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HomeMy WebLinkAbout08(A) - Resolution Approving the Issuance and Sale of General Obligation Bonds Series 2026A Report ITEM: 8A CITY COUNCIL AGENDA REPORT MEETING DATE: July 28, 2026 PREPARED BY: Nicole Klekner, Finance Director PRESENTED BY: Nicole Klekner AGENDA ITEM: Resolution Approving the Issuance and Sale of General Obligation Bonds Series 2026A RECOMMENDED ACTION: Adopt the resolution providing for the issuance and sale of $5,045,000 General Obligation Bonds, Series 2026A. BACKGROUND: Introduction A representative of the City’s municipal advisor, Tammy Omdal, from Northland Public Finance, will be present at the meeting to present and answer questions related to the Council approval of the sale of bonds. She will 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 an amount of $5,045,000 for Series 2026A. The proceeds of the bonds will be used for the Northwood Road Phases I and II and Green Heights area Street Improvement projects, and Facilities replacement/capital improvement projects. History The City Council approved Resolution No. 26-088 on June 23, 2026, which provided for the competitive negotiated sale of General Obligation Bonds, Series 2026A. Current Circumstances The bonds have been rated AAA by Standard and Poor’s. The report issued by S&P is attached to this agenda report. The AAA rating indicates the highest possible bond rating a city can receive. It is essentially the City’s credit score for financial management and creditworthiness. The rating agency’s report noted that the AAA rating with a stable outlook reflects their view that the City will continue to have positive financial results, strong reserve levels, and assessed valuation growth that will support stability within its operations. Proposals are due by 10:00 a.m. on July 28, 2026. 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 July 28, 2026, City Council meeting. A copy of the resolution prepared by the City’s bond counsel, Taft Law, is attached for the Council’s review. The attached resolution is a template of the resolution that will be presented to the City Council. A revised resolution will be provided to the City Council that contains the information from the recommended bid. Northland Public Finance will present a sale summary to the City Council at the meeting on July 28. City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372 Item 8A Page | 2 Conclusion The City Council will consider a resolution approving the issuance and sale of bonds. The bond sale will be awarded based on the lowest true interest cost. This information will be shared at the Council meeting. Closing on the bonds is expected to occur on August 18. FINANCIAL IMPACT: The revenues to pay debt service on the street improvement bonds and facilities replacement/capital improvement bonds is expected to come from a combination of tax levy, franchise fees, utility fund transfers and special assessments levied against benefitted properties. The initial projections show that an average annual net levy of approximately $610,000 for all portions of the bonds. The facilities replacement/capital improvement portion and street reconstruction portion of the bonds have a 10-year term and the PIR mill & overlay portion of the bonds has a 5-year term. Special assessments support the repayment of Northwood Road Phases I and II Street Improvement bond issuance, as well as Green Heights area Street Improvement . The street assessments for the projects have a 5-year term for mill & overlay and a 10-year term for reconstruction/reclamation. ALTERNATIVES: 1. Adopt Resolutions Providing for the Issuance and Sale of $5,045,000 General Obligation Bonds, Series 2026A 2. Reject bond sale for a specific reason. ATTACHMENTS: 1. Resolution 2. Standard & Poor’s Rating Report (AAA) EXTRACT OF MINUTES OF A MEETING CITY COUNCIL OF THE CITY OF PRIOR LAKE, MINNESOTA HELD: JULY 28, 2026 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 July 28, 2026, at 7:00 P.M., for the purpose, in part of authorizing the issuance and awarding the sale of $5,045,000 General Obligation Bonds, Series 2026A. The following members were present: and the following were absent: Member __________ introduced the following resolution and moved its adoption: RESOLUTION NO. ______ RESOLUTION AUTHORIZING THE ISSUANCE AND AWARDING THE SALE OF $5,045,000 GENERAL OBLIGATION BONDS, SERIES 2026A, PLEDGING FOR THE SECURITY THEREOF SPECIAL ASSESSMENTS AND LEVYING A TAX FOR THE PAYMENT THEREOF A. WHEREAS, the City Council has heretofore determined and declared that it is necessary and expedient to issue $5,045,000 General Obligation Bonds, Series 2026A (the "Bonds" or individually a "Bond"), pursuant to Minnesota Statutes, Chapters 475; and 1. Section 475.521 to finance the City's 2026 capital improvement projects (the "Capital Improvement Projects"); and 2. Section 429 to finance various improvement projects (the "PIR Improvements"); and 3. Section 475.58, Subdivision 3b to finance the City's 2026 street reconstruction projects under the City's Street Reconstruction Plan, dated August 12, 2025 (the "Street Reconstruction Projects"); and). B. WHEREAS, on August 12, 2025, the