96-045 RESEXTRACT OF MINq3TES OF A MEETING OF THE
CITY COLIP~C!L OF ~THE CITY OF
ELK RiVeR,~ M%NNESOTA
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 in the Elk River City Hall on July 15,
1996, commencing at 6~0D P.M., C.T., in part for the purpose
of considering certain offers which had been received for the
purchase of the City's $2,100,000 General Obligation Ice Arena
Bonds, Series 1996C.
The following Councilmembers were present:
DUITSMAN, DIETZ, SCHEEL, FARBER and HOLMGREN
and the following were absent:
None
During said meeting Councilmember Farber
introduced the following Resolution and moved its adoption:
RESOLUTION NO.~ 96-45
RESOLUTION PROVIDING FOR THE
ISSUANCE AND SALE OF THE CITY'S
$2,100,000 GENERAL OBLIGATION iCE
ARENA BONDS, SERIES 1996C
BE IT RESOLVED by the City Council (the "Council") of
the City of Elk River, Minnesota (the "City"), as follows:
1. R~citals. It is hereby determined:
(a) Pursuant to Minnesota Statutes, Sections 471.15 to
471.1911 and 475.58, Subdivision 3, the City has dete~mined
to ac.c/mire, develop, equip, furnish, operate, and maintain
an indoor ice arena intended to be used predominately for
youth athletic facilities (the "Ice Arena"), and the costs
of completing and financing the ice Arena are currently
estimated to be not less than $2,100,000.
324502.1
(b) It is therefore determined to be necessary and
expedient that the City issue its $2,100,000 General
Obligation Ice Arena Bo!%~!£e~ies 1996C (the "Bonds"),
pursuant to Minnesota Statutes, Chapter 475 (including
particularly Section 475.58, Subdivision 3, thereof), to
provide financing for the Ice Arena.
(c) The Ice Arena and its financing (i) have been
approved by a certain resolution adopted on March 25, 1996,
by the School Board of the Elk River School District
(Independent School District No. 728), and the Ice Arena
would be located within the School District, and (ii) are
hereby approved by this resolution of the City Council.
(d) The Bcnds will be and hereby are secured by a
pledge of and first lien on the gross revenues of the Ice
Arena.
(e) The City Council hereby finds, based on analyses
provided by Marquette Partners, that the Ice Arena's gross
revenues and other available money will be sufficient to pay
the Bonds, without reliance on a property tax levy or the
City's genezal purpose state aid.
(f) On June 3, 1996, the City Council held a public
hearing on the question of the issuance of the Bonds to
finance the Ice Arena. Notice of that public hearing was
published in the City's official newspaper on May 22 and
May 29, 1996, and all persQns who attended the public
hearing were given an opportunity to provide their oral
and/or written comments on 'these issues.
(g) At no time on or before the date hereof has the
City received any petition signed by registered voters equal
to 10% of the votes cast in the last general election in the
City requesting that a vote be held on the issuance of the
Bonds for the Ice Arena.
(h) The City has retained Springsted Incorporated, St.
Paul, Minnesota, as its independent financing advisor for
the Bonds and is therefore authorized to issue and sell the
Bonds by private negotiation in accordance with Minnesota
Statutes, Section 4'75.60, Subdivision 2(9).
324502.1
2. Acceptance of Offer. The First National Bank of
Elk River, the Bank of Elk River, and the State Bank of Rogers
(collectively, the "Purcha~r~")~'~~ offered to purchase the
Bonds at par, the Bonds to be subject to the terms and conditions
herein provided. The Bonds shall consist of three separate Bond
certificates, two in the aggregate principal amount of $900,000
each purchased by the Bank of Elk River and the First National
Bank of Elk River, respectively, and one in the aggregate
principal amount of $300,000 purchased by the State Bank of
Rogers. Each of the Purchasers has submitted to the Council for
its consideration a separate Bond Purchase Agreement respecting
the Bond to be purchased by it, and the Council hereby approves
said Agreements and authorizes and approves the City's execution
and delivery thereof at such time and with such amendments
thereto as the City officials executin~ the same may deem
desirable, as evidenced by their execution and delivery thereof.
