HomeMy WebLinkAbout9B Bond Sale
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 9, 2016
AGENDA #: 9B
PREPARED BY: DON URAM, FINANCE DIRECTOR
PRESENTED BY: DON URAM
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION FOR THE ISSUANCE AND SALE
OF $3,505,000 GENERAL OBLIGATION BONDS, SERIES 2016A
DISCUSSION: Introduction
Mr. Rusty Fifield, Director of Public Finance for Northland Securities Inc., will pre-
sent to the Council a completed resolution formally authorizing the issuance of
general obligation bonds in the amount $3.505 million for the refunding of the
2007A Water Treatment Facility bonds and the following projects:
TH13 / 150th Street
2016 Equipment Purchases
Manitou Road Project
Mr. Fifield will be present during the Council meeting to request Council approval
for the negotiated public sale of $3,505,000 General Obligation, Series 2016A
bonds. A copy of the resolution prepared by the City’s bond counsel, Briggs and
Morgan is attached for the Council’s review.
History
The City Council approved Resolution #16-048 on April 11, 2016, which author-
ized a negotiated bond sale, designed to time the sale in the market to obtain the
optimum interest rate on these bonds. At that time, the City expected the par
amount of the bonds to be $3,825,000. Due to infrastructure changes within the
Manitou improvement project and favorable interest rates, the par amount of the
bonds has been reduced to $3,505,000, a savings of $320,000.
Current Circumstances
The bonds have been rated AA+ by Standard and Poor’s. Staff did not seek a
Moody’s rating for this bond issuance for several reasons including cost ($10,000),
no expected rating upgrade, and market expectations only requiring one rating.
The report issued by S&P is attached to this agenda report.
Also attached is the summary report for the 2016A 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.
2
FINANCIAL
IMPACT:
The net interest cost of the bond issue is as follows:
New Money Refunding
Net Interest Cost
(NIC)
1.69% 1.49%
The 2017 debt service tax levy for the 2016A (new money portion) bond issue is
estimated to be $240,000.
This 2016A bond issue completes the refunding of $1,649,030 of the 2007A bond
issue. The present value of the savings generated by the refunding is $90,368 as
compared to $59,511 when we started this process earlier in the year. 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 $3,505,000 Gen-
eral Obligation Bonds, Series 2016A.
2. Reject bond sale for a specific reason.
RECOMMENDED
MOTION:
Alternative #1
ATTACHMENTS:
1. Resolution
2. Standard & Poor’s Rating Report (AA+)
3. 2016A Bond Summary Report
7588397v1
EXTRACT OF MINUTES OF A MEETING
CITY COUNCIL OF THE
CITY OF PRIOR LAKE, MINNESOTA
HELD: May 9, 2016
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 May 9, 2016, at 7:00 P.M., for
the purpose, in part, of authorizing the issuance and awarding the sale of $3,505,000 General
Obligation Bonds, Series 2016A.
