HomeMy WebLinkAboutNov 18, 1998
SPECIAL MEETING OF THE
PRIOR LAKE CITY COUNCIL
AGENDA
1. Date: Wednesday, November 18, 1998
Time: 5:00 P.M.
Location: Fire Hall, 16776 Fish Point Road SE
2. Call to Order
3. Consider Approval of Resolution 98-133 Approving Sale
of $1,275,000 General Obligation Improvement Bonds of
1998.
4. Adjourn
16200 ~&~ek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
Moody's Rating: _
Preliminary Official Statement
(Dated October 27, 1998)
City of Prior Lake, Minnesota
(Dakota County)
$1,275,000
General Obligation
Improvement Bonds of 1998
Interest Payable: 6-1-99 and semiannually thereafter Call Option: 12-1-04 @ 100
REGISTRATIONIBOOK ENTRY: This offering will be issued as fully registered Bonds and, when issued, will
be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to
which principal and interest payments on the Bonds will be made. Individual purchases will be made in book-entry
form only, in the principal amount of $5,000 or any whole multiple thereof. Purchasers of Bonds will not receive
physical delivery of bond certificates. Please see "Book-Entry Only System" herein for additional information.
DATE, TIME and
PLACE of BID OPENING
DATE, TIME and
PLACE of AWARD
Wednesday, November 18,1998
11 :30 a.m., Central Time
Juran & Moody, a division of
Miller, Johnson & Kuehn, Incorporated
1100 Minnesota W orid Trade Center
St. Paul, Minnesota 55101
Wednesday, November 18, 1998
5:00 p.m., Central Time
Fire Hall
16776 Fish Point Road Southeast
Prior Lake, Minnesota 55372
In the opinion of Briggs and Morgan, Professional Association, Bond COWlsel, based on present fedeml and Minnesota laws,
regulations, rulings and decisions, at the time of their issuance and delivery to the original purchaser, interest on the bonds is
excluded from gross income for purposes of United States income tax and is excluded, to the same extent in computing both
gross income and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes
measured by income and imposed on corporations and fmancial institutions). Interest on the bonds is not an item of tax
preference for purposes of the alternative minimwn tax imposed on individuals and corporations; however, interest on the bonds
is taken into accoWlt in determining adjusted C\UTent earnings for purposes of computing the federal alternative minimwn tax
imposed on corporations. No opinion will be expressed by Bond COWlSel regarding other state or fedeml tax consequences
caused by the receipt or accrual of interest on the bonds or arising with respect to ownership of the bonds. See "Tax Exemption
and Other Tax Considerations" herein.
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JURAN & MOODY ,
A 1)IVlStO", OP Mll.Lf.R, JOIIN:ll)N.. !i.CIIlU;, L'l<'XlaroaATU'
INVf.STMENT SECURITIES SINCE 1~)39
MILLER, JOHNSON & KUEHN, L~CORPORATED
INV.ESTMENT SECURITIES
TABLE OF CONTENTS
Page
Summary of Offering................ .................................... .................................................................. 2
Principal City Officials............................................ .............................. ........ ................................. 3
Issuer's Certificate ..... ...... ............................................................... 4
................................................
Official Terms of Bond Sale ............ ........... ............................. ............ .............. ............................. 5 - 10
Authority and Security for the Bonds............................................................................................. 11
Purpose .............................................................................................................................. . . . . . . .. . . . .. II
Statutory Debt Limit ............. .... ...... .... ........... ................. ....... ........ ............... .................................. 12
Estimated Source and Application of Funds .................................................................................. 13
Future Financing............................................................................................................................. 14
Bond Rating........................................................................................................................ ............ 14
Litigation..................................................................................................................... .................... 14
Certification........ ..................... .... .... ...... ....... ........... ..... .... ..... ............ ........... ... ... ............................ 14
Legality.............................. ........... ......... .... ......... ..... ............................ ......... ... ...... ......................... 14
Continuing Disclosure.... ................ ............................... ....... .... ... ....... .................. ....... ................... 15
Book-Entry Only System................. ...................... ..... ....... ......... ............ ....... ........... ..... ... .............. 16
Tax Exemption and Other Tax Considerations...............................................................................17 - 18
The City of Prior Lake (General Information)................................................................................ 19 - 24
Minnesota Valuations, Tax Credits and Levy Limitations............................................................. 25 - 27
The City of Prior Lake (Economic and Financial Information) ..................................................... 28 - 35
Summary of Debt and Debt Statistics...... ............. ................... ....... .................... .... ...... ... ............... 36
Worksheet ... .... ... ............... ................ ............ .... .............. .................. ....... ..... ....... ...... .......... ........... 37
Proposal Form............................................................................................................................... .. 39
Appendix A - Proposed Form of Legal Opinion
Appendix B - Form of Continuing Disclosure Undertaking
Appendix B - City's Financial Report
SUMMARY OF OFFERING
$1,275,000
GENERAL OBLIGA TION IMPROVEMENT BONDS OF 1998
(Book-Entry Only)
.-\~10UNT - :>1.275,000.
ISSUER - City of Prior Lake. Minnesota (the" City").
SALE DATE - Wednesday, November 18. 1998.
OPENING - 1130 AM. Central Time. atJuran & Moody. a division of Miller. Johnson & Kuehn. Incorporated. 1100 Minnesota World Trade Center,
30 East Seventh Street. St. Paul. Minnesota 55101-4901, telephone: (651) 224-1500 or (800) 950-4666.
A WARD - 500 PM.. Central Time. at the Prior Lake Fire Hall. 16776 Fish Point Road Southeast, Prior Lake. Minnesota 55372-1714.
TYPE OF ISSUE - General Obligation Improvement Bonds of 1998 (the" Bonds"). See Authority and Security for the Bonds and Estimated Source
and ApplicatIon of Funds herein for additional information.
SECURITY & PURPOSE - These Bonds are being issued pursuant to Minnesota Statutes. Chapters 429 and 475. The Bonds are payable primarily from
special assessments against all benefitted property. The full faith and credit of the City is pledged to their payment and the
City has validly obligated itself to levy additional ad valorem taxes in the event of any deficiency in the Debt Service Ac-
count established for this issue. These taxes will be levied upon all of the taxable property within the City and withoutlimi-
tation of amount. The interest on the Bonds is not includable in the gross income of the recipient for purposes of United
States income tax or the State of Minnesota income tax (other than Minnesota corporate excise taxes measured by income)
according to present Federal and Minnesota laws. regulations. rulings and decisions. In addition, the proceeds of the Bonds
will be used to provide funds for the financing of assessable improvements within the City. including but not limited to
sanitary sewer and water line connections. storm sewer, streets, sidewalks. and curb & guner.
DATE OF ISSUE - December I. 1998.
INTEREST PAYABLE DATES - June 1. 1999, and semiannually thereafter on December I and June I and to registered owners of the Bonds appear-
ing of record in the bond register as of the close of business on the fifteenth (15th) day (whether or not a business
day) of the immediately preceding month.
MATURITIES -
12/01/99 $125,000
12/01/00 125,000
12/01/01
12/01/02
$125,000
125,000
12/01/03 $125,000
12101/04 125.000
12/01/05 $125.000
12/01/06 125,000
12/01/07 $125,000
12/01/08 150,000
A VERAGE MATURITY - 5.58824 years.
