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HomeMy WebLinkAbout8A-Bond Sale O� PRION. ti 0.4 U 4646 Dakota Street SE Prior Lake, MN 55372 4fNNESO"t CITY COUNCIL AGENDA REPORT MEETING DATE: APRIL 27, 2015 AGENDA#: 8A PREPARED BY: CATHY ERICKSON, ACCOUNTING MANAGER PRESENTED BY: CATHY ERICKSON AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION PROVIDING FOR THE ISSU- ANCE AND SALE OF $10,000,000 GENERAL OBLIGATION BONDS, SERIES 2015A AND $2,490,000 TAXABLE GENERAL OBLIGATION BONDS, SERIES 2015B DISCUSSION: Introduction Ms. Tammy Omdal from Northland Securities Inc., will present to the Council a completed resolution formally authorizing the issuance of general obligation bonds in the amount $12.49 million for the following projects and the refunding of the 2007A Water Treatment Facility bonds: • TH 13/ 1501h Street • 2015 Reconstruction Project • Mushtown / Maple/ Panama • Credit River Road Tonight's request Council approval for the negotiated public sale of$10,000,000 General Obligation, Series 2015A and $2,490,000 Taxable General Obligation Bonds, Series 20158. A copy of the resolution is attached for the Council's review. The City's bond counsel, Briggs and Morgan, prepared the resolution. History The City Council approved Resolution #15-056 and #15-057 on March 23, 2015, which authorized a negotiated bond sale, designed to time the sale in the market to obtain the optimum interest rate on these bonds. Current Circumstances The bonds have been rated AA+ by Standard and Poor's and Aa2 by Moody's In- vestor Service. The reports issued by S&P and Moody's are attached to this agen- da report. Also attached are summary reports for the 2015A Bonds and 2015B Bonds. Conclusion The City Council will consider a resolution approving the issuance and sale of bonds. ISSUES: The sale of these bonds in the present bond climate have resulted in interest rates that are very favorable. FINANCIAL The net interest cost of the bond issue is as follows: IMPACT: New Mone * Refundin Net Interest Cost 2.3657441% t2.6393253% (NIC) *combined NIC for New Money portion, inclusive of the 2015A Bonds and 2015B Bonds 2015A* 2015B Net Interest Cost 2.4803566% 2.021426% NIC *includes both New Money portion and Refunding portion All Bonds maturing on December 15, 2023 and thereafter, shall be subject to re- demption and prepayment at the option of the City on December 15, 2022, and on any date thereafter at a price of par plus accrued interest. The 2016 debt service tax levy for the combined 2015A (new money portion) and 2015B bond issues is estimated to be $95,146. This 2015A bond issue includes a partial refunding of$5,160,000 of the 2007A bond issue. The present value of the savings generated by the refunding is $536,816. There is no debt service tax levy for the 2007A bond issue; debt service is paid from enterprise fund (water) revenue. ALTERNATIVES: The following alternatives are available to the City Council: 1. Adopt Resolutions Providing for the Issuance and Sale of$10,000,000 General Obligation Bonds, Series 2015A and $2,490,000 Taxable General Obligation Bonds, Series 2015B. 2. Reject bond sale for a specific reason. RECOMMENDED Alternative#1 MOTION: ATTACHMENTS: 1. Resolution 2. Standard & Poor's Rating Report (AA+) 3. Moody's Rating Report (Aa2) 4. 2015A Bonds Reports (Pages 1-11) 5. 2015B Bonds Reports (Page 1-6) EXTRACT OF MINUTES OF A MEETING CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA HELD: April 27, 2015 Pursuant to due call, a regular or special meeting of the City Council of the City of Prior Lake, Scott County, Minnesota,was duly held at the City Hall on April 27, 2015, at 7:00 P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of$10,000,000 General Obligation Bonds, Series 2015A. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $10,000,000 GENERAL OBLIGATION BONDS, SERIES 2015A, PLEDGING FOR THE SECURITY THEREOF NET REVENUES AND SPECIAL ASSESSMENTS AND LEVYING A TAX FOR THE PAYMENT THEREOF A. WHEREAS, the City Council of the City of Prior Lake, Minnesota(the "City"), has heretofore determined and declared that it is necessary and expedient to issue $10,000,000 General Obligation Bonds, Series 2015A (the "Bonds" or individually a "Bond"), pursuant to (i) Minnesota Statutes, Chapter 475 and 429, to finance the construction of various public improvements within the City(the "Improvements'), in the amount of$4,640,000 (the "Improvement Portion of the Bonds") and (ii) Minnesota Statutes, Section 475.67 to finance a partial crossover refunding on December 15, 2017 (the "Crossover Date") of the City's $8,500,000 original principal amount of General Obligation Water Treatment Plant Revenue Bonds, Series 2007A, dated May 15, 2007 (the "Series 2007A Bonds"), which mature, or are subject to mandatory redemption, on and after December 15, 2023 (the "Prior Bonds") in the amount of$5,360,000 (the "Refunding Portion of the Bonds"); and B. WHEREAS, the Improvements and all their components have been ordered prior to the date hereof, after a hearing thereon for which notice was given describing the Improvements or all their components by general nature, estimated cost, and area to be assessed; and C. WHEREAS, the City owns and operates a municipal water system (the "System") as a separate revenue producing public utility and other than the Prior Bonds, there are no outstanding obligations of the City, the interest and principal of which would constitute a prior lien upon the net revenues of the System; and D. WHEREAS, $5,160,000 aggregate principal amount of the Prior Bonds will be called on the Crossover Date (the "Refunded Bonds"), at a price of par plus accrued interest, as provided in the resolution of the City Council adopted on April 30, 2007, authorizing the issuance of the Prior Bonds (the "Prior Resolution"); and 7000395v1 E. WHEREAS, the Refunding of the Refunded Bonds is consistent with covenants made with the holders thereof, and is necessary and desirable for the reduction of debt service cost to the City; and F. WHEREAS, $2,350,000 aggregate principal amount of the Series 2007A Bonds (the "Outstanding Bonds") maturing in the years 2015 through 2022 shall be paid in accordance with the Prior Resolution and as such is consistent with the covenants made with the holders thereof, and G. WHEREAS, the City has retained Blue Rose Capital Advisors, Inc., in Minneapolis, Minnesota, as its independent financial advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); and H. WHEREAS, it is in the best interests of the City that the Bonds be issued in book- entry form as hereinafter provided; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Prior Lake, Minnesota, as follows: 1. Acceptance of Offer. The offer of Northland Securities, Inc. (the "Purchaser"), to purchase the Bonds in accordance with the terms and at the rates of interest hereinafter set forth, and to pay therefor the sum of$10,159,786.50, plus interest accrued to settlement, is hereby accepted. 2. Bond Terms. (a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds shall be dated May 1, 2015, as the date of original issue and 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(the "Authorized Denominations") and shall mature on December 15 in the years and amounts as follows: Year Amount Year Amount 2018 $75,000 2025 $1,290,000 2019 75,000 2026 1,140,000 2020 75,000 2027 1,105,000 2021 75,000 2028 1,120,000 2022 75,000 2029 1,190,000 2023 885,000 2030 1,185,000 2024 1,070,000 2031 640,000 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). 7000395v1 (b) Allocation. The Improvement Portion of the Bonds, being the aggregate principal amount of$4,640,000, maturing in each of the years and amounts hereinafter set forth, is issued to finance the Improvements. The Refunding Portion of the bonds,being the aggregate principal amount of$5,360,000,maturing in each of the years and amounts hereinafter set forth is issued to finance the Refunding: Improvement Refunding Year Portion Portion Total Amount 2018 $75,000 $ 75,000 2019 75,000 75,000 2020 75,000 75,000 2021 75,000 75,000 2022 75,000 75,000 2023 $405,000 480,000 885,000 2024 575,000 495,000 1,070,000 2025 775,000 515,000 1,290,000 2026 610,000 530,000 1,140,000 2027 555,000 550,000 1,105,000 2028 550,000 570,000 1,120,000 2029 600,000 590,000 1,190,000 2030 570,000 615,000 1,185,000 2031 640,000 640,000 If Bonds are prepaid, the prepayments shall be allocated to the portions of debt service (and hence allocated to the payment of Bonds treated as relating to a particular portion of debt service) as provided in this paragraph. If the source of prepayment moneys is the general fund of the City, or other generally available source, the prepayment may be allocated to any of the portions of debt service in such amounts as the City shall determine. If the source of a prepayment is special assessments pledged to and taxes levied for the Improvements,the prepayment shall be allocated to the Improvement Portion of debt service. If the source of prepayments is excess net revenues of the System pledged for the Prior Bonds,the prepayment shall be allocated to the Refunding Portion of the Bonds. For the purpose of complying with Minnesota Statutes, Section 475.54, Subdivision 1, the maturity schedule for the Bonds has been combined with the maturity schedule of the City's outstanding Taxable General Obligation Bonds, Series 2015B, as permitted by Minnesota Statutes, Section 475.54, Subdivision 2. (c) Book Entry 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: (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 7000395v1 complying with this requirement under paragraphs 5 and 10 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(as hereinafter defined) 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 City 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 City, 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 City 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 City 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 purpose 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 City'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 hereof, references to the Nominee hereunder shall refer to such new Nominee. 7000395v1 (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 City, as the case may be,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 City 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 City or the Bond Registrar may establish a special record date for such consent or other action. The City 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 to the extent possible. (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, make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (d) Termination of Book-Entry Only System. Discontinuance of a particular Depository's services and termination of the book-entry only system may be 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 City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bond if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book-entry transfers through the Depository is not in the best interests of the City or the Beneficial Owners. 70003950 (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City or the Beneficial Owners of the Bond 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 may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10, the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph(d) shall limit or restrict the provisions of paragraph 10. (e) 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. Purpose; Refunding Findings. The Improvement Portion of the Bonds shall provide funds to finance the construction of the Improvements (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 Improvement Portion of the Bonds. 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 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 Refunding Portion of the Bonds shall provide funds for a crossover refunding of the Refunded Bonds (the "Refunding"). It is hereby found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, Subdivision 13, and as of the Crossover Date, shall result in a reduction of the present value of the dollar amount of the debt service to the City from a total dollar amount of$6,373,411.96 for the Prior Bonds to a total dollar amount of$5,847,390.18 for the Refunding Portion of the Bonds, computed in accordance with the provisions of Minnesota Statutes, Section 475.67, Subdivision 12, and accordingly the dollar amount of such present value of the debt service for the Refunding Portion of the Bonds is lower by at least three percent than the dollar amount of such present value of the debt service for the Prior Bonds, as required in Minnesota Statutes, Section 475.67, Subdivision 12. 4. Interest. The Bonds shall bear interest payable semiannually on June 15 and December 15 of each year(each, an "Interest Payment Date"), commencing December 15, 2015, 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: 7000395v1 Maturity Year Interest Rate Maturity Year Interest Rate 2018 1.00% 2025 2.00% 2019 1.00 2026 2.50 2020 1.50 2027 2.50 2021 1.50 2028 3.00 2022 1.50 2029 3.00 2023 2.00 2030 3.00 2024 2.00 2031 3.00 5. Redemption. All Bonds maturing on December 15, 2023 and thereafter, shall be subject to redemption and prepayment at the option of the City on December 15, 2022, and on any date thereafter at a price of par plus accrued interest. Redemption may be 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 City; 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 thirty days prior to the date fixed for redemption. 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 such 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 such Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such 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 such 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 City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the City and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly authorized in writing) and the City 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. 6. Bond Re istrar. Northland Trust Services, Inc., in Minneapolis, 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 City 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 7000395v1 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 12. 