3. Title; Oriqinal Issue Date: Denominations~.
Maturities. The Bonds shall be titled "General Obligation Ice
Arena Bonds, Series 1996C," shall be dated July 16, 1996, or as
soon thereafter as simultaneous settlement of all of the Bonds
can be arranged with the Purchasers. The Bonds shall be fully
registered and numbered R-I, R-2 and R-3 in the denominations of
$900,000, $900,000 and $300,000, respectively. Each of the
$900,000 Bonds shall be repayable as to principal in installments
due on December 1 in the years and amounts, respectively, as
follows:
Year Amount
1997 $ 15,000
1998 35,000
1999 40,000
2000 40,000
2001 40,000
2002 A5,000
2003 45,000
2004 50,000
2005 50,000
2006 55,000
2007 60,000
2008 60,000
2009 65,000
2010 70,000
2011 75,000
2012 75~000
2013 80~000
$900,000
The $300,000 Bond shall be repayable as no principal in
installments due on December 1 in the years and amounts,
respectively, as follows:
324502.1 3
Year Amount
1997 $ 10,000
1998 10,000
1999 5,000
2000 10,000
2001 15,000
2002 15,000
2003 20,000
2004 15,000
2005 20,000
2006 20,000
2007 15,000
2008 25,000
2009 20,000
2010 20,000
2011 20,000
2012 30,000
2013 30,000
$300,000
4. Purpose. The Bonds shall provide funds to finance
the Ice Arena. The total cost of the Ice Arena, 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 Ice Arena shall proceed with due diligence to
completion.
5. Interest. The principal amounts of the Bonds
shall bear interest at the rate of 5.70% per annum, with interest
payable semiannually on June 1 and December 1 of each year (each,
an "Interest Payment Date"), commencing June 1, 1997, calculated
on the basis of a 360-day year consisting of twelve 30-day
months.
6. Redemption. The principal installments of each of
the Bonds shall be subject to redemption and prepayment prior to
their respective stated maturity dates, at par plus accrued
interest to date of redemption, in inverse order of stated due
dates upon at least fifteen days' prior written notice to the
applicable owner of a Bond being redeemed in whole or in part.
Each partial redemption of a Bond shall be in a principal amount
of not less than $10,000.
7. Bond Registrar. The City Finance Director 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.
324502.1 4
8. Form of Bond. The Bonds, together with the Bond
Registrar's Certificate of Registration, shall be in
substantially the following form:
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
R- $
GENERAL OBLIGATION ICE
ARENA BOND, SERIES 1996C
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
, or its registered assigns '(the "Registered
Owner"), the Principal Sum of HUNDRED
THOUSAND DOLLARS ($ ) on December 1 in the years and
principal amounts, respectively, as follows:
Year
1997
1998
1999
'2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Principal Amount
$
or on any earlier date on which the principal amounts of this
Bond may be and shall have been duly called for prepayment, and
to pay interest to the Registered Owner from the date hereof on
the principal amounts hereof until the same are paid at the rate
of five and seventy hundredths percent (5.70%) per annum,
interest to maturity payable on June 1, 1997, and on each
December 1 and June 1 thereafter (the "Interest Payment Dates").
Interest shall be calculated on the basis of a 360-day year
consisting of 12 months of 30 days each. The City Finance
324502.1 5
Director will pay the interest due on this Bond on each 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 such Interest Payment Date. Both principal of
and interest on this Bond 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 Bond, the
Registered Owner shall surrender this Bond to the City Finance
Director.
The principal installments of this Bond are subject to
prepayment at the option of the City at any time, in inverse
order of their respective stated maturity dates, in whole or in
part, at par plus accrued interest to the date of prepayment,
upon 15 days' prior written notice to the Registered Owner. Each
prior redemption of this Bond shall be in a principal amount of
not less than $10,000.
This Bond 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 and constructing a municipal ice arena in the City
intended predominantly for youth athletic activities. This Bond
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 Bond 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 Bond to the City Finance Director either in
exchange for a new fully registered Bond or for transfer of this
Bond on the registration records. Each such assignee shall take
this Bond subject to this condition. The City shall treat the
Registered Owner as the absolute owner of this Bond for purposes
of paying the principal of and interest on this Bond and for all
other purposes whatsoever.
This Bond has been designated by the City as a "qualified
tax-exempt obligation" for purposes of Section 265(b) (3) of the
Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, con-
ditions, 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 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 indebtedness of the City outstanding on
324502.1 6
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 Bond 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 Bond; and has caused this Bond to be dated
, 1996.
City Aaministrator
Mayor
324502
7
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Bond was as of the
latest date listed below registered in the name of the last
Registered Owner noted below, and that, at the request of said
Registered Owner of this Bond, the undersigned has as of said
applicable date registered this Bond as to principal and interest
on the Bond 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
DATE OF
REGISTRATION
SIGNATURE OF CITY
FINANCE DIRECTOR
, 1996
, 19
, 19
, 19
, 19
324502.1 8
9. Legal Opinion. The City Finance Director shall
obtain a copy of the proposed approving legal opinion of bond
counsel for the Bonds, Briggs and Morgan, St. Paul, Minnesota,
and shall cause such opinion to be filed in the offices of the
City.