City Council held a public hearing on the proposed issuance of general obligation capital improvement plan bonds, pursuant to resolution approved and adopted the 2026 through 2030 Five-Year Capital Improvement Plan (the "Plan"), and approved the issuance of general obligation capital improvement plan bonds to finance the acquisition and betterment of the Capital Improvement Projects 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 was filed with the City Clerk within 30 days after the public 301194599v1 hearing on the Plan and on the issuance of the general obligation capital improvement plan bonds; and D. WHEREAS, there are currently no other capital improvement plan bonds outstanding; and E. WHEREAS, the City has heretofore determined, in accordance with Minnesota Statutes, Section 475.521, Subd. 4, that the principal and interest to become due in any year on the Capital Improvements Portion of the Bonds, as hereinafter defined, issued by the City under Minnesota Statutes, Section 475.521, including the Capital Improvements Portion of the Bonds, will be less than 0.16 percent of the estimated market value of property in the City; and F. WHEREAS, the PIR Improvements and all their components have been ordered prior to the date hereof, pursuant to the procedural requirements of Minnesota Statutes, Chapter 429; and G. WHEREAS, on August 12, 2025, following duly published notice thereof, the City Council held a public hearing on the issuance of not to exceed approximately $24,900,000 principal amount of bonds to finance the Street Reconstruction Projects and all persons who wished to speak or provide written information relative to the public hearing were afforded an opportunity to do so; and H. WHEREAS, no petition signed by voters equal to 5 percent of the votes cast in the City in the last municipal general election requesting a vote on the issuance of the street reconstruction bonds was filed with the City Clerk within 30 days after the public hearing on August 12, 2025; and I. WHEREAS, the City has retained Northland Securities, Inc., in Minneapolis, Minnesota ("Northland"), as its independent municipal advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been solicited by Northland; and J. WHEREAS, the proposals set forth on Exhibit A attached hereto were received by the Finance Director, or designee, at the offices of Northland at 10:00 A.M. on the date hereof, pursuant to the Notice of Sale established for the Bonds; and K. 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 ________________________ (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 $__________, plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable proposal received, 2 301194599v1 is hereby accepted and the Bonds are hereby awarded to the Purchaser. The Finance Director is directed to retain the deposit of the Purchaser. 2. Bond Terms. (a) Original Issue Date; Denominations; Maturities; Term Bond Option; Debt Limitations. The Bonds shall be dated August 18, 2026, 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: Amount Year Amount Year 2027 2032 2028 2033 2029 2034 2030 2035 2031 2036 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). The Bonds, together with any outstanding bonds of the City that are subject to the City's net debt limit, do not exceed the City's net debt limit. (b) Allocation. The aggregate principal amount of $___________ maturing in each of the years and amounts hereinafter set forth is issued to finance the Capital Improvement Projects (the "Capital Improvements Portion" of the Bonds"); and the aggregate principal amount of $_____________ maturing in each of the years and amounts hereinafter set forth is issued to finance the PIR Improvements (the "PIR Portion" of the Bonds); and the aggregate principal amount of $_____________ maturing in each of the years and amounts hereinafter set forth is issued to finance the Street Reconstruction Projects (the "Street Reconstruction Portion" of the Bonds). Capital Street Improvements Reconstruction Year Portion PIR Portion Portion Total 2027 2028 2029 2030 2031 2032 3 301194599v1 Capital Street Improvements Reconstruction Year Portion PIR Portion Portion Total 2033 2034 2035 2036 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 or all portions of debt service in such amounts as the City shall determine. 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 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 4 301194599v1 Registered Holder of any Bonds (the "Holder"). For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds are credited on the record date identified in a listing attached to the omnibus proxy. (iv) The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 10 hereof, references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or City, as the case may be, to the Depository as provided in the Letter of Representations to the Depository required by the Depository as a condition to its acting as book-entry Depository for the Bonds (said Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating 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. 