HomeMy WebLinkAbout09(A)- Resolution Authorizing the Competitive Negotiated Sale of General Obligation Bonds, Series 2023A
City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372
CITY COUNCIL AGENDA REPORT
ITEM:9A
MEETING DATE: April 17, 2023
PREPARED BY: Cathy Erickson, Finance Director
PRESENTED BY: Cathy Erickson
AGENDA ITEM: Resolution Authorizing the Competitive Negotiated Sale of General
Obligation Bonds, Series 2023A
RECOMMENDED ACTION:
Council adoption of the attached resolution which provides for the issuance and sale of the Series
2023A.
BACKGROUND:
Introduction
A representative of the City’s municipal advisor, Tammy Omdal, from Northland Securities Inc.,
will be present at the meeting to answer questions related to the Council approval of the sale of
bonds for the following street improvement projects:
• Fish Point Rd Phase II Street improvement
• CSAH21/Revere Street Improvement
A resolution is attached providing for the competitive negotiated sale of General Obligation
Bonds, Series 2023A in an amount not-to-exceed $4,670,000. The final bond amount will be
determined at the time of the sale on June 20.
History
Bids have been received and contracts awarded for both Fish Point Rd Phase II and the
CSAH21/Revere Street improvement projects.
The city has two options for financing the state aid eligible portion of the Fish Point Rd Street
improvement project. The city can 1 ) request a State Aid advance or 2) issue Municipal State
Aid (MSA) Bonds. The city has requested a state aid advance. To ensure that the resolution
addresses the possibility of utilizing MSA bonds, option 2 - MSA bonds is included in this bonding
request. Tonight’s resolution includes setting the not-to-exceed amount for the bond issue. The
not-to-exceed amount will be $4,670,000.
The city was recently notified that the State Aid advance request has been approved, therefore,
we will lower the amount of project costs to be financed with bonds to approximately $1,756,845
because $2,806,993 of the project costs will be financed with the interest free state aid advance.
June 1 is the day that city needs to confirm the project costs to be financed and source of payment.
A description of the two state aid financing options is show below:
Option 1 – State Aid Advance: Municipalities have the option of advancing state aid construction
allotment funds up to the value of 5 years allotment or $4,000,000, whichever is less. This is
Item 9A
Page | 2
interest free. However, the city will not receive the annual state-aid allotment until that advance is
paid off.
Option 2 - MSA Bonds: A Minnesota State Aid City can use their state-aid allotments to repay the
principal and interest on a local bond issue when the funds are used for the purposes stated in
the law. The State of Minnesota is not a party to the bond issue, but the municipality can pledge
repayment with its available annual state aid construction (principal) and maintenance (interest)
allotments. These are called MSA bonds as Minnesota State Aid is the repayment pledge.
Current Circumstances
The city will use a competitive sale process to solicit proposals from underwriters. The resolution
providing for the sale of the bonds will set terms for the bond issue. On June 20, the city will
receive bids from interested underwriters or underwriting groups. The low bid will be determined
based on the true interest cost (TIC) of the underwriter’s discount and interest expense. Closing
on the bonds is expected to occur in July.
The structure of the bond issue reflected in the financing plan is based upon the following
components in rounded amounts for the new project:
The finance plan does not reflect the recent approval of the state aid advance. Staff will lower
the amount of project costs to be financed with bonds to approximately $1,756,845 because
$2,806,993 of the project costs will be financed with the interest free state aid advance.
Attached is a Finance Plan Summary prepared by Northland Securities, which provides
additional detail with respect to the estimated sources and uses of funds, interest rates, debt
service principal/interest payments, and sources of repayment. The three primary sources of
repayment are property taxes, MSA and special assessments. It should be noted that the finance
plan will be updated to reflect the recent notification that the city received the state aid advance.
2023A Series
Fish Point Road
Phase II Street
Reconstruction
Fish Point Road
Phase II - MSA
CSAH 21/
Revere Street
Improvement Total
Estimated Project Costs 5,682,290 5,773,793 11,456,083
Less: Federal ARPA Grant (826,957) (826,957)
Less: County (2,309,487)
Less: Construction MSA (1,300,000) (1,300,000)
Less: Water Fund (720,627) (720,627)
Less: Sewer Fund (414,078) (414,078)
Less: Street Oversize Fund (1,094,844) (1,094,844)
Less: Trunk Oversize Fund (226,252) (226,252)
Project Costs to Bond 3,247,585 - 1,316,253 4,563,838
Adjust for bonding authority (2,806,993) 2,806,993 -
Costs of Issuance (estimated)5,495 34,661 16,244 56,400
Total Underwriter's Discount (1.000%)4,550 28,700 13,450 46,700
Rounding Amount 4,363 (354) (947) 3,062
Total New Money 455,000 2,870,000 1,345,000 4,670,000
Item 9A
Page | 3
The City’s bond counsel, Taft Law, has reviewed all the necessary bond documents and has
prepared the attached resolution providing for the issuance and sale of the general obligation
bonds.
Prior to June 12, the City Manager, Finance Director, and Ms. Omdal will participate in a bond
rating call with S&P Global. The city currently has a “AA+” rating from S&P Global.
Conclusion
The City Council should adopt the attached resolution which provides for the issuance and sale
of bonds.
FINANCIAL IMPACT:
Property Taxes
The majority of revenues to pay debt service on the Bonds is expected to come from Special
Assessments. The initial projections show that for the Bonds, an annual net levy ranging from
$0 to $11,820 for the Street Reconstruction Portion may be needed to meet the 105% statutory
requirement.
Special assessments
Special assessments support the repayment of both the Fish Pt Rd Phase II and the
CSAH21/Revere Street project bond issuance. The street assessments for the projects have a
10-year term.
ALTERNATIVES:
1. Motion and a second to Adopt the Resolution Authorizing the Issuance of General
Obligation Bonds, Series 2023A
2. Motion and a second to table action and to provide direction to staff for more information.
ATTACHMENTS:
1. Finance Plan General Obligation Bonds, Series 2023A
2. Resolution - Consider Approval of a Resolution Authorizing the Competitive Negotiated
Sale of General Obligation Bonds, Series 2023A
Finance Plan
City of Prior Lake, Minnesota
$4,670,000
General Obligation Bonds, Series 2023A
April 17, 2023
150 South 5th Street, Suite 3300
Minneapolis, MN 55402
612-851-5900 800-851-2920
www.northlandsecurities.com
Member FINRA and SIPC | Registered with SEC and MSRB
Northland Securities, Inc. Page 2
Contents
Executive Summary ........................................................................................................................................................... 2
Issue Overview .................................................................................................................................................................... 3
Purpose ................................................................................................................................................................ 3
Authority ............................................................................................................................................................. 3
Structure .............................................................................................................................................................. 4
Security and Source of Repayment ........................................................................................................ 4
Plan Rationale ................................................................................................................................................... 5
Issuing Process ................................................................................................................................................. 5
Attachment 1 – Preliminary Debt Service Schedules ........................................................................................ 6
Attachment 2 – Estimated Levy Schedule ............................................................................................................... 9
Attachment 3 – Related Considerations ................................................................................................................ 10
Bank Qualification ................................................................................................................................ 10
Arbitrage Compliance ......................................................................................................................... 10
Continuing Disclosure ........................................................................................................................ 10
Premiums .................................................................................................................................................. 10
Rating .......................................................................................................................................................... 11
Attachment 4 – Calendar of Events .......................................................................................................................... 12
Attachment 5 - Risk Factors ......................................................................................................................................... 14
Northland Securities, Inc. Page 2
Executive Summary
The following is a summary of the recommended terms for the issuance of $4,670,000 General
Obligation Bonds, Series 2023A (the “Bonds”). Additional information on the proposed finance
plan and issuing process can be found after the Executive Summary, in the Issue Overview and
Attachment 3 – Related Considerations.