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: UNITED STATES OF AMERICA STATE OF MINNESOTA SCOTT COUNTY CITY OF PRIOR LAKE R- $ GENERAL OBLIGATION BOND, SERIES 2015A Interest Rate Maturity Date Date of Original Issue CUSIP % December 15, May 1, 2015 REGISTERED OWNER: CEDE& CO. PRINCIPAL AMOUNT: The City of Prior Lake, Scott 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, unless called for earlier redemption, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, and to pay interest thereon semiannually on June 15 and December 15 of each year(each, an "Interest Payment Date"), commencing December 15, 2015, 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 principal office of Northland Trust Services, Inc., in Minneapolis, 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 first day of the calendar month of 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 7000395v1 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,premium, if any, 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, and surrender of this Bond shall not be required for payment of the redemption price upon a partial redemption of this Bond. Until termination of the book-entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. Prior to the date on which any Bond or Bonds are directed by the Issuer to be redeemed in advance of maturity, the Issuer will cause notice of the call thereof for redemption identifying the Bonds to be redeemed to be mailed to the Bond Registrar and all Bondholders, at the addresses shown on the Bond Register. All Bonds so called for redemption will cease to bear interest on the specified redemption date, provided funds for their redemption have been duly deposited. Optional Redemption. All Bonds of this issue (the "Bonds")maturing on December 15, 2023, and thereafter, are subject to redemption and prepayment at the option of the Issuer on December 15, 2022, and on any date thereafter at a price of par plus accrued interest. Redemption may be 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 registered holder of the Bonds at least thirty days prior to the date fixed for redemption. 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 such 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 such 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 such 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 Obligation. 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, 7000395v1 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 City Council on April 27, 2015 (the "Resolution"), for the purpose of providing money to finance the construction of various public improvements within the jurisdiction of the Issuer and for a partial crossover refunding on December 15, 2017, of the Issuer's outstanding General Obligation Water Treatment Plant Revenue Bonds, Series 2007A, dated May 15, 2007, which mature or are subject to mandatory redemption on and after December 15, 2023. This Bond is payable out of the General Obligation Bonds, Series 2015A 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 Issuer have been and are hereby irrevocably pledged. Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the 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 office of the Bond Registrar. Transfer. This Bond is transferable by the Holder in person or the Holder's attorney duly authorized in writing at the 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. Authentication. 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. Qualified Tax-Exempt Obli ag tion. 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. 7000395v1 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; that the Issuer has covenanted and agreed with the Holders of the Refunding Portion of the Bonds that it will impose and collect charges for the service, use and availability of the water system(the "System") at the times and in amounts necessary to produce net revenues, together with other sums pledged to the payment of the Refunding Portion of the Bonds, adequate to pay all principal and interest when due on the Refunding Portion of the Bonds; and that the Issuer will levy a direct, annual, irrepealable ad valorem tax upon all of the taxable property of the Issuer, without limitation as to rate or amount, for the years and in amounts sufficient to pay the principal and interest on the Refunding Portion of the Bonds as they respectively become due, if the net revenues from the System, and any other sums irrevocably appropriated to the Debt Service Account are insufficient therefor; 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 City of Prior Lake, Scott County, Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and its City Manager, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: Registrable by: NORTHLAND TRUST SERVICES, INC. BOND REGISTRAR'S Payable at: NORTHLAND TRUST SERVICES, CERTIFICATE OF INC AUTHENTICATION CITY OF PRIOR LAKE, This Bond is one of the Bonds SCOTT COUNTY, MINNESOTA described in the Resolution mentioned within. NORTHLAND TRUST /s/Facsimile Mayor SERVICES, INC. Minneapolis, Minnesota Bond Registrar /s/Facsimile By: City Manager Authorized Signature 7000395v1 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 (Cust) (Minor) under the Uniform (State) 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 or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 Ad-15(a)(2). 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.) 7000395v1 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 7000395v1 8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of the City by the signatures of its Mayor and City Manager and be sealed with the seal of the City; provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate seal has been omitted. In the event of disability or resignation or other absence of either officer, the Bonds may be 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 such 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 City 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 May 1, 2015. 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 City 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 City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration(as provided in paragraph 9) 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 may be 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 office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City 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 canceled by the Bond Registrar and thereafter disposed of as directed by the City. 7000395v1 All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City 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 City 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. The City Manager is hereby authorized to negotiate and execute the terms of said agreement. 11. Rights 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 City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the first day of the calendar month of 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 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 premium, if any, and interest (subject to the payment provisions in paragraph 12) 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. 14. Delivery; Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Manager 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 established a special fund to be designated "General Obligation Bonds, Series 2015A Fund (the "Fund")to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds 70003950 maintained in the official financial records of the City. The Fund shall be maintained in the manner herein specified until all of the Bonds and the interest thereon have been fully paid. The Operation and Maintenance Account heretofore established by the City shall continue to be maintained in the manner heretofore provided by the City. All moneys remaining after paying or providing for the items set forth in the resolution establishing the Operation and Maintenance Account shall constitute or are referred to as "net revenues" until the Refunding Portion of the Bonds and the Outstanding Bonds have been paid. There shall be maintained in the Fund the following separate accounts to which shall be credited and debited all income and disbursements of the System as hereinafter set forth. The Manager and all officials and employees concerned therewith shall establish and maintain financial records of the receipts and disbursements of the System in accordance with this resolution. In such records there shall be established accounts or accounts shall continue to be maintained as the case may be, of the Fund for the purposes and in the amounts as follows: (a) Escrow Account. The Escrow Account shall be maintained as an escrow account with Northland Trust Services, Inc. (the "Escrow Agent"), in Minneapolis, Minnesota, which is a suitable financial institution within or without the State. $5,405,232.91 in proceeds of the sale of the Refunding Portion of the Bonds including a pro rata share of accrued interest shall be used to fund the Escrow Account and $55,055.00 proceeds of the sale of the Bonds shall be received by the Escrow Agent and applied to pay costs of issuing the Bonds. Proceeds of the Refunding Portion of the Bonds, less proceeds used to pay costs of issuance and any rounding(or surplus funds)returned to the City, are hereby irrevocably pledged and appropriated to the Escrow Account, together with all investment earnings thereon. The amounts deposited in the Escrow Account at closing shall be in an amount sufficient to provide funds, (i)to pay when due the interest to accrue on the Refunding Portion of the Bonds to and including the Crossover Date; and (ii)to pay when called for redemption on the Crossover Date,the principal amount of the Refunded Bonds. The Escrow Account shall be irrevocably appropriated to the payment of(i) all interest on the Refunding Portion of the Bonds to and including the Crossover Date, and (ii) the principal of the Refunded Bonds due by reason of their call for redemption on the Crossover Date. The moneys in the Escrow Account shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account may be remitted to the City, all in accordance with the Escrow Agreement, by and between the City and Escrow Agent (the "Escrow Agreement"), a form of which is on file in the office of the City Manager. Any moneys remitted to the City pursuant to the Escrow Agreement shall be deposited in the Debt Service Account. (b) Construction Account. To the Construction Account there shall be credited $4,571,529.40 of the proceeds of the sale of the Bonds, less accrued and capitalized interest received thereon, plus a pro rata share of any special assessments levied with respect to the Improvements and collected prior to completion of the Project and payment of the costs thereof. From the Construction Account there shall be paid all costs and expenses of the Project, including the cost of any construction contracts heretofore let and all other costs incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65. Moneys in the Construction 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 or special assessments herein levied or covenanted to be levied; and provided further that if upon completion of the Project there shall remain any unexpended balance in the Construction Account, the balance (other than any special assessments) shall be transferred by the Council to the Debt Service Account, or in the case of any balance attributable to the Improvement Portion of the Bonds,the fund of any other improvement instituted pursuant to Minnesota Statutes, Chapter 429, and provided further that any special assessments credited to the Construction Account shall only be applied towards payment of the costs of the Improvements upon adoption of a resolution by the City Council determining that the application of the special assessments for such purpose will not cause the City to no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (c) Debt Service Account. There shall be maintained separate subaccounts in the Debt Service Account to be designated the "Improvement Debt Service Subaccount" and the "Refunding Debt Service Subaccount." There are hereby irrevocably appropriated and pledged to, and there shall be credited to the separate subaccounts of the Debt Service Account: (i) Improvement Debt Service Subaccount. There are hereby irrevocably appropriated and pledged to, and there shall be credited to the Improvement Debt Service Subaccount: (i) a pro rata share of all collections of special assessments herein covenanted to be levied with respect to the Improvements and either initially credited to the Construction Account and not already spent as permitted above and required to pay any principal and interest due on the Improvement Portion of the Bonds or collected subsequent to the completion of the Improvements and payment of the costs thereof; (ii) capitalized interest in the amount of$125,798.82 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Improvement Portion of the Bonds on or before June 15, 2016); (iii) a pro rata share of all accrued interest received upon delivery of the Bonds; (iv) any collections of all taxes herein or hereafter levied for the payment of the Improvement Portion of the Bonds and interest thereon; (v) a pro rata share of funds remaining in the Construction Account after completion of the Improvements and payment of the costs thereof, not so transferred to the account of another improvement; (vi) all investment earnings on funds held in the Improvement Debt Service Subaccount; and(vii) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Improvement Debt Service Subaccount. The Improvement Debt Service Subaccount shall be used solely to pay the principal and interest and any premiums for redemption of the Improvement Portion of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. (ii) Refunding Debt Service Subaccount. To the Refunding Debt Service Subaccount there shall be irrevocably appropriated and pledged to: (i) after the December 15, 2017 Crossover Date, the net revenues of the System not otherwise pledged and applied to the payment of other obligations of the City, in an amount, together with other funds which may herein or hereafter from time to time be irrevocably 70oo395vl appropriated to the account sufficient to meet the requirements of Minnesota Statutes, Section 475.61 for the payment of the principal and interest of the Refunding Portion of the Bonds; (ii) any collections of all taxes which may hereafter be levied in the event the net revenues of the System herein pledged to the payment of the principal and interest on the Refunding Portion of the Bonds are insufficient therefor; (iii) any balance remitted to the City pursuant to the Escrow Agreement; (iv) all investment earnings on funds held in the Refunding Debt Service Subaccount; (v) any funds remaining after the Crossover Date in the debt service account established by the Prior Resolution; and (vi) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Refunding Debt Service Subaccount. The Refunding Debt Service Subaccount shall be used solely to pay the principal and interest and any premium for redemption of the Refunding Portion of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said subaccount as provided by law. 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. To this effect, any proceeds of the Bonds and any sums from time to time held in the Construction Account, Operation and Maintenance Account or Debt Service Account(or any other City 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 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 guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code"). 