The Bonds. to be
redeemed shall be the Bonds to which were assigned numbers so selected; provided, however,
that only so much of the principal amount of the Bond of a denomination of more than $5,000
shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a
Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the
Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly
authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall
authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds
having the same stated maturity and interest rate and of any authorized denomination or
denominations, as requested by the Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Bond so surrendered.
Issuance; Purpose; General Obli ag tion. This Bond is one of an issue in the total principal
amount of $10,000,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate, denomination and redemption privilege, issued pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by
the Board of Commissioners on October 15, 2007 (the "Resolution"), for the purpose of
providing funds to finance the acquisition and betterment of a recreational facility. This Bond is
payable out of the General Obligation Bonds, Series 2007 Fund of the Issuer. This Bond
constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full
payment of its principal, premium, if any, and interest when the same become due, the full faith
and credit and taxing powers of the. City of Elk River, Minnesota, have been and are hereby
irrevocably pledged pursuant to Ordinance No. 07-13 adopted by the City Council of the City of
Elk River, Minnesota, on October 15, 2007.
2084694x1 g
Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered
form in the denominations of $5,000 and integral multiples thereof of a single maturity and are
exchangeable for fully registered Bonds of other authorized denominations in equal aggregate
principal amounts at the principal office of the Bond Registrar, but only in the manner and
subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution
for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on
file in the principal office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in person or by the Holder's attorney
duly authorized in writing at the principal office of the Bond Registrar upon presentation and
surrender hereof to the Bond Registrar, all subject to the terms and. conditions provided in the
Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and
deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the
transferee (but not registered in blank or to "bearer" or similar designation), of an authorized
denomination or denominations, in aggregate principal amount equal to the principal amount of
this Bond, of the same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection with the transfer
or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in
whose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond
Registrar shall be affected by notice to the contrary.
4ualified Tax-Exempt Obli atg ions. This Bond has been designated by the Issuer as a
"qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to happen and to be
performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law, and that this
Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof
and the date of its issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF, the Economic Development Authority for the City of Elk
River, Sherburne County, Minnesota, by its Board of Commissioners has caused this Bond to be
executed on its behalf by the facsimile signatures of its President and Executive Director, the
corporate seal of the Issuer having been intentionally omitted as permitted by law.
2084694v1 9
Date of Registration:
2007
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described in the
Resolution mentioned
within.
U.S. Bank National Association,
as Bond Registrar
By
Authorized Signature
Registrable by: U.S. BANK NATIONAL
ASSOCIATION
Payable at: U.S. BANK NATIONAL
ASSOCIATION
ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF ELK RIVER
SHERBURNE COUNTY, NITNNESOTA
/s/Facsimile
President
/s/Facsimile
Executive Director
Zosa69a~i 10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UTMA - as custodian for under the
(Gust) (Minor) (State)
Uniform Transfers to Minors Act
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and does hereby
irrevocably constitute and appoint attorney to transfer the Bond on the
books kept for the registration thereof, with full power of substitution in the premises.
Dated: Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face of the
within Bond in every particular, without alteration or any
change whatever.
Signature Guaranteed:
Signature(s) must be guaranteed by a national bank or trust company or by a brokerage
firm having a membership in one of the major stock exchanges.
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address:
(Include information for all joint owners if the Bond is held by joint account.)
2084694x1 l l
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
Date Amount Authorized Signature
of Holder
2084694v1 12
8. Execution; Temporary Bonds. The Bonds shall be in typewritten form, shall be
executed on behalf of the Authority by the signatures of its President and Executive Director and
be sealed with the seal of the Authority; provided, as permitted by law, both signatures maybe
photocopied facsimiles and the corporate seal has been omitted. In the event of disability. or
resignation or other absence of either officer, the Bonds maybe signed by the manual or
facsimile signature of the officer who may act on behalf of the absent or disabled officer. In case
either officer whose signature or facsimile of whose signature shall appear on the Bonds shall
cease to be such officer before the delivery of the Bonds, the signature or facsimile shall
nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in
office until delivery.
9. Authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this resolution unless a Certificate of Authentication on
the Bond, substantially in the form hereinabove set forth, shall have been duly executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different
Bonds need not be signed by the same person. The Bond Registrar shall authenticate the
signatures of officers of the Authority on each Bond by execution of the Certificate of
Authentication on the Bond and by inserting as the date of registration in the space provided the
date on which the Bond is authenticated, except that for purposes of delivering the original
Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of
original issue of November 8, 2007. The Certificate of Authentication so executed on each Bond
shall be conclusive evidence that it has been authenticated and delivered under-this resolution.
10. Registration; Transfer; Exchange. The Authority will cause to be kept at the
principal office of the Bond Registrar a bond register in which, subject to such reasonable
regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the
registration of Bonds and the registration of transfers of Bonds entitled to be registered or
transferred as herein provided.
Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the
Authority shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date
of registration (as provided in paragraph 9 with respect to authentication) of, and deliver, in the
name of the designated transferee or transferees, one or more new Bonds of any authorized
denomination or denominations of a like aggregate principal amount, having the same stated
maturity and interest rate, as requested by the transferor; provided, however, that no Bond may
be registered in blank or in the name of "bearer" or similar designation.
At the option of the Holder, Bonds maybe exchanged for Bonds of any authorized
denomination or denominations of a like aggregate principal amount and stated maturity, upon
surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever
any Bonds are so surrendered for exchange, the Authority shall execute (if necessary), and. the
Bond Registrar.. shall authenticate, insert the date of registration of, and deliver the Bonds which
the holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly cancelled by the Bond Registrar and thereafter disposed of as directed by the
Authority.
Zoaa6~a~i 13
All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
obligations of the Authority evidencing the same debt, and entitled to the same benefits under
this resolution, as the Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar,
duly executed by the holder thereof or the Holder's attorney duly authorized in writing.
The Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the Authority contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to
close its transfer books between record dates and payment dates.
11. Ri is Upon Transfer or Exchange. Each Bond delivered upon transfer of or in
exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any Bond shall be paid on each
Interest Payment Date by check or draft mailed to the person in whose name the Bond is
registered (the "Holder") on the registration books of the Authority maintained by the Bond
Registrar and at the address appearing thereon at the close of business on the fifteenth day of the
calendar month next preceding such Interest Payment Date (the "Regular Record Date"). Any
such interest not so timely paid shall cease to be payable to the person who is the Holder thereof
as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at
the close of business on a date (the "Special Record Date") fixed by the Bond Registrar
whenever money becomes available for payment of the defaulted interest. Notice of the Special
Record Date shall be given by the Bond Registrar to the Holders not less than ten days prior to
.the Special Record-Date.
13. Treatment of Registered Owner. The Authority and Bond Registrar may treat the
person in whose name any Bond is registered as the owner of such Bond for the purpose of
receiving payment of principal of and premium, if any, and interest (subject to the payment
provisions in paragraph 12 with respect to interest payment and record date) on, such Bond and
for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the
Authority nor the Bond Registrar shall be affected by notice to the contrary.
14. Delivery; Application ofProceeds. The Bonds when so prepared and executed
shall be delivered by the Treasurer to the Purchaser upon receipt of the purchase price, and the
Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby created a special fund to be designated the
"General Obligation Bonds, Series 2007 Fund" (the "Fund") to be administered and maintained
by the Treasurer as a bookkeeping account separate and apart from all other funds maintained in
the official financial records of the Authority. The Fund shall be maintained in the manner
zosas9a~i 14
herein specified until all of the Bonds and the interest thereon have been fully paid. There shall
be maintained in the Fund the following separate accounts:
(i) Project Account. To the Project Account there shall be credited the
proceeds of the sale of the Bonds, less any accrued interest received thereon. From the
Project Account there shall be paid all costs and expenses of the Project, including the
cost of acquisition and any construction contracts heretofore let and all other costs
incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65;
and the moneys in the Project Account shall be used for no other purpose except as
otherwise provided by law; provided that the proceeds of the Bonds may also be used to
the extent necessary to pay interest on the Bonds due prior to the anticipated date of
commencement of the collection of taxes herein levied or covenanted to be levied.