Purpose Proceeds from the Bonds will be used to finance the City’s 2023
street improvement projects and to finance the costs associated
with the issuance of the Bonds.
Security The Bonds will be a general obligation of the City. The City will
pledge municipal state aid revenues received, special
assessments levied against benefitted properties and property
tax levies for payment of the Bonds.
Repayment Term The Bonds will mature annually each December 15 in the years
2024 through 2033. Interest on the Bonds will be payable on
June 15, 2024, and semiannually thereafter on each June 15 and
December 15.
Estimated Interest Rate True interest cost (TIC): 2.93%
Prepayment Option Bonds maturing on and after December 15, 2032, will be subject
to redemption on December 15, 2031, and any day thereafter at
a price of par plus accrued interest.
Rating A rating will be requested from Standard and Poor’s (S&P). The
City’s general obligation debt is currently rated "AA+" by S&P.
Tax Status The Bonds will be tax-exempt, bank qualified obligations.
Risk Factors There are certain risks associated with all debt. Risk factors
related to the Bonds are discussed in Attachment 5.
Type of Bond Sale Public Sale – Competitive Bids
Proposals Received Tuesday, June 20, 2023 @ 10:30 A.M.
Council Consideration Tuesday, June 20, 2023 @ 7:00 P.M.
Northland Securities, Inc. Page 3
Issue Overview
Purpose
Proceeds from the Bonds will be used to finance the City’s 2023 street improvement projects and
to pay costs associated with issuing the Bonds. The street projects include a Street Reconstruction
Portion, a Municipal State Aid (“MSA”) Portion and an Improvement Portion. The Bonds have
been sized based on cost estimates provided by City staff. The table below contains the estimated
sources and uses of funds for the bond issue.
Authority
The Bonds will be issued pursuant to the authority of Minnesota Statutes, Chapters 429 and 475
and Sections 162.18 and 475.58, Subdivision 3b.
Under Chapter 429, an Improvement means any type of improvement made under authority
granted by Section 429.021, which includes, but is not limited to, improvements to streets and
sidewalks, storm and sanitary sewer systems, and street lighting systems.
Before issuing bonds under Chapter 429, the City must hold a public hearing on the
improvements and the proposed bonds and must then pass a resolution ordering the
improvements by at least a 4/5 majority. A public hearing will be held on April 11, 2023, for the
Projects and it is expected that the resolution ordering the improvements will be adopted with at
least a 4/5 majority at the meeting.
Under Section 162.18, cities may issue bonds for establishing, locating, relocating, constructing,
reconstruction, and improving municipal state-aid streets. The amount of principal and interest
due in any calendar year for the Bonds cannot exceed 90% of the last annual construction fund
allotment. The City’s last annual construction fund allotment (January 2023) was $843,911. The
average annual amount of principal and interest due in any calendar year is anticipated to be
$345,916, which is less than $759,519.90.
Under Section 475.58, Subdivision 3b., street reconstruction bonds can be used to finance the
reconstruction and bituminous overlay of existing city streets. Eligible improvements may
include turn lanes and other improvements having a substantial public safety function,
realignments, other modifications to intersect with state and county roads and the local share of
state and county road projects. Eligible improvements do not include the portion of project cost
allocable to widening a street or adding curbs and gutters where none previously existed.
Fish Point Rd
Phase II Street
Reconstruction
Fish Point Rd
Phase II MSA
CSAH21/Revere
Street
Improvements
Issue
Summary
Sources Of Funds
Par Amount of Bonds $455,000.00 $2,870,000.00 $1,345,000.00 $4,670,000.00
Total Sources $455,000.00 $2,870,000.00 $1,345,000.00 $4,670,000.00 Uses Of Funds
Deposit to Project Construction Fund 440,592.00 2,806,993.00 1,316,253.00 4,563,838.00
Costs of Issuance 5,495.06 34,661.26 16,243.68 56,400.00
Total Underwriter's Discount (1.000%)4,550.00 28,700.00 13,450.00 46,700.00
Rounding Amount 4,362.94 (354.26)(946.68)3,062.00
Total Uses $455,000.00 $2,870,000.00 $1,345,000.00 $4,670,000.00
Northland Securities, Inc. Page 4
Before issuing street reconstruction bonds, the City must hold a public hearing on the street
reconstruction project and the proposed bonds, and then must pass a resolution approving the
Street Reconstruction Plan and issuance of street reconstruction bonds. The City held the
required public hearing and approved the Street Reconstruction Plan on August 16, 2021.
Structure
The Street Reconstruction Portion and MSA Portion of the Bonds have each been structured to
result in relatively level annual payments over 10 years. The Improvement Portion of the Bonds
has been structured over 10 years and to result in a zero net levy after the application of special
assessments.
The proposed structure for the bond issue and preliminary debt service projections are illustrated
in Attachment 1 and the estimated levies illustrated in Attachment 2.
Security and Source of Repayment
The Bonds will be general obligations of the City. The finance plan relies on the following
assumptions for the revenues used to pay debt service, as provided by City staff:
• State Aid. The City will use its state-aid allotments to repay the principal and interest on
the MSA Portion of the Bonds.
• Special Assessments. The City is expected to levy special assessments against benefited
properties in the amount of $1,316,253 (100% of the project) for the Improvement Portion
of the Bonds, with an interest rate of 2.00% over the net interest cost of the Improvement
Portion of the Bonds (currently estimated to be 4.95%). The assessment to property 6025
170th St. E. is estimated at $839,013.98, with interest only payments years 1-5, followed by
principal and interest payments due in years 6-10, pursuant to term in Assessment
Development Agreement with the property owner dated 12/5/2022. For purpose of
calculating net levy, the assessment to property 6010 170th St. E. in the amount of
$477,238.58, is estimated to repaid in equal annual principal payments between years 1-5.
Actual payment of assessments from this property will vary based on timing of issuance
of building permits and pursuant to terms in the Assessment Development Agreement
with the property owner dated 12/5/2022. The Plan assumes that the assessments will be
levied in 2023 for initial payment in 2024.