OPTIONAL REDEMPTION. At the option of the Issuer, Bonds maturing after December I, 2004, shall be subject to prior redemption on said date.
and any interest payment date thereafter, at a price of par and accrued interest. Redemption may be in whole or in pan of
the Bonds subject to prepayment. If redemption is in part, the Bonds remaining unpaid which have the latest maturity
date shall be prepaid first. If only pan of the Bonds having a common maturity date are called for prepayment, the Issuer
will notify DTC of the panicular amount of such maturity to be prepaid. DTC will determine by lot the amount of each
panicipant's interest in such maturity to be redeemed and each panicipant will then select by lot the beneticial owner-
ship interests is such maturity to be redeemed. Notice of such call shall be given by mailing a notice thereof by regis-
tered or certified mail at least thirty (30) days prior to the date fixed for redemption to the registered owner of each bond
to be redeemed at the address shown on the registered books.
BOOK-ENTRY SYSTEM - The Bonds will be issued as fully registered bonds and, when issued. will be registered in the name of Cede & Co., as
nominee of the Depository Trust Company, New York. New York. to which principal and interest payments on the Bonds
will be made. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any whole
multiple thereof. Purchasers of the Bonds will not receive physical delivery of bonds.
PA YING AGENT & REGISTRAR. The City will act as its own Paying Agent/Registrar. The Finance Director will be responsible for all maners
relating to the Bonds.
METHOD OF SALE - Sealed bids only. accompanied by a good faith deposit in the amount of $25.500 at a price of not less than $1.254,600 plus ac-
crued interest. See Official renru of Bond Sale herein for additional information.
T AX DESIGNATIONS.
NOT Private Activity Bonds. These Bonds are not "private activity bonds" as defined in ~141 of the Internal Revenue Code of 1986. as
amended (the Code).
NOT Oualified Tax-Exemot ObliRations . The Issuer WILL NOT designate these Bonds" qualified tax-exempt obligations" for purposes of
~26S(b)(3) of the Code.
LEGAL OPINION - Briggs and Morgan, Professional Association. 51. Paul and Minneapolis, Minnesota.
RATING. The City currently has a general obligation bond rating of" A2" assigned by Moody's Investors Service. The City ~ applying to
Moody's for a rating on these Bonds.
ESITMA TED CLOSING DATE - December 2, 1998.
PRIMARY CONTACT - Frank Boyles, City Manager, (612) 447-4230.
Ralph Teschner, City Finance Director, (612) 447-4230.
Steven J. Mattson. Vice President, Juran & Moody, (651) 291-3034 or (800) 950-4666.
-2-
------,- -
Name
Wes Mader
Tom Kedrowski
Jim Peterson
Peter Schenck
Dave Wuellner
Frank Boyles
Ralph Teschner
Campbell Knutson, P.A.-
S uesan Lea Pace
Greg Ilkka
CITY OF PRIOR LAKE
PRINCIPAL CITY OFFICIALS
Elected Officials
City Council
Position
Mayor
Council Member
Council Member
Council Member
Council Member
ADDointed Officials
City Manager
City Finance Director
City Consulting Attorney
City Engineer
Bond Counsel
Briggs and Morgan, Professional Association
S1. Paul and Minneapolis, Minnesota
Underwriter
Juran & Moody
a division of Miller. Johnson & Kuehn. Incorporated
S 1. Paul, Minnesota
-3-
Term EXDires
12/31/01
12/31/99
12/3 1/01
12/31/01
12/31/99
ISSUER'S CERTIFICATE
This Official Statement has been prepared in conformance with the Disclosure Guidelines for offerings
of municipal securities as promulgated by the Government Finance Officers Association (GFOA) of
the United States and Canada, insofar as possible.
The City of Prior Lake has retained the firm of Juran & Moody, St. Paul, Minnesota, to serve as un-
dernTiter with respect to the securities being offered in this Official Statement. All statements con-
tained herein, while not guaranteed, have been compiled from sources believed to be reliable in all
material respects.
Financial statements of the City are audited annually by an independent firm of certified public ac-
countants. Excerpts from the financial statements for the year ended December 31, 1997, along with
comparative December 31, 1996 figures, are included in this Official Statement and complete financial
statements are available for inspection at the Prior Lake City Hall as well as at the St. Paul office of
Juran & Moody.
The City of Prior Lake has always promptly met all payments of principal and interest on its indebted-
ness when due.
NO FINAL OFFICIAL STA TEMENT WILL BE PREPARED.
THE ISSUER WILL PROVIDE THE SUCCESSFUL
UNDERWRITER WITH AN ADDENDUM THA T TOGETHER
WITH THIS PRELIMINARY OFFICIAL STA TEMENT WILL
BE DEEMED THE FINAL OFFICIAL STA TEMENT BY
THE ISSUER.
THE DATE OF THIS OFFICIAL STATEMENT IS OCTOBER 27,1998.
-4-
----------,. -
O??ICIA~ TERMS OF
BOND SAL:::
$1,275,000
GENERAL OBLIGATION HiPROVEMENT
BONDS OF 1998
CITY OF PRIOR LAKE
SCOTT COUNTY
MI~TNESOTA
(Book Entry Only)
NOTICE IS HEREBY GIVEN that these bonds will be offered for sale
according to the following terms:
TIME AND PLACE:
Sealed proposals will be opened by the
City Manager, or designee, on Wednesday,
November 18, 1998, at 11:30 A.M.,
Central Time, at the offices of Juran &
Moody, 1100 Minnesota World Trade
Center, 30 East Seventh Street, in Saint
Paul, Minnesota 55101-2091. Considera-
tion of the proposals for award of the
sale will be by the City Council at its
meeting in the Prior Lake Fire Hall
beginning at 5:00 P.M., on the same day.
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 ("OTC"), New
York, New York, which will act as
securities depository of the bonds.
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 OTC and its
participants. Principal and interest
are payable by the Issuer to OTC or its
nominee as registered owner of the
bonds. Transfer of principal and
interest payments to participants of OTC
-5-
DATE OF ORIGINAL
ISSUE OF BONDS:
PURPOSE:
INTEREST PAYMENTS:
MATURITIES:
REDEMPTION:
984293.1
will be the responsibility of DTCi
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
proposal maker, as a condition of
delivery of the bonds, will be required
to deposit the bond certificates with
DTC.
December 1, 1998.
For the purpose of providing money to
finance the construction of various
improvements in the Issuer.
June 1, 1999, and semiannually
thereafter on June 1 and December 1 to
registered owners of :~e bonds appearing
of record in the bond register as of the
close of business on the fifteenth
(15th) day (whether or not a business
day) of the immediately preceding month.
December 1 in each of the years and
amounts as follows:
Year
Amount
1999-2007
2008
$125,000
150,000
All dates are inclusive.
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.
At the ootion of the Issuer, bonds
maturing~after December 1, 2004, shall
be subject to prior payment on said
date, and any interest payment date
thereafter, at a price of par and
accrued interest. Redemption may be ~n
whole or in part of the bonds subject to
-6-
,..,
prepayment. If yedemption is in part,
the bonds remaining unpaid which have
the latest maturity date shall be
prepaid first. If only part of the
bonds having a common maturity date aye
called for prepayment, the Issuer will
notify DTC of the particular amount of
such maturity to be prepaid. OTC will
determine by lot the amount of each
participant's interest in such maturity
to be redeemed and each participant will
then select by lot the beneficial
ownership interests in such maturity to
be redeemed. Notice of such call shall
be given by mailing a notice thereof by
registered or certified mail at least
thirty (30) days prior to the date fixed
for redemption to the registered owner
of each bond to be redeemed at the
address shown on the registered books.
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 Purchaser 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 ~~ paid by
the Purchaser.
DELIVERY:
Forty days after award subject to
approving legal opinion of Briggs and
Morgan, Professional Association, of St.
Paul and Minneapolis, Minnesota. Legal
opinion will be paid by the Issuer and
delivery will be anywhere in the
continental United States without cost
to the Purchaser at DTC.