(ii) Debt Service Account. There are hereby irrevocably appropriated and
pledged to, and there shall be credited to, the Debt Service Account: (a) all accrued
interest received upon delivery of the Bonds; (b) any collections of all taxes herein or
hereafter levied for the payment of the Bonds and interest thereon; (c) any funds made
available to the Authority from the City; (d) all funds remaining in the Project Account
after completion of the Project and payment of the costs thereof; (e) all investment
earnings on funds held in the Debt Service Account; and (f) any and all other moneys,
which are properly available and are appropriated by the governing body of the Authority
to the Debt Service Account. The Debt Service Account shall be used solely to pay the
principal and interest and any premiums for redemption of the Bonds.
No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher
yielding investments or to replace funds which were used directly or indirectly to acquire higher
yielding investments, except (1) for a reasonable temporary period until such proceeds are
needed for the purpose for which the Bonds were issued and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. Any
proceeds of the Bonds and any sums from time to time held in the Project Account or Debt
Service Account (or any other Authority account which will be used to pay principal or interest
to become due on the bonds payable therefrom) in excess of amounts which under then
applicable federal arbitrage regulations maybe invested without regard to yield shall not be
invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage
regulations on such investments after taking into account any applicable "temporary periods" or
"minor portion" made available under the federal arbitrage regulations. Money in the Fund shall
not be invested in obligations or deposits issued by, guaranteed by or insured. by the United
States or any agency or instrumentality thereof if and to the extent that such investment would
cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
16. Tax Levy; Coverage Test. To provide moneys for payment of the principal and
interest on the Bonds there is hereby levied upon all of the taxable property in the City a direct
annual ad valorem tax which shall be spread upon the tax rolls and collected with and as part of
other general property taxes in the City for the years and in the amounts as follows:
Zosa6sa~i 15
Year of Tax Levy Year of Tax Lew Amount
See Attached Tax Levy Schedule
The tax levies are such that if collected in full they, together with and any other revenues herein
pledged for the payment of the Bonds, will produce at least five percent in excess of the amount
needed to meet when due the principal and interest payments on the Bonds. The tax levies shall
be irrepealable so long as any of the Bonds are outstanding and unpaid, provided that the City
reserves the right and power to reduce the levies in the manner and to the extent permitted by
Minnesota Statutes, Section 475.61, Subdivision 3.
17. General Obligation P1edQe. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing
powers of the City have been irrevocably pledged by the Ordinance. If the balance in the Debt
Service Account is ever insufficient to pay all principal and interest then due on the Bonds and
any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds
of the Authority which are available for such purpose, and such other funds may be reimbursed
with or without interest from the Debt Service Account when a sufficient balance is available
therein.
18. Certificate of Re~'stration and Tax Lew. The Executive Director is hereby
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 that the tax levy required by law has been made.
19. Records and Certificates. The officers of the Authority are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality. of the
issuance of the Bonds, certified copies of all proceedings and records of the Authority relating to
the Bonds and to the financial condition and affairs of the Authority, and such other affidavits,
certificates and information as are required to show the facts relating to the legality and
marketability of the Bonds as the same appear from the books and records under their custody
and control or as otherwise known to them, and all such certified copies, certificates and
affidavits, including any heretofore furnished, shall be deemed representations of the Authority
as to the facts recited therein.
20. Tax-Exempt Status of the Bonds; Rebate. The Authority shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(a) requirements relating to temporary periods for investments;
(b) limitations on amounts invested at a yield greater than the yield on the Bonds; and
(c) the rebate of excess investment earnings to the United States.