Additionally, although not pledged as security to the Bonds, the City anticipates levying
special assessments against benefitted properties in the amount of $455,000 for the Street
Reconstruction Portion of the Bonds. The assessments will be payable over 10 years, with
an interest rate of 2.00% over the net interest cost of the Street Reconstruction Portion of
the Bonds (currently estimated to be 4.95%) and structured for equal annual payments of
principal. The Plan assumes that the assessments will be levied in 2023 for initial payment
in 2024.
• Property Taxes. The majority of revenues to pay debt service on the Bonds are expected to
come from State Aid and Special Assessments. The initial projections show that for the
Bonds, an annual net levy ranging from $0 to $11,820 for the Street Reconstruction Portion
and an annual net levy ranging from $0 to $7,746 for the Improvement Portion may be
needed to meet the 105% statutory requirement. The full 105% levy will need to be certified
by the City but may be adjusted or canceled annually based on actual monies in the debt
service fund. Actual monies may vary depending on timing of collection of special
assessments. The initial levies will be made in 2023 for taxes payable in 2024.
Northland Securities, Inc. Page 5
Plan Rationale
The Finance Plan recommended in this report is based on a variety of factors and information
provided by the City related to the financed project and City objectives, Northland’s knowledge
of the City and our experience in working with similar cities and projects. The issuance of General
Obligation Bonds provides the best means of achieving the City’s objectives and cost-effective
financing. The City has successfully issued and managed this type of debt for previous projects.
Issuing Process
Northland will receive bids from underwriters to purchase the Bonds on Tuesday, June 20, 2023,
at 10:30 A.M. Market conditions and the marketability of the Bonds support issuance through a
competitive sale. This process has been chosen as it is intended to produce the lowest combination
of interest expense and underwriting expense on the structure, date and time set to receive bids.
The calendar of events for the issuing process can be found in Attachment 4.
Municipal Advisor: Northland Securities, Inc., Minneapolis, Minnesota
Bond Counsel: Taft Stettinius & Hollister LLP, Minneapolis, Minnesota
Paying Agent: Northland Trust Services, Inc. Minneapolis, Minnesota
Northland Securities, Inc. Page 6
Attachment 1 – Preliminary Debt Service Schedules
Combined Debt Service Schedule
*Based on preliminary “AA+” rates as of April 6, 2023, plus 0.25%.
Date Principal Coupon Interest Total P+I Fiscal Total
07/19/2023 -----
06/15/2024 --114,958.02 114,958.02 -
12/15/2024 360,000.00 2.700%63,473.75 423,473.75 538,431.77
06/15/2025 --58,613.75 58,613.75 -
12/15/2025 415,000.00 2.700%58,613.75 473,613.75 532,227.50
06/15/2026 --53,011.25 53,011.25 -
12/15/2026 425,000.00 2.650%53,011.25 478,011.25 531,022.50
06/15/2027 --47,380.00 47,380.00 -
12/15/2027 435,000.00 2.600%47,380.00 482,380.00 529,760.00
06/15/2028 --41,725.00 41,725.00 -
12/15/2028 435,000.00 2.600%41,725.00 476,725.00 518,450.00
06/15/2029 --36,070.00 36,070.00 -
12/15/2029 495,000.00 2.600%36,070.00 531,070.00 567,140.00
06/15/2030 --29,635.00 29,635.00 -
12/15/2030 510,000.00 2.650%29,635.00 539,635.00 569,270.00
06/15/2031 --22,877.50 22,877.50 -
12/15/2031 520,000.00 2.750%22,877.50 542,877.50 565,755.00
06/15/2032 --15,727.50 15,727.50 -
12/15/2032 530,000.00 2.850%15,727.50 545,727.50 561,455.00
06/15/2033 --8,175.00 8,175.00 -
12/15/2033 545,000.00 3.000%8,175.00 553,175.00 561,350.00
Total $4,670,000.00 -$804,861.77 $5,474,861.77 -
Yield Statistics
Bond Year Dollars $29,193.94
Average Life 6.251 Years
Average Coupon 2.7569477%
Net Interest Cost (NIC)2.9169123%
True Interest Cost (TIC)2.9297541%
Bond Yield for Arbitrage Purposes 2.7508478%
All Inclusive Cost (AIC)3.1490963% IRS Form 8038
Net Interest Cost 2.7569477%
Weighted Average Maturity 6.251 Years Optional Redemption
12/15/2031 @100.000%
Northland Securities, Inc. Page 7
Street Reconstruction Portion
MSA Portion
Date Principal Coupon Interest Total P+I Fiscal Total
07/19/2023 -----
06/15/2024 --11,185.88 11,185.88 -
12/15/2024 35,000.00 2.700%6,176.25 41,176.25 52,362.13
06/15/2025 --5,703.75 5,703.75 -
12/15/2025 40,000.00 2.700%5,703.75 45,703.75 51,407.50
06/15/2026 --5,163.75 5,163.75 -
12/15/2026 45,000.00 2.650%5,163.75 50,163.75 55,327.50
06/15/2027 --4,567.50 4,567.50 -
12/15/2027 45,000.00 2.600%4,567.50 49,567.50 54,135.00
06/15/2028 --3,982.50 3,982.50 -
12/15/2028 45,000.00 2.600%3,982.50 48,982.50 52,965.00
06/15/2029 --3,397.50 3,397.50 -
12/15/2029 45,000.00 2.600%3,397.50 48,397.50 51,795.00
06/15/2030 --2,812.50 2,812.50 -
12/15/2030 50,000.00 2.650%2,812.50 52,812.50 55,625.00
06/15/2031 --2,150.00 2,150.00 -
12/15/2031 50,000.00 2.750%2,150.00 52,150.00 54,300.00
06/15/2032 --1,462.50 1,462.50 -
12/15/2032 50,000.00 2.850%1,462.50 51,462.50 52,925.00
06/15/2033 --750.00 750.00 -
12/15/2033 50,000.00 3.000%750.00 50,750.00 51,500.00
Total $455,000.00 -$77,342.13 $532,342.13 -
Date Principal Coupon Interest Total P+I Fiscal Total
07/19/2023 -----
06/15/2024 --70,585.79 70,585.79 -
12/15/2024 225,000.00 2.700%38,973.75 263,973.75 334,559.54
06/15/2025 --35,936.25 35,936.25 -
12/15/2025 265,000.00 2.700%35,936.25 300,936.25 336,872.50
06/15/2026 --32,358.75 32,358.75 -
12/15/2026 270,000.00 2.650%32,358.75 302,358.75 334,717.50
06/15/2027 --28,781.25 28,781.25 -
12/15/2027 280,000.00 2.600%28,781.25 308,781.25 337,562.50
06/15/2028 --25,141.25 25,141.25 -
12/15/2028 285,000.00 2.600%25,141.25 310,141.25 335,282.50
06/15/2029 --21,436.25 21,436.25 -
12/15/2029 295,000.00 2.600%21,436.25 316,436.25 337,872.50
06/15/2030 --17,601.25 17,601.25 -
