6.3.B. SR 06-16-2008REQUEST FOR ACTION
To Item Number
Ci Council 6.3.B.
Agenda Section Meeting Date Prepared by
Administration une 16, 2008 Tim Simon, Finance Director
Item Description Reviewed by
Resolution Accepting The Offer Of The Minnesota Public Lori ohnson, Ci Administrator
Facilities Authority To Purchase A $2,431,500 General Reviewed by
Obligation State-Aid Loan Note of 2008, Providing For Its
Issuance And Authorizing Execution Of A Minnesota Public
Facilities Authority Project Loan And General Obligation Bond
Purchase A reement
Action Requested
The City Council is asked to approve a resolution accepting the offer of the Minnesota Public Facilities
Authority to purchase a $2,431,500 General Obligation State-Aid Loan Note of 2008, providing for its
issuance and authorizing execution of a Minnesota Public Facilities Authority Project Loan And General
Obligation Bond purchase agreement.
Background/Discussion
Earlier this year the Council approved the 193`d Avenue Project. The financing for the 193`d project will
be paid from our current and future state-aid allotments and SAFETEA-LU federal funds over the next
four or five years depending on the final cost of the land acquisition and construction bid. To finance the
upfront construction costs we received approval for a transportation revolving loan in the amount of $2.4
million, at an interest rate of 1.311 percent repaid over five years, with repayment from our future
Municipal State-aid allotment. The land acquisition costs will also be repaid out of the MSA allotment,
but based on the appraisals it hopefully will be under the estimated amount.
The City's bond attorney has reviewed all agreements and resolutions.
Financial Impact
Future State-Aid allotments will be used to repay the loan and land acquisition costs. The loan is adjusted
based on the actual costs incurred; therefore it cannot exceed $2,431,500 but could be less depending on
the construction bid.
Attachments
• Resolution Accepting The Offer Of The Minnesota Public Facilities Authority To Purchase A
$2,431,500 General Obligation State-Aid Loan Note of 2008, Providing Fox Its Issuance And
Authorizing Execution Of A Minnesota Public Facilities Authority Project Loan And General
Obligation Bond Purchase Agreement.
Action Motion by Second by Vote
C:\Documents and Settings\jmiller\Local Settings\Temporary Internet Files\OLK3E\193rd loan resolution.doc
Follow Up
C:\Documents and Settings\jmiller\Local Settings\Temporary Internet Files\OLK3E\193rd loan resolution.doc
EXTRACT OF MINUTES OF A MEETING
CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: June 16, 2008
Pursuant to due call and notice thereof, a regular meeting of the Council of the City of
Elk River, Sherburne County, Minnesota, was duly called and held at the City Hall on June 16,
2008, at o'clock P.M., for the purpose in part of authorizing the issuance of $2,431,500
General Obligation State-Aid Loan Note of 2008 of the City.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION ACCEPTING THE OFFER OF THE MINNESOTA PUBLIC FACILITIES
AUTHORITY TO PURCHASE A $2,431,500 GENERAL OBLIGATION STATE-AID LOAN
NOTE OF 2008, PROVIDING FOR ITS ISSUANCE AND AUTHORIZING EXECUTION OF
A MINNESOTA PUBLIC FACILITIES AUTHORITY PROJECT LOAN AND GENERAL
OBLIGATION BOND PURCHASE AGREEMENT
A. WHEREAS, the City Council of the City of Elk River, Minnesota (the "City"),
has heretofore applied for a loan from the Minnesota Public Facilities Authority (the "MPFA") to
provide financing pursuant to Minnesota Statutes, Chapter 475 and Section 446A.085, for the
construction of the 193rd Avenue project (the "Project"); and
B. WHEREAS, the MPFA is authorized pursuant to Minnesota Statutes, Chapter
446A, as amended, to issue its bonds (the "MPFA Bonds") and to use the proceeds thereof,
together with certain other funds, to provide loans and other assistance to municipalities to fund
eligible costs of construction of transportation projects in accordance with Minnesota Statutes,
Section 446A.085; and
C. WHEREAS, the City has applied for a loan from the MPFA pursuant to such
program and the MPFA has committed to make a loan to the City in the principal amount of
$2,431,500 to be disbursed and repaid in accordance with the terms of a Minnesota Public
Facilities Authority Project Loan and General Obligation Bond Purchase Agreement
(Transportation Revolving Fund) MPFA-07-0002-R-FY08, dated Apri129, 2008 (the "Project
Loan Agreement"), a copy of which has been presented to the Council and is on file with the
Finance Director; and
D. WHEREAS, the $2,431,500 General Obligation State-Aid Loan Note of 2008 (the
"Note") is tax-exempt and the City will need to assure the tax-exemption of the MPFA Bonds;
and
E. WHEREAS, in accordance with Minnesota Statutes, Section 475.60, Subdivision
