HomeMy WebLinkAbout9B Bond Sale Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: JUNE 12, 2017
AGENDA #: 9B
PREPARED BY: CATHY ERICKSON, ACCOUNTING MANAGER
PRESENTED BY: CATHY ERICKSON
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION FOR THE ISSUANCE AND SALE
OF $4,510,000 GENERAL OBLIGATION BONDS, SERIES 2017A
DISCUSSION: Introduction
The City’s financial advisor, Ms. Tammy Omdal from Northland Securities Inc., will
be present during the meeting to present bids for the sale of general obligation
bonds, and to request Council approval to award the sale and issue the general
obligation bonds in the amount $4.510 million for the following projects:
• 2017 Reconstruction Projects
o Franklin Trail
o Cates Street Area
o Balsam Street Area
o Sycamore Trail
• 2017 Mill and Overlay Project
• Public Works Maintenance Building – Roof Replacement
History
The City Council approved Resolution #17-058 on April 24, 2017, which author-
ized a competitive bond sale in the maximum amount of $5,800,000 General Obli-
gation Bonds.
Current Circumstances
The bonds have been rated AA+ by Standard and Poor’s. The report issued by
S&P is attached to this agenda report.
Contracts for the project work have been awarded. The project costs are lower
than anticipated due to favorable bids. This reduced the total bond issue by
$1,295,000 to a total of $4,510,000. The final amount of bonds issued may be
less if the City receives a premium bid. The premium may be used to reduce the
par amount of the bonds.
Proposals are due by 10:30 a.m. on June 12, 2017. The bids will be evaluated as
specified in the Notice of Sale of the Bonds and the results will be presented to the
City Council during the June 12, 2017 City Council meeting.
The attached resolution is a template of what will be presented to the City Council.
A revised resolution will be provided to the City Council that contains the infor-
mation from the recommended bid.
2
Conclusion
The City Council will consider a resolution approving the issuance and award the
sale of bonds.
ISSUES: The sale will be awarded on the basis of the lowest true interest cost. This infor-
mation will be shared at the Council meeting.
Minnesota Statutes, Section 429.091, Subd. 7a, authorizes the issuance of gen-
eral obligation bonds secured by the revenues of a permanent improvement re-
volving fund (PIR Fund). The 2017A Bonds includes the issuance of PIR Bonds to
finance the 2017 street mill and overlay projects supported by special assess-
ments. The establishment of the PIR Fund will allow the City more flexible use of
revenues from special assessments. The alternative would have been to finance
the street mill and overlay projects with the issuance of “Improvement Bonds” (is-
sued under a different statutory authority), but with “Improvement Bonds” special
assessment revenues can only be used to pay debt service on the bonds to which
they are pledged. For the City’s annual street mill and overlay projects, financed
with PIR Bonds, the revenues can then be used for any authorized purpose of the
PIR Fund. For example, special assessments collected from a previous improve-
ment could be used to provide upfront funding for the future improvement. PIR
Fund Bonds are secured by revenues of the Fund and not solely by the special as-
sessments of the financed improvements.
FINANCIAL
IMPACT:
The average annual debt service for the total bond issue is estimated to be
$324,000. This may change based on the net interest cost of the bond issue. The
City has planned for these projects and they were included in the long term finan-
cial plan and Capital Improvement Plan.
ALTERNATIVES: The following alternatives are available to the City Council:
1. Adopt Resolutions Providing for the Issuance and Award the Sale of
$4,510,000 General Obligation Bonds, Series 2017A.
2. Reject bond sale for a specific reason.
RECOMMENDED
MOTION:
Alternative #1
ATTACHMENTS:
1. Resolution
2. Standard & Poor’s Rating Report (AA+)
8313294v2
EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL OF THE
CITY OF PRIOR LAKE, MINNESOTA
HELD: June 12, 2017
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 June 12, 2017, at 6:00 P.M.,
for the purpose, in part, of authorizing the issuance and awarding the sale of $4,505,000 General
Obligation Bonds, Series 2017A.
