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3.3. SR 11-12-2002MEMORANDUM *Item 3.3.* TO: Mayor and City Council FROM: Lori Johnson, Finance Director DATE: November 12, 2002 SUBJECT: Consider Resolution Awarding the Sale of the City's $267,500 General Obligation Equipment Certificate of 2002; Fixing its Form and Specifications; Directing its Execution and Delivery; and Providing for its Payment Attached is a resolution to award the sale and set the terms of the $267,500 General Obligation Taxable Equipment Certificate of 2002, as approved in the 2002 budget for the purchase of public safety and public works equipment. The certificate is being purchased by The Bank of Elk River and carries an interest rate of 2.75 percent for a term of one year. Action Requested The City Council is asked to approve the attached resolution awarding the sale of the City's $267,500 General Obligation Taxable Equipment Certificate of 2002; fixing its form and specifications; directing its execution and delivery; and providing for its payment. S / Coundl/ Lori/ GenObBond CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION 02- RESOLUTION AWARDING THE SALE OF THE CITY'S $267,500 GENERAL OBLIGATION TAXABLE EQUIPMENT CERTIFICATE OF 2002; FIXING ITS FORM AND SPECIFICATIONS; DIRECTING ITS EXECUTION AND DELIVERY; AND PROVIDING FOR ITS PAYMENT BE IT RESOLVED by the City Council (The "Council") of the City of Elk River, Minnesota (the "City"), as follows: 1. It is hereby determined: (a) It is necessary and expedient to issue the City's $267,500 General Obligation Taxable Equipment Certificate of 2002 (the "Certificate") pursuant to Minnesota Statutes, Section 412.301, to finance the costs of the City's acquisition of public safety vehicles, park equipment and public works trucks and equipment (hereinafter referred to as the "Equipment"). (b) The Equipment has an expected useful life at least as long as the final maturity of the Certificate, and the $267,500 amount of the Certificate does not exceed 0.25% of the market value of the taxable property in the City. (c) The City is authorized pursuant to Minnesota Statutes, Section 475.60, Subdivision 2(6), to negotiate the sale of the Certificate without public notice and sale because the City determines, on the advice of bond counsel, that the interest in the Certificate cannot be represented to be excluded from gross income for purposes of federal income taxation. 2. 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 $267,500 par, the Certificate to be subject to the terms and conditions herein provided. 3. The City shall forthwith issue and sell its $267,500 General Obligation Taxable Equipment Certificate of 2002. The Certificate shall be dated December 2, 2002 (or as soon thereafter as settlement can be arranged with the Purchaser), shall be a single, fully registered obligation without interest coupons, shall bear interest payable on December 1, 2003, and shall mature and bear interest as provided in the form of the Certificate set out in paragraph 5 of this Resolution. 1464957vl The Certificate shall be subject to redemption in whole or in part at the option of the City at any time, in inverse order of the principal maturities thereof, upon prior written notice to the Registered Owner thereof, at par plus accrued interest to date of redemption. Interest on the Certificate shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each. 4. Both principal of and interest on the Certificate shall be payable by the City Finance Director, who shall also act as registrar and transfer agent (the "Certificate Registrar") for the Certificate. 5. The Certificate shall be substantially the following form: 1464957vl 2 [Form of Certificate] No. R-1 $267,5OO UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER GENERAL OBLIGATION TAXABLE EQUIPMENT CERTIFICATE OF 2002 KNOW ALL BY THESE PRESENTS that the City of Elk River, Sherburne County, Minnesota, 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 TWO HUNDRED SIXTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($267,500) on December 1, 2003, 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 two and seventy-five hundredths percent (2.75%) per annum, interest to maturity payable on December 1, 2003 (the "Interest Payment Date"). Interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each. The City Finance Director will pay the interest due on this Certificate on the Interest Payment Date by mailing or delivering a check or draft made payable to the person that was the Registered Owner at the end of the day preceding the 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 City Finance Director. This Certificate is subject to prepayment at the option of the City at any time, in inverse order of the principal maturities hereof, in whole or in part, at par plus accrued interest to the date of prepayment, upon prior written notice to the Registered Owner. This Certificate is issued by the City pursuant to and in full conformity with the Constitution and laws of the State of Minnesota for the purpose of providing funds to finance costs of acquiring certain 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 of the 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 City Finance Director, and the assignee shall surrender this Certificate to the City 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. 1464957v I 3 Taxable Obligation. The City is not issuing this Certificate as a tax-exempt obligation and accordingly makes no representation and intends to convey no expectation that the interest on this Certificate will be excluded from gross income for purposes of United States income taxation or from either gross income or taxable net income for purposes of State of Minnesota income taxation. 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 City Administrator; has caused the official seal of the City to be impressed upon this Certificate; and has caused this Certificate to be dated December 2, 2002. City Administrator Mayor 1464957vl 4 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 City 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. NAME OF REGISTERED OWNER The Bank of Elk River DATE OF REGISTRATION SIGNATURE OF CITY FINANCE DIRECTOR December 2, 2002 (End of Form of Certificate) 1464957vl 5 6. The City Finance Director shall obtain a copy of the proposed approving legal opinion of bond counsel for the Certificate, Briggs and Morgan, 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 City Administrator and shall be duly registered by the manual signature of the City Finance Director as Certificate 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 City 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 City 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 of the 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 (1) first, 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 particularly the tax levies made in 2001 (for collection in 2002) for that purpose (and made in anticipation of the issuance of the Certificate); (2) second, amounts of capitalized interest, if necessary, needed to pay the interest first coming due on the Certificate; and (3) third, 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 of the 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 City 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 the City made a certain tax levy in 2001 for collection in 2002. 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 heretofore made and other 1464957vl 6 funds appropriated by the Council for payment of debt service on the Certificate) will be in amounts not less than 5% in excess of the amount needed to meet, when due, the principal of and interest on the Certificate. The City Finance Director is directed to file a certified copy of this Resolution with the County Auditor of Sherburne County and to obtain the certificate of the County Auditor required by Minnesota Statutes, Section 475.63. 13. 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 knowledge 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. 14. When any obligation of the Certificate has been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this Resolution to the registered owner of the 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 of law now or hereafter authorizing or regulating such action, by depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow agent for this purpose, cash or securities which are backed by the full faith and credit of the United States of America, bearing interest payable at such times and at such rates and maturing on such dates and in such amounts as shall be required and sufficient, subject to sale and/or reinvestment in like securities, to pay said obligation(s), which may include any interest payment on such 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). 15. 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 information, notices of certain material events or any other disclosure or information which would otherwise be required by that Rule. Adopted by the Elk River City Council on November 12, 2002. 1464957vl 7 CERTIFICATION I, the undersigned City Clerk of the City of Elk River, Minnesota, do hereby certify the following: The foregoing is true and correct copy of a Resolution on file and of record in the offices of the City, which Resolution relates to the issuance by the City of its $267,500 General Obligation Taxable Equipment Certificate of 2002. Said Resolution was duly adopted by the Elk River City Council at a regular or special meeting of the Council held on November 12, 2002. Said meeting was duly called and regularly held and was open to the public and was held at the place at which meetings of the Council are regularly held, a quorum of the Council being present and acting throughout. Councilmember moved the adoption of the Resolution, which motion was seconded by Councilmember A vote being taken on the motion, the following members of the Council voted in favor of the Resolution: and the following voted against the same: Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full force and effect and no action has been taken by the Council which would in any way alter or amend the Resolution. this WITNESS MY HAND officially as the City Clerk of the City of Elk River, Minnesota, ~ day of ,2002. (SEAL) City Clerk City of Elk River, Minnesota 1464957vl