TYPE OF PROPOSAL:
Sealed proposals of not less than
$1,254,600 and accrued interest on the
orincioal sum of $1,275,000 from date of
original issue of the bonds to date of
delivery must be filed with the
undersigned prior to the time of sale.
prooosals must be unconditional except
as to legality. A certified or
984293.1
-7-
cashier's check (the "DeDosit") in the
amount of $25,500, payabie to the order
of the Finance Director of the Issuer,
or a Financial Surety Bond complying
with the provisions below, must
accompany each proposal, to be forfeited
as liquidated damages if proposal maker
fails to comply with accepted proposal.
Proposals for the bonds should be
delivered to Juran & Moodv, and
addressed to: -
Ralph Teschner
Finance Director
Prior Lake City Hall
16200 Eagle Creek Avenue
Prior Lake, Minnesota 55372-1714
If a Financial Surety Bond is used, it
must be from an insurance company
licensed to issue such a bond in the
State of Minnesota, and preapproved by
the Issuer. Such bond must be submitted
to Juran & Moody prior to the opening of
the proposals. The Financial Surety
Bond must identify each proposal maker
whose Deposit is guaranteed by such
Financial Surety Bond. If the bonds are
awarded to a proposal maker using a
Financial Surety Bond, then that
purchaser is required to submit its
Deposit to Juran & Moody in the form of
a certified or cashier's check or wire
transfer as instructed by Juran & Moody
not later than 3:30 P.M., Central Time,
on the next business day following the
award. If such Deposit is not received
by that time, the Financial Surety Bond
may be drawn by the Issuer to satisfy
the Deposit requirement. The Issuer
will de=osit the check of the ourchaser,
the amount of which will be deducted at
settlement and no interest will accrue
to the ourchaser. In the event the
purchas~r fails to comply with the
accepted proposal, said amount will be
retained by the Issuer. No proposal can
be withdrawn after the time set for
receiving proposals unless the meeting
of the Issuer scheduled for award of the
bonds is adjourned, recessed, or
984293.1
-8-
[{Jl.. :'::: S ;
INFORMATION FROM
PURCHASER:
NOT QUALIFIED TAX
EXEMPT OBLIGATIONS:
CONTINUING DIS-
CLOSURE u~DERTAKING:
F-.WARD:
98429j 1
continued to another date without award
of the bonds having been made.
All rates must be in integral multiples
of 1/20th or 1/8th of 1%. No limitation
is placed upon the number of rates which
may be used. All bonds of the same
maturity must bear a single uniform rate
from date of issue to maturity.
The successful purchaser 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.
The Issuer will not designate the
bonds as qualified tax exempt
obligations for purposes of Section
265(b) (3) of the Internal Revenue Code
of 1986, as amended.
The Issuer will covenant in the
resolution awarding the sale or the
bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be
provided, annual financial information,
including audited financial statements
of the Issuer, and notices of certain
material events, as required by SEe Rule
15c2-12.
Award will be made solely on the basis
of lowest dollar interest cost,
determined by addition or any discount
to and deduction of any premium from the
total interest on all bonds from their
date to their stated maturity.
-9-
The Issue~ ~eserves the right to reject any and all proposals, to
waive informalities and to adjourn the sale.
Dated: October 19, 1998.
BY ORDER OF THE CITY COL~CIL
/s/ Frank Bovles
City Manager
Additional information
may be obtained from:
JURAN & MOODY
1100 Minnesota World Trade Center
30 East Seventh Street
St. Paul, Minnesota 55101-2091
Telephone No.: (612) 224-1500
984293.1
-10-
AUTHORITY AND SECURITY FOR THE BONDS
51,275,000 General Obligation Improvement Bonds of 1998
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. At closing, Bond
Counsel will render an opinion that the Bonds are valid and binding general obligations of the City of
Prior Lake. The Bonds are payable primarily from special assessments against all benefitted property
and the full faith and credit of the City is pledged to their payment. These taxes will be levied upon all
of the taxable property within the City and without limitation of amount. The interest on the Bonds is
not includable in the gross income of the recipient for purposes of United States income tax or the State
of Minnesota income tax (other than Minnesota corporate excise taxes measured by income) according
to present Federal and Minnesota laws, regulations, rulings and decisions. See Appendix A - Proposed
Form of Legal Opinion.
PURPOSE
51,275,000 General Obligation Improvement Bonds of 1998
The purpose of the Bonds is to provide funds for the financing of assessable improvements within the
City, including but not limited to sanitary sewer and water line connections, storm sewer, streets, side-
walks, and curb & gutter.
-11-
STATUTORY DEBT LIMITI
Minnesota Statutes, S 475.53, states that a city may not incur or be subject to a net debt in excess of
two percent (2%) of its estimated market value. Net debt is, with limited exceptions, debt paid solelv
from ad valorem taxes. .
Computation of Legal Debt Margin as of October 16, 1998, plus these issues:
1997/1998 Estimated Market Value
Times 2% of Estimated Market Value
$ 690,317,000
x .02
Statutory Debt Limit
Amount of debt applicable to debt limit:
Net Bonded Debt (includes this issue)
Less: General Obligation Improvement Bonds (includes this issue)
General Obligation Refunding Bonds
General Obligation Crossover Refunding Bonds
General Obligation Water and Sewer Revenue Bonds
Total debt applicable to debt limit
Legal debt margin
$ 13.806.340
$ 22,100.000.
( 7,020.000)
( 2,515.000)
( 2,185.000)
( 235.000)
$ 10.145.000
$ 3.661.340
I Total bonded debt. for purposes of statutory debt limit calculations, includes all general obligations issued by the City as well as all
debt issued by the EDA that is backed by the general taxing powers of the City.
The outstanding (i) $1,850,000 of the outstanding $2.085,000 of the $2,200,000 General Obligation Water and Sewer Revenue Bonds
of 1995. dated November I, 1995 and (ii) $7,025,000 of the outstanding $7,800,000 of the $7,800,000 General Obligation Park Bonds
of 1997. dated May I, 1997 have been deducted to arrive at the net bonded debt.
-12-
ESTIMATED SOURCE AND APPLICATION OF FUNDS
51,275,000 General Obligation Improvement Bonds of 1998
I. Source of Funds
General Obligation Improvement Bonds of 1998
II. Application of Funds
Estimated Costs to be Financed:
Project Costs to be Financed
Add Estimated Issuance Costs:
[Bond counsel, fiscal fee and bond
rating fee]
Underwriter's Discount (1.60% of par)
Total Estimated Issuance Costs
Par Amount of Bond Issue
-\3-
$21,000
20.400
$1,233.600
41.400
$1.275.000
$1.275.000
FUTURE FINANCING
The City does not anticipate the need to finance any capital improvements with the issuance of general
obligation bonds within the next two months.
BOND RATING
The City currently has a general obligation bond rating of "A2" assigned by Moody's Investors
Service. The City will be applying to Moody's for a rating on these Bonds.
LITIGA TION
The City Consulting Attorney, Campbell Knutson, P.A., Suesan Lea Pace, indicated as of October 20,
1998, that no litigation is pending or threatened that would jeopardize the creditworthiness of the City
of Prior Lake. Claims or other actions in which the City is a defendant are covered by insurance or of
insignificant amounts.
CERTIFICATION
The City will furnish a statement to the effect that this Official Statement, to the best of their knowl-
edge and belief, as of the date of sale and the date of delivery, is true and correct in all material re-
spects, and does not contain any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading.
LEGALITY
Legal matters incident to the authorization and issuance of the Bonds are subject to the approving
opinion of Bond Counsel as to validity and tax exemption. A copy of such opinion will be available at
the time of the deliverY of the Bonds. See Appendix A - Proposed Form of Legal Opinion.