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 $3,505,000 GENERAL
OBLIGATION BONDS, SERIES 2016A, 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 $3,505,000
General Obligation Bonds, Series 2016A (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 $1,105,000 (the
"Improvement Portion"), (ii) Section 475.58, Subdivision 3b 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 $350,000 (the "Street
Reconstruction Portion"), (iii) Minnesota Statutes, Section 412.301 to finance the acquisition of
capital equipment (the "Equipment") in the amount of $410,000 (the "Equipment Portion", and
together with the Improvement Portion and the Street Reconstruction Portion, the "New Money
Portion"), and (iv) Minnesota Statutes, Section 475.67 to finance a crossover refunding on
December 15, 2017 (the "Crossover Date") of the City's remaining outstanding $8,500,000
original principal amount of 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, 2018 (the "Prior Bonds") in the amount of $1,640,000 (the "Refunding Portion");
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
7588397v1
2
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
Reconstruction Portion of the Bonds was filed with the City Manager 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, the City owns and operates a municipal water system (the "System")
as a separate revenue producing public utility and the net revenues of the S ystem are pledged to
the payment of the Prior Bonds and the "Refunding Portion" of the City's outstanding
$10,000,000 General Obligation Bonds, Series 2015A, dated May 1, 2016 (the "Outstanding
Bonds"), the interest and principal of which constitutes a prior lien upon the net revenues of the
System; and
G. WHEREAS, $1,630,000 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
H. 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
I. WHEREAS, each item of Equipment to be financed by the Equipment Portion of
the Bonds has an expected useful life at least as long as the term of the Equipment Portion of the
Bonds; and
J. WHEREAS, the principal amount of the Equipment Portion of the Bonds does not
exceed one-quarter of one percent (0.25%) of the estimated market value of the taxable property
in the City ($2,620,934,100 times 0.25% is $6,552,335); and
K. 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
L. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
7588397v1
3
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 $3,584,841.45, 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, 2016, 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
2017 $200,000 2022 $570,000
2018 495,000 2023 205,000
2019 515,000 2024 145,000
2020 530,000 2025 145,000
2021 550,000 2026 150,000
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).
(b) Allocation. The Improvement Portion of the Bonds, being the aggregate principal
amount of $1,105,000, 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 $350,000, maturing in each of the years and amounts hereinafter
set forth, is issued to finance the Street Reconstruction Improvements. The Equipment Portion
of the Bonds, being the aggregate principal amount of $410,000, maturing in each of the years
and amounts hereinafter set forth, is issued to finance the acquisition of the Equipment. The
Refunding Portion of the Bonds, being the aggregate principal amount of $1,640,000, maturing
in each of the years and amounts hereinafter set forth is issued to provide funds for a crossover
refunding of the Refunded Bonds (the "Refunding"):
7588397v1
4
Year
Improvement
Portion
Street
Reconstruction
Portion
Equipment
Portion
Refunding
Portion
Total
Amount
2017 $115,000 $30,000 $55,000 $200,000
2018 110,000 35,000 55,000 $295,000 495,000
2019 110,000 35,000 60,000 310,000 515,000
2020 110,000 35,000 60,000 325,000 530,000
2021 110,000 35,000 60,000 345,000 550,000
2022 110,000 35,000 60,000 365,000 570,000
2023 110,000 35,000 60,000 205,000
2024 110,000 35,000 145,000
2025 110,000 35,000 145,000
2026
110,000 40,000 150,000
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. If the source of a prepayment is
taxes levied for the Equipment, the prepayment shall be allocated to the Equipment 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.
(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").
(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
7588397v1
5
"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 and other matters relating
7588397v1
6
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 Cit y 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 shall no longer be registered as being
registered in the bond register in the name of the Nominee, but may be registered
7588397v1
7
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 Street Reconstruction
Portion of the Bonds shall provide funds to finance the Street Reconstruction Improvements.
The Equipment Portion of the Bonds shall provide funds to finance the acquisition of the
Equipment. The Improvements, the Street Reconstruction Improvements and the Equipment,
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 New Money 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 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
$1,829,157.91 for the Prior Bonds to a total dollar amount of $1,740,392.79 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, 2016,
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:
7588397v1
8
Maturity Year Interest Rate Maturity Year Interest Rate
2017 2.00% 2022 2.00%
2018 2.00 2023 2.00
2019 2.00 2024 2.00
2020 2.00 2025 2.00
2021 2.00 2026 2.00
5. Redemption. All Bonds maturing on December 15, 2024 and thereafter, shall be
subject to redemption and prepayment at the option of the City on December 15, 2023, 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 Registrar. 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
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.