The following members were present:
and the following were absent:
Member ______________ introduced the following resolution and moved its adoption:
RESOLUTION NO. _______
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $4,505,000 GENERAL
OBLIGATION BONDS, SERIES 2017A, PLEDGING FOR THE SECURITY THEREOF
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 $4,505,000
General Obligation Bonds, Series 2017A (the "Bonds" or individually a "Bond"), pursuant to
Minnesota Statutes, Chapter 475 and (i) Section 475.521 to finance the roof replacement for the
City’s Public Works building in the City (the "Capital Improvements"), in the amount of
$370,000 (the "CIP Portion of the Bonds"); and (ii) Chapter 429 to finance street and public trail
improvements within the City (the "429 Improvements") in the amount of $3,780,000 (the
"Improvement Portion of the Bonds") and to finance the 2017 mill and overlay project within the
City (the “PIR Improvements”, and together with the 429 Improvements, the “Improvements”) in
the amount of $355,000 (the “PIR Portion of the Bonds”); and
B. WHEREAS, on August 8, 2016, the City Council held a public hearing on the
proposed issuance of general obligation capital improvement plan bonds and, pursuant to a
resolution approved and adopted on August 22, 2016, the 2016 through 2021 Capital
Improvement Plan (the "Plan"), and approved the issuance of general obligation capital
improvement plan bonds to finance the Capital Improvements, all pursuant to the Plan and in
accordance with the provisions of Minnesota Statutes, Section 475.521; and
C. WHEREAS, no petition signed by voters equal to five percent of the votes cast in
the City in the last general election requesting a vote on the issuance of the general obligation
capital improvement plan bonds has been filed with the City Manager within thirty days after the
public hearing on the Plan and on the issuance of the general obligation capital improvement
plan bonds; and
8313294v2
2
D. WHEREAS, the City has heretofore determined, in accordance with Minnesota
Statutes, Section 475.521, Subd. 4, that the maximum amount of principal and interest to become
due in any year on the CIP Portion of the Bonds, and any other outstanding bonds issued under
Minnesota Statutes, Section 475.521, is less than 0.16 percent of the taxable market value of
property of the City; and
E. 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
F. WHEREAS, the City has retained Northland Securities, Inc. ("Northland"), as its
independent financial advisor, in connection with the sale of the Bonds, and therefore the City is
authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes,
Section 475.60; Subdivision 2(9) and proposals to purchase the Bonds have been solicited by
Northland; and
G. WHEREAS, the proposals set forth on Exhibit A attached hereto were received
by the City Manager, or designee, at the offices of Northland, at 10:30 A.M. this same day
pursuant to the Notice of Sale established for the Bonds; and
H. WHEREAS, it is in the best interests of the City that the Bonds be issued in book-
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Prior Lake,
Minnesota, as follows:
1. Acceptance of Proposal. The proposal of Robert W. Baird & Co., Inc., in
Milwaukee, Wisconsin (the "Purchaser"), to purchase the Bonds in accordance with the Notice of
Sale, at the rates of interest hereinafter set forth and to pay therefor the sum of $4,578,557.98,
plus accrued interest to the settlement date, is hereby accepted and the Bonds are hereby awarded
to the Purchaser. The City Manager is directed to return to the unsuccessful bidders their good
faith checks or drafts.
2. Bond Terms.
(a) Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds
shall be dated June 29, 2017, 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:
8313294v2
3
Year Amount Year Amount
2018 $425,000 2023 $440,000
2019 475,000 2024 445,000
2020 490,000 2025 400,000
2021 500,000 2026 410,000
2022 505,000 2027 415,000
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 CIP Portion of the Bonds, being the aggregate principal amount
of $370,000, maturing in each of the years and amounts hereinafter set forth, is issued to finance
the Capital Improvements. The Improvement Portion of the Bonds, being the aggregate
principal amount of $3,780,000, maturing in each of the years and amounts hereinafter set forth,
is issued to finance the 429 Improvements. The PIR Portion of the Bonds, being the aggregate
principal amount of $355,000, maturing in each of the years and amounts hereinafter set forth, is
issued to finance the PIR Improvements.