2(4), the City is authorized to issue obligations to a board, department or agency of the State of
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Minnesota by negotiation and without advertisement for bids and the MPFA is, and has
represented that it is, a board, department or agency of the State of Minnesota; and
F. WHEREAS, a contractor contracts for the Project have been made by the City
with the approval of the MPFA and all other state and federal agencies of which approval is
required; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Elk River,
Minnesota, as follows:
1. Acceptance of Offer; Payment. The offer of the MPFA to purchase the Note at
the rate of interest hereinafter set forth, and to pay therefor the sum of $2,431,500 as provided
below, is hereby accepted, and the sale of the Note is hereby awarded to the MPFA. Payment for
the Note shall be made in installments as eligible costs of the Project are reimbursed or paid, all
as provided in the Project Loan Agreement.
2. Date; Denomination; Interest Rate; Maturities. The Note shall be a fully
registered negotiable obligation, shall be dated as of the date of delivery, shall be issued
forthwith, shall be in the principal amount of $2,431,500, or so much thereof as shall be
disbursed pursuant to the Project Loan Agreement, shall bear interest on so much of the principal
amount of the Note as may be disbursed and remains unpaid until the principal amount of the
Note has been paid or has been provided for, at the rate of one and three hundred eleven
hundredths percent (1.311%) per annum (calculated on the basis of a 360-day year of twelve 30-
day months). Interest on the Note is payable semiannually on February 20 and August 20,
commencing August 20, 2008. Interest. starts accruing as of the date of the initial disbursement.
Principal on the Note shall mature on August 20 in the years and installments as follows:
Year Amount Year Amount
2008 $500,000 2011 $486,000
2009 474,000 2012 492,000
2010 480,000 2013 499,000
Interest shall accrue only on the aggregate principal amount of the Note which has been
disbursed and is unpaid under the Project Loan Agreement. The principal installments shall be
paid in the amounts scheduled above even if at the time of payment the full principal amount of
the Note has not been disbursed; provided that if the full principal amount of the Note is never
disbursed, the amount of the principal not disbursed shall be applied to reduce each unpaid
principal installment in the proportion that such installment bears to the total of all unpaid
principal installments (i.e., the remaining principal payment schedule shall be reamortized to
provide similarly level annual installments of total debt service payments). Principal, interest
and any premium due under the Note will be paid on each payment date by wire payment, or by
check or draft mailed at least five business days prior to the payment date to the person in whose
name the Note is registered, in any coin or currency of the United States which at the time of
payment is legal tender for public and private debts.
Interest on .the Note includes amounts treated by the MPFA as service fees.
2170696v1 2
3. Purpose; Cost. The proceeds of the Note shall provide funds to finance
construction of the Project. The total cost of the construction of the Project, including legal and
other professional charges, publication and printing costs, interest accruing on money borrowed
for the Project before the collection of future Municipal State-Aid Street funds appropriated
therefor, and all other costs necessarily incurred and to be incurred from the inception to the
completion of the Project, is estimated to be at least equal to the aggregate principal amount of
the Note. The City covenants that it shall do all things and perform all acts required of it to
assure that work on the Project proceeds with due diligence to completion and that any and all
permits and studies required under law for the Project are obtained. The average annual amount
of principal and interest due in all subsequent calendar years on the Note payable from the City's
account of the Municipal State-Aid Street Fund ($ )does not exceed ninety percent
of the amount of the last annual allotment preceding the issuance of the Note received by the
City from the Construction Account of the Municipal State-Aid Street Fund ($ ).
4. Redemption. The Note shall be subject to redemption and prepayment in whole
or in part at the option of the City or mandatorily as provided in the Project Loan Agreement. If
redemption is in part, installments of principal payable last under the Note shall be prepaid first,
unless the City and the holder of the Note agree to a different result.