7588397v1
9
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 2016A
Interest Rate Maturity Date Date of Original Issue CUSIP
________% December 15, May 1, 2016
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, 2016, 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
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
7588397v1
10
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,
2024, and thereafter, are subject to redemption and prepayment at the option of the Issuer on
December 15, 2023, 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 $3,505,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate, denomination and redemption privilege, issued pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by
7588397v1
11
the City Council on May 9, 2016 (the "Resolution"), for the purpose of providing money to
finance the construction of various public improvements, street reconstruction improvements and
the acquisition of capital equipment within the jurisdiction of the Issuer and for a 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, 2018. This Bond is payable out of the
General Obligation Bonds, Series 2016A 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 Obligation. 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.
7588397v1
12
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:
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the Bonds
described in the Resolution
mentioned within.
NORTHLAND TRUST
SERVICES, INC.
Minneapolis, Minnesota
Bond Registrar
By:
Authorized Signature
Registrable by: NORTHLAND TRUST SERVICES,
INC.
Payable at: NORTHLAND TRUST SERVICES,
INC.
CITY OF PRIOR LAKE,
SCOTT COUNTY, MINNESOTA
/s/ Facsimile
Mayor
/s/ Facsimile
City Manager
7588397v1
13
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.)
7588397v1
14
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
7588397v1
15
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, 2016. 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.
7588397v1
16
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 Finance Director to the Purchaser upon receipt of the purchase price,
and the Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby established a special fund to be designated
"General Obligation Bonds, Series 2016A Fund" (the "Fund") to be administered and maintained
by the Finance Director as a bookkeeping account separate and apart from all other funds
7588397v1
17
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 Finance Director 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. $1,666,789.45 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 $33,030.00 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) Capital Account. To the Capital Account there shall be credited $1,871,213.94 of
the proceeds of the sale of the New Money Portion of the Bonds 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 Capital 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 Capital Account shall be used for no other purpose except as
otherwise provided by law; provided that the proceeds of the New Money Portion of the Bonds
may also be used to the extent necessary to pay interest on such Bonds due prior to the
anticipated date of commencement of the collection of taxes or special assessments herein levied
7588397v1
18
or covenanted to be levied; and provided further that if upon completion of the Project or the
acquisition of the Equipment there shall remain any unexpended balance in the Capital Account,
the balance (other than any special assessments) shall be transferred by the City 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 Capital 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", the "Street
Reconstruction Debt Service Subaccount", the "Equipment 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: (A) all collections of special assessments herein covenanted
to be levied with respect to the Improvements and either initially credited to the
Capital 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; (B) capitalized interest in the amount of $12,216.39 (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 December 15, 2016); (C) a pro rata share of all accrued
interest received upon delivery of the Bonds; (D) any collections of all taxes
herein or hereafter levied for the payment of the Improvement Portion of the
Bonds and interest thereon; (E) a pro rata share of funds remaining in the Capital
Account after completion of the Improvements and payment of the costs thereof,
not so transferred to the account of another improvement; (F) all investment
earnings on funds held in the Improvement Debt Service Subaccount; and (G) 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 Street
Reconstruction Debt Service Subaccount: (A) capitalized interest in the amount
of $3,869.45 (together with interest earnings thereon and subject to such other
adjustments as are appropriate to provide sufficient funds to pay interest due on
7588397v1
19
the Street Reconstruction Portion of the Bonds on or before December 15, 2016);
(B) a pro rata share of all accrued interest received upon delivery of the Bonds;
(C) any collections of all taxes herein or hereafter levied for the payment of the
Street Reconstruction Portion of the Bonds and interest thereon; (D) a pro rata
share of funds remaining in the Capital Account after completion of the Street
Reconstruction Improvements and payment of the costs thereof; (E) all
investment earnings on funds held in the Street Reconstruction Debt Service
Subaccount; and (F) 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 Reconstruction 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.