Year
CIP Portion
(Amount)
Improvement
Portion (Amount)
PIR Portion
(Amount)
Total Amount
2018 $45,000 $315,000 $65,000 $425,000
2019 50,000 355,000 70,000 475,000
2020 55,000 365,000 70,000 490,000
2021 55,000 370,000 75,000 500,000
2022 55,000 375,000 75,000 505,000
2023 55,000 385,000 440,000
2024 55,000 390,000 445,000
2025 400,000 400,000
2026 410,000 410,000
2027 415,000 415,000
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, including the levy of taxes, 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 the prepayment is special assessments pledged to the 429 Improvements, the
prepayment shall be allocated to the Improvement Portion of debt service. If the source of the
prepayment is special assessments pledged to the PIR Improvements, the prepayment shall be
allocated to the PIR Portion of debt service.
(c) Book Entry Only System. The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York or any of its successors or its
8313294v2
4
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
"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
8313294v2
5
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,
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
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.
(d) Termination of Book-Entry Only System. Discontinuance of a particular
Depository's services and termination of the book-entry only system may be effected as follows:
(i) The Depository may determine to discontinue providing its services with respect
to the Bonds at any time by giving written notice to the City and discharging its
responsibilities with respect thereto under applicable law. The City may
terminate the services of the Depository with respect to the Bond if it determines
8313294v2
6
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
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. The CIP Portion of the Bonds shall provide funds to finance the
construction of the Capital Improvements. The Improvement Portion of the Bonds shall provide
funds to finance the 429 Improvements. The PIR Portion of the Bonds shall provide funds to
finance the PIR Improvements. The Capital Improvements, the 429 Improvements and the PIR
Improvements are herein referred to together as the Project. The total cost of the Project, which
shall include all costs enumerated in Minnesota Statutes, Section 475.65, is estimated to be at
least equal to the amount of the Bonds. The City covenants that it shall do all things and perform
all acts required of it to assure that work on the Project proceeds with due diligence to
completion and that any and all permits and studies required under law for the Project are
obtained.
4. Interest. The Bonds shall bear interest payable semiannually on December 15 and
June 15 of each year (each, an "Interest Payment Date"), commencing June 15, 2018, 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:
8313294v2
7
Maturity Year Interest Rate Maturity Year Interest Rate
2018 2.00% 2023 2.00%
2019 2.00 2024 2.00
2020 2.00 2025 2.00
2021 2.00 2026 2.25
2022 2.00 2027 2.25
5. Redemption. All Bonds maturing on December 15, 2025 and thereafter, shall be
subject to redemption and prepayment at the option of the City on December 15, 2024, 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 not more than sixty (60) days
and not fewer than thirty (30) 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.
8313294v2
8
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 2017A
Interest Rate Maturity Date Date of Original Issue CUSIP
December 15, June 29, 2017
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 December 15 and June 15 of each year (each, an "Interest Payment
Date"), commencing June 15, 2018, 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, 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
8313294v2
9
this Bond and notice with respect thereto shall be made as provided in the Letter of
Representations, as defined in the Resolution, and surrender of this Bond shall not be required
for payment of the redemption price upon a partial redemption of this Bond. Until termination of
the book-entry only system pursuant to the Resolution, Bonds may only be registered in the
name of the Depository or its Nominee.
Optional Redemption. All Bonds of this issue (the "Bonds") maturing on December 15,
2025, and thereafter, are subject to redemption and prepayment at the option of the Issuer on
December 15, 2024, 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
not more than sixty (60) days and not fewer than thirty (30) days prior to the date fixed for
redemption.
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.
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 $4,505,000, 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
8313294v2
10
with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by
the City Council on June 12, 2017 (the "Resolution"), for the purpose of providing money to
finance the construction of various improvement projects and capital improvement projects
within the jurisdiction of the Issuer. This Bond is payable out of the General Obligation Bonds,
Series 2017A Fund and the Permanent Improvement Revolving Sinking 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
principal 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 principal
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 principal 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.
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
8313294v2
11
performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law; and that this
Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof
and the date of its issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF, the City of Prior Lake, Scott County, Minnesota, by its City
Council has caused this Bond to be executed on its behalf by the facsimile signatures of its
Mayor and its 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
8313294v2
12
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.)