12/15/2030 300,000.00 2.650%17,601.25 317,601.25 335,202.50
06/15/2031 --13,626.25 13,626.25 -
12/15/2031 310,000.00 2.750%13,626.25 323,626.25 337,252.50
06/15/2032 --9,363.75 9,363.75 -
12/15/2032 315,000.00 2.850%9,363.75 324,363.75 333,727.50
06/15/2033 --4,875.00 4,875.00 -
12/15/2033 325,000.00 3.000%4,875.00 329,875.00 334,750.00
Total $2,870,000.00 -$487,799.54 $3,357,799.54 -
Northland Securities, Inc. Page 8
Improvement Portion
Date Principal Coupon Interest Total P+I Fiscal Total
07/19/2023 -----
06/15/2024 --33,186.35 33,186.35 -
12/15/2024 100,000.00 2.700%18,323.75 118,323.75 151,510.10
06/15/2025 --16,973.75 16,973.75 -
12/15/2025 110,000.00 2.700%16,973.75 126,973.75 143,947.50
06/15/2026 --15,488.75 15,488.75 -
12/15/2026 110,000.00 2.650%15,488.75 125,488.75 140,977.50
06/15/2027 --14,031.25 14,031.25 -
12/15/2027 110,000.00 2.600%14,031.25 124,031.25 138,062.50
06/15/2028 --12,601.25 12,601.25 -
12/15/2028 105,000.00 2.600%12,601.25 117,601.25 130,202.50
06/15/2029 --11,236.25 11,236.25 -
12/15/2029 155,000.00 2.600%11,236.25 166,236.25 177,472.50
06/15/2030 --9,221.25 9,221.25 -
12/15/2030 160,000.00 2.650%9,221.25 169,221.25 178,442.50
06/15/2031 --7,101.25 7,101.25 -
12/15/2031 160,000.00 2.750%7,101.25 167,101.25 174,202.50
06/15/2032 --4,901.25 4,901.25 -
12/15/2032 165,000.00 2.850%4,901.25 169,901.25 174,802.50
06/15/2033 --2,550.00 2,550.00 -
12/15/2033 170,000.00 3.000%2,550.00 172,550.00 175,100.00
Total $1,345,000.00 -$239,720.10 $1,584,720.10 -
Northland Securities, Inc. Page 9
Attachment 2 – Estimated Levy Schedule
Street Reconstruction Portion
Improvement Portion
Date Total P+I 105% Levy
Less:
Special
Assessment
Revenue*Net Levy
Levy
Year
Collection
Year
12/15/2023 ----
12/15/2024 52,362.13 54,980.24 71,399.61 (16,419.37) 2023 2024
12/15/2025 51,407.50 53,977.88 67,817.76 (13,839.89) 2024 2025
12/15/2026 55,327.50 58,093.88 65,338.00 (7,244.13) 2025 2026
12/15/2027 54,135.00 56,841.75 62,858.26 (6,016.51) 2026 2027
12/15/2028 52,965.00 55,613.25 60,378.50 (4,765.25) 2027 2028
12/15/2029 51,795.00 54,384.75 57,898.76 (3,514.01) 2028 2029
12/15/2030 55,625.00 58,406.25 55,419.00 2,987.25 2029 2030
12/15/2031 54,300.00 57,015.00 52,939.26 4,075.74 2030 2031
12/15/2032 52,925.00 55,571.25 50,459.50 5,111.75 2031 2032
12/15/2033 51,500.00 54,075.00 47,979.76 6,095.24 2032 2033
Total $532,342.13 $558,959.24 $592,488.41 (33,529.17)
*Special assessment revenue is based on assessments totaling $455,000 assessed at a rate of 4.95% (2% over
the Net Interest Cost, rounded to the nearest 0.05%), with equal annual principal payments spread over 10
years.
Date Total P+I 105% Levy
Less: Special
Assessment
Revenue for
6025 170th
Street*
Less: Special
Assessment
Revenue for
6010 170th
Street*Net Levy
Levy
Year
Collection
Year
12/15/2023 --- -
12/15/2024 151,510.10 159,085.61 43,377.02 120,120.95 (4,412.37) 2023 2024
12/15/2025 143,947.50 151,144.88 41,531.20 114,346.36 (4,732.69) 2024 2025
12/15/2026 140,977.50 148,026.38 41,531.20 109,621.70 (3,126.53) 2025 2026
12/15/2027 138,062.50 144,965.63 41,531.20 104,897.03 (1,462.61) 2026 2027
12/15/2028 130,202.50 136,712.63 41,531.20 100,172.37 (4,990.95) 2027 2028
12/15/2029 177,472.50 186,346.13 209,334.00 -(22,987.88) 2028 2029
12/15/2030 178,442.50 187,364.63 201,027.76 -(13,663.14) 2029 2030
12/15/2031 174,202.50 182,912.63 192,721.52 -(9,808.89) 2030 2031
12/15/2032 174,802.50 183,542.63 184,415.27 -(872.64) 2031 2032
12/15/2033 175,100.00 183,855.00 176,109.03 -7,745.97 2032 2033
Total $1,584,720.10 $1,663,956.11 $1,173,109.40 $549,158.41 (58,311.71)
*Special assessment revenue is based on assessments totaling $1,316,253 assessed at an estimated rate of 4.95% (2% over the Net
Interest Cost, rounded to the nearest 0.05%). Assessment to Property 6025 170th St. E. is estimated at $839,013.98, with interest
only payments year 1-5, followed by principal and interest payments due in year 6-10, pursuant to term in Assessment
Development Agreement with property owner, dated 12/5/2022. For purpose of calculating net levy, assessment to Property 6010
170th St. E. in the amount of $477,238.58, is estimated to repaid in equal annual payments between years 1-5. Actual payment of
assessments from this property will vary based on timing of issuance of building permits and pursuant to terms in the Assessment
Development Agreement with property owner dated 12/5/2022.
Northland Securities, Inc. Page 10
Attachment 3 – Related Considerations
Bank Qualification
We understand the City (in combination with any subordinate taxing jurisdictions or debt issued
in the City’s name by 501(c)3 corporations) anticipates issuing $10,000,000 or less in tax-exempt
debt during this calendar year. Therefore, the Bonds will be designated as “bank qualified”
obligations pursuant to Federal Tax Law.
Arbitrage Compliance
Project/Construction Fund. All tax-exempt bond issues are subject to federal rebate requirements
which require all arbitrage earned to be rebated to the U.S. Treasury. A rebate exemption the
City expects to qualify for is the “small issuer exemption” because the City expects to issue less
than $5,000,000 of tax-exempt bonds, including any 501(c)3 conduit financings, in calendar year
2023.
Debt Service Fund. The City must maintain a bona fide debt service fund for the Bonds or be
subject to yield restriction in the debt service fund. A bona fide debt service fund involves an
equal matching of revenues to debt service expense with a balance forward permitted equal to
the greater of the investment earnings in the fund during that year or 1/12 of the debt service of
that year.
The City should become familiar with the various Arbitrage Compliance requirements for this
bond issue. The Resolution for the Bonds prepared by Bond Counsel explains the requirements
in greater detail.