5 301194599v1 (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 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. Purposes. The Capital Improvements Portion of the Bonds shall provide funds to finance the acquisition of the Capital Improvement Projects. The PIR Portion of the Bonds shall provide funds to finance the PIR Improvements. The Street Reconstruction Portion of the Bonds shall provide funds to finance the Street Reconstruction Projects. The Capital Improvement Projects, the PIR Improvements, and the Street Reconstruction Projects 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. 6 301194599v1 4. Interest. The Bonds shall bear interest payable semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing June 15, 2027, calculated on the basis of a 360-day year of twelve 30-day months, at the respective rates per annum set forth opposite the maturity years as follows: Maturity Year Interest Rate Maturity Year Interest Rate 2027 % 2032 % 2028 2033 2029 2034 2030 2035 2031 2036 5. Redemption. All Bonds maturing on December 15, 2035 and thereafter, shall be subject to redemption and prepayment at the option of the City on December 15, 2034, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the maturities and the principal amounts within each maturity to be redeemed shall be determined by the City; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of redemption shall be given to the paying agent and to each affected registered holder of the Bonds thirty (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 Bond Services, a division of First National Bank of Omaha, 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 any successor Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as paying agent 7 301194599v1 unless and until a successor-paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12. 7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the form set forth on Exhibit B attached hereto. 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 set forth on Exhibit B attached hereto, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting as the date of registration in the space provided the date on which the Bond is authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue of August 18, 2026. 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 8 301194599v1 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. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City evidencing the same debt, and entitled to the same benefits under this resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the Holder thereof or his, her or its attorney duly authorized in writing. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subject to reasonable regulations of the City contained in any agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. The Finance Director 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 st appearing thereon at the close of business on the first (1) 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 (10) days prior to the Special Record Date. 13. Treatment of Registered Owner. The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 12) on, such Bond and for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. 14. Delivery; Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 9 301194599v1 15. Fund and Accounts. There is hereby established a special fund to be designated "General Obligation Bonds, Series 2026A Fund" (the "Fund") to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Fund shall be maintained in the manner herein specified until all of the Bonds and the interest thereon have been fully paid. In such records there shall be established accounts of the Fund for the purposes and in the amounts as follows: (a) Construction Account. To the Construction Account there shall be credited the proceeds of the sale of the Capital Improvements Portion of the Bonds and the Street Reconstruction Portion of the Bonds. From the Construction Account there shall be paid all costs and expenses of the Capital Improvement Projects and the Street Reconstruction Projects, 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. Any balance remaining in the fund after completion of the costs shall be transferred to the Utility Improvements Debt Service Account. (b) Debt Service Account. There shall be maintained separate subaccounts in the Debt Service Account to be designated the "Capital Improvement Projects Debt Service Subaccount," the "Improvement Project Debt Service Subaccount," and the "Street Reconstruction Projects 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 Improvement Projects Debt Service Subaccount. To the Capital Improvement Projects Debt Service Subaccount there shall be credited: (A) all collections of taxes herein or hereinafter levied for the payment of the Capital Improvements Portion of the Bonds and interest thereon; (B) a pro rata share of all funds remaining in the Construction Account after completion of the Project and payment of the costs thereof; (C) all investment earnings on funds held in the Capital Improvement Projects Debt Service Subaccount; and (D) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Capital Improvement Projects Debt Service Subaccount. The amount of any surplus remaining in the Capital Improvement Projects Debt