(iii) Equipment Debt Service Subaccount. To the Equipment Debt Service
Subaccount there shall be credited: (A) all collections of taxes herein or
hereinafter levied for the payment of the Equipment Portion of the Bonds and
interest thereon; (B) a pro rata share of any accrued interest received upon
delivery of the Bonds; (C) available funds of the City in an amount sufficient to
pay interest due on the Equipment Portion of the Bonds on or before December
15, 2016; (D) a pro rata share of all funds remaining in the Capital Account after
completion of the Project and payment of the costs thereof; (E) all investment
earnings on funds held in the Equipment Debt Service Subaccount; and (F) any
and all other moneys which are properly available and are appropriated by the
governing body of the City to the Equipment Debt Service Subaccount. The
Equipment Debt Service Subaccount shall be used solely to pay the principal and
interest and any premium for redemption of the Equipment Portion of the Bonds.
(iv) Refunding Debt Service Subaccount. To the Refunding Debt Service Subaccount
there shall be irrevocably appropriated and pledged to: (A) after the 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 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; (B) 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; (C) any balance remitted to the City pursuant to the Escrow Agreement;
(D) all investment earnings on funds held in the Refunding Debt Service
Subaccount; (E) 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
7588397v1
20
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 Escrow
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
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:
7588397v1
21
Improvement
Designation
Amount
Levy Years
Collection
Year
Rate
2016 Improvement Project $435,000 2016-2025 2017-2026 3.70%
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.
(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 Street Reconstruction Portion of the Bonds.
(a) Tax Levy; 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:
7588397v1
22
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
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 Pledge. 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. Covenants Relating to the Equipment Portion of the Bonds.
(a) Tax Levy; Coverage Test. To provide moneys for payment of the principal and
interest on the Equipment 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 Equipment 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 Equipment Portion of the Bonds. The tax levies shall be irrepealable so long as any of the
Equipment 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 Pledge. For the prompt and full payment of the principal and
interest on the Equipment 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
7588397v1
23
balance in the Equipment Debt Service Subaccount is ever insufficient to pay all principal and
interest then due on the Equipment 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
Equipment Debt Service Subaccount when a sufficient balance is available therein.
19. 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 on the Outstanding Bonds and a sum at
least five percent in excess thereof. The net revenues of the System are hereby pledged on a
parity lien with the Outstanding Bonds and shall be applied for that purpose, but solely to the
extent required to meet, together with other pledged sums, the principal and interest requirements
of the Bonds. 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
7588397v1
24
reimbursed without interest from the Escrow Account or the Refunding Debt Service Subaccount
when a sufficient balance is available therein.
20. 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.
21. 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.
22. 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 20, 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.
23. Redemption of Refunded Bonds. The Refunded 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.
24. 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 Cit y 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.
7588397v1
25
(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.
25. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall, to the extent permitted by law, cease. The 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.
26. 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 New Money 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
7588397v1
26
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 and Street Reconstruction
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 New Money 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 New Money 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 and Street Reconstruction 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 New Money Portion of the
Bonds.
27. 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.
28. 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
7588397v1
27
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.
29. Supplemental Resolution. The Prior Resolution is hereby supplemented to the
extent necessary to give effect to the provisions of this resolution.
30. 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.
31. Tax-Exempt Status of the Bonds; Rebate - 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.
32. Tax-Exempt Status of the Bonds: Rebate – New Money 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 New Money
Portion of the Bonds, including without limitation (1) requirements relating to temporary periods
for investments, (2) limitations on amounts invested at a yield greater than the yield on the New
Money Portion of the Bonds, and (3) the rebate of excess investment earnings to the United
States, if the New Money Portion of the Bonds (together with other obligations reasonably
expected to be issued and outstanding at one time in this calendar year) exceed the small issuer
exception amount of $5,000,000. For purposes of qualifying for the exception to the federal
arbitrage rebate requirements for governmental units issuing $5,000,000 or less of bonds, the
City hereby finds, determines and declares that:
(a) the Bonds are issued by a governmental unit with general taxing powers;
(b) no Bond is a private activity bond;
(c) ninety-five percent or more of the net proceeds of the Bonds are to be used for
local governmental activities of the City (or of a governmental unit the jurisdiction of which is
entirely within the jurisdiction of the City);
(d) the aggregate face amount of all tax exempt bonds (other than private activity
bonds) issued by the City (and all subordinate entities thereof, and all entities treated as one
issuer with the City) during the calendar year in which the Bonds are issued and outstanding at
one time is not reasonably expected to exceed $5,000,000, all within the meaning of Section
148(f)(4)(D) of the Code;
7588397v1
28
(e) there shall not be taken into account for purposes of said $5,000,000 limit any
bond issued to refund (other than to advance refund) any bond to the extent the amount of the
refunding bond does not exceed the outstanding amount of the refunded bond;
(f) the aggregate face amount of the Bonds does not exceed $5,000,000.