Continuing Disclosure
Type: Full
Dissemination Agent: Northland Securities
The requirements for continuing disclosure are governed by SEC Rule 15c2-12. The primary
requirements of Rule 15c2-12 actually fall on underwriters. The Rule sets forth due diligence
needed prior to the underwriter’s purchase of municipal securities. Part of this requirement is
obtaining commitment from the issuer to provide continuing disclosure. The document
describing the continuing disclosure commitments (the “Undertaking”) is contained in the
Official Statement that will be prepared to offer the Bonds to investors.
The City has more than $10,000,000 of outstanding debt and is required to undertake “full”
continuing disclosure. Full disclosure requires annual posting of the audit and a separate
continuing disclosure report, as well as the reporting of certain “material events.” Material events
set forth in the Rule, including, but not limited to, bond rating changes, call notices, and issuance
of “financial obligations” (such as PFA loans, leases, or bank placements) must be reported within
ten business days of occurrence. The report contains annual financial information and operating
data that “mirrors” material information presented in the Official Statement. The specific contents
of the annual report will be described in the Undertaking that appears in the appendix of the
Official Statement. Northland currently serves as dissemination agent for the City, assisting with
the annual reporting. The information for the Bonds will be incorporated into our reporting.
Premiums
In the current market environment, it is likely that bids received from underwriters will include
premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the
par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums
Northland Securities, Inc. Page 11
reflects the bidder’s view on future market conditions, tax considerations for investors and other
factors. Ultimately, the true interest cost (“TIC”) calculation will determine the lowest bid,
regardless of premium.
A premium bid produces additional funds that can be used in several ways:
• The premium means that the City needs less bond proceeds and can reduce the size of the
issue by the amount of the premium.
• The premium can be deposited in the Construction Fund and used to pay additional
project costs, rather than used to reduce the size of the issue.
• The premium can be deposited in the Debt Service Fund and used to pay principal and
interest.
Northland will work with City staff prior to the sale day to determine use of premium (if any).
Rating
A rating will be requested from Standard and Poor’s (S&P). The City’s general obligation debt is
currently rated "AA+" by S&P. The rating process will include a conference call with the rating
analyst. Northland will assist City staff in preparing for and conducting the rating call.
Northland Securities, Inc. Page 12
Attachment 4 – Calendar of Events
The following checklist of items denotes each milestone activity as well as the members of the
finance team who will have the responsibility to complete it. Please note this proposed timetable
assumes regularly scheduled City Council meetings.
Date Action Responsible Party
April 3 City to confirm costs to be included in Set Sale Resolution City Staff
April 10 Set Sale Resolution and Finance Plan Sent to City Northland, Bond
Counsel
April 14 General Information Certificate Sent to City Northland
April 17 Set Sale Resolution Adopted and Review of Finance Plan Northland, Bond
Counsel, City
Council Action
April 28 City Returns Completed General Information Certificate City Staff
May 15 Rating Request sent to S&P. Preliminary Official
Statement Sent to City for Sign Off
Northland, City
Late May or Early
June
Rating Call Northland, City,
Rating Agency
June 1 City confirms project costs to be financed and source of
payment and plans for use of any premium that may be
bid
City Staff
June 12 Rating Received
Northland, City,
Rating Agency
April 2023 May 2023
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 1 2 3 4 5 6
2 3 4 5 6 7 8 7 8 9 10 11 12 13
9 10 11 12 13 14 15 14 15 16 17 18 19 20
16 17 18 19 20 21 22 21 22 23 24 25 26 27
23 24 25 26 27 28 29 28 29 30 31
30
June 2023 July 2023
Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat
1 2 3 1
4 5 6 7 8 9 10 2 3 4 5 6 7 8
11 12 13 14 15 16 17 9 10 11 12 13 14 15
18 19 20 21 22 23 24 16 17 18 19 20 21 22
25 26 27 28 29 30 23 24 25 26 27 28 29
30 31
Holiday
Northland Securities, Inc. Page 13
Date Action Responsible Party
June 13 Awarding Resolutions sent to City Northland, Bond
Counsel
June 20 Bond Sale at 10:30 a.m.
Bond Proposal Signed and Awarding Resolution adopted
– 7:00 p.m.
Northland, City
Council Action
July 19 Closing on the Series 2023A Bonds
Northland, City
Staff, Bond Counsel
Northland Securities, Inc. Page 14
Attachment 5 - Risk Factors
Property Taxes: Property tax levies shown in this Finance Plan are based on projected debt service
and other revenues. Final levies will be set based on the results of sale. Levies should be reviewed
annually and adjusted as needed. The debt service levy must be included in the preliminary levy
for annual Truth in Taxation hearings. Future Legislative changes in the property tax system,
including the imposition of levy limits and changes in calculation of property values, would affect
plans for payment of debt service. Delinquent payment of property taxes would reduce revenues
available to pay debt service.
Special Assessments: Special assessments for the financed projects have not been levied at this
time. This Finance Plan is based on the assumptions listed earlier in this report. Changes in the
terms and timing for the actual assessments will alter the projected flow of funds for payment of
debt service on the Bonds. Also, special assessments may be prepaid. It is likely that the income
earned on the investment of prepaid assessments will be less than the interest paid if the
assessments remained outstanding. Delinquencies in assessment collections would reduce
revenues needed to pay debt service. The collection of deferred assessments, if any, have not been
included in the revenue projections. Projected assessment income should be reviewed annually
and adjusted as needed.
State Aid: This issue is expected to be payable entirely from State Aid allocated to the City. In the
unlikely event that the State were to reduce or delay the payment of state aid in any given year,
this would result in the City needing to use property tax levies to cover principal and interest on
the Bonds.
General: In addition to the risks described above, there are certain general risks associated with
the issuance of bonds. These risks include, but are not limited to:
• Failure to comply with covenants in bond resolution.
• Failure to comply with Undertaking for continuing disclosure.
• Failure to comply with IRS regulations, including regulations related to use of the proceeds
and arbitrage/rebate. The IRS regulations govern the ability of the City to issue its bonds as
tax-exempt securities and failure to comply with the IRS regulations may lead to loss of tax-
exemption.
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EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL
CITY OF PRIOR LAKE, MINNESOTA
HELD: APRIL 17, 2023
Pursuant to due call and notice thereof, a regular or special meeting of the City Council
of the City of Prior Lake, Scott County, Minnesota, was duly held at the City Hall on April 17,
2023, at 7:00 P.M. for the purpose in part of authorizing the competitive negotiated sale of the
$4,670,000 General Obligation Bonds, Series 2023A.
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 COMPETITIVE NEGOTIATED SALE OF
GENERAL OBLIGATION BONDS, SERIES 2023A
A. WHEREAS, the City Council of the City of Prior Lake, Minnesota (the "City"),
has heretofore determined that it is necessary and expedient to issue General Obligation Bonds,
Series 2023A (the "Bonds") to finance the City’s street improvement projects and to pay costs
associated with the issuance of the Bonds; and
B. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis,
Minnesota ("Northland"), as its independent municipal advisor and is therefore authorized to sell
the Bonds by competitive negotiated sale in accordance with Minnesota Statutes, Section 475.60,
Subdivision 2(9); and
C. WHEREAS, the City has retained Taft Stettinius & Hollister LLP, in
Minneapolis, Minnesota as its bond counsel for purposes of this financing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Prior Lake,
Minnesota, as follows:
1. Authorization. The City Council hereby authorizes Northland to solicit proposals
for the competitive negotiated sale of the Bonds.