Bond Counsel has not participated in the preparation of this Official Statement and is not passing upon
its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine,
or verify, any of the financial or statistical statements or data contained in this Official Statement, and
will express no opinion with respect thereto.
-14-
. I
CONTINUING DISCLOSURE
In order to assist the Underwriters in complying with SEC Rule 15c2-12 (the "Rule"), pursuant to the
Award Resolution and a Form of Continuing Disclosure Undertaking to be executed on behalf of the
City on or before Bond Closing, the City has and will covenant (the" Undertaking") for the benefit of
holders of the Bonds to provide certain financial information and operating data relating to the City to
certain information repositories annually, and to provide notices of the occurrence of certain events
enumerated in the Rule to certain information repositories or the Municipal Securities Rulemaking
Board and to any state information depository. The specific nature of the Undertaking, as well as the
information to be contained in the annual report or the notices of material events is set forth in the
Form of Continuing Disclosure Undertaking in substantially the form attached hereto as Appendix B.
The City has never failed to comply in all material respects with any previous undertakings under the
Rule to provide annual reports or notices of material events. A failure by the City to comply with the
Undertaking will not constitute an event of default on the Bonds (although holders will have an en-
forceable right to specific performance). Nevertheless, such a failure must be reported in accordance
with the Rule and must be considered by any broker, dealer or municipal securities dealer before rec-
ommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure
may adversely affect the transferability and liquidity of the Bonds and their market price.
The Issuer will covenant in the resolution awarding the sale of the Bonds and in a Form of Continuing
Disclosure Undertaking to provide, or cause to be provided, annual financial information, including
audited financial statements of the Issuer, and notices of certain material events, as required by SEC
Rule 15c2-12. Please see Appendix B - Form of Continuing Disclosure Undertaking for further infor-
mation regarding continuing disclosure for the City of Prior Lake, Minnesota.
-15 -
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company (the" DTC"), New York, New York, will act as securities depository
for the Bonds. Upon issuance of the Bonds, one fully registered Bond will be registered in the name of
Cede & Co., as nominee for DTC, for each maturity of the Bonds as set forth on the cover page hereof,
each in the aggregate principal amount of such maturity. So long as Cede & Co. is the registered owner
of the Bonds, references herein to the Owners of the Bonds shall mean Cede & Co. and shall not mean
the Beneficial Owners of the Bonds.
DTC is a limited purpose trust company organized under the laws of the State of New York, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of 917 A of the Secu-
rities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants (the
"DTC Participants") and to facilitate the clearance and settlement of securities transactions among
DTC Participants in such securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities Bonds. DTC Partici-
pants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system
is also available to others such as banks, brokers, dealers, and trust companies that clear through or
maintain a custodial relationship with DTC Participants, either directly or indirectly (the" Indirect Par-
ticipants" ).
The interest of each of the Beneficial Owners of the Bonds will be recorded through the records of a
DTC Participant or Indirect Participant. Each DTC Participant will receive a credit balance on the rec-
ords of DTC. Individual purchases will be made in the denomination of $5,000 or any whole multiple
thereof. Beneficial owners of Bonds will receive a written confirmation of their purchases providing
details of the Bonds acquired. Beneficial owners of Bonds will not receive Bonds representing their
ownership interest in the Bonds, except as specifically provided below.
Transfers of beneficial ownership interest in the Bonds will be accomplished by book entries made by
DTC and, in turn, by the DTC Participants who act on behalf of the Indirect Participants and the Bene-
ficial Owners of Bonds. For every transfer and exchange of beneficial ownership of Bonds, the benefi-
cial owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that
may be imposed in relation thereto.
The City will make payments of principal and interest on the Bonds to DTC or its nominee, Cede &
Co., as registered owner of the Bonds. Upon receipt of moneys, DTC's current practice is to immedi-
ately credit the accounts of the DTC Participants in accordance with their respective holdings shown on
the records of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners will
be governed by standing instructions and customary practices such as those which are now the case for
municipal securities held in bearer form or registered in "street name" for the accounts of customers
and will be the responsibility of such DTC Participants or Indirect Participants and not the responsibil-
ity of DTC or the Issuer, subject to any statutory and regulatory requirements as may be in effect from
time to time.
-16-
.. ,e
TAX EXEMPTION AND OTHER TAX CONSIDERATIONS
THE $1,275,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 1998 WILL NOT BE
BANK QUALIFIED AND INTEREST ON THE BONDS IS EXCLUDED FROM GROSS INCOME
FOR PURPOSES OF UNITED STATES INCOME TAX AND IS EXCLUDED, TO THE SAME
EXTENT, IN COMPUTING BOTH GROSS AND TAXABLE NET INCOME FOR PURPOSES OF
STATE OF MINNESOTA INCOME TAX (OTHER THAN MINNESOTA FRANCHISE TAXES
MEASURED BY INCOME AND IMPOSED ON CORPORATIONS AND FINANCIAL
INSTITUTIONS.)
Tax Exemption
At closing Bond Counsel will render an opinion that, at the time of their issuance and delivery to the
original purchaser, under present federal and State of Minnesota laws, regulations, rulings and deci-
sions (which excludes any pending legislation which may have a retroactive effect), the interest on
each Bond is excluded from gross income for purposes of United States income tax and is excluded, to
the same extent, in computing both gross income and taxable net income for purposes of State of
Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on cor-
porations and financial institutions), and that interest on the Bonds is not an item of tax preference for
purposes of computing the federal alternative minimum tax imposed on individuals and corporations or
the Minnesota alternative minimum tax applicable to individuals, estates or trusts; provided that inter-
est on the Bonds is subject to federal income taxation to the extent it is included as part of adjusted cur-
rent earnings for purposes of computing the alternative minimum tax imposed on certain corporations.
No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences
caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the
Bonds. Preservation of the exclusion of interest on the Bonds from federal gross income and state gross
and taxable net income, however, depends upon compliance by the Issuer with all requirements of the
Internal Revenue Code of 1986, as amended, (The" Code") that must be satisfied subsequent to the is-
suance of the Bonds in order that interest thereon be (or continue to be) excluded from federal gross
income and state gross and taxable net income.
The Issuer will covenant to comply with requirements necessary under the Code to establish and
maintain the Bonds as tax-exempt under S 103 thereof, including without limitation, requirements re-
lating to temporary periods for investments and limitations on amounts invested at a yield greater than
the yield on the Bonds.
Property and Casualty Insurance Companies
Property and casualty insurance companies are required to reduce the amount of their loss reserve de-
duction by 15% of the amount of tax-exempt interest received or accrued during the taxable year on
certain obligations acquired after August 7, 1986, including interest on the Bonds.
Foreign Insurance Companies
Foreign companies carrying on an insurance business in the United States ~e su~ject to a. tax on in-
come which is effectively connected with their conduct of any trade or busmess 10 the Umted States,
including" net investment income." Net investment income includes tax-exempt interest such as inter-
est on the Bonds.
Branch Profits Tax
A foreign corporation is subject to a branch profits tax equal to 30% of the "dividen.d equivalent
amount" for the taxable year. The" dividend equivalent amount" is the foreign corporation's .. effec-
tively connected earnings and profits," adjusted for increase or decrease in "U.S. n~t equity." A
branch's earnings and profits may include tax-exempt municipal bond interest, such as mterest on the
Bonds.
-17-
Passive Investment Income of S Corporations
Passive investment income, including interest on the Bonds, may be subject to federal income taxation
under ~ 1375 of t~e Code for an S corporation that has Subchapter C earnings and profits at the close of
the taxable year If more than 25% of the gross receipts of such S corporations is passive investment
income.