5. Registration of Note. At the time of issuance and delivery of the Note, the officer
of the City performing the functions of the treasurer (the "Finance Director") shall register the
Note in the name of the payee in a note register which he and his successors in office shall
maintain for the purpose of registering the ownership of the Note. The Note shall be prepared
for execution with an appropriate text and spaces for notation of registration. The force and
effect of such registration shall be as stated in the form of Note hereinafter set forth. Payment of
principal installments and interest, whether upon redemption or otherwise, made with respect to
the Note, may be made to the registered holder thereof or to the holder's legal representative,
without presentation or surrender of the Note.
6. Form of Note. The Note, together with the Certificate of Registration attached
thereto, shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF MINNESOTA
SHERBURNE COUNTY
CITY OF ELK RIVER
$2,431,500 GENERAL OBLIGATION STATE-AID LOAN NOTE OF 2008
The City of Elk River, Sherburne County, Minnesota (the "City"), certifies that it is
indebted and for value received promises to pay to the Minnesota Public Facilities Authority or
the registered assign, the principal sum of TWO MII.LION FOUR HUNDRED THIRTY ONE
THOUSAND FNE HUNDRED DOLLARS, or so much thereof as shall have been disbursed,
on August 20 in the years and installments as follows:
2170696v1
Year Amount Year Amount
2008 $500,000 2011 $486,000
2009. 474,000 2012 492,000
2010 480,000 2013 499,000
and to pay interest on so much of the principal amount of the debt as may be disbursed and
remains unpaid until the principal amount hereof is paid or has been provided for, at the rate of
one and three hundred eleven hundredths percent (1.311%) per annum (calculated on the basis of
a 360-day year of twelve 30-day months). Interest on this Note is payable semiannually on
February 20 and August 20, commencing August 20, 2008. Interest starts accruing as of the date
of the initial disbursement.
Principal and Interest Payments. Interest shall accrue only on the aggregate amount of
this Note which has been disbursed under the Minnesota Public Facilities Authority Project Loan
and General Obligation Bond Purchase Agreement (Transportation Revolving Fund) MPFA-07-
0002-R-FY08, dated as of April 29, 2008, by and between the City and the Minnesota Public
Facilities Authority (the "Project Loan Agreement"). The principal installments shall be paid in
the amounts scheduled above even if at the time of payment the full principal amount of the Note
has not been disbursed; provided that if the full principal amount of this Note is never disbursed,
the amount of the principal not disbursed shall be applied to reduce each unpaid principal
installment in the proportion that such installment bears to the total of all unpaid principal
installments (i.e., the remaining principal payment schedule shall be reamortized to provide
similarly level annual installments of total debt service payments). Interest on this Note includes
amounts treated by the Minnesota Public Facilities Authority as service fees. Principal, interest
and any premium due under this Note will be paid on each payment date by wire payment, or by
check or draft mailed five business days prior to the payment date to the person in whose name
this Note is,registered, in any coin or currency of the United States of America which at the time
of payment is legal tender for public and private debts.
Redemption. This Note is subject to redemption and prepayment in whole or in part at
the option of the City or mandatorily as provided in the Project Loan Agreement. If redemption
is in part installments of principal payable last under this Note shall be prepaid first, unless the
City and the holder of this Note agree to a different result.
Purpose; General Obli a~ tion. This Note has been issued pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota for the purpose of providing
money to finance the construction of the 193rd Avenue project in the City, and is payable out of
the MPFA Debt Service Account of the Transportation Fund of the City, to which account have
been pledged from moneys to be allotted to the City from its account in the City's State-Aid
Street Fund. This Note constitutes a general obligation of the City, and to provide moneys for
the prompt and full payment of said principal installments and interest when the same become.
due, the full faith, credit and taxing powers of the City have been and are hereby irrevocably
pledged.
Registration; Transfer. This Note shall be registered in the name of the payee on the
books of the City by presenting this Note for registration to the City's Finance Director, who will
2170696v1 4
endorse his. or her. name and note the date of registration opposite the name of the payee in the
certificate of registration attached hereto. Thereafter this Note may be transferred to a bona fide
purchaser only by delivery with an assignment duly executed by the registered owner or the
registered owner's legal representative, and the City may treat the registered owner as the person
exclusively entitled to exercise all the rights and powers of an owner until this Note is presented
with such assignment for registration of transfer, accompanied by assurance of the nature
provided by law that the assignment is genuine and effective, and until such transfer is registered
on said books and noted hereon by the City's Finance Director.