16. Covenants Relating to the Improvement Portion of the Bonds. (a) Assessments. It is hereby determined that no less than twenty percent(20%) of the cost to the City of each Improvement financed hereunder within the meaning of Minnesota Statutes, Section 475.58, Subdivision 1(3), shall be paid by special assessments to be levied against every assessable lot, piece and parcel of land benefitted by any of the Improvements. The City hereby covenants and agrees that it will let all construction contracts not heretofore let within one (1) year after ordering each Improvement financed hereunder unless the resolution ordering the Improvement specifies a different time limit for the letting of construction contracts. The City hereby further covenants and agrees that it will do and perform as soon as they may be done all acts and things necessary for the final and valid levy of such special assessments, and in the event that any such assessment be at any time held invalid with respect to any lot,piece or parcel of land due to any error, defect, or irregularity in any action or proceedings taken or to be 7000395v1 taken by the City or the City Council or any of the City officers or employees, either in the making of the assessments or in the performance of any condition precedent thereto, the City and the City Council will forthwith do all further acts and take all further proceedings as may be required by law to make the assessments a valid and binding lien upon such property. The special assessments have heretofore been authorized. Subject to such adjustments as are required by the conditions in existence at the time the assessments are levied, it is hereby determined that the assessments shall be payable in equal, consecutive, annual installments, with general taxes for the years shown below and with interest on the declining balance of all such assessments at the rates per annum not less than the rate per annum set forth opposite the collection years specified below: Improvement Collection Desi nation Amount Lever Year Rate Credit River Road $399,185 2015-2024 2016-2025 % Mushtown Road, Maple $294,382 2015-2024 2016-2025 % Lane and Panama Avenue $509,808 2015-2034 2016-2035 % Highland Avenue, March Street, Skyline Avenue, Grainwood Trail and Eau Claire Trail $928,606 2015-2024 2016-2025 % At the time the assessments are in fact levied the City Council shall, based on the then- current estimated collections of the assessments, make any adjustments in any ad valorem taxes required to be levied in order to assure that the City continues to be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (b) Tax Levy; Coverage Test. To provide moneys for payment of the principal and interest on the Improvement Portion of 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: Years of Tax Levy Years of Tax Collection Amount See attached schedule The tax levies are such that if collected in full they, together with estimated collections of special assessments and other revenues herein pledged for the payment of the Improvement Portion of the Bonds, will produce at least five percent (5%) in excess of the amount needed to meet when due the principal and interest payments on the Improvement Portion of 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. 7000395v1 (c) General Obligation Pledge. For the prompt and full payment of the principal and interest on the Improvement Portion of the Bonds, as the same respectively become due,the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the balance in the Improvement Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Improvement Portion of 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 reimbursed with or without interest from the Improvement Debt Service Subaccount when a sufficient balance is available therein. 17. Covenants Relating to the Refunding Portion of the Bonds. (a) Pledge of System Net Revenues; Coverage Test. It is hereby found, determined and declared that the net revenues of the System are sufficient to pay when due the principal of and interest on the Refunding Portion of the Bonds and a sum at least five percent in excess thereof. The net revenues of the System are sufficient to pay when due the principal and interest and a sum at least five percent in excess thereof. Nothing contained herein shall be deemed to preclude the City from making further pledges and appropriations of the System net revenues for the payment of other or additional obligations of the City,provided that it has first been determined by the City Council that the estimated System net revenues will be sufficient for the payment of the Refunding Portion of the Bonds and such additional obligations and any such pledge and appropriation of the System net revenues may be made superior or subordinate to, or on a parity with the pledge and appropriation herein. (b) Covenant to Maintain Rates and Charges. In accordance with Minnesota Statutes, Section 444.075, the City hereby covenants and agrees with the Holders of the Refunding Portion of the Bonds that it will impose and collect charges for the service, use, availability and connection to the System at the times and in the amounts required to produce System net revenues adequate to pay the principal and interest when due on the Refunding Portion of the Bonds. Minnesota Statutes, Section 444.075, Subdivision 2, provides as follows: "Real estate tax revenues should be used only, and then on a temporary basis, to pay general or special obligations when the other revenues are insufficient to meet the obligations." (c) Excess System Net Revenues. System net revenues in excess of those required for the foregoing may be used for any proper purpose. (d) General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Refunding Portion of the Bonds as the same respectively become due, the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the System net revenues pledged to the payment of the principal and interest on the Refunding Portion of the Bonds, together with other funds irrevocably appropriated to the Escrow Account or the Refunding Debt Service Subaccount, shall at any time be insufficient to pay the principal and interest when due, 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 it becomes due. If the balance in the Escrow Account or the Refunding Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Refunding Portion of the Bonds payable therefrom,the deficiency shall be promptly paid out of any other accounts of the City which are available for such purpose, and such other funds may be 7000395v1 reimbursed without interest from the Escrow Account or the Refunding Debt Service Subaccount when a sufficient balance is available therein. 18. Securities; Escrow Agent. Securities purchased from moneys in the Escrow Account shall be limited to securities set forth in Minnesota Statutes, Section 475.67, Subdivision 8, and any amendments or supplements thereto. Securities purchased from the Escrow Account shall be purchased simultaneously with the delivery of the Refunding Portion of the Bonds. The City Council has investigated the facts and hereby finds and determines that the Escrow Agent is a suitable financial institution to act as escrow agent. 19. Escrow Agreement. On or prior to the delivery of the Refunding Portion of the Bonds the Mayor and the Manager shall, and are hereby authorized and directed to, execute on behalf of the City an Escrow Agreement. The Escrow Agreement is hereby approved and adopted and made a part of this resolution, and the City covenants that it will promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent. 20. Purchase of SLGS or Open Market Securities. The Escrow Agent, as agent for the City, is hereby authorized and directed to purchase on behalf of the Council and in its name the appropriate United States Treasury Securities, State and Local Government Series and/or open market securities as provided in paragraph 19, from the proceeds of the Bonds and, to the extent necessary, other available funds, all in accordance with the provisions of this resolution and the Escrow Agreement and to execute all such documents (including the appropriate subscription form) required to effect such purchase in accordance with the applicable U.S. Treasury Regulations. 21. Redemption of Prior Bonds. The Prior Bonds shall be redeemed and prepaid in accordance with the terms and conditions set forth in the Notice of Call for Redemption, in the form attached to the Escrow Agreement, which terms and conditions are hereby approved and incorporated herein by reference. The Notice of Call for Redemption shall be given pursuant to the Escrow Agreement. 22. 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 a Continuing Disclosure Undertaking(the "Undertaking") hereinafter described: (a) Provide or cause to be provided to the Municipal Securities Rulemaking Board (the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. (b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten (10)business days after the occurrence of the event, in accordance with the Undertaking. 7000395v1 (c) Provide or cause to be provided to the MSRB notice of a failure by the City to provide the annual financial information with respect to the City described in the Undertaking, in not more than ten(10) business days following such occurrence. (d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders; 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 Manager 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 presented to the City Council 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. 23. 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 City 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 City 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 City may also at any time discharge its obligations with respect to any Bonds, subject to the 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, without regard 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. 24. Compliance With Reimbursement Bond Regulations. The provisions of this paragraph are intended to establish and provide for the City's compliance with United States Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the "reimbursement proceeds" of the Improvement Portion of the Bonds, being those portions thereof which will be used by the City to reimburse itself for any expenditure which the City paid or will have paid prior to the Closing Date (a "Reimbursement Expenditure"). The City hereby certifies and/or covenants as follows: (a) Not later than sixty days after the date of payment of a Reimbursement Expenditure, the City(or person designated to do so on behalf of the City) has made or will have 70003950 made a written declaration of the City's official intent(a "Declaration") which effectively (i) states the City'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 City 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 City 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 Improvement Portion 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 Improvement Portion of the Bonds. (b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of the Improvement Portion of the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the Reimbursement Regulations. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Improvement Portion of the Bonds and in all events within the period ending on the date which is the later of three years after payment of the Reimbursement Expenditure or one year after the date on which the Project to which the Reimbursement Expenditure relates is first placed in service. (d) Each such reimbursement allocation will be made in a writing that evidences the City's use of Improvement Portion of the Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30 days after the Bonds are issued, shall be treated as made on the day the Improvement Portion Portion of the Bonds are issued. Provided, however,that the City may take action contrary to any of the foregoing covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that such action will not impair the tax-exempt status of the Improvement Portion of the Bonds. 25. Certificate of Registration. The City Manager is hereby directed to file a certified copy of this resolution with the County Auditor of Scott County, Minnesota, together with such other information as the Auditor shall require, and to obtain the County Auditor's certificate that the Bonds have been entered in the County Auditor's Bond Register and the tax levy required by law has been made. 26. 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, certificates and information as are required to show the facts relating to the legality and marketability of the 7000395v1 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. 27. Negative Covenant as to Use of Bond Proceeds and Project. The City hereby covenants not to use the proceeds of the Bonds or to use the Project or the System, 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 the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 28. Tax-Exempt Status of the Bonds, Rebate - Refunding Portion of the Bonds; Improvement Portion of the Bonds. (i) Refunding Portion of the Bonds. The City is subject to the rebate requirement imposed by Section 148(f) of the Code because the Refunded Bonds did not qualify for the small issuer exemption from rebate, as provided in Section 148(f)(4)(D) of the Code and Section 1.148-8 of the Regulations and no exceptions are available. (ii) Improvement Portion of the Bonds. 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(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 City expects to satisfy the twenty four month expenditure exemption for gross proceeds of the Improvement Portion of the Bonds as provided in Section 1.148-7(d)(1) of the Regulations. If any elections are available now or hereafter with respect to arbitrage or rebate matters relating to the Bonds, the Mayor,the Manager, or either of them, are hereby authorized and directed to make such elections 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 City. 29. 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 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 treated as one issuer with the City, and all subordinate 70003950 entities whose obligations are treated as issued by the City) during this calendar year 2015 will not exceed $10,000,000; (e) not more than$10,000,000 of obligations issued by the City during this calendar year 2015-have been designated for purposes of Section 265(b)(3) of the Code; (f) the aggregate face amount of the Bonds does not exceed $10,000,000. 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. 30. 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 31. 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 a 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. 