8313294v2
13
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
the 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,
which date is June 29, 2017. 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 principal 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.
8313294v2
14
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 City Manager to the Purchaser upon receipt of the purchase price, and
the Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby established a special fund to be designated
"General Obligation Bonds, Series 2017A Fund" (the "Fund") to be administered and maintained
by the Finance Director as a bookkeeping account separate and apart from all other funds
maintained in the official financial records of the City. The Fund shall be maintained in the
8313294v2
15
manner herein specified until all of the CIP Portion and the Improvement Portion of the Bonds
and the interest thereon have been fully paid. There shall be maintained in the Fund two (2)
separate accounts, to be designated the "Capital Account" and "Debt Service Account",
respectively.
(a) Capital Account. To the Capital Account there shall be credited the proceeds of
the sale of the CIP Portion and Improvement Portion of the Bonds, less a pro rata share of any
amount paid for the Bonds in excess of the minimum bid, plus any special assessments levied
with respect to the 429 Improvements and collected prior to completion of the 429 Improvements
and payment of the costs thereof. From the Capital Account there shall be paid all costs and
expenses of the Capital Improvements and the 429 Improvements, 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 CIP
Portion and the Improvement Portion of the Bonds may also be used to the extent necessary to
pay interest on the CIP Portion and the Improvement Portion of the Bonds due prior to the
anticipated date of commencement of the collection of taxes herein levied or covenanted to be
levied; and provided further that if upon completion of the Capital Improvements and the 429
Improvements there shall remain any unexpended balance in the Capital Account, the balance
shall be transferred to the Debt Service Account.
(b) Debt Service Account. There shall be maintained two separate subaccounts in the
Debt Service Account to be designated the "Capital Improvements Debt Service Subaccount",
and the "429 Improvements 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) Capital Improvements Debt Service Subaccount. To the Capital Improvements
Debt Service Subaccount there shall be credited: (A) a pro rata share of all funds
paid for the Bonds in excess of the minimum bid; (B) collections of all taxes
herein or hereafter levied for the payment of the principal and interest on the CIP
Portion of the Bonds; (C) a pro rata share of all funds remaining in the Capital
Account after completion of the Project and payment of the costs thereof; (D) all
investment earnings on funds held in the Capital Improvements Debt Service
Subaccount; and (E) any and all other moneys which are properly available and
are appropriated by the governing body of the City to the Capital Improvements
Debt Service Subaccount. The Capital Improvements Debt Service Subaccount
shall be used solely to pay the principal and interest and any premium for
redemption of the CIP 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.
(ii) 429 Improvements Debt Service Subaccount. To the 429 Improvements Debt
Service Subaccount there shall be credited: (A) all collections of special
assessments herein covenanted to be levied with respect to the 429 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
8313294v2
16
Improvement Portion of the Bonds or collected subsequent to the completion of
the 429 Improvements and payment of the costs thereof; (B) a pro rata share of all
funds paid for the Improvement Portion of the Bonds in excess of the minimum
bid; (C) any collections of all taxes herein or hereinafter levied for the payment of
the Improvement Portion of the Bonds and interest thereon; (D) a pro rata share of
all funds remaining in the Capital Account after completion of the 429
Improvements and payment of the costs thereof; (E) all investment earnings on
funds held in the 429 Improvements 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 429 Improvements Debt Service Subaccount. The 429
Improvements Debt Service Subaccount shall be used solely to pay the principal
and interest and any premium 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 subaccount as provided by law.
16. Permanent Improvement Revolving Fund; Permanent Improvement Revolving
Sinking Fund. There is hereby created two special funds to be designated the "Permanent
Improvement Revolving Fund" and "Permanent Improvement Revolving Sinking Fund,"
respectively, administered and maintained by the Finance Director as bookkeeping accounts
separate and apart from all other funds maintained in the official financial records of the City.