Service Subaccount when the Capital Improvements Portion of the Bonds and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61, Subdivision 4. The Capital Improvement Projects Debt Service Subaccount shall be used solely to pay the principal and interest on the Capital Improvements 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) Street Reconstruction Projects Debt Service Subaccount. To the Street Reconstruction Projects Debt Service Subaccount there shall be credited: (A) all collections of taxes herein or hereafter levied for the payment of the principal and interest on the Street Reconstruction Portion of the Bonds; (B) a pro rata share of all funds remaining in the Construction Account after completion of the Project and payment of the costs thereof; (C) all investment earnings on funds held in the Street Reconstruction Projects Debt Service Subaccount; and (D) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Street Reconstruction Projects Debt Service Subaccount. The amount of any surplus remaining in the Street Reconstruction 10 301194599v1 Projects Debt Service Subaccount when the Street Reconstruction Portion of the Bonds and interest thereon are paid shall be used consistent with Minnesota Statutes, Section 475.61, Subdivision 4. The Street Reconstruction Projects Debt Service Subaccount shall be used solely to pay the principal and interest on the Street Reconstruction Portion of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said subaccount as provided by law. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the above in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Construction Account or Debt Service Account (or any other City account which will be used to pay principal or interest to become due on the bonds payable therefrom) in excess of amounts which under then applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code"). 16. Permanent Improvement Revolving Fund; Permanent Improvement Revolving Sinking Fund. There has heretofore been established two special funds designated the "Permanent Improvement Revolving Fund" and the “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 continue to 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; and/or (ii) 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, 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 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 11 301194599v1 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 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 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 collections of all taxes herein and hereafter levied for the payment of the PIR Portion of the Bonds and interest thereon; (iii) 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; (iv) all investment earnings on funds held in the Permanent Improvement Revolving Sinking Fund; and (v) 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 Capital Improvements Portion of the Bonds. (a) Tax Levy. To provide moneys for payment of the principal and interest on the Capital Improvements 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 in Exhibit C 12 301194599v1 (b) Coverage Test. The tax levies are such that if collected in full they will produce at least five percent in excess of the amount needed to meet when due the principal and interest payments on the Capital Improvements Portion of the Bonds. The tax levies shall be irrepealable so long as any of the Capital Improvements 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. 18. Covenants Relating to the PIR Portion of the Bonds. (a) Special 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 special 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 special 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 special assessments a valid and binding lien upon such property. The special assessments have heretofore been authorized. Subject to such adjustments as are required by conditions in existence at the time the assessments are levied, it is hereby determined that the assessments shall be payable in equal, consecutive, annual installments, including both principal and interest, with interest at a rate per annum set forth below: PIR Improvement Designation Levy Years Collection Years Amount See Attached Schedule in Exhibit C At the time the assessments are in fact levied the City Council shall, based on the then- current estimated collections of the assessments, make any adjustments in any ad valorem taxes required to be levied in order to assure that the City continues to be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (b) Tax Levy. 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: Levy Years Collection Years Amount 13 301194599v1 See Attached Schedule in Exhibit C (c) Coverage Test. The tax levies are such that if collected in full they, together with estimated collections of special assessments herein pledged for the payment of the PIR Portion of the Bonds, will produce at least five (5%) 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. 