10. Execution. The Bonds shall be executed on behalf
of the City by the manual signatures of the Mayor and the City
Administrator (or, in the event of the unavailability of either,
by the Acting Mayor and/or the Acting City Administrator) and
shall be duly registered by the manual signature of the City
Finance Director as Bond Registrar. The official seal of the
City shall be impressed upon the Bonds. The Bonds, when fully
executed and sealed, shall be delivered by the City Finance
Director to the respective Purchasers upon receipt of the
purchase prices thereof, and the Purchasers shall not be
obligated to see to the proper application thereof.
11. Treatment of Registered Owner. The City 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 interest on such Bond and for all
other purposes whatsoever whether or not such Bond shall be
overdue, and neither the City nor the Bond Registrar shall be
affected by notice to the contrary.
12. Delivery; Application of Proceedm. The Bonds when
so prepared and executed shall be delivered by the City Finance
Director to the Purchaser upon receipt of the purchase price, and
the Purchaser shall not be obliged to see to the proper
application thereof.
13. Fund and Accounts. There is hereby created a
special fund of the City designated the "$2,100,000 General
Obligation Ice Arena Bonds, Series 1996C Fund" (the "Fund") to be
held and administered by the City as a bookkeeping account
separate and apart from all other funds maintained in the
official financial records of the City. The Fund shall continue
to be maintained in the manner herein specified until all of the
Bonds herein authorized and all other bonds payable from said
Fund and the interest thereon have been fully paid. There shall
be maintained in the Fund two (2) separate accounts, to be
designated the "Capital Account" and "Debt Service Account",
respectively.
(i) Capital Account. To the Capital Account there shall be
credited the proceeds of the sale of the Bonds, less amounts
thereof directed in paragraph 13(ii) below for deposit into the
Debt Service Account. From the Capital Account there shall be
paid all costs and expenses of issuing the Bonds and of acquiring
and completing the Ice Arena, including the cost of any
construction contracts heretofore let and all other costs
incurred and to be incurred of the kind authorized in Minnesota
324502.1 9
Statutes, Section 475.65; and the moneys in said account shall be
used for no other purpose except as otherwise provided by law;
provided that the proceeds o~,.~e Bonds may also be used to the
extent necessary to pay interest on the Bonds due prior to the
anticipated date of commencemenE of the collection of revenues
from the Ice Arena.
(ii) Debt Service Account. There are hereby irrevocably
appropriated and pledged to, and there shall be credited to, the
Debt Service Account: (a) the "Gross Revenues" (hereinafter
defined) of the Icc Arena, but only at such times and in such
amounts as may be required, when combined with other monies
available in the Debt Service Account for such purposes, to pay
the principal of and interest on the Bonds, when due; (b) all
collections of any taxes hereafter levied for the payment of the
Bonds and interest thereon; (c) all funds remaining in the
Capital Account after completion of the Ice Arena and payment of
the costs thereof; (d) all investment earnings on funds held in
the Debt Service Account; and (e) any and all other moneys which
are properly available and are appropriated by the Council to tho
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. As in this Resolution, "Gross Revenues"
means all revenue derived by the City, from whatever source, from
its operation of the Ice Arena.
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 (5%) of
the "Sale Proceeds" of the Bonds (being the "issue price" of the
Bonds less accrued interest). To this effect, any proceeds of
the Bonds and any sums from time to time held in the CapiEal
Account or Debt Service Account in excess of amounts which under
then-applicable 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 Bonds to be "federally ~uaranteed"
within the meaning of Section 149(b) of the federal Internal
Revenue Code of ].986, as amended (the "Code").
14. 105% Debt Service Coverage. It is hereby
determined and reasonably anticipated that the estimated
collections of Gross Revenues from the Ice Arena and the other
324502.1 ! 0
revenues available to the Debt Service Account will produce at
least 5% in excess of the amount needed to meet, when due, the
principal of and interest ~n~~s. Accordingly, no tax levy
is needed at this time or anticipated to be necessary hereafter.
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 said official required by Minnesota
Statutes, Section 475.63.
15. General Obliqation Pledqe. 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 Bonds, 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 Council shall levy ad valorem taxes on all taxable
property in the City in tke amount of such deficiency. 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 City which are available for such
purpose, and such other funds may be rei,~bursed with or without
interest from the Debt Service Account when a sufficient balance
is available therein.
16. Records and Certificates. The officers of the
City 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 City relating to the Bonds and to the financial
condition and affairs of the City, and such other affidavits,
~~~=~cates ~ 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 City as to the
facts recited therein.