The funds shall be maintained in the manner herein and hereafter specified until all of the PIR
Portion of the Bonds and any other obligations made payable from the Permanent Improvement
Revolving Fund (the "Additional Bonds") and the interest thereon and all improvements to be
paid from the Permanent Improvement Revolving Fund have been fully paid. The Permanent
Improvement Revolving Fund is intended for the payment, in whole or in part, of the costs (i) of
"improvements" (as defined in Minnesota Statutes, Chapter 429) designated by the City for
funding therefrom for which at least twenty percent of the costs thereof are to be assessed against
benefited properties; (ii) of water works, sewer system, or storm sewer system improvements
described in Minnesota Statutes, Section 444.075; and/or (iii) of such other improvements as
may be permitted in accordance with the terms of Section 429.091.
(a) Permanent Improvement Revolving Fund. To the Permanent Improvement
Revolving Fund there shall be credited the proceeds of the sale of the PIR Portion of the Bonds,
less a pro rata share of all funds paid for the Bonds in excess of the minimum bid, plus any
special assessments levied with respect to the PIR Improvements and special assessments levied
with respect to the Additional Improvements (as hereinafter defined). From the Permanent
Improvement Revolving Fund there shall be paid all costs and expenses of making the PIR
Improvements listed in paragraph 19 and such other improvements for which special assessments
may be levied as the City Council may designate (the "Additional Improvements"), 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; and the moneys in the Permanent
Improvement Revolving Fund shall be used for no other purpose except as otherwise provided
by law; provided that the proceeds of the PIR Portion of the Bonds may also be used to the
extent necessary to pay interest on the PIR Portion of the Bonds due prior to the anticipated date
of commencement of the collection of taxes and special assessments herein levied or covenanted
to be levied; and provided further that if upon completion of the PIR Improvements or the
Additional Improvements there shall remain any unexpended balance in the Permanent
8313294v2
17
Improvement Revolving Fund, the balance may be transferred by the Council to the fund of any
other improvement instituted pursuant to Minnesota Statutes, Chapter 429, and provided further
that any special assessments credited to the Permanent Improvement Revolving Fund shall only
be applied towards payment of the costs of the PIR Improvements or the Additional
Improvements upon the determination by the City Manager or the City Finance Director 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. The City reserves the right
granted by Minnesota Statutes, Section 429.091, Subdivision 7A to establish a separate
construction account within the Permanent Improvement Revolving Fund into which the City
may deposit the proceeds of the PIR Portion of the Bonds or the proceeds of Additional Bonds.
(b) Permanent Improvement Revolving Sinking Fund. There are hereby irrevocably
appropriated and pledged to, and there shall be credited to, the Permanent Improvement
Revolving Sinking Fund: (i) all collections of special assessments herein covenanted to be
levied or hereafter levied with respect to the PIR Improvements and either initially credited to
the Permanent Improvement Revolving Fund and not already spent as permitted above and
required to pay any principal and interest due on the PIR Portion of the Bonds or collected
subsequent to the completion of the PIR Improvements and the payment of the costs thereof; (ii)
all funds paid for the PIR Portion of the Bonds in excess of the minimum bid; (iii) any
collections of all taxes herein and hereafter levied for the payment of the PIR Portion of the
Bonds and interest thereon; (iv) all funds remaining in the Permanent Improvement Revolving
Fund after completion of the PIR Improvements and the Additional Improvements and payment
of the costs thereof; (v) all investment earnings on funds held in the Permanent Improvement
Revolving Sinking Fund; and (vii) any and all other moneys which are properly available and are
appropriated by the governing body of the City to the Permanent Improvement Revolving
Sinking Fund. The Permanent Improvement Revolving Sinking Fund shall be used solely to pay
the principal and interest and any premiums for redemption of the PIR Portion of the Bonds and
any Additional Bonds.