19. Covenants Relating to the Street Reconstruction Portion of the Bonds. (b) Tax Levy. To provide moneys for payment of the principal and interest on the Street Reconstruction Portion of the Bonds there is hereby levied upon all of the taxable property in the City a direct annual ad valorem tax which shall be spread upon the tax rolls and collected with and as part of other general property taxes in the City for the years and in the amounts as follows Levy Years Collection Years Amount See Attached Schedule in Exhibit C (b) Coverage Test. The tax levies are such that if collected in full they will produce at least five percent in excess of the amount needed to meet when due the principal and interest payments on the Street Reconstruction Portion of the Bonds. The tax levies shall be irrepealable so long as any of the Street Reconstruction Portion of the Bonds are outstanding and unpaid, provided that the City reserves the right and power to reduce the levies in the manner and to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3. 20. General Obligation Pledge. For the prompt and full payment of the principal and interest on 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 Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds of the City which are available for such purpose, and such other funds may be reimbursed with or without interest from the Debt Service Account when a sufficient balance is available therein. 21. Defeasance. When all Bonds have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the registered holders of the Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full, provided that notice of 14 301194599v1 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. 22. Continuing Disclosure. The City is the sole obligated person with respect to the Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the "Undertaking") hereinafter described to: (a) Provide or cause to be provided to the Municipal Securities Rulemaking Board (the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. (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. 23. 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: 15 301194599v1 (a) Not later than sixty days after the date of payment of a Reimbursement Expenditure, the City (or person designated to do so on behalf of the City) has made or will have 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 "Program"); and (iii) states the maximum principal amount of debt expected to be issued by the City for the purpose of financing the Program; provided, however, that no such Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for the Program, defined in the Reimbursement Regulations to include engineering or architectural, surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not exceed twenty percent of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement Expenditures not in excess of the lesser of $100,000 or five percent of the proceeds of the Bonds. (b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of the Bonds or any of the other types of expenditures described in Section 1.150-2(d)(3) of the Reimbursement Regulations. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Bonds, and not later than 18 months after the later of (i) the date of the payment of the Reimbursement Expenditure, or (ii) the date on which the Program to which the Reimbursement Expenditure relates is first placed in service, but in no event more than three years after the date of payment of the Reimbursement Expenditure. (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. 24. Certificate of Registration and Tax Levy. A certified copy of this resolution is hereby directed to be filed with the with the Auditor-Treasurer of Scott County, Minnesota, together with such other information as the Auditor-Treasurer shall require, and there shall be obtained from the Auditor-Treasurer a certificate that the Bonds have been entered in the Auditor- Treasurer's Bond Register and that the tax levy required by law has been made. 25. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, bond counsel, 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 16 301194599v1 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. The City expects to satisfy the twenty-four month exemption for gross proceeds of the Bonds as provided in Section 1.148-7(e) of the Regulations. The Mayor and/or the City Manager and/or the Finance Director, are hereby authorized and directed to make such elections as to arbitrage and rebate matters relating to the Bonds as they deem necessary, appropriate or desirable in connection with the Bonds, and all such elections shall be, and shall be deemed and treated as, elections of the City. 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 2026 will not exceed $10,000,000; and (e) not more than $10,000,000 of obligations issued by the City during this calendar year 2026 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 17 301194599v1 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. Severability. If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution 31. Headings. Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. The motion for the adoption of the foregoing resolution was duly seconded by member _____________ and, after a full discussion thereof and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: Whereupon the resolution was declared duly passed and adopted. 