Social Security and Railroad Retirement Benefits
Certain recipients of social security benefits and railroad retirement benefits are required to include a
portion of such benefits within gross income by reason of receipt of interest on tax exempt obligations,
including the Bonds.
Exclusion Not Constitutionally Required; Pending Legislation
The United States Supreme Court ruled in 1988 that the exclusion from gross income of interest on
state and local bonds is not required by the United States Constitution. The Constitution of the State of
Minnesota likewise does not require the exclusion from gross income or taxable net income of interest
on bonds of Minnesota issuers. Hence, future federal and/or state laws could cause the inclusion of in-
terest on bonds, including the Bonds, in gross income of taxable net income, or could otherwise cause
such interest to be taxed or to be included in the calculation of other income which is taxed.
NOT Qualified Tax-Exempt Obligations
The City WILL NOT designate the Bonds as "qualified tax-exempt obligations" for purposes of
g265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial insti-
tutions to deduct from income for federal income tax purposes, interest expense that is allocable to car-
rying and acquiring tax-exempt obligations. "Qualified tax-exempt obligations" are treated as acquired
by a financial institution before August 8, 1986. Interest allocable to such obligations remains subject
to the 20% disallowance under prior law.
General
The preceding is not a comprehensive list of all federal tax consequences which may arise from the re-
ceipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may otherwise
affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recipient based
on the particular taxes to which the recipient is subject and the particular tax status of other items of in-
come or deductions. Bond Counsel expresses no opinion regarding any such consequences. All pro-
spective purchasers of the Bonds are advised to consult their own tax advisors as to the tax conse-
quences of, or tax considerations for, purchasing or holding the Bonds.
-18-
THE CITY OF PRIOR LAKE
GENERAL INFORMATION
Access and Transoortation
The City of Prior Lake, situated in north central Scott County, is located approximately 24 miles
sout~~est of Minneapolis and is part of the Twin Cities Metropoli~an Area. Prior Lake is bordered by
the cIties of Shakopee on the north and Savage on the east. Access IS provided via State Highway 13 as
well as County Roads 12,21,23,39,42,44,81,82 and 87. In addition, Interstate Highway 35 and 494
lie just five and seven miles east and north of the City, respectively. There are approximately 66.5
miles of paved streets within the City's corporate limits.
Tax Base
For taxes collectible in 1998, the tax breakdown is 76.59% residential homestead (non-agriculture),
1.15% agricultural, .31% public utility, 9.23% commercial & industrial, 8.80% non-homestead
residential, 1.19% seasonal commercial & residential and 2.73% personal property.
Area
10,240 Acres
(16.00 Square Miles)
Pooulation
1970 Census
1980 Census
1990 Census
1998 Estimate
1,114
7,284
11,682
14,700
Municioal Facilities
Revenue Producing Facilities:
The Waterworks System has approximately 4,730 ml1Ilicipal connections that consists of two elevated
water storage facilities with a combined total of 1,750,000 gallons as well as three wells that have the
capacity to pump 3,900 gallons per minute or 5,616,000 gallons per day. Average demand is 1,900,000
gallons per day while peak demand reaches 3,300,000 gallons per day. Total tap water hardness is 19
parts per million.
The Sewer System has approximately 4,739 municipal connections. The sanitary sewer disposal nee~s
are served by the Metropolitan Waste Control Commission with 29 lift stations. Average demand IS
23,000,000 gallons per day while peak demand reaches 60,000,000 gallons per day.
-19-
The 1997 audited g~~ss water and sewer utility operating revenues w~re $2,174.965 with the average
water and sewer utility charge per year per household and commercial connection at approximately
$459. The residential and industrial water rate is $1.15 per thousand gallons. The sewage use charge
for Metropolitan Council Environmental Service1 is $1.32 per thousand gallons and the City residential
charge is $2.85 per thousand gallons.
Other Municipal Services:
Fire and Rescue Deoartment. The City currently has a 38-member volunteer fire and rescue department
consisting of one tanker, two fire trucks, an aerial fire truck, two pumpers, one ambulance/emergency
vehicle as well as other miscellaneous fire fighting and rescue equipment.
Police Deoartment. The City operates its own police department with one chief of police, one lieuten-
ant, three sergeants, two detectives, twelve officers, one part-time community service officer and four
secretaries-two full-time and two part-time. In addition, the Department owns and operates a total of
twelve utility, marked and unmarked police vehicles.
Parks and Recreation. The City currently operates approximately 32 designated park sites plus a 70-
acre athletic complex encompassing 464 acres. Facilities include an indoor swimming pool, enclosed
picnic shelters with picnic tables, walkinglsnowmobilinglcross-country ski trails,
hockey/skatinglbroomball rinks, basketball courts, baseball/softball fields, football fields and general
playground equipment.
City Government
The City of Prior Lake, organized in 1891, is a Minnesota Statutory City with an Optional Plan B form
of government. It has a mayor elected at large for a four-year term and four council members also
elected at large for four-year terms. The professional staff is appointed and consists of a city manager,
city finance director, city consulting attorney and city engineer.
EmDlovee Pension Proarams
The City employs 71 people-65 full-time and 6 part-time. The pension plan covers 71 of the City's
employees.
The City participates in contributory pension plans through the Public Employees Retirement Associa-
tion (PERA) under Minnesota Statutes, Chapter 353, which covers substantially all employees except
those qualifying as temporary or seasonal employees. This plan is state administered and is coordinated
with the Federal Social Security Retirement Plan (FICA). State statute requires the City to fund current
service pension cost as it accrues. Prior service cost is being amortized over a period of 40 years and is
being funded by payment determined as a portion of gross wages paid by all employers participating in
the State Association. The amount of unfunded prior service cost attributed to individual reporting en-
tities is not determinable.
The City's contributions to PERA for the past six years have been as follows:
Year
1997
1996
1995
Amount
Year
1994
1993
1992
Amount
$194,625
177,354
170,012
$152,499
146,149
129,744
1 The Metropolitan Council Environmental Service (MCES) issues a fee that is assessed to the City for treating the City's sewage
system.
-20-
,.
The volunteer firemen of the City are eligible for pension benefits through membership in the
Prior Lake Firemen' s Relief Association organized under Minnesota Statutes, Chapter 69, and adminis-
tered by a separate Board elected by the membership. This plan is funded by state aids investment
earnings and City contributions. State statute requires this plan to fund current service cost 'as it accrues
and prior service cost to be amortized over a period of ten years.
All members of the Prior Lake Fire Department who have served for at least 20 years and have reached
the age of 50 years shall be paid a pension equal to the sum of $2,200 per year' of service. Volunteers
who have served a minimum of 10 years but less than 20 years shall be paid a pension at age 50 ac-
cording to the following schedule:
10 years - 60%
11 years - 64%
12 years - 68%
13 years - 72%
14 years - 76%
15 years - 80%
16 years - 84%
17 years - 88%
18 years - 92%
19 years - 96%
20 years - 100%
Residential Development
There are approximately 4,153 single-family homes and 948 multifamily units located within the City.
In addition, there have been 134 single-family homes and 34 multifamily units constructed within the
past twelve months.