2. Meeting; Proposal Opening. The City Council shall meet at the time and place
specified in the Notice of Sale, in substantially the form attached hereto as Attachment A, for the
purpose of considering sealed proposals for and awarding the sale of the Bonds. The Finance
Director, or designee, shall open proposals at the time and place specified in the Notice of Sale.
3. Notice of Sale. The terms and conditions of the Bonds and the negotiation thereof
are in substantially in the form set forth in the Notice of Sale attached hereto as Attachment A
and hereby approved and made a part hereof.
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4. Official Statement. In connection with the competitive negotiated sale of the
Bonds, the Finance Director and other officers or employees of the City are hereby authorized to
cooperate with Northland and participate in the preparation of an official statement for the
Bonds, and to execute and deliver it on behalf of the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by member
_______________ and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
76905027v1
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STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting City Clerk 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 the City's $4,670,000 General
Obligation Bonds, Series 2023A.
WITNESS my hand on April 17, 2023.
__________________________________
City Clerk
76905027v1
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ATTACHMENT A
NOTICE OF SALE
$4,670,000*
GENERAL OBLIGATION BONDS, SERIES 2023A
CITY OF PRIOR LAKE, MINNESOTA
(Book-Entry Only)
NOTICE IS HEREBY GIVEN that these Bonds will be offered for sale according to the following terms:
TIME AND PLACE:
Proposals (also referred to herein as “bids”) will be opened by the City’s Finance Director, or designee, on
Tuesday, June 20, 2023, at 10:30 A.M., CT, at the offices of Northland Securities, Inc. (the City’s
“Municipal Advisor”), 150 South 5th Street, Suite 3300, Minneapolis, Minnesota 55402. Consideration of
the Proposals for award of the sale will be by the City Council at its meeting at the City Offices beginning
Tuesday, June 20, 2023 at 7:00 P.M., CT.
SUBMISSION OF PROPOSALS
Proposals may be:
a) submitted to the office of Northland Securities, Inc.,
b) faxed to Northland Securities, Inc. at 612-851-5918,
c) emailed to PublicSale@northlandsecurities.com
d) for proposals submitted prior to the sale, the final price and coupon rates may be submitted to
Northland Securities, Inc. by telephone at 612-851-5900 or 612-851-4968, or
e) submitted electronically.
Notice is hereby given that electronic proposals will be received via PARITY™, or its successor, in the
manner described below, until 10:30 A.M., CT, on Tuesday, June 20, 2023. Proposals may be submitted
electronically via PARITY™ or its successor, pursuant to this Notice until 10:30 A.M., CT, but no Proposal
will be received after the time for receiving Proposals specified above. To the extent any instructions or
directions set forth in PARITY™, or its successor, conflict with this Notice, the terms of this Notice shall
control. For further information about PARITY™, or its successor, potential bidders may contact Northland
Securities, Inc. or i-Deal at 1359 Broadway, 2nd floor, New York, NY 10018, telephone 212-849-5021.
Neither the City nor Northland Securities, Inc. assumes any liability if there is a malfunction of PARITY™
or its successor. All bidders are advised that each Proposal shall be deemed to constitute a contract between
the bidder and the City to purchase the Bonds regardless of the manner in which the Proposal is submitted.
BOOK-ENTRY SYSTEM
The Bonds will be issued by means of a book-entry system with no physical distribution of bond
certificates made to the public. The Bonds will be issued in fully registered form and one bond certificate,
representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the
name of Cede & Co. as nominee of Depository Trust Company (“DTC”), New York, New York, which
will act as securities depository of the Bonds.
* The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or decrease will be
made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted, the purchase price will also be adjusted
to maintain the same gross spread.
76905027v1
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Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof
of a single maturity through book entries made on the books and records of DTC and its participants.
Principal and interest are payable by the City through Northland Trust Services, Inc., Minneapolis,
Minnesota (the “Paying Agent/Registrar”), to DTC, or its nominee as registered owner of the Bonds.
Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC;
transfer of principal and interest payments to beneficial owners by participants will be the responsibility of
such participants and other nominees of beneficial owners. The successful bidder, as a condition of delivery
of the Bonds, will be required to deposit the bond certificates with DTC. The City will pay reasonable and
customary charges for the services of the Paying Agent/Registrar.
DATE OF ORIGINAL ISSUE OF BONDS
Date of Delivery (Estimated to be July 19, 2023)
AUTHORITY/PURPOSE/SECURITY
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475 and Sections 162.18 and
475.58, Sub. 3b. Proceeds will be used to finance the City’s street improvement projects and to pay costs
associated with the issuance of the Bonds. The Bonds are payable from municipal state aid revenues and
special assessments levied against benefited property and additionally secured by ad valorem taxes on all
taxable property within the City. The full faith and credit of the City is pledged to their payment and the
City has validly obligated itself to levy ad valorem taxes in the event of any deficiency in the debt service
account established for this issue.
INTEREST PAYMENTS
Interest is due semiannually on each June 15 and December 15, commencing June 15, 2024, to registered
owners of the Bonds appearing of record in the Bond Register as of the close of business on the first day
(whether or not a business day) of the calendar month of such interest payment date.
MATURITIES
Principal is due annually on December 15, inclusive, in each of the years and amounts as follows:
Year Amount Year Amount
2024 $360,000 2029 $495,000
2025 415,000 2030 510,000
2026 425,000 2031 520,000
2027 435,000 2032 530,000
2028 435,000 2033 545,000
Proposals for the Bonds may contain a maturity schedule providing for any combination of serial bonds
and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject
to mandatory redemption in each year conforms to the maturity schedule set forth above.
INTEREST RATES
All rates must be in integral multiples of 1/20th or 1/8th of 1%. The rate for any maturity may not be more
than 2.00% less than the rate for any preceding maturity. All Bonds of the same maturity must bear a single
uniform rate from date of issue to maturity.
ESTABLISHMENT OF ISSUE PRICE
(HOLD-THE-OFFERING-PRICE RULE MAY APPLY – BIDS NOT CANCELLABLE)
76905027v1
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The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and
deliver to the City at closing an “issue price” or similar certificate setting forth the reasonably expected
initial offering price to the public or the sales price or prices of the Bonds, together with the supporting
pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A, with
such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder,
the City and Bond Counsel. All actions to be taken by the City under this Notice of Sale to establish the
issue price of the Bonds may be taken on behalf of the City by the City’s Municipal Advisor and any notice
or report to be provided to the City may be provided to the City’s Municipal Advisor.