Fees Upon Transfer or Loss. The Finance Director may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection with the transfer
of this Note and any legal or unusual costs regarding transfers and lost notes.
Project Loan Agreement. The terms and conditions of the Project Loan Agreement are
incorporated herein by reference and made a part hereof. The Project Loan Agreement maybe
attached to this Note, and shall be attached to this Note if the holder of this Note is any person
other than the Minnesota Public Facilities Authority.
Tax-Exempt Obligation. The City intends that the interest on this Note will be excluded
from gross income for United States income tax purposes and from both gross income and
taxable net income for State of Minnesota income tax purposes.
Qualified Tax-Exempt Obli ation. This Note has been designated by the City as a
"qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the federal 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 Note, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law; and that .this
Note, together with all other debts of the City outstanding on the date hereof, being the date of its
actual issuance and delivery, does not exceed any constitutional or statutory limitation of
indebtedness.
2170696v1
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, Minnesota, by its
City Council has caused this Note to be executed on its behalf by the signatures of its Mayor and
its Administrator, the corporate seal of the City having been intentionally omitted as permitted
by law, all as of (do not date) , 2008.
CITY OF ELK RIVER, SHERBURNE
COUNTY, MINNESOTA
(do not sign)
Mayor
(do not sign)
Administrator
2170696v1 6
CERTIFICATE OF REGISTRATION
The transfer of ownership of the principal amount of the attached Note may be made only
by the registered owner or his, her or its legal representative last noted below.
Date of Registration Registered Owner Signature of Finance Director
Minnesota Public Facilities
Authority
St. Paul, Minnesota
Federal Employer Identification
do not date) No. 41-6007162 (do not sign)
2170696v1 7
7. Execution. The Notes shall be executed on behalf of the City by the signatures of
its Mayor and Administrator; the sale of the City has been intentionally omitted as permitted by
law. In the event of disability or resignation or other absence of any such officer, the Note may
be signed by the manual signature of that officer who may act on behalf of such absent or
disabled officer. In case any such officer whose signature shall appear on the Note shall cease to
be such officer before the delivery of the Note, such signature shall nevertheless be valid and
sufficient for all purposes, the same as if such officer had remained in office until delivery.
8. Delivery; Application of Proceeds. The Note when so prepared and executed
shall be delivered by the Finance Director to the purchaser thereof prior to disbursements
pursuant to the Project Loan Agreement, and the purchaser shall not be obliged to see to the
proper application thereof.
9. Fund and Accounts. There is hereby created a separate fund of the City
designated the "Transportation Fund" (the "Fund"). The Fund shall be maintained in the manner
specified herein until the Note and interest thereon have been fully paid. There shall be
maintained in the Fund, the following accounts:
(a) An "MPFA Construction Account", to which shall be credited all proceeds
received from the sale of the Note. The Note shall be the only source of moneys credited
to the MPFA Construction Account. It is recognized that the sale proceeds of the Note
are received in reimbursement for costs expended on the Project or in direct payment of
such costs, and that accordingly the moneys need not be placed in the MPFA
Construction Account upon receipt but may be applied immediately to reimburse the
source from which the expenditure was made. The moneys in the MPFA Construction
Account shall be used solely for the purpose of paying for the cost of constructing the
Project, including all costs enumerated in Minnesota Statutes, Section 475.65, provided
that such moneys shall only be expended for costs and expenses which are permitted
under the Project Loan Agreement. The MPFA prohibits the use of proceeds of the Note
to reimburse costs initially paid from proceeds of other obligations of the City unless
otherwise specifically approved. Upon completion of the Project and the payment of the
costs thereof, any surplus shall be transferred to the MPFA Debt Service Account.
(b) An "MPFA Debt Service Account", to which there shall be irrevocably
appropriated, pledged and credited: (1) upon receipt from the Commissioner of Finance
of the State of Minnesota, the annual amount of money needed for payment of principal
and interest due each year on the Note from moneys allotted or to be allotted to the City
from its account in the Municipal State-Aid Street Fund; (2) any collections of taxes
which may hereafter be levied for payment of the principal of and interest on the Note;
(3) all investment earnings on moneys held in the MPFA Debt Service Account; (4) any
amounts transferred from the MPFA Construction Account; and (5) any other moneys
which are properly available and are appropriated by the City Council to the MPFA Debt
Service Account. The moneys in the MPFA Debt Service Account shall be used only to
pay or prepay the principal of and interest on the Note and to pay any rebate due to the
United States with respect to the MPFA Bonds in connection with the Note.