The status of residential subdivisions constructed or planned within the past three years is as follows:
Subdivision Name
Cardinal Ridge-3rd Addition
Cardinal Ridge-4th Addition
Knob Hill
Preserve at The Wilds
Westbury Ponds-l 51 Addition
Westbury Ponds-2nd Addition
Wilderness Ponds
Windsong on the Lake-2nd Addition
Woodridge Estates-3 rd Addition
Cardinal Ridge-4th Addition
Eagle Creek Villas
Pheasant Meadows
The Wilds-2nd Addition
West Edge Estates-2nd Addition
Westbury Ponds-3rd Addition
Cardinal Rid~e-5th Addition
Knob Hill-2n Addition
Maple Hill_2nd Addition
North Shore Oaks-7th Addition
Wilderness Ponds-2nd Addition
The Wilds-3rd Addition
The Wilds-4th Addition
Windstar
Number of
Dwellings
39
41
49
9
36
7
49
7
33
35
45
24
24
12
17
25
46
28
13
45
38
8
21
-21-
Year
Constructed
1995
1995
1995
1995
1995
1995
1995
1995
1995
1996
1996
1996
1996
1996
1996
1997
1997
1997
1997
1997
1997
1997
1997
Status
(% Develoved)
98% Complete
93% Complete
49% Complete
0% Complete
94% Complete
100% Complete
73% Complete
14% Complete
55% Complete
43% Complete
58% Complete
33% Complete
29% Complete
100% Complete
24% Complete
34% Complete
12% Complete
0% Complete
8% Complete
11 % Complete
0% Complete
0% Complete
24% Complete
The following pending residential subdivisions that are either in the preliminary or final stages for
1998 are as follows:
Subdivision Name
Pheasant Meadow-2nd Addition
Red Oaks-2nd Addition .
Creekside Estates (preliminary)
Glynwater (preliminary)
Northwood Oaks Estates (preliminary)
The Harbor-8th Addition ~fina1)
Windsong on the Lake-3 Addition
(preliminary)
Woodridge Estates-4lh Addition (final)
Number of Year
Dwellinfls Constructed
18 1998
2 1998
2 1998
121 1998
48 1998
3 1998
1 1998
2 1998
Status
(% Develooed)
0% Complete
0% Complete
N/A
N/A
N/A
N/A
N/A
N/A
Industrial Park(s)
The City of Prior Lake has two industrial parks totaling approximately 100 acres. Currently there are
15 enterprises occupying the parks, the larger of which include Scott Rice Telephone, E.M. Products,
Keyland Homes and Prior Lake Machine.
Commercial/Industrial DeveloDment
Building construction and commercial/industrial growth completed within the past three years have
been as follows:
Name
A ward Printing
American Glass/Metro Cabinets
Becker Arena Products
Burdick No.3 Office Building!
Carol's Furniture
City of Prior Lake
Construction 701
E.M. Products
Fairview Medical Clinic
Great Clips Beauty Salon
Holiday Station
Keyland Homes
Lemke Office Building!
NBC Products
Park Nicollet Clinic!
Speiker Building
Wilds Clubhouse
Product/
Service
Printing Publication Company
Glass Replacement/Cabinets
Ice Arena Mfg. Products
Office
Retail
City Maintenance Garage
Office/Warehouse
Industrial Generator Muffler
Medical Services
Hair Products
Gas/Convenience
Construction Company
Retail/Office
Air Filtration Systems
Medical Services
Office Space
Golf Course
Description
of Construction
New Construction
New Construction
New Construction
New Construction
Office Expansion
Office Expansion
New Construction
New Construction
New Construction
New Construction
Store Expansion
Millwork Expansion
Office Expansion
New Construction
New Construction
New Construction
New Multi-purpose Clubhouse
Pending plans for commercial/industrial development include the construction of Northgate Plaza
which will have retail/office space.
I New building construction completed within the past twelve months.
-22-
~~-
Buildina Permits
Building permits issued for the past six years and a portion of the current year have been as follows:
Commercial/
Industrial Residential Total Total
Number of Number Number Permit
Year of Permits of Permits of Permits Valuation
1998
(as of 09/30/98) 40 852 892 $25,838,069
1997 55 536 591 29,463,935
1996 56 608 664 48,541,444
1995 60 505 565 38,555,777
1994 38 517 555 34,522,273
1993 26 420 446 25,653,479
1992 10 324 334 15,906,528
Financial Institutions
Financial services are provided by U.S. Bank National Association (branch of Minneapolis), Marquette
Bank, National Association (branch of Golden Valley), Prior Lake State Bank and South Metro Federal
Credit Union. Reported deposits/assets for Prior Lake State Bank and South Metro Federal Credit
Union as of December 31,1997, are $74,506,000 and $13,719,000, respectively. Reported deposits for
U.S. Bank National Association and Marquette Bank, National Association are not available at this
time. All deposit and asset information was obtained from the latest edition (spring 1998) of the
McFadden Upper Midwest Financial DirectoryTM.
Education
The City of Prior Lake is served by Independent School District No. 719, Prior Lake and Independent
School District No. 720, Shakopee. Independent School District No. 719, Prior Lake, operates one
early childhood and kindergarten school, Ponds Edge, with a 1998/1999 enrollment of approximately
295. The District also operates three elementary schools, Five Hawks Elementary, grades three and
four, Grainwood Elementary, grades five and six, and Westwood Elementary, grades one and two; a
junior high school, grades seven and eight; and a senior high school, grades nine through twelve. Com-
bined enrollment at the five schools for the 1998/1999 school year is approximately 3,697.
Independent School District No. 720, Shakopee, operates two elementary schools, grades kindergarten
through four, one elementary school, grades five and six, a junior high school, grades seven through
nine and a senior high school, grades ten through twelve. Combined enrollment at the five schools for
the 1998/1999 school year is approximately 3,162.
In addition, there are three parochial schools located within Prior Lake; Prior Lake Christian,
St. Michael's Catholic and St. Paul's Lutheran. Prior Lake Christian consists of grades kindergarten
through twelve with an enrollment of 55, St. Michael's Catholic is comprised of grades kindergarten
through eight with an enrollment of 372 and St. Paul's Lutheran operates grades kindergarten t~ough
six with an enrollment of 33. Further, St. Michael's Catholic and St. Paul's Lutheran are accredited by
the Minnesota Nonpublic School Accrediting Association.
-23 -
Post secondary education is available at the following schools:
School
Hennepin Technical College
Normandale Community College
University of Minnesota
University of S1. Thomas
~
Technical College
Community College
Public University
Private University
Location
Eden Prairie, Minnesota
Bloomington, Minnesota
Minneapolis, Minnesota
S1. Paul, Minnesota
Distance
from
Prior Lake
9 Miles
9 Miles
20 Miles
28 Miles
Maior EmDlovers
The City has 40 retail or commercial enterprises in the downtown area employing an estimated 250
people. In addition, there is one 84,000 square foot shopping center located within the City with 19
stores employing approximately 80 people.
The following is a list of the ten largest employers within the City:
Commercial/Industrial
Mystic Lake Casino
ISD No. 719, Prior Lake
County Market
City of Prior Lake I
Edina Realty
Prior Lake State Bank
Norex Corp.
E.M. Products2
Scott Rice Telephone2
Keyland Homes2
Product/Service
Entertainment
Public Education
Grocery Store
City Government
Real Estate
financial Services
Computer Sales
Noise Abatement Equipment
Communications
Millwork Company
Number of
Emvlovees
3,900
565
153
71
46
43
33
31
28
26
LaraestTaxDavers
The following is a list of the ten largest taxpayers within the City as reported by Scott County:
Name
MN Valley Electric Cooperative
Northern State Power Company
Minnesota Gas Company
Restan LLC
Individual
Shamrock Recreational Properties
Inc.
Midway National Bank
Kestrel Properties LLP
SRMM Investments
Individual
Property
Class
Gas Utility
Gas Utility
Water Utility
Agricultural
Preferred Industrial
Residential (4 or
more units)
Apartments
Apartments
Apartments
Industrial
I Constitutes 6S full-time and six part-time employees.