The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining “competitive
sale” for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds
(the “competitive sale requirements”) because:
(1) the City shall disseminate this Notice of Sale to potential underwriters in a manner that is reasonably
designed to reach potential underwriters;
(2) all bidders shall have an equal opportunity to bid;
(3) the City may receive bids from at least three underwriters of municipal bonds who have established
industry reputations for underwriting new issuances of municipal bonds; and
(4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to
purchase the Bonds at the highest price (or lowest cost), as set forth in this Notice of Sale
Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase
of the Bonds, as specified in the bid.
In the event that the competitive sale requirements are not satisfied, the City shall promptly so advise the
winning bidder. The City may then determine to treat the initial offering price to the public as of the award
date of the Bonds as the issue price of each maturity by imposing on the winning bidder the Hold-the-
Offering-Price Rule as described in the following paragraph (the “Hold-the-Offering-Price Rule”). Bids
will not be subject to cancellation in the event that the City determines to apply the Hold-the-Offering-
Price Rule to the Bonds. Bidders should prepare their bids on the assumption that the Bonds will be
subject to the Hold-the-Offering-Price Rule in order to establish the issue price of the Bonds.
By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer
the Bonds to the public on or before the date of award at the offering price or prices (the “Initial Offering
Price”), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii)
agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will
neither offer nor sell unsold Bonds of any maturity to which the Hold-the-Offering Price Rule shall apply
to any person at a price that is higher than the Initial Offering Price to the public during the period starting
on the award date for the Bonds and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the award date; or
(2) the date on which the underwriters have sold at least 10% of a maturity of the Bonds to the public
at a price that is no higher than the Initial Offering Price to the public (the “10% Test”), at which
time only that particular maturity will no longer be subject to the Hold-the-Offering-Price Rule.
The City acknowledges that, in making the representations set forth above, the winning bidder will rely on
(i) the agreement of each underwriter to comply with the requirements for establishing issue price of the
Bonds, including, but not limited to, its agreement to comply with the Hold-the-Offering-Price Rule, if
applicable to the Bonds, as set forth in an agreement among underwriters and the related pricing wires, (ii)
in the event a selling group has been created in connection with the initial sale of the Bonds to the public,
the agreement of each dealer who is a member of the selling group to comply with the requirements for
establishing issue price of the Bonds, including but not limited to, its agreement to comply with the Hold-
the-Offering-Price Rule, if applicable to the Bonds, as set forth in a selling group agreement and the related
pricing wires, and (iii) in the event that an underwriter or dealer who is a member of the selling group is a
party to a third-party distribution agreement that was employed in connection with the initial sale of the
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Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with
the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to
comply with the Hold-the-Offering-Price Rule, if applicable to the Bonds, as set forth in the third-party
distribution agreement and the related pricing wires. The City further acknowledges that each underwriter
shall be solely liable for its failure to comply with its agreement regarding the requirements for establishing
issue price of the Bonds, including but not limited to, its agreement to comply with the Hold-the-Offering-
Price Rule, if applicable to the Bonds, and that no underwriter shall be liable for the failure of any other
underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to
a third-party distribution agreement to comply with its corresponding agreement to comply with the
requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply
with the Hold-the-Offering-Price Rule if applicable to the Bonds.
By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group
agreement and each third-party distribution agreement (to which the bidder is a party) relating to the initial
sale of the Bonds to the public, together with the related pricing wires, contains or will contain language
obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that
is a party to such third-party distribution agreement, as applicable, (A) to comply with the Hold-the-
Offering-Price Rule, if applicable if and for so long as directed by the winning bidder and as set forth in the
related pricing wires, (B) to promptly notify the winning bidder of any sales of Bonds that to its knowledge,
are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds
to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise
advised by the underwriter, dealer or broker-dealer, the winning bidder shall assume that each order
submitted by the underwriter, dealer or broker-dealer is a sale to the public, and (ii) any agreement among
underwriters or selling group agreement relating to the initial sale of the Bonds to the public, together with
the related pricing wires, contains or will contain language obligating each underwriter or dealer that is a
party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds
to the public to require each broker-dealer that is a party to such retail distribution agreement to comply
with the Hold-the-Offering-Price Rule, if applicable, in each case if and for so long as directed by the
winning bidder or the underwriter and as set forth in the related pricing wires:
Notes: Sales of any Bonds to any person that is a related party to an underwriter participating in the initial
sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to
the public for purposes of this Notice of Sale. Further, for purposes of this Notice of Sale:
(1) "public" means any person other than an underwriter or a related party,
(2) "underwriter" means (A) any person that agrees pursuant to a written contract with the City (or
with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the
Bonds to the public and (B) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the
public (including a member of a selling group or a party to a third-party distribution agreement
participating in the initial sale of the Bonds to the public).
(3) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the
purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting
power or the total value of their stock, if both entities are corporations (including direct ownership
by one corporation or another), (B) more than 50% common ownership of their capital interests
or profits interests, if both entities are partnerships (including direct ownership by one partnership
of another), or (C) more than 50% common ownership of the value of the outstanding stock of the
corporation or the capital interests or profit interests of the partnership, as applicable, if one entity
is a corporation and the other entity is a partnership (including direct ownership of the applicable
stock or interests by one entity of the other), and
(4) "sale date" means the date that the Bonds are awarded by the City to the winning bidder.
ADJUSTMENS TO PRINCIPAL AMOUNT AFTER PROPOSALS
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The City reserves the right to increase or decrease the principal amount of the Bonds. Any such increase or
decrease will be made in multiples of $5,000 and may be made in any maturity. If any maturity is adjusted,
the purchase price will also be adjusted to maintain the same gross spread. Such adjustments shall be made
promptly after the sale and prior to the award of Proposals by the City and shall be at the sole discretion of
the City. The successful bidder may not withdraw or modify its Proposal once submitted to the City for any
reason, including post-sale adjustment. Any adjustment shall be conclusive and shall be binding upon the
successful bidder.
OPTIONAL REDEMPTION
Bonds maturing on December 15, 2032 and 2033 are subject to redemption and prepayment at the option
of the City on December 15, 2031 and 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
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.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but
neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute
cause for a failure or refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in
accordance with terms of the purchase contract. The CUSIP Service Bureau charge for the assignment of
CUSIP identification numbers shall be paid by the successful bidder.
DELIVERY
Delivery of the Bonds will be within thirty-five days after award, subject to an approving legal opinion by
Taft Stettinius & Hollister, LLP, Bond Counsel.. The legal opinion will be paid by the City and delivery
will be anywhere in the continental United States without cost to the successful bidder at DTC.