2170696v1 8
No portion of the proceeds of the Note 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 Note was issued, and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Note or $100,000. To
this effect, any proceeds of the Note and any sums from time to time held in the MPFA
Construction Account or MPFA Debt Service Account (or any other City account which will be
used to pay principal or interest to become due on the Note) in excess of amounts which under
the federal arbitrage regulations may be invested without regard to yield shall not be invested at a
yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such
investments after taking into account any applicable "temporary periods" or minor portion made
available under the federal arbitrage regulations. Money in the 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 Note to be
"federally guaranteed" within the meaning of Section 149(b) of the Federal Internal Revenue
Code of 1986, as amended (the "Code").
The City shall observe the covenants of paragraphs 16, 17 and 18 of this resolution and of
Article IV of the Project Loan Agreement with regard to the Fund.
10. Restoration of Moneys. If any moneys of the City other than moneys received
from the City State-Aid Street Fund are used for the payment of the Note, the moneys so used
shall be restored to the appropriate fund from the moneys next received by the City from the
Construction or Maintenance Account in the City's State-Aid Street Fund which are not required
to be paid into a debt service account for other obligations.
11. Pledge of Allotted Moneys. There is hereby irrevocably pledged and appropriated
to the MPFA Debt Service Account moneys allotted or to be allotted to the City from its account
in the City's State-Aid Street Fund in an amount sufficient to pay the principal of and interest on
the Note as they respectively become due.
12. Covera eg Test. It is hereby determined and reasonably anticipated that the
estimated collections of the moneys to be available from the City's State-Aid Street Fund and to
be deposited to the MPFA Debt Service Account will produce at least five percent in excess of
the amount needed to meet, when due, the principal of and interest on the Note.
13. General Obligation Pledge. The full faith, credit and taxing powers of the City
shall be, and are hereby, irrevocably pledged for the prompt and full payment of the principal
and interest on the Note as the same respectively become due. If the balance in the MPFA Debt
Service Account shall at any time be insufficient to pay such principal and interest when due on
the Note payable from the MPFA Debt Service Account, the City covenants and agrees to levy,
without limitation as to rate or amount, an ad valorem tax upon all taxable property in the City
sufficient to pay such principal and interest as they become due. If the balance in the MPFA
Debt Service Account is ever insufficient to pay all principal and interest then due on the Note
and any other obligations payable therefrom, the deficiency shall be promptly paid out of any
other funds of the City which are available for such purpose, and such other funds may be
2170696v1 9
reimbursed, with or without interest, from the MPFA Debt Service Account when a sufficient
balance is available therein.
14. Certificate of Rep~istration. The Finance 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 Note has been entered in the County Auditor's Bond
Register.
15. Project Loan Agreement. The Project Loan Agreement is hereby approved in
substantially the form heretofore presented to the City Council, and in the form executed by the
MPFA is hereby incorporated by reference and made a part of this resolution. Each and all of
the provisions of this resolution relating to the Note are intended to be consistent with the
provisions of the Project Loan Agreement, and to the extent that any provision in the Project
Loan Agreement are in conflict with this resolution as it relates to the Note, that provision shall
control and this resolution shall be deemed accordingly modified. The Mayor and Administrator
are hereby authorized and directed to execute the Project Loan Agreement. The execution of the
Project Loan Agreement by the appropriate officers shall be conclusive evidence of the approval
of the Project Loan Agreement in accordance with the terms hereof. The Project Loan
Agreement may be attached to the Note, and shall be attached to the Note if the holder of the
Note is any person other than the MPFA.
16. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the MPFA, and to the attorneys approving the legality of the
issuance of the Note, certified copies of all proceedings and records of the City relating. to the
Note and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Note as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
17. Negative Covenants as to Use of Proceeds and Protect. The City hereby
covenants not to use the proceeds of the Note or to use the Project, or to cause or permit them to
be used, or to enter into any deferred payment arrangements for the cost of the Project, in such a
manner as to cause either of the Note to be a "private activity bond" within the meaning of
Sections 103 and 141 through 150 of the Code. The City reasonably expects that no actions will
be taken over the term of the Note that would cause them to be a private activity bond, °and the
average term of the Note is not longer than reasonably necessary for the governmental purpose
of the issue. The City hereby covenants not to use the proceeds of the Note in such a manner as
to cause the Note to be a "hedge bond" within the meaning of Section 149(g) of the Code.
The City hereby covenants not to use the proceeds of the Note or to use the Project, or to
cause or permit them to be used, or to enter into any deferred payment arrangement for the cost
of the Project, in such a manner as to cause the MPFA Bonds to be "private activity bonds"
within the meaning of Sections 103 and 141 through 150 of the Code. The City reasonably
expects that it will take no actions over the term of the Note that would cause the MPFA Bonds
2170696v1 10
to be private activity bonds, and the average term of the Note is not longer than reasonably
necessary for its governmental purpose.
18. Tax-Exempt Status of the Note; Rebate; Elections. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion of the interest on
the Note from gross income under Section 103 of the Code, including without limitation
requirements relating to temporary periods for investments, limitations on amounts invested at a
yield greater than the yield on the Note, and the rebate of excess investment earnings to the
United States. If any elections are available now or hereafter with respect to arbitrage or rebate
matters relating to the Note, the Mayor, Finance Director, or either of them, are hereby
authorized and directed to make such elections as they deem necessary, appropriate or desirable
in connection with the Note, and all such elections shall be, and shall be deemed and treated as,
elections of the City.
19. Tax-Exempt Status of the MPFA Bonds; Rebate. The City with respect to the
Note shall comply with requirements necessary under the Code to establish and maintain the
exclusion of the interest on the MPFA Bonds from gross income under Section 103 of the Code,
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 MPFA Bonds, and (c) the
rebate of excess investment earnings to the United States. The. City covenants and agrees with
.the MPFA and holders of the Note that the investments of proceeds of the Note, including the
investment of any revenues pledged to the Note which are considered gross proceeds of the
MPFA Bonds under the applicable regulations, and accumulated sinking funds, if any, shall be
limited as to amount and yield in such manner that the MPFA Bonds shall not be arbitrage bonds
within the meaning of Section 148 of the Code and any regulations thereunder. On the basis of
the existing facts, estimates and circumstances, including the foregoing findings and covenants,
the City hereby certifies that it is not expected that the proceeds of the Note will be used in such
manner as tQ cause the MPFA Bonds to be arbitrage bonds under Section 148 of the Code and
any regulations thereunder. The Mayor and Finance Director shall furnish a certificate to the
MPFA embracing or based on the foregoing certification at the time of delivery of the Notes to
the MPFA. The proceeds of the Note will likewise be used in such manner that the Note is not a
private activity bond under Section 103(b) of the Code.
20. Designation of Qualified Tax-Exempt Obligation. In order to qualify the Note as
a "qualified tax exempt obligation" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Note is issued after August 7, 1986;
(b) the Note is not a "private activity bond" as defined in Section 141 of the
Code;
(c) the City hereby designates the Note as a "qualified tax exempt obligation"
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
2170696v1 1 1
bonds) which will be issued by the City (and all entities treated as one issuer with the
City, and all subordinate entities whose obligations are treated as issued by the City)
during this calendar year 2008 will not exceed $10,000,000; and
(e) not more than $10,000,000 of obligations issued by the City during this
calendar year 2008 have been designated for purposes of Section 265(b)(3) of the Code.
The City shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this paragraph..
21. Consent to Representation. The City hereby consents to the representation by
Briggs and Morgan, Professional Association, which is acting as the City's bond counsel with
respect to the Note, of the MPFA with respect to the MPFA Bonds and the Note as the MPFA's
bond counsel pursuant to a special attorney appointment by the Attorney General of the State of
Minnesota.
22. 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.
23. 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.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
2170696v1 I2
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have compared the .attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and
complete transcript of the minutes of a meeting of the City Council duly called and held on the
date therein indicated, insofar as such minutes relate to the $2,431,500 General Obligation State-
Aid Loan Note of 2008.
WITNESS my hand and seal of the City on June 16, 2008.
Clerk
(SEAL)
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