18 301194599v1 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 authorizing the issuance and awarding the sale of $5,045,000 General Obligation Bonds, Series 2026A. WITNESS my hand on July 28, 2026. _______________________________________ Heidi Simon, City Clerk 19 301194599v1 EXHIBIT A PROPOSALS \[To be supplied by Northland Securities, Inc.\] A-1 301194599v1 EXHIBIT B FORM OF BOND UNITED STATES OF AMERICA STATE OF MINNESOTA SCOTT COUNTY CITY OF PRIOR LAKE R-___ $_________ GENERAL OBLIGATION BOND, SERIES 2026A Interest Rate Maturity Date Date of Original Issue CUSIP _____% December 15, August 18, 2026 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: ____________________________ The City of Prior Lake, Scott County, Minnesota (the "Issuer" or the "City"), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns, unless called for earlier redemption, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, and to pay interest thereon semiannually on June 15 and December 15 of each year (each, an "Interest Payment Date"), commencing June 15, 2027, 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 Bond Services, a division of First National Bank of Omaha, in Minneapolis, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder") on the registration books of the Issuer maintained by the Bond Registrar and at the address st appearing thereon at the close of business on the first (1) day of the calendar month of such Interest Payment Date (the "Regular Record Date"). Any interest not so timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record Date, and shall be payable to the person who is the Holder hereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. So long as this Bond is registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter described, and as those terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be made as provided in the Letter of B-1 301194599v1 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, 2035, and thereafter, are subject to redemption and prepayment at the option of the Issuer on December 15, 2034, 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 thirty (30) days prior to the date fixed for redemption. Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a common maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of the Bond, without service charge, a new Bond or Bonds having the same stated maturity and interest rate and of any Authorized Denomination or Denominations, as requested by the Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of $5,045,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination and redemption privilege, issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council on July 28, 2026 (the "Resolution"), for the purpose of providing money to finance (i) the City's 2026 capital improvement projects; (ii) various improvement projects; and (iii) the City's 2026 street reconstruction projects, all within the jurisdiction of the Issuer. This Bond is payable out of the General Obligation Bonds, Series 2026A 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. B-2 301194599v1 Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the office of the Bond Registrar. Transfer. This Bond is transferable by the Holder in person or the Holder's attorney duly authorized in writing at the office of the Bond Registrar upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized Denomination or Denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided herein with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the contrary. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. Qualified Tax-Exempt Obligation. This Bond has been designated by the Issuer as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed, in regular and due form, time and manner as required by law; that the Issuer has covenanted and agreed with the Holders of the Bonds that it will levy a direct, annual, irrepealable ad valorem tax upon all of the taxable property of the Issuer, without limitation as to rate or amount, for the years and in amounts sufficient to pay the principal and interest on the Bonds as they respectively become due, if any sums irrevocably appropriated to the Debt Service Account are insufficient therefor; and that this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and the date of its issuance and delivery to the original purchaser, does not exceed any constitutional or statutory limitation of indebtedness. B-3 301194599v1 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. Registrable by: NORTHLAND BOND SERVICES, A Date of Registration: DIVISION OF FIRST NATIONAL BANK OF OMAHA BOND REGISTRAR'S Payable at: NORTHLAND BOND SERVICES, A CERTIFICATE OF DIVISION OF FIRST NATIONAL AUTHENTICATION BANK OF OMAHA This Bond is one of the CITY OF PRIOR LAKE, Bonds described in the SCOTT COUNTY, MINNESOTA Resolution mentioned within. NORTHLAND BOND SERVICES, A /s/ Facsimile DIVISION OF FIRST NATIONAL Mayor BANK OF OMAHA Minneapolis, Minnesota, Bond Registrar /s/ Facsimile By: City Manager Authorized Signature B-4 301194599v1 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 affect 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.) B-5 301194599v1 EXHIBIT C SCHEDULES \[To be supplied by Northland Securities, Inc.