17. Covenants Relating to the CIP Portion of the Bonds.
(a) Tax Levy; Coverage Test. To provide moneys for payment of the principal and
interest on the CIP Portion of the Bonds there is hereby levied upon all of the taxable property in
the City a direct annual ad valorem tax which shall be spread upon the tax rolls and collected
with and as part of other general property taxes in the City for the years and in the amounts as
follows:
Year of Tax Levy Year of Tax Collection Amount
See Attached Schedule
The tax levies are such that if collected in full they, together with other revenues herein
pledged for the payment of the CIP 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 CIP
Portion of the Bonds. The tax levies shall be irrepealable so long as any of the CIP Portion of
the Bonds are outstanding and unpaid, provided that the City reserves the right and power to
8313294v2
18
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 CIP 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 Capital Improvements Debt Service Subaccount is ever insufficient to pay all principal and
interest then due on the CIP 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 Capital
Improvements Debt Service Subaccount when a sufficient balance is available therein.
18. Covenants Relating to the Improvement Portion of the Bonds.
(a) Assessments. It is hereby determined that no less than twenty percent of the cost
to the City of each 429 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 benefited by any of the 429 Improvements.
The City hereby covenants and agrees that it will let all construction contracts not heretofore let
within one year after ordering each 429 Improvement financed hereunder unless the resolution
ordering the 429 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. 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 a rate per annum not greater than the
maximum permitted by law and not less than the rates per annum shown opposite their collection
years specified below:
Improvement Designations Levy Years Collection Years Rate Amount
Balsam Street Area Improvements 2017-2026 2018-2027 3.85% $408,458
Franklin Trail Area Improvements 2017-2026 2018-2027 3.85 440,845
Sycamore Trail Improvements 2017-2026 2018-2027 3.85 200,988
Cates Street Area Improvements 2017-2026 2018-2027 3.85 323,265
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.
8313294v2
19
(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 special assessments and
other revenues herein pledged for the payment of the Improvement 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 Improvement Portion of the Bonds. The tax levies shall be irrepealable
so long as any of the Improvement 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.
(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 429 Improvements 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 429 Improvements Debt Service Subaccount when a sufficient balance is available
therein.
19. Covenants Relating to the PIR Portion of the Bonds.
(a) Assessments. It is hereby determined that no less than twenty percent of the cost
to the City of each PIR 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 benefited by any of the PIR Improvements.
The City hereby covenants and agrees that it will let all construction contracts not heretofore let
within one year after ordering each PIR Improvement financed hereunder unless the resolution
ordering the PIR 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. 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
8313294v2
20
on the declining balance of all such assessments at a rate per annum not greater than the
maximum permitted by law and not less than the rates per annum shown opposite their collection
years specified below:
Improvement Designations Levy Years Collection Years Rate Amount
2017 Mill and Overlay
Project
2017-2021 2018-2022 3.40% $350,357
The tax levies are such that if collected in full they, together with special assessments and
other revenues herein pledged for the payment of the PIR 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 PIR Portion of the Bonds. The tax levies shall be irrepealable so long as any of
the PIR 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) Tax Levy; Coverage Test. To provide moneys for payment of the principal and
interest on the PIR 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 special assessments and
other revenues herein pledged for the payment of the PIR 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 PIR Portion of the Bonds. The tax levies shall be irrepealable so long as any of
the PIR 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.
(c) General Obligation Pledge. For the prompt and full payment of the principal and
interest on the PIR 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 Permanent Improvement Revolving Sinking Fund is ever insufficient to pay all principal
and interest then due on the PIR 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 Permanent
Improvement Revolving Sinking Fund when a sufficient balance is available therein.
20. 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
8313294v2
21
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.
21. Compliance With Reimbursement Bond Regulations. The provisions of this
paragraph are intended to establish and provide for the City's compliance with United States
Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the
"reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the
City to reimburse itself for any expenditure which the City paid or will have paid prior to the
Closing Date (a "Reimbursement Expenditure").
The City hereby certifies and/or covenants as follows:
(a) Not later than 60 days after the date of payment of a Reimbursement Expenditure,
the City (or person designated to do so on behalf of the City) has made or will have made a
written declaration of the City's official intent (a "Declaration") which effectively (i) states the
City's reasonable expectation to reimburse itself for the payment of the Reimbursement
Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional
description of the property, project or program to which the Declaration relates and for which the
Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the
general functional purpose thereof from which the Reimbursement Expenditure was to be paid
(collectively the "Project"); and (iii) states the maximum principal amount of debt expected to be
issued by the City for the purpose of financing the Project; provided, however, that no such
Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for
the Project, defined in the Reimbursement Regulations to include engineering or architectural,
surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not
exceed 20% of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement
Expenditures not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of
the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the
Reimbursement Regulations.