The Authority expects to satisfy the twenty-four month expenditure exemption for gross
proceeds of the Bonds as provided in Section 1.148-7(c) of the Regulations. The President and
2084694x1 1 6
Tax Levy Calculation For:
Economic Development Authority of the City of Elk River, Minnesota
$10,000,000 General Obligation Bonds, Series 2007
Dated Date: 11/8/2007
Levy
Year Collect
Year Pay
Year Total
P 8~I P & I
x105% Net
Levy
2007 / 2008 / 2009 505,018.47 530,269.39 530,269.39
2008 / 2009 / 2010 410,398.76 430,918.70 430,918.70
2008 / 2009 / 2010 410,398.76 430,918.70 430,918.70
2008 / 2009 / 2010 410,398.76 430,918.70 430,918.70
2008 / 2009 ! 2010 410,398.76 430,918.70 430,918.70
2008 / 2009 / 2010 410,398.76 430,918.70 430,918.70
2008 / 2009 / 2010 410,398.76 430,918.70 430,918.70
2014 / 2015 / 2016 790,398.76 829,918.70 829,918.70
2015 / 2016 / 2017 790,958.76 830,506.70 830,506.70
2016 / 2017 / 2018 790,948.76 830,496.20 830,496.20
2017 / 2018 / 2019 795,368.76 835,137.20. 835,137.20-
2018 / 2019 / 2020 793,813.76 833,504.45 833,504.45
2019 / 2020 / 2021 796,458.76 836,281.70 836,281.70
2020 / 2021 / 2022 798,091.26 837,995.82 837,995.82
2021 / 2022 / 2023 798,691.26 838,625.82 838,625.82
2022 / 2023 / 2024 .798,238.76 838,150.70 838,150.70
2023 / 2024 / 2025 801,976.26 842,075.07 842,075.07
2024 / 2025 / 2026 804,426.26 844,647.57 844,647.57
2025 / 2026 / 2027 805,707.50 845,992.88 845,992.88
2026 / 2027 / 2028 805,807.50 846,097.88 846,097.88
2027 / 2028 / 2029 809,557.50 850,035.38 850,035.38
2028 / 2029 / 2030 816,720.00 857,556.00 857,556.00
2029 / 2030 / 2031 81.7,395.00 858,264.75 858,264.75
2030 / 2031 / 2032 821,435.00 862,506.75 862,506.75
2031 / 2032 / 2033 823,970.00 865,168.50 865,168.50
Totals 17,427,374.89 18,298,743.63 18,298,743.63
FREERS
& ASSOCIATES INC
or Executive Director are hereby authorized and directed to make such elections as to arbitrage
and rebate matters relating to the Bonds as they deem necessary, appropriate or desirable in
connection with the Bonds, and all such elections shall be, and shall be deemed and treated as,
elections of the Authority.
21. Designation of Qualified Tax-Exempt Obligations. In order to qualify the Bonds
as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
Authority hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(c) the Authority hereby designates the Bonds as "qualified tax exempt obligations"
for purposes of Section 265(b)(3) of the Code;
(d) the reasonably anticipated amount of tax exempt obligations (other than private
activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds) which will
be issued by the Authority (and all entities treated as one issuer with the Authority, and all
subordinate entities whose obligations are treated as issued by the Authority) during this calendar
year 200? will not exceed $10,000,000; and
(e) not more than $10,000,000 of obligations issued by the Authority during this
calendar year 2007 have been designated for purposes of Section 265(b)(3) of the Code.
The Authority shall use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designation made by this paragraph.
22. Tax Covenants. In order to ensure that the interest on the Bonds shall at all times
be excluded from federal gross income, the Authority specifically represents, warrants and
covenants with all holders of the Bonds, as follows:
(a) It will fulfill all conditions specified in Sections 103 and 141 through 150 of the
Code and applicable Treasury Regulations as necessary to maintain the tax exempt status of the
interest borne by the Bonds.
(b) The Project, including any property financed or otherwise provided for by the net
proceeds of the Bonds, will be owned by the Authority and used by the general public or
organizations described in Section 501(c)(3) of the Code.
(c) Less than five percent of the net proceeds of the Bonds will be used to provide
property used either (i) by an organization described in Section 501(c)(3) of the Code in an
activity that constitutes an unrelated trade or business, or (ii) in a trade or business by a person
other than an organization described in Section 501(c)(3) of the Code or a governmental unit
(within the meaning of Section 141 of the Code).