\] C-1 301194599v1 spglobal.com/ratings June 25, 2026 1 S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings permission. See terms of use/disclaimer on last page. Research Update: Prior Lake, MN Series 2026A GO Bonds Assigned 'AAA' Rating June 25, 2026 Overview •S&P Global Ratings assigned its 'AAA' rating to Prior Lake, Minnesota's $5.045 million series 2026A general obligation (GO) bonds. •The outlook is stable. Rationale Security The series 2026A bonds are payable from special assessments levied against benefitted properties. In the event of any deficiency in the debt service account established for this issue, the city has validly obligated itself to levy additional ad valorem taxes upon all the taxable property within the city, without limitation as to rate or amount. Therefore, we rate to the city's general obligation. Proceeds will fund street improvement and facility projects within the city. Credit highlights The city's credit strengths are evident across all factors, though its local income levels, which are well above national medians, are a particular credit strength and reflective of the 'AAA' rating, and offset its higher debt costs that are absorbed through its wealthy and rapidly growing tax base. The gross county product per capita is below average, but this somewhat understates the county's economic strength and reflects Scott County's more residential and rural nature. The city's population and tax base growth have been very strong over the past decade, which we view as favorable credit trends. The city expects over 100 additional housing permits to be issued annually through 2029, continuing the expansion of its primarily residential tax base. The city has posted operating surpluses since fiscal 2014, driving the accumulation of $8.6 million in general fund reserves that have allowed significant contingency for one-time capital needs or temporary deficit spending should it arise. The city's surplus of $991,000 in fiscal 2025 outperformed previous expectations of a breakeven result, largely due to investment performance, permitting revenues, and lower staffing costs in the public works and police departments. We expect financial performance will remain positive despite a budgeted $402,000 Primary Contact Tyler Livesey Chicago 1-609-426-7533 tyler.livesey @spglobal.com Secondary Contact Rebecca Y Roman Chicago 1-708-219-0455 rebecca.roman @spglobal.com Prior Lake, MN Series 2026A GO Bonds Assigned 'AAA' Rating spglobal.com/ratings June 25, 2026 2 S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings permission. See terms of use/disclaimer on last page. use of fund balance because of the city's trend of budgeting conservatively and outperforming expectations, which is evident in prior year performance historically doing so. Management expects these surpluses to moderate in size due to increased healthcare costs and a short-term, temporary decrease of growth in future years, as well as previous uplifts in prior fiscal years of $3 million in American Rescue Plan Act funds. However, local property taxes make up more than 70% of general fund revenues, and both continued growth and robust long-term planning create a stable and predictable operating environment, in our view. The presence of long-term planning tools, such as a multiyear financial forecast and capital plan, allow the city to plan for future budgetary pressures in outyears, such as additional staffing costs or the issuance of new debt, as it has done historically. We estimate that future costs of debt will likely continue to exceed 20% of governmental funds revenues, which is elevated, but is indicative of management's rapid debt repayment strategy. The rating further reflects our assessment of the following factors: •The city's wealthy and expanding economy that is rooted primarily in the manufacturing, finance, and public administration industries that also benefits from its location within the Minneapolis metropolitan area, allowing many residents to commute for work and boost local incomes. •Financial results that are consistently positive, which we expect to continue, and evident in no deficit results since fiscal 2014. While we believe that financial results may moderate in the future, management has demonstrated the ability to continue to operate within a surplus environment. •Large operating flexibility allows Prior Lake to withstand one-time costs. As of the most recent fiscal year, reserves stand at 64% of total general fund revenues, which we view as very strong. •Management practices are well defined and forward looking, and include narratives surrounding decision making and frequent monitoring of budget-to-actual performance. In addition, the presence of investment, debt, and fund balance policies restricts the city to operating more conservatively, reflective of its financial performance. Cyber security practices are in line with peers. •Net direct debt levels are manageable at 93% of total governmental funds revenues and net direct debt of $1,000 and are expected to remain at current levels despite annual issuances of new money debt. We