7000395v1 STATE OF MINNESOTA COUNTY OF SCOTT CITY OF PRIOR LAKE I,the undersigned, being the duly qualified and acting City Manager of the City of Prior Lake, 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 authorizing the issuance and awarding the sale of$10,000,000 General Obligation Bonds, Series 2015A. WITNESS my hand on April 27, 2015. City Manager 70003950 EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA HELD: April 27, 2015 Pursuant to due call and notice thereof, a regular or special meeting of the City Council of the City of Prior Lake, Scott County, Minnesota, was duly held at the City Hall on April 27, 2015, at 7:00 P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of $2,490,000 Taxable General Obligation Bonds, Series 2015B. The following members were present: and the following were absent: Member introduced the following resolution and moved its adoption: RESOLUTION NO. RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $2,490,000 TAXABLE GENERAL OBLIGATION BONDS, SERIES 2015B, PLEDGING SPECIAL ASSESSMENTS FOR THE SECURITY THEREOF AND LEVYING A TAX FOR THE PAYMENT THEREOF A. WHEREAS, the City Council of the City of Prior Lake, Minnesota(the "City"), has heretofore determined and declared that it is necessary and expedient to issue $2,490,000 Taxable General Obligation Bonds, Series 2015B (the "Bonds" or individually, a "Bond"), pursuant to Minnesota Statutes, Chapter 475 and 429 and Section 475.58, Subdivision 3b,to finance the construction of various public improvements within the City (the "Improvements'), in the amount of$2,330,000 (the "Improvement Portion of the Bonds"), and to finance street reconstruction improvements under the City's Street Reconstruction Plan 2015-2019, adopted August 11, 2014 (the "Street Reconstruction Improvements") in the amount of$160,000 (the "Street Reconstruction Portion of the Bonds"); B. WHEREAS, the Improvements and all their components have been ordered prior to the date hereof, after a hearing thereon for which notice was given describing the Improvements or all their components by general nature, estimated cost, and area to be assessed; and C. WHEREAS, on November 10, 2014, following duly published notice thereof,the Council held a public hearing on the issuance of approximately$6,157,000 principal amount of bonds to finance the Street Reconstruction Improvements and all persons who wished to speak or provide written information relative to the public hearing were afforded an opportunity to do so; and D. WHEREAS, no petition signed by voters equal to 5 percent of the votes cast in the City in the last municipal general election requesting a vote on the issuance of the Street 7000395v1 Reconstruction Portion of the Bonds has been filed with the City Clerk within 30 days after the public hearing on November 10, 2014; and E. WHEREAS, the Street Reconstruction Portion of the Bonds, together with any outstanding bonds of the City that are subject to the City's net debt limit, do not exceed the City's net debt limit; and F. WHEREAS, it is in the best interests of the City that the Bonds be issued in book- entry form as hereinafter provided; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake, Minnesota, as follows: 1. Acceptance of Offer. The offer of Northland Securities, Inc. (the "Purchaser"),to purchase the Bonds in accordance with the terms and at the rates of interest hereinafter set forth, and to pay therefor the sum of$2,467,666.60, plus interest accrued to settlement, is hereby confirmed and accepted. 2. Bond Terms. (a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds shall be dated May 1, 2015, 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 (the "Authorized Denominations") and shall mature, without option of prepayment, on December 15 in the years and amounts as follows: Year Amount 2016 $280,000 2017 230,000 2018 650,000 2019 355,000 2020 210,000 2021 315,000 2022 450,000 All dates are inclusive. 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). 7000395v1 (b) Allocation. The Improvement Portion of the Bonds, being the aggregate principal amount of$160,000, maturing in each of the years and amounts hereinafter set forth, is issued to finance the Improvements. The Street Reconstruction Portion of the Bonds, being the aggregate principal amount of$2,330,000, maturing in each of the years and amounts hereinafter set forth, is issued to finance the Street Reconstruction Improvements. Improvement Street Reconstruction Year Portion(Amount) Portion(Amount) Total Amount 2016 $20,000 $260,000 $280,000 2017 20,000 210,000 230,000 2018 20,000 630,000 650,000 2019 25,000 330,000 355,000 2020 25,000 185,000 210,000 2021 25,000 290,000 315,000 2022 25,000 425,000 450,000 If Bonds are prepaid,the prepayments shall be allocated to the portions of debt service (and hence allocated to the payment of Bonds treated as relating to a particular portion of debt service) as provided in this paragraph. If the source of prepayment moneys is the general fund of the City, or other generally available source, the prepayment may be allocated to any of the portions of debt service in such amounts as the City shall determine. If the source of a prepayment is special assessments pledged to and taxes levied for the Improvements,the prepayment shall be allocated to the Improvement Portion of debt service. If the source of a prepayment is taxes levied for the Street Reconstruction Improvements,the prepayment shall be allocated to the Street Reconstruction Portion of debt service. (c) Book Entry 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: (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 and 10, 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(as hereinafter defined) in the name of CEDE & CO., as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee"). 70oo395v1 (iii) With respect to the Bonds neither the City 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 City, 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 City 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 City 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 purpose 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 City'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 hereof, 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 City, as the case may be,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 7000395v1 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 City 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 City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than 15 calendar days in advance of such special record date to the extent possible. (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 hereof, make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (d) Termination of Book-Entry Only System. Discontinuance of a particular Depository's services and termination of the book-entry only system may be 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 City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bond if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book-entry transfers through the Depository is not in the best interests of the City 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 is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City or the Beneficial Owners of the Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds 70oo395v1 shall no longer be registered as being registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10 hereof. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10 hereof,the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph(c) shall limit or restrict the provisions of paragraph 10 hereof. (e) 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. Purpose. The Improvement Portion of the Bonds shall provide funds to finance the construction of the Improvements. The Street Reconstruction Portion of the Bonds shall provide funds to finance the Street Reconstruction Improvements. The Improvements and Street Reconstruction Improvements collectively are herein referred to together as 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. 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. 4. Interest. The Bonds shall bear interest payable semiannually on June 15 and December 15 of each year(each, an "Interest Payment Date"), commencing December 15, 2015, 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 Interest Maturity Interest Year Rate Year Rate 2016 1.00% 2020 1.90% 2017 1.00 2021 2.10 2018 1.40 2022 2.25 2019 1.60 5. No Redemption. The Bonds shall not be subject to redemption and prepayment prior to their stated maturity dates. 6. Bond Re ig strar. Northland Trust Services, Inc. in Minneapolis, 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 City and Bond Registrar shall execute which is consistent herewith. 7000395v1 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 12. 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: 7000395vl UNITED STATES OF AMERICA STATE OF MINNESOTA SCOTT COUNTY CITY OF PRIOR LAKE R- $ TAXABLE GENERAL OBLIGATION BOND, SERIES 2015B INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP DECEMBER 15, MAY 1, 2015 REGISTERED OWNER: CEDE& CO. PRINCIPAL AMOUNT: DOLLARS THE CITY OF PRIOR LAKE, SCOTT 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, without option of prior payment, and to pay interest thereon semiannually on June 15 and December 15 of each year(each, an "Interest Payment Date"), commencing December 15, 2015, 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 Northland Trust Services, Inc., in Minneapolis, 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 first day of the calendar month of 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, premium, if any, and interest on this Bond and 70003950 notice with respect thereto shall be made as provided in Letter of Representations, as defined in the Resolution, and surrender of this Bond shall not be required for payment of the redemption price upon a partial redemption of this Bond. Until termination of the book-entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. No Optional Redemption. The Bonds of this issue (the "Bonds") are not subject to redemption and prepayment prior to their stated maturity dates. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of$2,490,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination, 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 City Council on April 27, 2015 (the "Resolution"), for the purpose of providing money to finance the construction of various public improvements and street reconstruction improvements within the jurisdiction of the Issuer. This Bond is payable out of the Taxable General Obligation Bonds, Series 2015B 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 Issuer have been and are hereby irrevocably pledged. Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the 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 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 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 7000395v1 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. Authentication. 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. Taxable Interest. The interest on this Bond is included in the gross income of the owner hereof for purposes of United States income tax and to the same extent in both gross income and taxable net income for purposes of State of Minnesota income tax. 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 City of Prior Lake, Scott County, Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and its Manager. Date of Registration: Registrable by: NORTHLAND TRUST SERVICES, INC. Payable at: NORTHLAND TRUST SERVICES, INC. BOND REGISTRAR'S CITY OF PRIOR LAKE, CERTIFICATE OF SCOTT COUNTY, MINNESOTA AUTHENTICATION This Bond is one of the Bonds described in the /s/Facsimile Resolution mentioned Mayor within. 7000395v1 NORTHLAND TRUST SERVICES, INC., Minneapolis, Minnesota, /s/Facsimile Bond Registrar Manager By 70oo395v1 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 (Cust) (Minor) under the Uniform Transfers to Minors Act (State) 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 or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 Ad-I5(a)(2). 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.) 7000395v1 8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of the City by the signatures of its Mayor and Manager and be sealed with the seal of the City; provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate seal has been omitted. In the event of disability or resignation or other absence of either officer, the Bonds may be 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 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 City 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, which date is May 1, 2015. 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 City will cause to be kept at the 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 office of the Bond Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 9) 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 may be 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 office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange,the City 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 canceled by the Bond Registrar and thereafter disposed of as directed by the City. 7000395v1 All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City 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 his,her or its 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 City 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. The Manager is hereby authorized to negotiate and execute the terms of said agreement. 11. Rights 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 City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the first(1 st) day of the calendar month of 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 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 premium, if any, and interest (subject to the payment provisions in paragraph 12) 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. 14. Delivery, Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Manager to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 70003950 15. Fund and Accounts. There is hereby created a special fund to be designated the "Taxable General Obligation Bonds, Series 2015B Fund" (the "Fund")to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Fund shall be maintained in the manner 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: (a) Construction Account. To the Construction Account there shall be credited the proceeds of the sale of the Bonds, less accrued and capitalized interest received thereon, plus a pro rata share of any special assessments levied with respect to the Improvements and collected prior to completion of the Project and payment of the costs thereof. From the Construction Account there shall be paid all costs and expenses of the Project, including the cost of any construction contracts heretofore let and all other costs incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65. Moneys in the Construction 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 or special assessments herein levied or covenanted to be levied; and provided further that if upon completion of the Project there shall remain any unexpended balance in the Construction Account, the balance (other than any special assessments) shall be transferred by the Council to the Debt Service Account, or in the case of any balance attributable to the Improvement Portion of the Bonds,the fund of any other improvement instituted pursuant to Minnesota Statutes, Chapter 429, and provided further that any special assessments credited to the Construction Account shall only be applied towards payment of the costs of the Improvements upon adoption of a resolution by the City Council determining that the application of the special assessments for such purpose will not cause the City to no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (b) Debt Service Account. Debt Service Account. There shall be maintained separate subaccounts in the Debt Service Account to be designated the "Improvement Debt Service Subaccount" and the "Street Reconstruction Debt Service Subaccount". There are hereby irrevocably appropriated and pledged to, and there shall be credited to the separate subaccounts of the Debt Service Account: (i) Improvement Debt Service Subaccount. There are hereby irrevocably appropriated and pledged to, and