8313294v2
22
(c) The "reimbursement allocation" described in the Reimbursement Regulations for
each Reimbursement Expenditure shall and will be made forthwith following (but not prior to)
the issuance of the Bonds and in all events within the period ending on the date which is the later
of three years after payment of the Reimbursement Expenditure or one year after the date on
which the Project to which the Reimbursement Expenditure relates is first placed in service.
(d) Each such reimbursement allocation will be made in a writing that evidences the
City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30
days after the Bonds are issued, shall be treated as made on the day the Bonds are issued.
Provided, however, that the City may take action contrary to any of the foregoing
covenants in this paragraph upon receipt of an opinion of its Bond Counsel for the Bonds stating
in effect that such action will not impair the tax-exempt status of the Bonds.
22. Investments. 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 Capital Account, Debt Service Account, Permanent Improvement Revolving
Fund or Permanent Improvement Revolving Sinking Fund (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").
23. 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 County Auditor shall require, and there shall be obtained from the
County Auditor a certificate that the Bonds have been entered in the County Auditor's Bond
Register and that the tax levy required by law has been made.
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 to:
(a) Provide or cause to be provided to the Municipal Securities Rulemaking Board
(the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual
8313294v2
23
financial information and operating data in accordance with the Undertaking. The City reserves
the right to modify from time to time the terms of the Undertaking as provided therein.
(b) Provide or cause to be provided to the MSRB notice of the occurrence of certain
events with respect to the Bonds in not more than ten (10) business days after the occurrence of
the event, in accordance with the Undertaking.
(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 City Manager of the City, or any other officer of the City authorized to
act in their place (the "Officers") are hereby authorized and directed to execute on behalf of the
City the Undertaking in substantially the form presented to the City Council subject to such
modifications thereof or additions thereto as are (i) consistent with the requirements under the
Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.
25. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the
issuance of the Bonds, certified copies of all proceedings and records of the City relating to the
Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Bonds as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
26. 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 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.
27. Tax-Exempt Status of the Bonds; Rebate. The City shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(i) requirements relating to temporary periods for investments, (ii) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (iii) the rebate of excess investment
earnings to the United States if the Bonds (together with other obligations reasonably expected to
be issued and outstanding at one time in this calendar year) exceed the small issuer exception
amount of $5,000,000.
8313294v2
24
For purposes of qualifying for the small issuer 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 (i) the Bonds are issued by a governmental unit with general taxing
powers; (ii) no Bond is a private activity bond; (iii) 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); and
(iv) the aggregate face amount of all tax exempt bonds (other than private activity bonds) issued
by the City (and all entities subordinate to, or 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.
28. 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 2017 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2017 have been designated for purposes of Section 265(b)(3) of the Code; and
(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.
29. Official Statement. The Official Statement relating to the Bonds prepared and
distributed by Northland is hereby approved and the officers of the City are authorized in
connection with the delivery of the Bonds to sign such certificates as may be necessary with
respect to the completeness and accuracy of the Official Statement.
30. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the
amount of Bond proceeds allocable to the payment of issuance expenses to the Bond Registrar
on the closing date for further distribution as directed by the Purchaser.
31. 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.
8313294v2
25
32. Headings. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
Beaton and, after a full discussion thereof and upon a vote being taken thereon, the following
voted in favor thereof: _____________________;
and the following voted against the same: ______________.
Whereupon the resolution was declared duly passed and adopted.
8313294v2
26
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 $4,505,000 General Obligation Bonds, Series 2017A.
WITNESS my hand on June 12, 2017.