2 Located within one of the City's industrial parks.
3 Before the tax increment and fiscal disparity adjustments.
-24-
1997/1998
Estimated
Market
Value
$2,373,000
2,248,500
2,312,500
2,172,300
1,688,300
2,162,000
1,700,000
1,938,000
1,102,500
1,381,600
1997/1998
Net Tax
Cavacitv
$166,730
150,744
137,806
121,324
97,704
79,460
71,352
59,887
46,273
42,832
Percent of
Real Property
To Net
Tax Capacity
($10.224.779)3
1.63%
1.47
1.35
1.19
.96
.78
.70
.59
.45
.42
MINNESOTA VALUATIONS. TAX CREDITS AND LEVY LIMITATIONS
:\'tarket Value
Acc?rding ~o Minnesota Statutes, Chapter 273, all real property subject to taxation is to be appraised at
maXImum Intervals of four years. All real property becoming taxable in any year is listed at its esti-
mated market value on January 2 of that year. The estimated market value is the County Assessor's
appraisal of the worth of the property.
Indicated Market Value
The Minnesota Department of Revenue conducts the Real Estate Assessment/Sales Ratio Studv to ac-
complish equalization of property valuation in the State of Minnesota and to determine the probable
selling price of a property. The study is a three-year average of sale prices as related to the latest asses-
sor's estimated market value. The indicated market value is determined by dividing the estimated mar-
ket value by the Assessment/Sales Ratio for the city as determined by the Department of Revenue.
Net Tax Capacity
Starting with taxes payable in 1990, net tax capacity replaced gross tax capacity as the measure of tax-
able value. To determine net tax capacity, the estimated market value is multiplied by a factor called
"class rate," that varies depending on the use of the property. Net tax capacity differs from gross tax
capacity primarily in setting lower values for homesteaded residential and agricultural properties. Net
tax capacity is multiplied by the" local tax rate" to determine taxes payable.
Tax Cycle
Minnesota local government ad valorem property taxes are extended and collected by the various
counties within the state. The process begins in the fall of every year with the certification, to the
county auditor, of all local taxing districts' property tax levies. Local tax rates are calculated by divid-
ing each taxing district's levy by its net tax capacity. One percentage point of local tax rate represents
one dollar of tax per $100 net tax capacity. A list of taxes due is then prepared by the county auditor
and turned over to the county treasurer on or before the first Monday in January.
The county treasurer is responsible for collecting all property taxes within the county. Real estate tax
statements are to be mailed out no later than January 31 and personal property tax statements no later
than February 15. The due dates for payment of real property taxes are one-half on or before May 15
and one-half on or before October 15. Personal property taxes become due one-half on or before
February 28 and one-half on or before June 30.
Following each settlement (March 5, June 5, and November 5 of each year), the county treasurer must
redistribute property tax revenues to the local taxing districts in proportion to their tax capacity ratios.
Delinquent property taxes are penalized at various rates depending on the type of property and the
length of delinquency.
Tax Credits
Prior to 1990, taxes on homestead residential and agricultural property were reduced by a direct sub-
sidy to the taxpayer. Beginning in 1990, the homestead credit has been eliminated. The state subsidy is
now accomplished through lower class rates to homesteaded classifications of property and increased
state aids paid directly to local taxing districts. This new system is intended to have generally the same
impact as the former homestead credit system.
-25 -
Tax Levies for General Obligation Bonds
(:\Iinnesota Statutes, ~475.61)
The governing body of any municipality issuing general obligations shall, prior to delivery of the obli-
gations, levy by resolution a direct general ad valorem tax upon all taxable property in the municipality
to be spread upon the tax rolls for each year of the term of the obligations. The tax levies for all years
shall be specified and such that if collected in full they, together with estimated collections of special
assessments and other revenues pledged for the payment of said obligations, will produce at least five
percent in excess of the amount needed to meet when due the principal and interest payments on the
obligations. Such resolution shall irrevocably appropriate the taxes so levied and any special assess-
ments or other revenues so pledged to the municipality's debt service fund or a special debt service
fund or account created for the payment of one or more issues of obligations. The governing body may,
at its discretion, at any time after the obligation have been authorized, adopt a resolution levying only a
portion of such taxes, to be filed, assessed, extended, collected and remitted as hereinafter provided,
and the amount or amounts therein levied shall be credited against the tax required to be levied prior to
delivery of the obligations.
The recording officer of the municipality shall file in the office of the county auditor of each county in
which any part of the municipality is located a certified copy of the resolution, together with full in-
formation regarding the obligations for which the tax is levied. No further action by the municipality is
required to authorize the extension, assessment and collection of the tax, but the municipality's liability
on the obligations is not limited thereto and its governing body shall levy and cause to be extended,
assessed and collected any additional taxes found necessary for full payment of the principal and inter-
est. The auditor shall annually assess and extend upon the tax rolls the amount specified for such year
in the resolution, unless the amount has been reduced as authorized below or, if the municipality is lo-
cated in more than one county, the portion thereof that bears the same ratio to the whole amount as the
tax capacity value of taxable property in that part of the municipality located in his county bears to the
tax capacity value of all taxable property in the municipality.
Tax levies so made and filed shall be irrevocable, except that if the governing body in any year makes
an irrevocable appropriation to the debt service fund of moneys actually on hand or if there is on hand
any excess amount in the debt service fund, the recording officer may certify to the county auditor the
fact and amount thereof and the auditor shall reduce by the amount so certified the amount otherwise to
be included in the rolls next thereafter prepared.
All such taxes shall be collected and remitted to the municipality by the county treasurer as other taxes
are collected and remitted, and shall be used only for payment of the obligations on account of that
levied or to repay advances from other funds used for such payments, except that any surplus remain-
ing in the debt service fund when the obligations and interest thereon are paid may be appropriated to
any other general purpose by the municipality.
Levy Limitations
The 1997 Minnesota Legislature (Laws 1997, Chapter 231, Article 3) established levy limitations for
all counties and for all cities over 2,500 population which will be effective for taxes collected in 1998
and 1999. The computations oflevy limits were determined by the Commissioner of Revenue and were
are available for each City and County as of August 1, 1997. The levy limits will not apply to certain
"special levies" which will include levies to pay debt service. See Property Tax Classifications on
following page for partial summary of 1998/1999 class rates percentages.
Class Rate
The factors (class rates) for converting estimated market value to net tax capacity represent a basic
element of the State's property tax relief system and are therefore subject to annual revisions by the
State Legislature.
- 26-
-~~~...- -~
,
The following is a partial summary of these factors:
Property Tax Classifications
1995/1996 1996/1997 1997/1998 1998/1999
Class Rate Class Rate Class Rate Class Rate
Tvoe of Prooertv Percent Percent Percent Percent
Residential Homestead
Under $72,000 1.000% 1.000%
Over $72,00 I 2.000 2.000
Under $75,000 1.000% 1.000%
Over $75,001 1.850 1.700
Commercial/Industrial Public Utility
Under $100,000 3.000 3.000
Over $100,001 4.600 4.600
Under $150,000 2.700 2.450
Over $150,00 I 4.000 3.500
Agricultural Property
Homestead:
House, Garage & I Acre
Under $72,000 1.000 1.000
Over $72,00 I 2.000 2.000
Under $75,000 1.000 1.000
Over $75,001 1.850 1.700
Remainder to 320 Acres
Under $115,000 .450 .450 .400 .350
Over $115,001 I. 000 1.000 .900 .800
Over 320 Acres
Under $115,000 .450 .450 .400 .350
Over $115,001 1.500 1.500 1.400 1.250
Non-Homestead:
House, Garage, I Acre 2.300 1.500 1.400 1.250
Land/Timberland 1.500 1.500 1.400 1.250
Residential Non-Homestead
Apartments:
1 to 3 units 2.300 2.300
I Unit 1.900 1.000
2 or 3 units 2.000 1.000
4 or more units 3.400 3.400 2.900 2.500
Small cities less than 5,000
population with 4 or more units 2.300 2.300 2.300 2.150
Seasonal Recreational
Non-Commercial:
Under $72,000 2.000 \. 750
Over $72,00 I 2.500 2.500
Under $75,000 1.400 1.250
Over $75,001 2.500 2.200
Commercial (i.e. resorts) 2.300 2.300 2.100 1.800
Vacant Land 'See Footnote 'See Footnote 2.100 1.700
· All vacant land is reclassified to highest and best use pursuant to local zoning ordinance.