(d) It shall make no use of the Project, including but not limited to entering into any
agreement for the management of the Project or any similar agreement, the effect of which
2084694v1 17
would cause the Bonds not to constitute "qualified 501(c)(3) bonds," within the meaning of
Section 145 and related Sections of the Code, and any service contract to be entered into with
respect to the Project (unless entered into with an organization described in Section 501(c)(3) of
the Code) shall constitute a "qualified management agreement" within the meaning of all
pertinent provisions of law, including all relevant provisions of the Code and regulations, rulings
and revenue procedures thereunder, including Revenue Procedure 97-13.
(e) Not more than two percent of the proceeds of the Bonds will be applied to the
payment of costs of issuance of the Bonds and all costs of issuance in excess of that amount will
bepaid by the City from funds other than proceeds of the Bonds.
(f) It has not leased, sold, assigned, granted or conveyed and will not lease, sell,
assign, grant or convey all or any portion of the Project or any interest therein to the United
States or any agency or instrumentality thereof within the meaning of Section 149(b) of the
Code.
(g) No portion of the proceeds of the Bonds will be used to provide any of the
following facilities or facilities related or incidental thereto: any airplane, skybox or other private
luxury box, facility used primarily for gambling, or store the principal business of which is the
sale of alcoholic beverages for consumption off premises..
(h) As of the date hereof, the Authority and The Young Men's Christian Association
of Metropolitan Minneapolis (the "YMCA") are the only "principal users" of the Project and it
will not permit any person to become a "principal user" of the Project if such action would cause
the interest on the Bonds to become includable in federal gross income in the hands of the
Bondholders.
(i) The average maturity of the Bonds does not exceed one hundred twenty percent
of the average reasonably expected economic life of the Project as determined in accordance
with Section 147(b) of the Code.
(j) No obligations have been or will be issued which are described in Section 141,
142,.143, 144 or 145 of the Code and that are (i) sold at substantially the same time as the Bonds,
(ii) sold pursuant to a common plan of marketing and (iii) payable in whole or in part by the
YMCA or otherwise have any common or pooled security for the payment of debt service
thereon with the Bonds.
(k) It will not use the proceeds of the Bonds in such a manner as to cause the Bonds
to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable Treasury
Regulations.
(1) It reasonably expects that eighty-five percent of the spendable proceeds of the
Bonds will be used to carry out the governmental purpose of the Bonds within three years of the
date the Bonds are issued. Not more than fifty percent of the proceeds of the Bonds will be
invested in nonpurpose investments (as defined in Section 148(f)(6)(A) of the Code) having a
substantially guaranteed yield for four years or more.
2084694x1 1 g
(m) It will comply with and fulfill all other requirements and conditions of the Code
and Treasury Regulations and rulings issued pursuant thereto relating to the acquisition,
construction and operation of the Project to the end that interest on the Bonds shall at all times be
excludable from federal gross income.
(n) It will not use the proceeds of the Bonds in such a manner as to cause the Bonds
to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable Treasury
Regulations; and to this end, the Authority shall pay to the United States, as a rebate, an amount
equal to the sum of (i) the excess of (I) the aggregate amount earned on all nonpurpose
obligations (other than investments attributable to an excess described in this clause), over (II)
the amount which would have been earned if all nonpurpose obligations were invested at a rate
equal to the yield on the Bonds plus (ii) any income attributable to the excess described in clause
(i), at the times and in the amounts required by Section 148 of the Code, all within the meaning
of Section 148 of the Code. The Authority shall maintain records of the interest rate borne by
the Bonds and the investments of the Project Account and Debt Service Account and earnings
thereon in adequate detail to enable the Authority to calculate the amount of any rebate required
to be made to the United States. The Authority shall pay the rebate to the United States at times
and in installments which satisfy Section 148 of the Code and the Treasury Regulations, at least
once every five years and within sixty days after the day on which the last of the Bonds is
redeemed. Calculations of the amount to be rebated shall be made at least every five years, by an
independent accountant selected by the Authority. Such calculations shall be retained until six
years after the retirement of the Bonds. The rebate shall be calculated as provided in the
.applicable Treasury Regulations, including taking into. account the gain or loss on the disposition
of nonpurpose investments.
23. Tax Exemption Agreement. The Authority will enter into a Tax Exemption
Agreement, dated November 1, 2007, with the YMCA. The Tax Exemption Agreement is
hereby approved and the President and Executive Director are authorized to execute the Tax
Exemption Agreement on behalf of the Authority.