estimate future debt costs will rise to approximately 23% of governmental funds revenues within the next two years, which is elevated, in our view. •For more information on our institutional framework assessment for Minnesota municipalities, see Institutional Framework Assessment: Minnesota Local Governments, Sept. 10, 2024. Environmental, social, and governance We have analyzed Prior Lake's environmental, social, and governance (ESG) risks relative to the city's economy, management, financial measures, and debt and liability profile, and have determined that all are neutral within our credit rating analysis. Rating above the sovereign Prior Lake's bonds are eligible to be rated above the sovereign because we believe the city can maintain better credit characteristics than the nation in a stress scenario. Under our criteria Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, Nov. 19, 2013, we consider state and local governments to have moderate Prior Lake, MN Series 2026A GO Bonds Assigned 'AAA' Rating spglobal.com/ratings June 25, 2026 3 S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings permission. See terms of use/disclaimer on last page. sensitivity to country risk. The city's special assessments and local property tax revenue are the primary source of security on the bonds, which significantly limits the possibility of negative sovereign intervention in the payment of debt or operations. The institutional framework in the nation is predictable for local governments, allowing them significant autonomy and independent treasury management; there has been no history of negative federal government intervention in local finances. Outlook The stable outlook reflects our view that the city will continue to have positive financial results, strong reserve levels, and assessed valuation growth that will support stability within its operations. Downside scenario We could take a negative rating action if the city were to issue significant amounts of debt beyond current plans and economic growth would slow or income metrics would materially weaken. Prior Lake, Minnesota‑‑credit summary Institutional framework (IF)1 Individual credit profile (ICP)1.65 Economy 1.5 Financial performance 2 Reserves and liquidity 1 Management 1.00 Debt and liabilities 2.75 Prior Lake, Minnesota‑‑key credit metrics Most recent 2025 2024 2023 Economy Real GCP per capita % of U.S. 78 ‑‑ 78 74 County PCPI % of U.S. 116 ‑‑ 116 116 Market value ($000s) 6,486,913 6,174,919 6,025,493 5,814,922 Market value per capita ($) 227,188 216,262 211,028 204,470 Top 10 taxpayers % of taxable value 4.7 4.3 3.3 4.5 County unemployment rate (%) 3.5 3.4 2.8 2.4 Local median household EBI % of U.S. 144 ‑‑ 144 156 Local per capita EBI % of U.S. 145 ‑‑ 145 157 Local population 28,553 ‑‑ 28,553 28,439 Financial performance Operating fund revenues ($000s) ‑‑ 22,660 21,877 18,394 Operating fund expenditures ($000s) ‑‑ 21,766 20,103 17,774 Net transfers and other adjustments ($000s) ‑‑ 97 633 (73) Operating result ($000s) ‑‑ 991 2,407 547 Prior Lake, MN Series 2026A GO Bonds Assigned 'AAA' Rating spglobal.com/ratings June 25, 2026 4 S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings permission. See terms of use/disclaimer on last page. Prior Lake, Minnesota‑‑key credit metrics Most recent 2025 2024 2023 Operating result % of revenues ‑‑ 4.4 11.0 3.0 Operating result three‑year average % ‑‑ 6.1 4.7 1.6 Reserves and liquidity Available reserves % of operating revenues ‑‑ 63.6 61.3 59.8 Available reserves ($000s) ‑‑ 14,402 13,412 11,005 Debt and liabilities Debt service cost % of revenues ‑‑ 15.0 14.9 14.5 Net direct debt per capita ($) 1,019 848 938 1,006 Net direct debt ($000s) 29,090 24,215 26,775 28,620 Direct debt 10‑year amortization (%) 93 94 97 ‑‑ Pension and OPEB cost % of revenues ‑‑ 6.0 5.0 5.0 NPLs per capita ($) ‑‑ 230 261 333 Combined NPLs ($000s) ‑‑ 6,567 7,455 9,469 Financial data may reflect analytical adjustments and are sourced from issuer audit reports or other annual disclosures. Economic data is generally sourced from S&P Global Market Intelligence, the Bureau of Labor Statistics, Claritas, and issuer audits and other disclosures. Local population is sourced from Claritas. Claritas estimates are point in time and not meant to show year‑over‑year trends. GCP‑‑Gross county product. PCPI‑‑Per capita personal income. EBI‑‑Effective buying income. OPEB‑‑Other postemployment benefits. NPLs‑‑Net pension liabilities. Ratings List New Issue Ratings US$5045000 City of Priorities Lake, Minnesota, General Obligation Bonds, Series 2026A, dated: Date of Delivery, due: December 15, 2036 Long Term Rating AAA/Stable Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/504352. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings referenced herein can be found on S&P Global Ratings' public website at www.spglobal.com/ratings. Prior Lake, MN Series 2026A GO Bonds Assigned 'AAA' Rating spglobal.com/ratings June 25, 2026 5 S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings permission. See terms of use/disclaimer on last page. Copyright ©2026 by Standard & Poor’s Financial Services LLC. All rights reserved. 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