TYPE OF PROPOSAL
Proposals of not less than $4,623,300 (99.00%) and accrued interest on the principal sum of $4,670,000
must be filed with the undersigned prior to the time of sale. Proposals must be unconditional except as to
legality. Proposals for the Bonds should be delivered to Northland Securities, Inc. and addressed to:
Cathy Erickson, Finance Director
4646 Dakota Street SE.
Prior Lake, Minnesota 55372
A good faith deposit (the “Deposit”) in the amount of $93,400 in the form of a federal wire transfer (payable
to the order of the City) is only required from the apparent winning bidder, and must be received within
two hours after the time stated for the receipt of Proposals. The apparent winning bidder will receive
notification of the wire instructions from the Municipal Advisor promptly after the sale. If the Deposit is
not received from the apparent winning bidder in the time allotted, the City may choose to reject their
Proposal and then proceed to offer the Bonds to the next lowest bidder based on the terms of their original
proposal, so long as said bidder wires funds for the Deposit amount within two hours of said offer.
The City will retain the Deposit of the successful bidder, the amount of which will be deducted at settlement
and no interest will accrue to the successful bidder. In the event the successful bidder fails to comply with
the accepted Proposal, said amount will be retained by the City. No Proposal can be withdrawn after the
time set for receiving Proposals unless the meeting of the City scheduled for award of the Bonds is
adjourned, recessed, or continued to another date without award of the Bonds having been made.
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AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost
(TIC) basis. The City’s computation of the interest rate of each Proposal, in accordance with customary
practice, will be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The City
will reserve the right to: (i) waive non-substantive informalities of any Proposal or of matters relating to
the receipt of Proposals and award of the Bonds, (ii) reject all Proposals without cause, and (iii) reject any
Proposal which the City determines to have failed to comply with the terms herein.
INFORMATION FROM SUCCESSFUL BIDDER
The successful bidder will be required to provide, in a timely manner, certain information relating to the
initial offering price of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions
of the Internal Revenue Code of 1986, as amended.
OFFICIAL STATEMENT
By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the
City agrees that, no more than seven business days after the date of such award, it shall provide to the senior
managing underwriter of the syndicate to which the Bonds are awarded, the Final Official Statement in an
electronic format as prescribed by the Municipal Securities Rulemaking Board (MSRB).
FULL CONTINUING DISCLOSURE UNDERTAKING
The City will covenant in the resolution awarding the sale of the Bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be provided, annual financial information, including audited financial
statements of the City, and notices of certain material events, as required by SEC Rule 15c2-12.
BANK QUALIFICATION
The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of
the Internal Revenue Code of 1986, as amended.
BOND INSURANCE AT UNDERWRITER’S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the
option of the successful bidder, the purchase of any such insurance policy or the issuance of any such
commitment shall be at the sole option and expense of the successful bidder of the Bonds. Any increase in
the costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the
successful bidder, except that, if the City has requested and received a rating on the Bonds from a rating
agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the
successful bidder. Failure of the municipal bond insurer to issue the policy after the Bonds have been
awarded to the successful bidder shall not constitute cause for failure or refusal by the successful bidder
to accept delivery on the Bonds.
The City reserves the right to reject any and all Proposals, to waive informalities and to adjourn the sale.
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Dated: April 17, 2023 BY ORDER OF THE PRIOR LAKE CITY COUNCIL
/s/ Cathy Erickson
Finance Director
Additional information may be obtained from:
Northland Securities, Inc.
150 South 5th Street, Suite 3300
Minneapolis, Minnesota 55402
Telephone No.: 612-851-5900
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EXHIBIT A
[FORM OF ISSUE PRICE CERTIFICATE – COMPETITIVE SALE SATISFIED]
The undersigned, on behalf of ______________________________ (the "Underwriter"), hereby
certifies as set forth below with respect to the sale of the General Obligation Bonds, Series 2023A (the "Bonds")
of the City of Prior Lake, Minnesota (the "Issuer").
1. Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by
the Underwriter are the prices listed in Schedule A (the "Expected Offering Prices"). The Expected Offering
Prices are the prices for the Maturities of the Bonds used by the Underwriter in formulating its bid to purchase the
Bonds. Attached as Schedule B is a true and correct copy of the bid provided by the Underwriter to purchase the
Bonds.
(b) The Underwriter was not given the opportunity to review other bids prior to submitting its bid.
(c) The bid submitted by the Underwriter constituted a firm offer to purchase the Bonds.
2. Defined Terms.
(a) "Maturity" means Bonds with the same credit and payment terms. Bonds with different maturity
dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(b) "Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party"
for purposes of this certificate generally means any two or more persons who have greater than 50 percent
common ownership, directly or indirectly.
(c) "Sale Date" means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is _______________.
(d) "Underwriter" means (i) any person that agrees pursuant to a written contract with the Issuer (or
with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the
Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described
in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a
selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the
Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this
certificate represents the Underwriter's interpretation of any laws, including specifically Sections 103 and 148 of
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned
understands that the foregoing information will be relied upon by the Issuer with respect to certain of the
representations set forth in the Nonarbitrage Certificate and with respect to compliance with the federal income
tax rules affecting the Bonds, and by Taft Stettinius & Hollister LLP, Bond Counsel in connection with rendering
its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the
preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to
the Issuer from time to time relating to the Bonds.
Dated: July 19, 2023.
[FORM OF ISSUE PRICE CERTIFICATE – HOLD-THE-OFFERING-PRICE RULE APPLIES]
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76589026v1
The undersigned, on behalf of ________________________________(the "Underwriter"), on behalf of
itself, hereby certifies as set forth below with respect to the sale and issuance of General Obligation Bonds, Series
2023A (the "Bonds") of the City of Prior Lake, Minnesota (the "Issuer").
1. Initial Offering Price of the Bonds.
(a) The Underwriter offered each Maturity of the Bonds to the Public for purchase at the respective
initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the
pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Notice of Sale and bid award, the Underwriter has agreed in writing that, (i) for
each Maturity of the Bonds, it would neither offer nor sell any of the Bonds of such Maturity to any person at a
price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity
(the "hold-the-offering-price rule"), and (ii) any selling group agreement shall contain the agreement of each dealer
who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each
broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule.
Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Bonds at a
price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding
Period.
2. Defined Terms.
(a) "Holding Period" means, for each Maturity of the Bonds, the period starting on the Sale Date and
ending on the earlier of (i) the close of the fifth business day after the Sale Date (________________), or (ii) the
date on which the Underwriter has sold at least 10% of such Maturity of the Bonds to the Public at prices that are
no higher than the Initial Offering Price for such Maturity.
(b) "Maturity" means Bonds with the same credit and payment terms. Bonds with different maturity
dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) "Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party"
for purposes of this certificate generally means any two or more persons who have greater than 50 percent common
ownership, directly or indirectly.
(d) "Sale Date" means the first day on which there is a binding contract in writing for the sale of a
Maturity of the Bonds. The Sale Date of the Bonds is ________________.
(e) "Underwriter" means (i) any person that agrees pursuant to a written contract with the Issuer (or
with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the
Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described
in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a
selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate
represents the Representative's interpretation of any laws, including specifically Sections 103 and 148 of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that
the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth
in the Nonarbitrage Certificate and with respect to compliance with the federal income tax rules affecting the Bonds,
and by Taft Stettinius & Hollister LLP, Bond Counsel, in connection with rendering its opinion that the interest on
the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue
Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating
to the Bonds.
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Dated: July 19, 2023.