24. Payment of Issuance Expenses. The Authority authorizes the Purchaser to
forward the amount of Bond proceeds allocable to the payment of issuance expenses to U.S.
Trust Company, N.A., in Crreenwich, Connecticut, on the closing date for further distribution as
directed by Ehlers.
25. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall, to the extent permitted by law, cease. The Authority may discharge its obligations
with respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The Authority may also discharge its obligations with respect to any prepayable Bonds
called for redemption on any date when they are prepayable according to their terms, by
depositing with the Bond Registrar on or before that date a sum sufficient for the payment
thereof in full, provided that notice of redemption thereof has been duly given. The Authority
may also at any time discharge its obligations with respect to any Bonds, subject to the
2084694x1 1 9
provisions of law now or hereafter authorizing and regulating such action, by depositing
irrevocably in escrow, with a suitable banking institution qualified by law as an escrow agent for
this purpose, cash or securities described in Minnesota Statutes, Section 475.67, Subdivision 8,
bearing interest payable at such times and at such rates and maturing on such dates as shall be
required, subject to sale and/or reinvestment, to pay all amounts to become due thereon to
maturity or, if notice of redemption as herein required has been duly provided for, to such earlier
redemption date.
26. Compliance with Reimbursement Bond Regulations. The provisions of this
paragraph are intended to establish and provide for the Authority's compliance with United
States Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to
the "reimbursement proceeds" of the Bonds, being those portions thereof which will be used by
the Authority to reimburse itself for any expenditure which the Authority paid or will have paid
prior to the Closing Date (a "Reimbursement Expenditure").
The Authority hereby certifies and/or covenants as follows:
(a} Not later than sixty days after the date of payment of a Reimbursement
Expenditure, the Authority (or person designated to do so on behalf of the Authority) has made
or will have made a written declaration of the Authority's official intent (a "Declaration") which
effectively (i) states the Authority's reasonable expectation to reimburse itself for the payment of
the Reimbursement Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a
general and functional description of the property, project or program to which the Declaration
relates and for which the Reimbursement. Expenditure is paid, or identifies a specific fund or
account of the Authority and the general functional purpose thereof from which the
Reimbursement Expenditure was to be paid (collectively the "Project"); and (iii) states the
maximum principal amount of debt expected to be issued by the Authority for the purpose of
financing the Project; provided, however, that no such Declaration shall necessarily have been
made with respect to: (i) "preliminary expenditures" for the Project, defined in the
Reimbursement Regulations to include engineering or architectural, surveying and soil testing
expenses and similar prefatory costs, which in the aggregate do not exceed twenty percent of the
"issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement Expenditures not in
excess of the lesser of $100,000 or five percent of the proceeds of the Bonds.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of
the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the
Reimbursement Regulations.
27. Continuing Disclosure. The Authority is the issuer of the Bonds. However it is
not an "obligated person" subject to the disclosure requirements under the SEC Rule 15c2-
12(b)(5) (the "Rule") because (i) the bonds are general obligations of the City and not the
Authority and (ii) financial information and operating data set forth in the Official Statement
relates only to the City. The City shall enter into a Continuing Disclosure Undertaking.
28. Severability. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this resolution.
2084694v1 20
29. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
30. Effectiveness. This resolution shall become effective only upon adoption by the
City Council of the Ordinance authorizing the pledge of the City's full faith and credit to the
payment of the Bonds.
2084694v1 2 1
STATE OF MINNESOTA
COUNTY OF SHERBURNE
ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting Executive Director of the
Economic Development Authority for the City of Elk River, Minnesota, DO HEREBY
CERTIFY that I have compared the attached and foregoing extract of minutes with the original
thereof on file in my office, and that the same is a full, true and complete transcript of the
minutes of a meeting of the Board of Commissioners of said Authority, duly called and held on
the date therein indicated, insofar as such minutes relate to the Authority's $10,000,000 General
Obligation Bonds, Series 2007.
Dated: October 15, 2007.
~rt~
xecutive Director
2084694x1