________________________________
City Manager
8313294v2
A-1
EXHIBIT A
PROPOSALS
8313294v2
TAX LEVIES
CIP Portion of the Bonds
Years of Tax Levy Years of Tax Collection Amount
2017
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
2024
$58,602.83
59,325.00
63,525.00
62,370.00
61,215.00
60,060.00
58,905.00
Improvement Portion of the Bonds
Years of Tax Levy Years of Tax Collection Amount
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
$281,535.44
279,318.84
282,363.84
279,948.85
277,428.84
280,053.84
277,218.84
279,528.84
281,628.84
277,192.60
PIR Portion of the Bonds
Years of Tax Levy Years of Tax Collection Amount
2017
2018
2019
2020
2021
2018
2019
2020
2021
2022
$1,651.58
2,099.00
629.00
4,408.99
2,834.00
Page 1
City of Prior Lake, Minnesota
$4,505,000
General Obligation Bonds, Series 2017A
Bond Sale Summary
June 12, 2017
PURPOSE:To finance an improvement project, a permanent improvement revolving
fund project, a capital improvement plan project and to pay the costs
associated with the issuance of the Bonds.
FINANCE PLAN:To structure the Improvement Portion over 10 years, with relatively level
annual debt service payments; to structure the CIP Portion over seven
years, with relatively level annual debt service payments; and to structure
the PIR Fund Portion over five years with relatively level annual debt
service payments.
RESULTS:
Standard and Poor’s affirmed the City’s “AA+” rating.
Five bids were received. Lowest bid was Robert W. Baird & Co., Inc.
Final
on
6/12/17
Finance
Plan
04/24/2017
Par Amount $4,505,000* $5,805,000
Average Interest Rate 2.08%2.31%
True Interest Cost (TIC) 1.78%2.44%
* Final par amount was reduced by lower than expected bids on the construction
costs and unused discount on the Bonds.
RECOMMENDATION:The interest rates are reflective of current market rates for
tax exempt, bank qualified securities. Therefore, Northland
Securities recommends the City adopt the Bond Resolution
and award the Bonds to Robert W. Baird & Co., Inc.
Main Office 45 South 7th Street, Suite 2000, Minneapolis, Minnesota 55402 Main Office Toll Free 1-800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC
TABULATION OF BIDS
PRIOR LAKE, MINNESOTA
$4,510,000†
GENERAL OBLIGATION BONDS, SERIES 2017A
AWARD: ROBERT W. BAIRD & CO. INC.
DATE OF SALE: MONDAY, JUNE 12, 2017
STANDARD & POOR’S UNDERLYING RATING AA+
BIDDER
PURCHASE
PRICE
NET
INTEREST COST
TRUE
INTEREST
COST (TIC)
ROBERT W. BAIRD & CO., INC. $4,583,508.75 $472,865.28 1.7762810%
Milwaukee, WI
Syndicate: C.L. King & Associates WMBE, Dougherty &
Company, LLC, Vining-Sparks IBG, Limited Partnership,
Fidelity Capital Markets, WNJ Capital, Crews & Associates,
Inc., Davenport & Co. L.L.C., Duncan-Williams, Inc., Ross,
Sinclaire & Associates, LLC, Loop Capital Markets, Country
Club Bank, Oppenheimer & Co., SumRidge Partners, R.
Seelaus & Company, Inc., Sierra Pacific Securities, Isaak Bond
Investments, Inc., Alamo Capital WMBE, IFS Securities,
Rafferty Capital Markets, First Empire Securities, UMB Bank,
N.A., W.H. Mell Associates, Wayne Hummer & Co., FMS
Bonds, Inc., Central States Capital Markets, Wedbush
Securities Inc., Midland Securities
PIPER JAFFRAY $4,614,620.95 $479,357.11 1.7898285%
Minneapolis, MN
STIFEL NICOLAUS & CO., INC. $4,555,500.30 $480,191.92 1.8131905%
Birmingham, AL
WELLS FARGO BANK, NATIONAL ASSOCIATION $4,540,334.40 $500,849.91 1.8947929%
Charlotte, NC
RAYMOND JAMES & ASSOCIATES, INC. $4,767,909.90 $530,628.43 1.9419801%
Memphis, TN
†Par amount decreased from $4,510,000 to $4,505,000. The adjusted purchase price is $4,578,557.98, plus accrued interest from the date of
issue to the date of delivery, and the adjusted TIC is 1.7752646%.