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.
33. 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
entities whose obligations are treated as issued by the City) during this calendar year 2016 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2016 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.
34. 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
35. 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.
7588397v1
29
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:
VOTE Hedberg Keeney McGuire Morton Thompson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
and the following voted against the same:
VOTE Hedberg Keeney McGuire Morton Thompson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
Whereupon the resolution was declared duly passed and adopted.
7588397v1
30
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 $3,505,000 General Obligation Bonds, Series 2016A.
WITNESS my hand on May 9, 2016.
________________________________
City Manager
7588397v1
TAX LEVIES
Improvement Portion of the Bonds:
Years of Tax Levy Years of Tax Collection Amount
2016 2017 $83,644.67
2017 2018 78,304.50
2018 2019 77,604.00
2019 2020 76,903.50
2020 2021 76,203.00
2021 2022 75,502.50
2022 2023 74,802.00
2023 2024 74,101.50
2024 2025 73,401.00
2025 2026 72,700.50
Street Reconstruction Portion of the Bonds:
Years of Tax Levy Years of Tax Collection Amount
2016 2017 $38,850.00
2017 2018 43,470.00
2018 2019 42,735.00
2019 2020 42,000.00
2020 2021 41,265.00
2021 2022 40,530.00
2022 2023 39,795.00
2023 2024 39,060.00
2024 2025 38,325.00
2025 2026 42,840.00
Equipment Portion of the Bonds:
Years of Tax Levy Years of Tax Collection Amount
2016 2017 $66,360.00
2017 2018 65,205.00
2018 2019 69,300.00
2019 2020 68,040.00
2020 2021 66,780.00
2021 2022 65,520.00
2022 2023 64,260.00
Page 1
City of Prior Lake, Minnesota
$3,505,000 General Obligation Bonds,
Series 2016A
Bond Sale Summary
May 9, 2016
PURPOSE:To crossover refund on December 15, 2017, at a price of par plus accrued
interest, the 2018 through 2022 maturities of the City’s General Obligation
Water Treatment Plant Revenue Bonds, Series 2007A, to finance
improvement construction costs, to finance the purchase of new vehicles
and to finance street reconstruction within the City.
FINANCE PLAN:For the 2007A refunding portion: to achieve interest cost savings which
will lower the annual debt service costs on the City’s general obligation
debt.
For the improvement, equipment and street reconstruction portions: To
structure the improvement and street reconstruction portions over a term
of ten years and the equipment portion over a term of seven years.
Principal on the Bonds will be payable on December 15 from 2017
through 2026. Interest is payable semi-annually on June 15 and
December 15, beginning December 15, 2017. Tax levies are pledged to the
repayment of the debt service on the improvement, equipment and street
reconstruction portions of the Bonds. Special assessments are also
pledged to the repayment of the improvement portion. Net revenues of
the City’s water treatment plant are pledged for the refunding portion.
RATING: Standard and Poor’s Rating Services confirmed the City’s rating of
“AA+.”