there shall be credited to,the Improvement Debt Service Subaccount: (i) a pro rata share of all collections of special assessments herein covenanted to be levied with respect to the Improvements and either initially credited to the Construction Account and not already spent as permitted above and required to pay any principal and interest due on the Improvement Portion of the Bonds or collected subsequent to the completion of the Improvements and payment of the costs thereof; (ii) capitalized interest in the amount of$2,870.05 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Improvement Portion of the Bonds on or before June 15, 2016); (iii) a pro rata share of all accrued interest received upon delivery of the Bonds; (iv) any 7000395v1 collections of all taxes herein or hereafter levied for the payment of the Improvement Portion of the Bonds and interest thereon; (v) a pro rata share of funds remaining in the Construction Account after completion of the Improvements and payment of the costs thereof, not so transferred to the account of another improvement; (vi) all investment earnings on funds held in the Improvement Debt Service Subaccount; and (vii) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Improvement Debt Service Subaccount. The Improvement Debt Service Subaccount shall be used solely to pay the principal and interest and any premiums for redemption of the Improvement Portion of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. (ii) Street Reconstruction Debt Service Subaccount. There are hereby irrevocably appropriated and pledged to, and there shall be credited to,the Improvement Street Reconstruction Debt Service Subaccount: (i) capitalized interest in the amount of $41,236.92 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Street Reconstruction Portion of the Bonds on or before June 15, 2016); (ii) a pro rata share of all accrued interest received upon delivery of the Bonds; (iii) any collections of all taxes herein or hereafter levied for the payment of the Street Reconstruction Portion of the Bonds and interest thereon; (iv) a pro rata share of funds remaining in the Construction Account after completion of the Street Reconstruction Improvements and payment of the costs thereof, not so transferred to the account of another improvement; (v) all investment earnings on funds held in the Street Reconstruction Debt Service Subaccount; and(vi) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Street Reconstruction Debt Service Subaccount. The Street Improvement Debt Service Subaccount shall be used solely to pay the principal and interest and any premiums for redemption of the Street Reconstruction Portion of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. 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 proceeds of the Bonds or$100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Construction Account or Debt Service Account (or any other City 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 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 7000395v1 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. Covenants Relating to the Improvement Portion of the Bonds. (a) Assessments . It is hereby determined that no less than twenty percent(20%) of the cost to the City of each Improvement financed hereunder within the meaning of Minnesota Statutes, Section 475.58, Subdivision 1(3), shall be paid by special assessments to be levied against every assessable lot, piece and parcel of land benefitted by any of the Improvements. The City hereby covenants and agrees that it will let all construction contracts not heretofore let within one (1) year after ordering each Improvement financed hereunder unless the resolution ordering the Improvement specifies a different time limit for the letting of construction contracts. The City hereby further covenants and agrees that it will do and perform as soon as they may be done all acts and things necessary for the final and valid levy of such special assessments, and in the event that any such assessment be at any time held invalid with respect to any lot,piece or parcel of land due to any error, defect, or irregularity in any action or proceedings taken or to be taken by the City or the City Council or any of the City officers or employees, either in the making of the assessments or in the performance of any condition precedent thereto,the City and the City Council will forthwith do all further acts and take all further proceedings as may be required by law to make the assessments a valid and binding lien upon such property. The special assessments have heretofore been authorized. Subject to such adjustments as are required by the conditions in existence at the time the assessments are levied, it is hereby determined that the assessments shall be payable in equal, consecutive, annual installments, with general taxes for the years shown below and with interest on the declining balance of all such assessments at the rates per annum not less than the rate per annum set forth opposite the collection years specified below: Improvement Collection Designation Amount Levy Years Year Rate Credit River Road $399,185 2015-2024 2016-2025 % Mushtown Road, Maple $294,382 2015-2024 2016-2025 % Lane and Panama Avenue $509,808 2015-2034 2016-2035 % Highland Avenue, March Street, Skyline Avenue, Grainwood Trail and Eau Claire Trail $928,606 2015-2024 2016-2025 % At the time the assessments are in fact levied the City Council shall, based on the then- current estimated collections of the assessments, make any adjustments in any ad valorem taxes required to be levied in order to assure that the City continues to be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. 7000395v1 (b) Tax Levy; Coverage Test. To provide moneys for payment of the principal and interest on the Improvement Portion of 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: Year of Tax Levy Year of Tax Collection Amount See Attached Schedule The tax levies are such that if collected in full they, together with estimated collections of special assessments and other revenues herein pledged for the payment of the Improvement Portion of the Bonds, will produce at least five percent(5%) in excess of the amount needed to meet when due the principal and interest payments on the Improvement Portion of 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. (c) General Obligation Pled. For the prompt and full payment of the principal and interest on the Improvement Portion of the Bonds, as the same respectively become due,the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the balance in the Improvement Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Improvement Portion of 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 reimbursed with or without interest from the Improvement Debt Service Subaccount when a sufficient balance is available therein. 17. Covenants Relating to the Street Reconstruction Portion of the Bonds. (a) Tax Levy and Coverage Test. To provide moneys for payment of the principal and interest on the Street Reconstruction Portion of 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: Years of Tax Levy Years of Tax Collection Amount See Attached Schedule The tax levies are such that if collected in full they, together with other revenues herein pledged for the payment of the Street Reconstruction Portion 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 Street Reconstruction Portion of the Bonds. The tax levies shall be irrepealable 7000395v1 so long as any of the Street Reconstruction Portion 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. (b) General Obligation Pledgee. For the prompt and full payment of the principal and interest on the Street Reconstruction Portion of the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the balance in the Street Reconstruction Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Street Reconstruction Portion of 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 reimbursed with or without interest from the Street Reconstruction Debt Service Subaccount when a sufficient balance is available therein. 18. 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 City 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 City 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 City may also at any time discharge its obligations with respect to any Bonds, subject to the 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, without regard 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. 19. Compliance With Reimbursement Bond Regulations. The provisions of this paragraph are intended to establish and provide for the City'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 City to reimburse itself for any expenditure which the City paid or will have paid prior to the Closing Date (a "Reimbursement Expenditure"). The City hereby certifies and/or covenants as follows: 7000395v1 (a) Not later than 60 days after the date of payment of a Reimbursement Expenditure, the City(or person designated to do so on behalf of the City) has made or will have made a written declaration of the City's official intent(a "Declaration") which effectively(i) states the City'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 City 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 City 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 20% 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 5% 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. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Bonds and in all events within the period ending on the date which is the later of three years after payment of the Reimbursement Expenditure or one year after the date on which the Project to which the Reimbursement Expenditure relates is first placed in service. (d) Each such reimbursement allocation will be made in a writing that evidences the City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30 days after the Bonds are issued, shall be treated as made on the day the Bonds are issued. Provided, however,that the City may take action contrary to any of the foregoing covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that such action will not impair the tax-exempt status of the Bonds. 20. 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 a Continuing Disclosure Undertaking(the "Undertaking")hereinafter described to: (a) Provide or cause to be provided to the Municipal Securities Rulemaking Board (the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. 70003950 (b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten(10) business days after the occurrence of the event, in accordance with the Undertaking. (c) Provide or cause to be provided to the MSRB notice of a failure by the City to provide the annual financial information with respect to the City described in the Undertaking, in not more than ten (10)business days following such occurrence. (d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders; 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 Manager of the City, 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 presented to the City Council 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. 21. Certificate of Registration. A certified copy of this resolution is hereby directed to be filed with the County Auditor of Scott County, Minnesota,together with such other information as the Auditor shall require, and there shall be obtained from the County Auditor a 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. 22. 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, 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 City as to the facts recited therein. 23. Taxable Status of the Bonds. The City does not qualify the Bonds as tax-exempt under the Internal Revenue Code of 1986, as amended. It is hereby determined that the Bonds are to be issued as fully taxable obligations, and all interest received on the Bonds is to be included in the gross income of the Holder of any Bond for federal income taxation purposes and, to the same extent, in both gross income and taxable net income for state income taxation purposes. 7000395v1 24. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to the Bond Registrar on the closing date for further distribution as directed by the Purchaser. 25. 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. 26. Headinas. 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 a 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. 7000395v1 STATE OF MINNESOTA COUNTY OF SCOTT CITY OF PRIOR LAKE I, the undersigned, being the duly qualified and acting Manager of the City of Prior Lake, 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 the minutes relate to providing for the issuance and sale of $2,490,000 Taxable General Obligation Bonds, Series 2015B. WITNESS my hand on April 27, 2015. Manager 7000395v1 STANDARD&POOR'S RATINGS SERVICES WGRAW HILL FINANCIAL RatingsDirect° ............................................................................................................. Summary: Prior Lake, Minnesota; General Obligation Primary Credit Analyst: Andrew J Truckenmiller,Chicago(1)312-233-7032;andrew.truckenmiller@standardandpoors.com Secondary Contact: Jennifer Boyd,Chicago(1)312-233-7040;jennifer.boyd@standardandpoors.com Table Of Contents ............................................................................................................. Rationale Outlook Related Criteria And Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 17,2015 1 13944521 301372653 Summary: Prior Lake, Minnesota; General Obligation Credit Profile US$10.0 mil GO bnds ser 2015A dtd 05/01/2015 due 12/15/2031 Long Term Rating AA+/Stable New US$2.625 mil GO bnds ser 2015B dtd 05/01/2015 due 12/15/2022 Long Term Rating "AA+/Stable New Prior Lake ICR due 01/01/2099 Long Term Rating AA+/Stable Affirmed Rationale Standard&Poor's Ratings Services assigned its'AA+'long-term rating to Prior Lake,Minn.'s series 2015A general obligation bonds and series 2015B taxable general obligation(GO)bonds.At the same time,Standard&Poor's affirmed its'AA+'long-term rating on the city's existing GO debt.The outlook is stable. Both issuances are valid and binding general obligations of the city and are payable from special assessments and ad valorem taxes.The full faith and credit of the city is also pledged to their payment.We understand that a portion of the proceeds for the city's 2015A series will refund the series 2007A,while the balance will be used to finance street improvements.The proceeds for the city's 2015B series will be used to finance street improvements and reconstruction. The rating reflects our view of the city's: • Very strong economy,which benefits from participation in the broad and diverse economy of the Minneapolis St. Paul metropolitan area; • Very strong budgetary flexibility,with 2013 audited reserves at 71%of general fund expenditures; • Very strong liquidity,providing very strong cash levels to cover both debt service and expenditures; • Adequate budgetary performance; • Strong management conditions,with good financial practices and policies; • Weak debt and contingent liabilities position,mostly reflecting the city's high net direct debt burden and carrying charges;and • Strong institutional framework. Very strong economy Prior Lake's local economy is,in our view,very strong with per capita market value at roughly$124,267 and projected per capita effective buying income at 157%of the national average. In 2013,Scott County's unemployment rate was 4.6%,according to the Bureau of Labor Statistics.Residents benefit,in our opinion,from the city's participation in the broad and diverse Minneapolis-St.Paul-Bloomington metropolitan statistical area.We view this as credit strength. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 17,2015 2 1394452 1301372653 Summary:Prior Lake, Minnesota; General Obligation Very strong budgetary flexibility With available reserves at 71%of operating expenditures in fiscal 2013,it is our opinion that Prior Lake's budgetary flexibility is very strong.The available funds consist of the unassigned general fund,the net assets of the facility management,the revolving equipment,and the revolving park equipment funds.The city budgeted for general fund reserves to fall by$1 million in fiscal 2014 and by another$100,000 in fiscal 2015 for projects carried forward from 2014 net of projected fund performance.However,the city delayed some projects,and the reserves only fell by $654,000 in fiscal 2014(unaudited).We believe the city's reserves are a credit strength,as the available fund balance was more than 30%for the most recent audit and we expect it will remain above 30%in the near term. Very strong liquidity We believe very strong liquidity supports Prior Lake's finances,with total government available cash at 107%of total government fund expenditures and 4.8x debt service.Based on past issuance of debt,we believe that the issuer has strong access to capital markets to provide for liquidity needs,if necessary.We understand the city has entered into a privately placed 10-year lease with no acceleration provisions. Adequate budgetary performance We view Prior Lake's budgetary performance to be adequate overall,with a 1.9%deficit in the general fund and a 1% surplus in the total governmental fund in fiscal 2013.In fiscal 2014,the city's unaudited results indicate operating deficit of 1.4%,partly due to a one-time expense of a new financial data system.The city will carry forward$300,000 worth of reserves in fiscal 2015 to complete postponed projects from prior years. Strong management conditions We believe Prior Lake's management conditions are strong with"good"financial practices under our Financial Management Assessment methodology,indicating financial practices exist in most areas,but that governance officials might not formalize or monitor all of them on a regular basis.Strengths of the assessment,in our opinion,include strong revenue and expenditure assumptions in its budgeting process and strong oversight in terms of monitoring its progress against the budget during the year.The city also maintains a long-term financial plan and a multiple-year capital improvement plan,both of which are updated annually.The city has formally adopted a fund balance policy, indicating that the city should maintain 40%to 50%of the subsequent year's general fund expenditures. Weak debt and contingent liabilities We consider Prior Lake's debt and contingent liabilities profile weak.Net direct debt to total governmental funds revenue is 199%and total governmental funds debt service to total governmental fund expenditures is 22.6%. Amortization is rapid,with approximately 69%of debt due to be retired in 10 years.In our view,this is a credit strength. Prior Lake participates in the Public Employees Retirement Association(PERA)and the Public Employees Police and Fire Fund(PEPFF).The city makes annual contributions to the pension plans equal to the amount required by state statutes.The city allows retirees to remain on its healthcare plan,reflecting an implicit liability,but the city views the amount as immaterial and is not reflected in the audit.However,the city indicated that it paid$9,000 toward this liability in 2013.The pension expense represented 3.3%of total governmental expenditures in 2013. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 17,2015 3 1394452 1301372653 Summary:Prior Lake, Minnesota; General Obligation Strong institutional framework We consider the institutional framework score for Minnesota cities with a population of more than 2,500 as strong. Outlook The stable outlook reflects our view of the city's very strong budget flexibility and very strong economy,supported by strong management conditions.We do not anticipate changing the rating during our two-year outlook horizon due to our expectation that the city will at least maintain reserves that are aligned with its formal fund balance policy.The city's participation in the broad and diverse Minneapolis St.Paul regional economy adds stability to the rating. Improved yearly operating results as well as an improved debt burden may result in a higher rating.A significant decline in the city's reserve level could result in downward rating pressure. Related Criteria And Research Related Criteria USPF Criteria:Local Government GO Ratings Methodology And Assumptions,Sept. 12,2013 Related Research • S&P Public Finance Local GO Criteria:How We Adjust Data For Analytic Consistency,Sept. 12,2013 • Institutional Framework Overview:Minnesota Local Governments Ratings Detail(As Of Prior Lake GO bnds ser 2014A dtd 09/15/2014 due 12/15/2024 Long Term Rating AA+/Stable Affirmed Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com.All ratings affected by this rating action can be found on Standard&Poor's public Web site at www.standardandpoors.com.Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 17,2015 4 13944521 301372653 Copyright©2015 Standard&Poor's Financial Services LLC,a part of McGraw Hill Financial.All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 17,2015 5 1394452 1301372653 STANDARD &POOR`S RATINGS SERVICES 130East Randolph Street 29 Suite 2900 WGRAW HILL FINANCIAL Chicago,IL 60601 tel 312.233.7000 reference no.:762313 April 16, 2015 City of Prior Lake 4646 Dakota Street SE Prior Lake, MN 55372 Attention: Ms.Jerilyn Erickson, Finance Director Re:US$10,000,000 City of Prior Lake,Minnesota, General Obligation Bonds,Series 2015A, dated:May 01, 2015, due:December 15, 2031 US$2,625,000 City of Prior Lake,Minnesota, General Obligation Bonds,Series 2015B, dated:May 01, 2015, due:December 15, 2022 Dear Ms. Erickson: Pursuant to your request for a Standard&Poor's Ratings Services ("Ratings Services") rating on the above-referenced obligations,Ratings Services has assigned a rating of"AA+". Standard& Poor's views the outlook for this rating as stable. A copy of the rationale supporting the rating is enclosed. 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PF Ratings U.S. (02/16/13) MOODY'S INVESTORS SERVICE New Issue: Moody's assigns Aa2 rating to Prior Lake, MN's $12.6M Ser. 2015A and B GO Bonds Global Credit Research-16 Apr 2015 Maintains Aa2 on$40.8M rated debt post-sale PRIOR LAKE(CITY OF)MN Cities(including Towns,Villages and Townships) MN MoocVs Rating ISSUE RATING General Obligation Bonds,Series 2015A Aa2 Sale Amount $10,000,000 Expected Sale Date 04/27/15 Rating Description General Obligation Taxable General Obligation Bonds,Series 2015B Aa2 Sale Amount $2,625,000 Expected Sale Date 04/27/15 Rating Description General Obligation MoocVs Outlook NOO NEW YORK,April 16,2015--Moody's Investors Service has assigned a Aa2 rating to the City of Prior Lake's (MN)$10.0 million General Obligation Bonds,Series 2015A and$2.6 million Taxable General Obligation Bonds, Series 2015B.Concurrently, Moody's maintains the Aa2 rating on the city's outstanding general obligation(GO) debt. Post-sale,the city will have$40.8 million of Moody's rated GO debt outstanding. SUMMARY RATING RATIONALE The Aa2 rating reflects the city's moderately-sized tax base located in the Twin Cities(Minneapolis Aa1 stable;St. Paul Aa1 stable)metropolitan area;above average socioeconomic indicators;healthy financial operations and maintenance of strong General Fund reserves;average direct debt but elevated overall debt burden;and moderate exposure to unfunded pension liabilities. OUTLOOK Outlooks are usually not assigned to local government credits with this amount of debt outstanding. WHAT COULD MAKE THE RATING GO UP -Substantial expansion of the city's tax base -Maintenance of strong financial operations WHAT COULD MAKE THE RATING GO DOWN -Sustained deterioration of the city's tax base valuation -Substantial deterioration of reserve levels to levels below the city's peers STRENGTHS -Close proximity to the Twin Cities metropolitan area -Above average socioeconomic indices -Healthy financial operations with strong General Fund reserves CHALLENGES -Smaller tax base compared to similarly rated entities -Above average overall debt burden RECENT DEVELOPMENTS Recent developments are incorporated in the Detailed Rating Rationale. DETAILED RATING RATIONALE ECONOMY AND TAX BASE:GROWING TAX BASE NEAR THE TWIN CITIES The City of Prior Lake is a mostly residential community located 20 miles southwest of Minneapolis and St. Paul in Scott County(Aa1).After several years of decline during the recession,the tax base has grown in recent years due to increased residential development and its close proximity to the Twin Cities.The city's economic market value increased by 7.7%and 6.6%in the last two years,growing to$2.9 billion in 2015.Additionally,preliminary reports from the Scott County Assessor show that valuations are expected to increase in 2016 as well with net tax capacity growing by 8.5%. Looking forward, Prior Lake expects significant future tax base growth due to additional land annexations and expected population growth.The city currently has an annexation agreement in place with Spring Lake Township that calls for up to 3,000 acres to be annexed by 2024,which will further drive growth in population and the city's full value.The city is in the process of updating the annexation agreement,which was last amended in 2003,and expects that additional annexations are likely within the next year or two.The city experienced a significant 43.2%increase in population from 2000(15,917)to 2010(22,796),and similar growth in earlier decades.Officials expect the city's population to reach 30,000 by 2040. The city's largest employer is Mystic Lake Casino(4,000 employees),and operations are reportedly stable.The casino does not pay property taxes but provides the city a payment in lieu of taxes(PILOT)that is negotiated annually and dedicated for police services.The casino's PILOT payment was$400,000 in fiscal 2013.The city's top ten taxpayers comprised a modest 5.4%of assessed value in fiscal 2015,and officials report that operations at the city's other largest employers and taxpayers are stable. As of December 2014,the unemployment rate in Scott County was low at 3.3%,below both the state(3.7%)and national(5.4%)rates for the same time period. Favorably,the city's resident income levels exceed national averages,with median family income at 157.8%of the U.S,according to 2008-2012 American Community Survey estimates. FINANCIAL OPERATIONS AND RESERVES: HEALTHY FINANCIAL OPERATIONS SUPPORTED BY STRONG FUND BALANCES We expect the city's financial position will remain strong due to prudent management practices and healthy fund balances.The city's policy is to maintain an unrestricted General Fund balance of 40%to 50%of the subsequent year's projected expenditures.The city's available General Fund balance has consistently been greater than 45% of General Fund revenues since 2008. In both fiscals 2012 and 2013,the city planned to use General Fund reserves in order to bring reserves closer to its target level.Fund balance was used for one-time expenditures, including the early retirement of debt,advance funding the city's Facilities Management Fund,and the acquisition of land for a park. In fiscal 2013,the city's revised budget planned for the use of$831,000 of General Fund reserves; however,due to favorable variances to budget the city used just$541,000 of reserves. Management reports that building permit revenue in fiscal 2013 was higher than budget due to the increased development in the city,and personnel expenditures were lower than budget due to some open positions.The General Fund ended fiscal 2013 with an available fund balance of$6.4 million,or a healthy 54.8%of revenues. In fiscal 2014,the city's amended budget called for a$1.25 million draw down of General Fund reserves for one-time expenditures, including a new financial software system,election equipment,incentives to employees to transition to a high deductible health care plan,and temporary property tax relief. However,due to the delay of some of the projects, as well as favorable variances to budget,management estimates that the city reduced reserves by a lesser $650,000 bringing the available General Fund balance to approximately$5.8 million,or a still healthy 49%of fiscal 2013 revenues. The city's original fiscal 2015 budget was balanced; however,the city has amended the budget to account for the projects that were delayed during 2014.The amended budget calls for less than$300,000 use of General Fund reserves. Management notes the amendment is conservative and draws on reserves may be less than currently estimated. The city has limited reliance on intergovernmental revenue sources as the city does not receive any Local Government Aid(LGA). In fiscal 2013,over 60%of the General Fund revenues were from property taxes and 13% from intergovernmental sources,primarily state grants.Charges for services(9.9%)and licenses and permits (6.5%)are smaller but growing revenue streams due to the increased building permit activity and increased water and sewer rates.The city's enterprises include Water,Sewer,Water Quality and Transit.All of the enterprise fund operations are healthy and maintain satisfactory cash balances.City officials report that rates are reviewed annually and increased incrementally. Liquidity Similar to the city's available General Fund balance,the city maintains strong General Fund cash balances.The city closed 2013 with a General Fund cash position of$7.6 million,or 65.1%of revenue.Additionally,the city maintains alternate liquidity in several of its revolving capital improvement funds. In 2013,the city had an additional $2.3 million in cash and investments across its Revolving Equipment, Revolving Park Equipment,and Facility Management funds.If necessary,with city council approval,the city could use the reserves in these funds for operations,though there are no plans to do so at this time. DEBT AND PENSIONS:ABOVE-AVERAGE OVERALL DEBT BURDEN WITH SOME FUTURE BORROWING PLANNED We expect the city's debt burden to remain manageable given the city's moderate plans to issue new debt and history of paying debt early.Prior Lake's direct debt burden,net of self-supporting enterprises,is average at 1.2% of full value;however, its overall debt burden is an elevated 4.3%of full value due to a sizeable amount of debt issued by Prior Lake-Savage Area Independent School District No.719(Aa3).The city typically issues$3 million to$5 million per year for routine capital expenditures,as outlined in the city's multi-year capital improvement plan. Debt Structure Post-sale the city will have$41.1 million of GO debt outstanding,of which$40.8 million is rated by Moody's. Additionally,the district has$2.7 million of debt issued through a lease purchase