17. Neqative Covenant as to Use of Ice Arena. The
City hereby covenants not to use the Ice Arena or to cause or
permit the Ice Arena to be used, or to enter into any deferred
arrangements for use of the Ice Arena or payment of the cost of
the Ice Arena, in such a manner as (or to take any action or
permit any other circumstance to exist or any action to be taken,
the effect to which would be) to cause the Bonds to be "private
activity bonds" within the meanin~ of Sections 103 and 141
through 150 of the Code. In particular, but without limitation,
the City covenants to forebear the implementation, effectuation
or enforcement of any and all contracts or other agreements
respecting the Ice Arena or any property benefitted thereby or
assessed winh respect thereto, which it may now or in the future
have with users, managers, developers, contractors, owners or any
other person or parties to the extent that such implementation,
324502.1 1 !
effectuation or enforcement would (individually or in the
aggregate) cause the Bonds to become such "private activity
bonds," and to said limited~ ~t~h~he City would and hereby does
(solely for the benefit of the ~wners of the Bonds) disavow any
and all such provisions, entitlements and enforcements which
would or could become so offending.
18. Tax-Exempt Status of the Bonds; Rebate. The City
shall comply with requirements necessary under the Code to
establish and maintain the exclusion from gross income under
Section 103 of the Code of the interest on the Bonds, including
without limitation (1) requirements relating to temporary periods
for investments, (2) limitations on amounts invested at a yield
greater than the yield on the Bonds, and (3) the rebate of excess
investment earnings to the United States if the Bonds (together
with other obligations reasonably expected to be issued and
outstanding at one time in this calendar year) exceed the
small-issuer exception amount of $5,000,000. The City does not
expect to qualify for the small issuer exception to the federal
arbitrage rebate requirements because it is currently expected
that the aggregate face amount of all tax-exempt ob!J. gations
(other than private activity bonds) issued by the City (and all
entities subordinate to, or treated as one issuer with, the City)
during .the 1996 calendar year will exceed $5,000,000. The City
may avail itself of such other exceptions to arbitrage rebate as
may be available.
19. Desiqnation of Qualified Tax-Exempt Obliqations.
In order to qualify the Bonds as "qualified tax-exempt
obligations" within the meaning of Section 265(b) (3) of the Code,
the City 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 City 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 City (and all entities
subordinate to, or treated as one issuer with, the City)
during calendar year 1996 will not exceed $10,000,000; and
(e) not more than $!0,000,000 of obligations issued or
to be issued by the City during calendar year 1996 have been
designated for purposes of Section 265(b) (3) of the Code.
12
The City shall use its best efforts to comply with any federal
procedural requirements wh~~pply in order to effectuate
the designation made by thi~~'~aph.
20. Defeasance. When any obligation of a Bond has
been discharged as provided in this paragraph, all pledges,
covenants and other rights granted by this Resolution to the
registered owner of that Bond (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 any Bond, 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 mny interest payment on such Bond 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 redemotion date).
21. Compliance With Reimbursement Bond Requlations.
With respect to the Ice Arena, the City has complied and will
continue to comply with the "Reimbursement Regulations" provided
in United States Treasury Regulations Section 1.150-2. In
particular, except where the following may not be required by
said Regulations (e.g., with respect to certain "preliminary
expenditures"), t~ the extent that any of the proceeds of the
Bonds will be used to reimburse the City for a cost of the Ice
Arena theretofore paid and temporarily financed by the City out
of other City funds, prior to the initial payment thereof (or
within applicable time limits thereafter) the City has made or
wi].l have made a duly qualifying statement of its official intent
to bond for such costs (and the City will also make the written
"reimbursement allocation" required by the Reimbursement Regula-
tions); otherwise, the proceeds of the Bonds are to be used for
initial payment, and not for such reimbursement, of costs of the
Ice Arena.
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 shall not limit or
define the meaning of any provision hereof.
324502.1 13
24. NO Continuinq Disclosure Obliqation. Based upon
the representations made by th~Pu~hasers in their respective
Bond Purchase Agreements and upon the fact that the authorized
denominations of the Bonds exceed $!00,000, Rule 15c2-12(b) (5) of
the Securities and Exchange Commission, respecting continuing
disclosure, does not apply to the Bonds.
Adopted on July 15, 1996, by the Elk River City
Council.
The motion for the adoption of th-~ foregoing resolution was
duly seconded by Councilmember Holmgren and upon a vote
being taken thereon, the ~ol!~wing voted in favor thereof:
Duitsman, Dietz, Farber and Ho£mgren
and the foi!owin~ voted against the same:
Scheel
Whereupon said resolution was declared duly passed and
adopted.
324502.1 ! 4