Final on
05/05/2016
Finance Plan
04/11/2016
Par Amount $ 3,505,000* $3,825,000
Average Coupon 2.03% 1.65%
True Interest Cost (TIC) 1.55% 1.99%
All In Cost (AIC) 1.73% 2.15%
Net Future Value Savings – Refunding Portion $94,904 $63,845
Net Present Value Savings – Refunding Portion $90,367 $59,511
Deposit to Project Construction Fund $ 1,868,000* $2,066,000
*Par amount and deposit into Project Construction Fund was reduced compared to the Finance
Plan due to lower construction bids received on the projects.
Page 2
EXHIBIT A – DEBT SERVICE COMPARISON
2016A Bonds Refunding 2007A Bonds
Debt Service Comparison
Date Total P+I PCF Existing D/S Net New D/S Old Net D/S Savings
12/15/2016 20,408.89 (20,408.89)325,200.00 323,596.17 325,200.00 1,603.83
12/15/2017 32,800.00 (1,662,800.00)1,965,600.00 335,600.00 335,600.00 -
12/15/2018 327,800.00 --327,800.00 345,200.00 17,400.00
12/15/2019 336,900.00 --336,900.00 354,000.00 17,100.00
12/15/2020 345,700.00 --345,700.00 367,000.00 21,300.00
12/15/2021 359,200.00 --359,200.00 379,000.00 19,800.00
12/15/2022 372,300.00 --372,300.00 390,000.00 17,700.00
Total $1,795,108.89 (1,683,208.89) $2,290,800.00 $2,401,096.17 $2,496,000.00 $94,903.83
PV Analysis Summary (Net to Net)
Gross PV Debt Service Savings.....................88,765.12
Net PV Cashflow Savings @ 1.163%(Bond Yield).....88,765.12
Contingency or Rounding Amount....................1,603.83
Net Present Value Benefit $90,368.95
Net PV Benefit / $1,740,392.79 PV Refunded Debt Service 5.192%
Page 3
EXHIBIT B – TOTAL DEBT SERVICE
Date Principal Coupon Interest Total P+I Fiscal Total
05/26/2016 -----
12/15/2016 --43,617.78 43,617.78 43,617.78
06/15/2017 --35,050.00 35,050.00 -
12/15/2017 200,000.00 2.000%35,050.00 235,050.00 270,100.00
06/15/2018 --33,050.00 33,050.00 -
12/15/2018 495,000.00 2.000%33,050.00 528,050.00 561,100.00
06/15/2019 --28,100.00 28,100.00 -
12/15/2019 515,000.00 2.000%28,100.00 543,100.00 571,200.00
06/15/2020 --22,950.00 22,950.00 -
12/15/2020 530,000.00 2.000%22,950.00 552,950.00 575,900.00
06/15/2021 --17,650.00 17,650.00 -
12/15/2021 550,000.00 2.000%17,650.00 567,650.00 585,300.00
06/15/2022 --12,150.00 12,150.00 -
12/15/2022 570,000.00 2.000%12,150.00 582,150.00 594,300.00
06/15/2023 --6,450.00 6,450.00 -
12/15/2023 205,000.00 2.000%6,450.00 211,450.00 217,900.00
06/15/2024 --4,400.00 4,400.00 -
12/15/2024 145,000.00 2.000%4,400.00 149,400.00 153,800.00
06/15/2025 --2,950.00 2,950.00 -
12/15/2025 145,000.00 2.000%2,950.00 147,950.00 150,900.00
06/15/2026 --1,500.00 1,500.00 -
12/15/2026 150,000.00 2.000%1,500.00 151,500.00 153,000.00
Total $3,505,000.00 - $372,117.78 $3,877,117.78 -
Date And Term Structure
Dated 5/01/2016
Delivery Date 5/26/2016
First Coupon Date 12/15/2016
First available call date 12/15/2023
Call Price 100.0000000%
Average Coupon 2.0265109%
Net Interest Cost (NIC)1.5917035%
True Interest Cost (TIC)1.5477865%
Note: The maturities grouped in boxes represent the term bonds maturing in 2024 and 2026.