agreement with U.S.Bancorp(Al stable)for energy savings improvements,which is not rated by Moody's.All of the city's outstanding debt is long- term and fixed rate.Amortization is average,with 67.8%of principal retired within ten years. Debt-Related Derivatives The city is not party to any interest rate swap agreements. Pensions and OPEB Moody's three year average adjusted net pension liability(ANPL), net of self-supporting enterprise contributions, through fiscal 2013 is$21 million,equivalent to 0.72%of full valuation and 1.4 times operating revenue.The ANPL is based upon our allocation of the reported unfunded liabilities of two multi-employer cost-sharing pension plans, the General Employees Retirement Fund(GERF)and the Public Employees Police and Fire Fund(PEPFF),and one single-employer defined benefit pension plan administered by the Prior Lake Fire Department Firefighter's Relief and Pension Association.Moody's ANPL reflects certain adjustments we make to improve comparability of reported pension liabilities.The adjustments are not intended to replace the city's reported liability information,but to improve comparability with other rated entities.The actuarial valuation dates for the cost sharing plans are June 30,2013,and the actuarial valuation date for the single employer plan is as of December 31,2012.The city's total fiscal 2013 contribution to the plans, net of self-supporting enterprises,was$593,000,or 3.9%of operating revenues. MANAGEMENT AND GOVERNANCE:STRONG INSTITUTIONAL FRAMEWORK;CONSERVATIVE FINANCIAL MANAGEMENT Minnesota cities have an institutional framework score of"Aa"or strong.Cities rely on property taxes to fund the majority of operations followed by state aid.State Local Government Aid(LGA)typically comprise the second largest source and ranges approximately from 0%to 80%,or on average 25%of GF revenues.The State increased aid for next biennium,after years of state aid cuts and stagnant aid.Cities typically have above average debt related expenditures. Notably,overall expenditures are predictable and cities have the ability to reduce expenditures if necessary,and benefit from unlimited operating levy authority. The City of Prior Lake benefits from strong management that is typically conservative in budgeting both revenues and expenditures.The city's formal policy of maintaining 40%to 50%of the subsequent year's expenditures in reserve provides significant cushion for any unforeseen events.Additionally,the city prepares five year projections of revenues and expenditures to assist with its budgeting process. Management's five year projections estimate that there may be a small use of reserves in fiscal 2016, but the city will maintain its General Fund balance within the 40%to 50%range in each of the next five years. KEY STATISTICS -Full valuation(economic market value):$2.9 billion -Estimated full value per capita:$128,200 -2008-2012 Median Family Income as a%of the US: 157.8% -2013 Operating Fund Balance as a%of Revenues:42.0% -Five-Year Dollar Change in Fund Balance as %of Revenues:6.2% -2013 Cash Balance as a%of Revenues:49.9% -Five-Year Dollar Change in Cash Balance as%of Revenues: 12.4% -Institutional Framework:Aa -Operating History(Five-Year Average of Operating Revenues/Operating Expenditures): 1.00x -Net Direct Debt/Full Value: 1.2% -Net Direct Debt/Operating Revenues:2.3x -Three-Year Average of Moody's ANPL/Full Value:0.7% -Three-Year Average of Moody's ANPL/Operating Revenues: 1.4x OBLIGOR PROFILE The City of Prior Lake is located in north central Scott County,approximately 24 miles southwest of Minneapolis. The city covers an area of approximately 24 square miles and has 22,796 residents as of the 2010 census. LEGAL SECURITY All of the city's GO bonds are secured by the city's full faith and credit,general obligation pledge,which benefits from a dedicated property tax levy that is unlimited by rate or amount. USE OF PROCEEDS Proceeds Series 2015A bonds will be used to crossover refund a portion of the city's Series 2007A bonds for estimated net present value savings and to finance street improvements and reconstruction. Proceeds of the Series 2015B bonds will finance street improvements and reconstruction. PRINCIPAL METHODOLOGY The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014.Please see the Credit Policy page on www.moodys.com for a copy of this methodology. REGULATORY DISCLOSURES For ratings issued on a program,series or category/class of debt,this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider,this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned,and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt,in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com. Regulatory disclosures contained in this press release apply to the credit rating and,if applicable,the related rating outlook or rating review. Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Analysts Cora Bruemmer Lead Analyst Public Finance Group Moody's Investors Service Genevieve Nolan Additional Contact Public Finance Group Moody's Investors Service Contacts Journalists:(212)553-0376 Research Clients:(212)553-1653 Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 USA MOODY'S INVESTORS SERVICE ©2015 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc.and/or their licensors and affiliates(collectively,WOODY'S").All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC.AND ITS RATINGS AFFILIATES ("MIS")ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS,OR DEBT OR DEBT-LIKE SECURITIES,AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S("MOODY'S PUBLICATIONS")MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES,CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. 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City of Prior Lake,Minnesota G.O.Bonds, Series 2015A Table of Contents Report ISSUE SUMMARY Summary Debt Service Schedule 2 Pricing Summary Detail Costs Of Issuance 4 NEW MONEY Project Summary 5 Debt Service Schedule 6 Net Debt Service Schedule REFUNDING Refunding Summary g Debt Service Comparison 9 Debt Service Schedule 10 105%Levy 11 2015A Tax Exempt I Issue Summary 1 4/21/2015 1 2:23 PM Final City of Prior Lake,Minnesota G.O.Bonds, Series 2015A Summary Dated 05/01/2015 1 Delivered 05/14/2015 New Money (Street Issue Improvements) Refunding Summary Sources Of Funds Par Amount of Bonds $4,640,000.00 $5,360,000.00 $10,000,000.00 Reoffering Premium 133,639.20 143,647.30 277,286.50 Accrued Interest from 05/01/2015 to 05/14/2015 4,182 57 4,843.40 9,025.97 Total Sources $4,777,821.77 $5,508,490.70 $10,286,312.47 Uses Of Funds Deposit to Crossover Escrow Fund 5,405,232.91 5,405,232.91 Deposit to Project Construction Fund 4,567,516.55 .... 4,5 .55 Deposit to Capitalized Interest(CIF)Fund 125,798.82 125,798.82 Total Underwriter's Discount (L175%) 54,520.00 62,980.00 117,500.00 Costs of Issuance 25,522.32 29 482.68 55,005.00 Rounding Amount 281.51 10,795.11 11,076.62 Deposit to Debt Service Fund 4,182.57 - 4,182.57 ...._..._. Total Uses $4,777,821.77 $5,508,490.70 $10,286,312.47 Flow of Funds Detail State and Local Government Series(SLGS)rates for ..______......_........ Date of OMP Candidates Primary Purpose Fund Solution Method Net Funded Net Funded Net Funded Total Cost of Investments $4,567,516.55 $5,405,232.91 $9,972,749.46 Interest Earnings @ 0.785% 329,806.25 1.329,806.25 Total Draws $4,567,516.55 $5,511,705.56 $10,079,222.11 Capitalized Interest Fund Solution Method Net Funded Net Funded Net Funded Original Bond Proceeds 125,798.82 125,798.82 Accrued Interest 4,182 57 - 4,182.57 Total Draws $129,981 39 - — $129,981.39 ... .. ._______... PV Analysis Summary(Net to Net) Net PV Cashflow.Savings @ 2.1020/o(Bond Yield) 526,021.78 Contingency or Rounding Amount 10,795.11 Net Present Value Benefit $536,816.89 Net PV Benefit/ Refunded Principal 10.403% Net PV Benefit/ Refimding Principal 10.015% Bond Statistics Average Life 12.145 Years 12.318 Years 12.238 Years Average Coupon 2.5776423% 2.6393253% 2.6109213% Net Interest Cost(NIC) 2.4372470% 2.5171512% 2.4803566% Bond Yield for Arbitrage Purposes 2.1024126% 2.102412 6% 2.1024126 True Interest Cost(TIC) 2.3969230% 2.4735333% 2.4381519% All Inclusive Cost(AIC) 2.4487994% 2.5254338% 2.4900376% 2015A Tax Exempt I Issue Summary 1 4/21/2015 1 2:23 PM Northland Securities Public Final City of Prior Lake,Minnesota G.O. Bonds, Series 2015A I Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/14/2015 _ 12/15/2015 155,524.45 155,524.45 155,524.45 06/15/2016 124,975.00 124,975.00 - 12/15/2016 124,975.00 124,975.00 249,950.00 06/15/2017 - 124,975.00 124,975.00 12/15/2017 124,975.00 124,975.00 249,950.00 06/15/2018 - - 124,975.00 124,975.00 12/15/2018 75,000.00 1.000% 124,975.00 199,975.00 324,950.00 06/15/2019 - 124,600.00 124,600.00 - 12/15/2019 75,000.00 1.000% 124,600.00 199,600.00 324,200.00 06/15/2020 - 124,225.00 124,225.00 12/15/2020 75,000.00 1.500% 124,225.00 199,225.00 323,450.00 06/15/2021 - - 123,662.50 123,662.50 12/15/2021 75,000.00 1.500% 123,662.50 198,662.50 322,325.00 06/15/2022 - - 123,100.00 123,100.00 - 12/15/2022 75,000.00 1.500% 123,100.00 198,100.00 321,200.00 06/15/2023 - - 122,537.50 122,537.50 _ 12/15/2023 885,000.00 2.000% 122,537.50 1,007,537.50 1,130,075.00 06/15/2024 - - 113,687.50 113,687.50 12/15/2024 1,070,000.00 2.000% 113,687.50 1,183,687.50 1,297,375.00 06/15/2025 _. _ 102,987.50 102,987.50 12/15/2025 1,290,000.00 2.000% 102,987.50 1,392,987.50 1,495,975.00 06/15/2026 - 90,087.50 90,087.50 12/15/2026 1,140,000.00 2.500% 90,087.50 1,230,087.50 1,320,175.00 06/15/2027 - 75,837.50 75,837.50 _ 12/15/2027 1,105,000.00 2.500% 75,837.50 1,180,837.50 1,256,675.11 00 06/15/2028 - 62,025.00 62,025.00 12/15/2028 1,120,000.00 3.000% 62,025.00 1,182,025.00 1,244,050.00 06/15/2029 - 45,225.00 45,225.00 12/15/2029 1,190,000.00 3.000% 45 225.00 1,235,225.00 1,280,450.00 06/15/2030 - 27,375.00 27,375.00 12/15/2030 1,185,000.00 3.000% 27,375.00 1,212,375.00 1,239,750.00 06/15/2031 - 9,600.00 9,600.00 12/15/2031 640,000.00 3.000% 9,600.00 649,600.00 659,200.00 Total $10,000,000.00 - $3,195,274.45 $13,195,274.45 _ Dated 5/01/2015 Delivery Date 5/14/2015 First Coupon Date 12/15/2015 First available call date 12/15/2022 __ __ _ Call Price 100.0000000 Accrued Interest from 05/01/2015 to 05/14/2015 9,025.97 Bond Year Dollars $122,381.11 Average Life 12.238 Years Average Coupon 2.6109213% Net Interest Cost(NIC) 2.4803566 True Interest COSI(TIC) 2.4381519% All Inclusive Cost(A1C) - ---2.4900376% Bond Yield for Arbitrage Purposes 2.1024126% Net Interest Cost 2.3097203 Weighted Average Maturity ___ _ 12.255 Years 2015A Tax Exempt I Issue Summary 1 4/21/2015 1 2:23 PM Northland Securities Public Final City of Prior Lake,Minnesota G.O.Bonds, Series 2015A Pricing Summary Maturity Type of Bond Coupon Yield Maturity Value Price Dollar Price 12/15/2019 Term 1 Coupon 1.000% 1.000% 150,000.00 100.000% 150,000.00 12/15/2022 Term 2 Coupon 1.500% 1.500% 225,000.00 100.000% 225,000.00 12/15/2023 Serial Coupon 2.000% 1.600% 885,000.00 102.846% c 910,187.10 12/15/2024 Serial Coupon 2.000% 1.750% 1,070,000.00 101.768% c 1,088,917.60 12/15/2025 Serial Coupon 2.000% 1.850% 1,290,000.00 101.056% c 1,303,622.40 12/15/2026 Serial Coupon 2.500% 2.000% 1,140,000.00 103.502% c 1,179,922.80 12/15/2027 Serial Coupon 2.500% 2.100% 1,105,000.00 102.790% c 1,135,829.50 12/15/2028 Serial Coupon 3.000% 2.250% 1,120,000.00 105.202% C 1,178,262.40 12/15/2029 Serial Coupon 3.000% 2.450% 1,190,000.00 103.785% C 1,235,041.50 ---1211-5/2030 Serial Coupon 3.000% 2.600% 1,185,000.00 102.736% c 1,217,421.60 12/1 /2031 Serial Coupon 3.000% 2.700% 640,000.00 102.044% c 653,081.60 Total - - $10,000,000.00 - $10,277,286.50 Dated 5/01/2015 Delivery Date 5/14/2015 - _ First Coupon Date 12/15/2015 First available call date 12/15/2022 Call Price 100.0000000% Par Amount of Bonds $10,000,000.00 Reoffering Premium or(Discount) 277,286.50_ Gross Production $10,277,286.50 Total Underwriter's Discount (1.175%) $(117,500.00) Bid(]01.598%) 11 111.1 10,159,786.50 Accrued Interest from 05/01/2015 to 05/14/2015 9,025.97 - Total Purchase Price _. -_ - - $10,168,812.47 Bond Year Dollars - $122,381.11 Average Life 12.238 Years Average Coupon 2.6109213% -.. Net Interest Cost(NIC) 2.4803566% True Interest Cost(TIC) 2.4381519% 2015A Tax Exempt I Issue Summary 1 4/21/2015 1 2:23 PM PublicNorthland Securities g_ Final City of Prior Lake,Minnesota G.O. Bonds, Series 2015A Detail Costs Of Issuance Dated 05/01/201161 Delivered 05/14/2015 COSTS OF ISSUANCE DETAIL Bond Counsel $14,500.00 S&P Rating Agency Fee $13,200.00 Miscellaneous $265.00 Pricing Opinion $3,750.00 Moody's Rating Agency Fee $14,800.00 CPA/Verification $2,500.00 Escrow Agent $4,250.00 Paying Agent $1,740.00 TOTAL $55,005.00 ii 2015A Tax Exempt I Issue Summary 1 4/21/2015 1 2:23 PM Northland Securities Publicg- Final City of Prior Lake,Minnesota G.O.Bonds, Series 2015A New Money(Street Improvements)Allocation Project Summary Dated 05/01/2015 1 Delivered 05/14/2015 Sources Of Funds Par Amount of Bonds $4,640,000.00 Reoffering Premium - - - - - 133,639.20 Accrued Interest from 05/01/2015 to 05/14/2015 4,182.57 Total Sources $4,777,821.77 Uses Of Funds - Deposit to Project Construction Fund 4,567,516.55 Deposit to Capitalized Interest(CIF)Fund 125,798.82 Total Underwriter's Discount (1.175%) 54,520.00 Costs of Issuance 25,522.32 Deposit to Debt Service Fund 4,182.57 Rounding Amount 281.51 Total Uses $4,777,821.77 Flow of Funds Detail State and Local Government Series(SLGS)rates for Date of OMP Candidates - Project Construction Fund Solution Method Net Funded Total Cost of Investments $4,567,516.55 Total Draws $4,567,516.55 Capitalized Interest Fund Solution Method Net Funded ........... Original Bond Proceeds 125,798.82 Accrued Interest - - - - 4,182.57 Total Draws $129,981.39 I I Bond Statistics Average Life 12.145 Years Average Coupon 2.5776423% Net Interest Cost(NIC) 2.4372470% Bond Yield for Arbitrage Purposes 2.1024126% True Interest Cost(TIC) 2.3969230% All Inclusive Cost(AIC) 2.4487994% 2015A Tax Exempt I New Money 1 4/21/2015 1 2:23 PM Final City of Prior Lake,Minnesota G.O.Bonds,Series 2015A New Money Allocation Debt Service Schedule Date Principal Coupon Interest Total PA Fiscal Total 05/14/2015 - - - 12/15/2015 72,068.89 72,068.89 72,068.89 06/15/2016 57,912.50 57,912.50 - 12/15/2016 57,912.50 57,912.50 115,825.00 06/15/2017 - - - -_ 57,912.50 57,912.50 12/15/2017 57,912.50 57,912.50 115,825.00 06/15/2018 57,912.50 57,912.50 - 12/15/2018 57,912.50 57,912.50 115,825.00 06/15/2019 57,912.50 57,912.50 - 12/15/2019 57,912.50 57,912.50 115,825.00 06/15/2020 57,912.50 57,912.50 12/15/2020 57,912.50 57,912.50 115,825.00 06/15/2021 57,912.50 57,912.50 - 12/15/2021 57,912.50 57,912.50 115,825.00 06/15/2022 57,912.50 57,912.50 - 12/15/2022 57,912.50 57,912.50 115,825.00 06/15/2023 - - 57,912.50 57,912.50 - 12/15/2023 405,000.00 2.000% 57,912.50 462,912.50 520,825.00 06/15/2024 - - 53,862.50 53,862.50 - 12/15/2024 575,000.00 2.000% 53,862.50 628,862.50 682,725.00 06/15/2025 - - 48,112.50 48,112.50 - 12/15/2025 775,000.00 2.000% 48,112.50 823,112.50 871,225.00 06/15/2026 - - 40,362.50 40,362.50 - 12/15/2026 610,000.00 2.500% 40,362.50 650,362.50 690,725.00 06/15/2027 - - 32,737.50 32,737.50 - 12/15/2027 555,000.00 2.500% 32,737.50 587,737.50 620,475.00 06/15/2028 - - 25,800.00 25,800.00 - 12/15/2028 550,000.00 3.000% 25,800.00 575,800.00 601,600.00 06/15/2029 - - 17,550.00 17,550.00 - 12/15/2029 600,000.00 3.000% 17,550.00 617,550.00 635,100.00 06/15/2030 - 8,550.00 8,550.00 - 12/15/2030 570,000.00 3.000% 8,550.00 578,550.00 587,100.00 Total $4,640,000.00 - $1,452,618.89 $6,092,618.89 - Dated 5/01/2015 Delivery Date 5/14/2015 First Coupon Date _- -_ -_ -_ -_ _ -- 12/15/2015 First available call date 12/15/2022 Call Price 100.0000000% Accrued Interest from 05/01/2015 to 05/14/2015 4,182.57 Bond YearDollars $56,354.56 Average Life 12.145 Years Average Coupon -_ -_ 2.5776423% Net Interest Cost(NIC) 2.4372470% True Intere11 st Cost(TIC) _- 23969230% All Inclusive Cost(AIC) 2.4487994% Bond Yield for Arbitrage Purposes - - - 2.1024126% Net Interest Cost 2.2652108% Weighted Average Maturity 12.159 Years 2015A Tax Exempt I New Money 1 4/21/2015 1 2:23 PM Northland Securities Public Final City of Prior Lake,Minnesota G.O.Bonds, Series 2015A New Money Allocation Net Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New DIS 12/15/2015 72,068.89 72,068.89 (72,068.89) - 12/15/2016 115,825.00 115,825.00 (57,912.50) 57,912.50 12/15/2017 115,825.00 115,825.00 115,825.00 12/15/2018 115,825.00 115,825.00 115,825.00 12/15/2019 115,825.00 115,825.00 115,825.00 12/15/2020 115,825.00 115,825.00 115,825.00 12/15/2021 115,825.00 115,825.00 115,825.00 12/15/2022 115,825.00 115,825.00 115,825.00 12/15/2023 405,000.00 2.000% 115,825.00 520,825.00 520,825.00 12/15/2024 575,000.00 2.000% 107,725.00 682,725.00 682,725.00 12/15/2025 775,000.00 2.000% 96,225.00 871,225.00 871,225.00 12/15/2026 610,000.00 2.500% 80,725.00 690,725.00 690,725.00 12/15/2027 555,000.00 2.500% 65,475.00 620,475.00 620,475.00 12/15/2028 550,000.00 3.000% 51,600.00 601,600.00 601,600.00 12/15/2029 600,000.00 3.000% 35,100.00 635,100.00 635,100.00 12/15/2030 570,000.00 3.000% 17,100.00 587,100.00 587,100.00 Total $4,640,000.00 - $1,452,618.89 $6,0929618.89 (129,981.39) $5,962,637.50 2015A Tax Exempt I New Money 1 4/21/2015 1 2:23 PM Final City of Prior Lake,Minnesota G.O.Bonds, Series 2015A Refunding Allocation Refunding Summary Dated 05/011/20151 Delivered 05/14/2015 Sources Of Funds Par Amount of Bonds $5,360,000.00 Reoffering Premium 143,647.30 Accrued Interest from 05/01/2015 to 05/14/2015 4,843.40 Total Sources $5,508,490.70 Uses Of Funds Deposit to Crossover Escrow Fund 5,405,232.91 Total Underwriter's Discount (1.175%) 62,980.00 Costs of Issuance 29,482.68 Rounding Amount 10,795.11 Total Uses $5,508,490.70 Flow of Funds Detail State and Local Government Series(SLGS)rates for .......... Date of OMP Candidates Crossover Escrow Fund Solution Method Net Funded Total Cost of Investments $5,405,232.91 Interest Earnings @ 0.785% 329,806.25 Total Draws $5,511,705.56 Issues Refunded And Call Dates 07aold 12/15/2017 PV Analysis Summary(Net to Net) Net PV Cashflow Savings @ 2.102%(Bond Yield) 526,021.78 Contingency or Rounding Amount 10,795.11 Net Present Value Benefit $536,816.89 Net PV Benefit/ $5,160,000 Refunded Principal 10.403% Net PV Benefit/ $5,360,000 Refunding Principal 10.015% Bond Statistics Average Life 12.318 Years Average Coupon 2.6393253% Net Interest Cost(NIC) 2.5171512% Bond Yield for Arbitrage Purposes 2.1024126% True Interest Cost(TIC) 2.4735333% All Inclusive Cost(AIC) 2.5254338% 2015A Tax Exempt I Refunding 1 4/21/2015 1 2:23 PM Northland Final City of Prior Lake,Minnesota G.O. Bonds, Series 2015A Refunding Allocation Debt Service Comparison Date Total P+I PCF Existing D/S Net New D/S Old Net D/S Savings 12/15/2015 83,455.56 (83,455.56) 526,513.76 515,718.65 526,513.76 10,795.11 12/15/2016 134,125.00 (134,125.00) 537,713.76 537,713.76 537,713.76 - 12/15/2017 134,125.00 (5,294,125.00) 5,708,113.76 548,113.76 548,113.76 0.00 12/15/2018 209,125.00 345,200.00 554,325.00 557,713.76 3,388.76 12/15/2019 208,375.00 354,000.00 562,375.00 566,513.76 4,138.76 12/15/2020 207,625.00 367,000.00 574,625.00 579,513.76 4,888.76 12/15/2021 206,500.00 379,000.00 585,500.00 591,513.76 6,013.76 12/15/2022 205,375.00 390,000.00 595,375.00 602,513.76 7,138.76 12/15/2023 609,250.00 - 609,250.00 612,513.76 3,263.76 12/15/2024 614,650.00 614,650.00 621,513.76 6,863.76 12/15/2025 624,750.00 624,750.00 629,513.76 4,763.76 12/15/2026 629,450.00 629,450.00 636,513.76 7,063.76 12/15/2027 636,200.00 636,200.00 642,038.76 5,838.76 12/15/2028 642,450.00 642,450.00 646,413.76 3,963.76 12/15/2029 645,350.00 645,350.00 649,757.50 4,407.50 12/15/2030 652,650.00 652,650.00 657,070.00 4,420.00 12/15/2031 659,200.00 659,200.00 662,710.00 3,510.00 12/15/2032 - - 672,090.00 672,090.00 Total $7,102,655.56 (5,511,705.56) $8,607,541.28 $10,187,696.17 $10,940,245.14 $752,548.97 PV Analysis Summary(Net to Net) Gross PV Debt Service Savings—.... 526,021.78 Net PV Cashflow Savings @ 2.1021/.(Bond Yield)..... 526,021.78 Contingency or Rounding Amount.. . .. ...... 10,795.11 Net Present Value Benefit $536,816.89 Net PV Benefit/$5,847,390.18 PV Refunded Debt Service 9.180% Net PV Benefit/ $5,160,000 Refunded Principal.I 11.. 10.403% Net PV Benefit/ $5,360,000 Refunding Principal11 .. 10.015% Refunding Bond Information Refunding Dated Date 5/01/2015 Refunding Delivery Date 5/14/2015 2015A Tax Exempt I Refunding 1 4/21/2015 1 2:23 PM Northland Securities Public Final City of Prior Lake,Minnesota G.O.Bonds,Series 2015A Refunding Allocation Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/14/2015 - 12/15/2015 83,455.56 83,455.56 83,455.56 06/15/2016 67,062.50 67,062.50 12/15/2016 67,062.50 67,062.50 134,125.00 06/15/2017 67,062.50 67,062.50 - 12/15/2017 67,062.50 67,062.50 134,125.00 06/15/2018 67,062.50 67,062.50 - 12/15/2018 75,000.00 1.000% 67,062.50 142,062.50 209,125.00 06/15/2019 - 66,687.50 66,687.50 - 12/15/2019 75,000.00 1.000% 66,687.50 141,687.50 208,375.00 06/15/2020 - 66,312.50 66,312.50 - 12/15/2020 75,000.00 1.500% 66,312.50 141,312.50 207,625.00 06/15/2021 - - 65,750.00 65,750.00 - 12/15/2021 75,000.00 1.500% 65,750.00 140,750.00 206,500.00 06/15/2022 - - 65,187.50 65,187.50 - 12/15/2022 75,000.00 1.500% 65,187.50 140,187.50 205,375.00 06/15/2023 - - 64,625.00 64,625.00 - 12/15/2023 480,000.00 2.000% 64,625.00 544,625.00 609,250.00 06/15/2024 - - 59,825.00 59,825.00 - 12/15/2024 495,000.00 2.000% 59,825.00 554,825.00 614,650.00 06/15/2025 - - 54,875.00 54,875.00 - 12/15/2025 515,000.00 2.000% 54,875.00 569,875.00 624,750.00 06/15/2026 - - 49,725.00 49,725.00 12/15/2026 530,000.00 2.500% 49,725.00 579,725.00 629,450.00 06/15/2027 - _ 43,100.00 43,100.00 - 12/15/2027 550,000.00 2.500% 43,100.00 593,100.00 636,200.00 06/15/2028 - - 36,225.00 36,225.00 - 12/15/2028 570,000.00 3.000% 36,225.00 606,225.00 642,450.00 06/15/2029 - - 27,675.00 27,675.00 - 12/15/2029 590,000.00 3.000% 27,675.00 617,675.00 645,350.00 06/15/2030 _ 18,825.00 18,825.00 _ 12/15/2030 615,000.00 3.000% 18,825.00 633,825.00 652,650.00 06/15/2031 - - 9,600.00 9,600.00 - 12/15/2031 640,000.00 3.000% 9,600.00 649,600.00 659,200.00 Total $5,360,000.00 - $1,742,655.56 $7,102,655.56 - Dated 5/01/2015 Delivery Date 5/14/2015 First Coupon Date 12/15/2015 _ - First available call date 12/15/2022 Call Price 100.0000000% Accrued Interest from 05/01/2015 to 05/14/2015 4,843.40 Bond Year Dollars $66,026.56 Average Life 12.318 Years Average Coupon 2.6393253% Net Interest Cost(NIC) 2.5171512% True Interest Cost(TIC) 2.4735333% All Inclusive Cost(AIC) 2.5254338% .......... Bond Yield for Arbitrage Purposes 2.1024126% Net Interest Cost 2.3477678% Weighted Average Maturity 12.338 Years 2015A Tax Exempt I Refunding 1 4/21/2015 1 2:23 PM PublicNorthland Securities 10 Final City of Prior Lake,Minnesota G.O.Bonds,Series 2015A New Money Allocation 105% Tax Levy Capitalized Less: Less:Transfer Certified Levy Collection Date TotalP+I Interest Net Levy 105%Levy Assessments to 201511 Levy Year Year 12/15/2015 72,068.89 (72,068.89) - 12/15/2016 115,825.00 (57,912.50) 57,912.50 60,808.13 258,981.08 (198,17295) - 2015 2016 12/15/2017 115,825.00 115,825.00 121,616.25 240,147.65 (118,531.40) - 2016 2017 12/15/2018 115,825.00 115,825.00 121,616.25 233,682.54 (112,066.29) - 2017 2018 12/15/2019 115,8200 115,825.00 121,61625 227,217.44 _._.(105,601.19) 2018 2019 12/15/2020 115,825.00 115,825.00 121,616.25 220,752.33 (99,136.08) 2019 2020 12/15/2021 115,825.00 115,825.00 121,616.25 214,287.23 (92,670.98) - 2020 2021 12/15/2022 115,825.00 115,825.00 121,616.25 207,822.12 (86,205.87) - 2021 2022 12/15/2023 520,825.00 520,825.00 546,866.25 201,357.02 345,509.24 2022 2023 _12/15/2024 682,725M682,725.00 716,861.25 194,891.9_1 521,969.34 2023 2024 12/15/2025 871,22500 _...___ ._... 871,225.00 914,786.25 _- 188,426.81 - 726,359.45_ --2024 2025 12/15/2026 690,725.00 690,725.00 725,261.25 35,049.30 690,211.95 2025 2026 12/15/2027 620,475.00 620,475.00 651,498.75 34,093.41 617,405.34 2026 2027 12/15/2028 601,600.00 601,600.00 631,680.00 33,137.52 598,542.48 2027 2028 12/15/2029 635,100.00 635,100.00 666,85500 32,181.63 _ 634,673.37 2028 2029 12/15/2030 587,100.00 587,100.00 616,45500 31,225.74 585,229.26 2029 2030 Total 56,092,618.89 (129,981.39) $5,962,637.50 56,260,769.38 $2,353,253.70 (812,38475) $1719,90042 2015A Tar Exempt I New Money 1 4212015 1 223 PM City of Prior Lake,Minnesota Taxable G.O. Bonds, Series 2015B New Money Table of Contents Report ISSUE SUMMARY Total Issue Sources And Uses 1 Debt Service Schedule2 Net Debt Service Schedule 3 Pricing Summary.............. 4 Detail Costs Of Issuance 5 105%Levy 6 20158 Taxable I Issue Summary 1 4/21/2015 1 12:39 PM Northland Securities Final City of Prior Lake,Minnesota Taxable G.O. Bonds, Series 2015B New Money Total Issue Sources And Uses Dated 05/01/2015 i Delivered 05/14/2015 Street Special Reconstructi Assessment Issue on Portion Portion Summary Sources Of Funds Par Amount of Bonds $2,330,000.00 $160,000.00 $2,490,000.00 Accrued Interest from 05/01/2015 to 05/14/2015 1,371.05 95.42 1,466.47 Reoffering Premium 1,227.20 94.40 1,321.60„ Total Sources $2,332,598.25 $160,189.82 $2,492,788.07 Uses Of Funds Deposit to Project Construction Fund 2,251,000.00 153,049.00 2,404,049.00 Deposit to Capitalized Interest(CIF)Fund 41,236.92 2,870.05 44,106.97 Total Underwriter's Discount (0.950%) 22,135.00 --1,520.00 23,655.00 Costs of Issuance 13,610.38 93 1.4.62 14,545.00 Rounding Amount - 3,244.90 1,720.73 4,965.63 Deposit to Debt Service Fund 1,371.05 95.42 1,466.47 Total Uses $2,332,598.25 $160,189.82 $2,492,788.07 I I i 20158 Taxable I Issue Summary 1 4/21/2015 1 12:39 PM Northland Securities Final City of Prior Lake,Minnesota Taxable G.O.Bonds, Series 2015B New Money Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/14/2015 - - - 12/15/2015 25,268.44 25,268.44 25,268.44 06/15/2016 - - 20,305.00 20,305.00 - 12/15/2016 280,000.00 1.000% 20,305.00 300,305.00 320,610.00 06/15/2017 - - 18,905.00 18,905.00 - 12/15/2017 230,000.00 1.000% 18,905.00 248,905.00 267,810.00 06/15/2018 - - 17,755.00 17,755.00 - 12/15/2018 650,000.00 1.400% 17,755.00 667,755.00 685,510.00 06/15/2019 - - 13,205.00 13,205.00 - 12/15/2019 355,000.00 1.600% 13,205.00 368,205.00 381,410.00 06/15/2020 - 10,365.00 10,365.00 - 12/15/2020 210,000.00 1.900% 10,365.00 220,365.00 230,730.00 06/15/2021 - - 8,370.00 8,370.00 - 12/15/2021 315,000.00 2.100% 8,370.00 323,370.00 331,740.00 06/15/2022 - - 5,062.50 5,062.50 - 12/15/2022 450,000.00 2.250% 5,062.50 455,062.50 460,125.00 Total $2,490,000.00 - $213,203.44 $2,703,203.44 - Dated 5/01/2015 Delivery Date 5/14/2015 First Coupon Date 12/15/2015 First available call date Call Price Accrued Interest from 05/01/2015 to 05/14/2015 1,466.47 Bond Year Dollars $11,659.42 Average Life 4.682 Years Average Coupon 1.8285944% Net Interest Cost(NIC) 2.0201426% True Interest Cost(TIC) 2.0086598% All Inclusive Cost(AIC) 2.1447077% Bond Yield for Arbitrage Purposes 1.7971292% Net Interest Cost 1.8043574% Weighted Average Maturity 4.681 Years 20158 Taxable i Issue Summary 1 4/21/2015 1 12:39 PM Final City of Prior Lake,Minnesota Taxable G.O. Bonds, Series 2015B New Money Net Debt Service Schedule Date Principal Coupon Interest Total P+I CIF Net New D/S 12/15/2015 - - 25,268.44 25,268.44 (25,268.44) - 12/15/2016 280,000.00 1.000% 40,610.00 320,610.00 (20,305.00) 300,305.00 12/15/2017 230,000.00 1.000% 37,810.00 267,810.00 267,810.00 12/15/2018 650,000.00 1.400% 35,510.00 685,510.00 685,510.00 12/15/2019 355,000.00 1.600% 26,410.00 381,410.00 381,410.00 12/15/2020 210,000.00 1.900% 20,730.00 230,730.00 230,730.00 12/15/2021 315,000.00 2.100% 16,740.00 331,740.00 331,740.00 12/15/2022 450,000.00 2.250% 10,125.00 460,125.00 460,125.00 Total $2,490,000.00 - $213,203.44 $2,703,203.44 (45,573.44) $2,657,630.00 20158 Taxable I Issue Summary 1 421/2015 1 12:39 PM PublicNorthland Securities Final City of Prior Lake,Minnesota Taxable G.O.Bonds, Series 2015B New Money Pricing Summary Type of Maturity Maturity Bond Coupon Yield Value Price Dollar Price 12/15/2016 Serial Coupon 1.000% 0.700% 280,000.00 100.472% 281,321.60 12/15/2017 Serial Coupon 1.000% 1.000% 230,000.00 100.000% 230,000.00 12/15/2018 Serial Coupon 1.400% 1.400% 650,000.00 100.000% 650,000.00 12/15/2019 Serial Coupon 1.600% 1.600% 355,000.00 100.000% 355,000.00 12/15/2020 Serial Coupon 1.900% 1.900% 210,000.00 100.000% 210,000.00 12/15/2021 Serial Coupon 2.100% 2.100% 315,000.00 100.000% 315,000.00 12/15/2022 Serial Coupon 2.250% 2.250% 450,000.00 100.000% 450,000.00 Total - - $2,490,000.00 - $2,491,321.60 Dated 5/01/2015 Delivery Date - — 5/14/2015 First Coupon Date 12/15/2015 First available call date Call Price Par Amount of Bonds $2,490,000.00 Reoffering Premium or(Discount) 1,321.60 Gross Production $2,491,321.60 Total Underwriters Discount (0.950%) $(23,655.00) Bid(99.103%) 2,467,666.60 Accrued Interest from 05/01/2015 to 05/14/2015 1,466.47 _-.. ......... Total Purchase Price $2,469,133.07 Bond Year Dollars $11,659.42 Average Life 4.682 Years Average Coupon 1.8285944% Net Interest Cost(NIC) 2.0201426% True Interest Cost(TIC) 2.0086598% 20158 Taxable I Issue Summary 1 4/21/2015 1 12:39 PM Northland Securities Final City of Prior Lake,Minnesota Taxable G.O.Bonds, Series 2015B New Money Detail Costs Of Issuance Dated 06/01/20151 Delivered 05/14/2015 COSTS OF ISSUANCE DETAIL Bond Counsel $6,500.00 S&P Rating Agency Fee $3,300.00 Moody's Rating Agency Fee $3,700.00 Payng Agent $1,045.00 TOTAL $14,545.00 i 2015B Taxable I Issue Summary 1 421/2015 1 12:39 PM Northland Securities Public Finance Page Final City of Prior Lake,Minnesota Taxable G.O.Bonds,Series 2015B Street Reconstruction New Money 105% Levy Capitalized Net Debt Less: Less:Transfers Equals Levy Collection Date TotalP+I Interest Service 105%Levy Assessments from 2015A Certified Levy Year Year 12/15/2015 25,268.44 (25,268.44) - - - 12/15/2016 320,610.00 (20,305.00) 300,305.00 315,320.25 22,000.79 198,172.95 95,146.51 2015 2016 12/15/2017 267,810.00 267,810.00 281,200.50 20,470.30 118,531.40 142,198.80 2016 2017 12/15/2018 685,510.00 685,510.00 719,785.50 19,896.37 112,066.29 587,822.84 2017 2018 12/15/2019 381,410.00 381,410.00 400,48050 19,322.44 105,601.19 275,556.88 2018 2019 12/15/2020 230,730.00 230,730.00 242,266.50 18,748.50 99,136.08 124,38192 2019 2020 12/15/2021 331,740.00 331,740.00 348,327.00 18,174.57 92,670.98 237,481.46 2020 2021 12/15/2022 460,125.00 460,125.00 483,131.25 17,600.64 86,205.87 379,324.75 2021 2022 Total 52,703,20.3.44 (45573.44) $2,657,630.00 52,790,511.50 5136,213.61 5812,384.75 $/,841,913.15 20158 Taxable I Street Recw fi.1 4212015 1 12'.39 PM