-27 -
THE CITY OF PRIOR LAKE
ECONOMIC AND FINANCIAL INFORMATION
Valuations
Real Property
Personal Property
Less: Tax Increment Deduction
Fiscal Disparities'
(Contribution to Pool)
Distribution from Pool
Estimated
,Harket Value
1997/1998
$683,144,300
7,172,700
Net Tax
Capacity
1997/1998
$ 10,224,779
286,908
( 143,201)
( 460,866)
1.161.802
$ 11.069.422
Total Valuation
$ 690.317.000
Market Value After Sales Assessment Ratio
The Minnesota Department of Revenue conducts the Real Estate Sales Assessment Ratio Study to ac-
complish equalization of property valuations in the State and to determine the probable selling price of
a property. The Study is a three-year average of sale prices as related to the latest assessor's market
value. The latest assessment sales ratio (1997) in Prior Lake is 88.0% meaning the County Auditor's
recorded real property market value of $683,144,300 is 88.0% of the probable resale market value. We
have made the foilowing computations in deriving the market value figure used in the" Summary of
Debt and Debt Statistics."
County Auditor's recorded real property market value.
Latest Composite Ratio from the Real Estate Sales Assessment
Ratio Study of the Minnesota Department of Revenue.
Indicated market value of real property.
Personal property.
Indicated market value of real and personal property used In
"Summary of Debt and Debt Statistics."
Sales Assessment Ratio Historv
The Sales Assessment Ratio for the City of Prior Lake over the past nine years have been as follows:
$683,144,300
88.0%
$ 776,300,341
+ 7.172.700
= $ 783.473.041
Year Ratio Year Ratio
1997 88.0% 1992 84.7%
1996 86.3 1991 87.1
1995 83.3 1990 85.6
1994 82.5 1989 84.6
1993 82.4
1 Fiscal Disoarities Law '
The 1971 Legislature enacted a .. fiscal disparities law" which allows all the Twin City Metropolitan Area Municipalities to share In
commercial/industrial growth, regardless of where the growth occurred geographically. ~orty percent (40%) of every metropolitan.
municipality's growth in commercial/industrial assessed valuation is pooled, then redistributed to all mUnlclpalttles on the basiS at
population and per capita valuation after the tax increment and fiscal disparity adjustments.
-28-
,-;.
Valuation Trends (Real and Personal ProDertv)
Valuation trends for the City of Prior Lake over the past nine years have been as follows:
Levy Year/
Collection Year
1997/1998
1996/1997
1995/1996
1994/1995
1993/1994
1992/1993
1991/1992
1990/1991
1989/1990
Estimated
Alarket Value
$690,317,000
627,072,200
543,216,800
470,730,200
429,291,100
410,883,900
390,094,100
373,981,900
353,259,200
Net Tax
Capacity
Before Fiscal
Disvarities'
$10,511,687
10,281,323
8,783,063
7,460,535
6,732,031
6,550,066
6,533,845
6,655,988
6,397,500
Net Ta;"
Capacity
After Fiscal
Disvarities2
$11,069,422
10,923,941
9,491,811
8,120,280
7,605,330
7,559,705
7,589,193
7,597,611
7,264,095
Breakdown of Valuations
1997/1998 Estimated Market Value. Real and Personal Property:
Residential Homestead
Agricultural
Public Utility
Commercial & Industrial
Non-Homestead Residential
Seasonal/Recreational Commercial & Industrial
Personal Property
Total
$ 586,661,800
11,335,000
810,100
28,340,300
48,630,800
7,366,300
7,172,700
$ 690,3 17,000
84.98%
1.64
.12
4.11
7.04
1.07
1.04
100.00%
1997/1998 Net Tax Capacity, Real and Personal Property (before the tax increment and fiscal dispar-
ity adjustments):
Residential Homestead $ 8,050,503 76.59%
Agricultural 120,962 1.15
Public Utility 32,404 .31
Commercial & Industrial 970,376 9.23
Non-Homestead Residential 925,276 8.80
Seasonal/Recreational Commercial & Industrial 125,258 1.19
Personal Property 286,908 2.73
Total $ 10.511.687 100.00%
1 Also before the captured tax capacity of tax increment distribution.
2 Also after the captured tax capacity of tax increment distribution.
-29-
Net Tax CaDacitv
1993/94 1994/95 1995/96 1996/97 1997/98
Net Tax Net Tax Net Tax Net Tax Net Tax
Levy Year/ Capacity Capacity Capacity Capacity Capacity
Collection Year Rates Rates Rates Rates Rates
County of Scott 48.475% 50.217% 46.060% 41.683% 40.936%
City of Prior Lake 36.509 36.707 33.962 32.721 34.689
City of Prior Lake (Rural) 25.556 25.695 23.774
City of Prior Lake (IV) 36.509
ISO No. 719, Prior Lake 57.925 61.810 52.472 60.710 58.110
ISO No. 720, Shakopee 65.540 70.685 64.535 64.052 73.306
Metropolitan Council .495 .577 .718 .718 .880
Metro Transit 3.465 3.612 2.845 1.837 .876
Light Rail Transit Authority .389 .268 .247
Mosquito Abatement .411 .405 .244 .249 .281
Scott County HRA .785 .721 .698 .630 .697
Prior Lake/Spring Lake
Watershed 1.400 2.195 1.591 2.085 2.315
Tax Levies and Collections
Levy Year/ 1993/ 1994/ 1995/ 1996/
Collection Year 1994 1995 1996 1997
Original Gross Tax Levy $4,004,849 $ 4,358,776 $4,645,308 $5,140,904
Property Tax Creditsl ( 1,210,482) ( 1,233,712) ( 1,244,559) ( 1,353,382)
Disparity Reduction Aid ( 672) ( 0) ( 0) ( 0)
Net Tax Levy $2,793,695 $3,125,064 $3,400,749 $3,787,522
Amount Collected during
Collection Year $2,743,624 $3,075,188 $3,340,452 $3,708,074
Percent of Net Tax Levy Collected 98.21 % 98.40% 98.23% 97.90%
Amount Delinquent at end of
Collection Year $ 50,071 $ 49,876 $ 60,297 $ 79,448
Delinquencies Collected as of
(06/01/98) ( 34,103) ( 32,912) ( 39,087) ( 29,080)
Delinquencies Abated or 9.191) 14.655)
Cancelled as of (06/0 1/98) ( 14.392) ( 11.462) ( (
Total Delinquencies Outstanding $ 12,019 $ 35,713
as of (06/0 1/98) $ 1,576 $ 5,502
Percent of Net Tax Levy Collected 99.94% 99.82% 99.65% 99.06%
Note: 1997/1998 Gross Tax Levy $5,872,572
1997/1998 Net Tax Levy 4,538,559
1 Property tax credits are aids provided by the State of Minnesota and paid directly to the City. Cities now deduct property tax credits
prior to certifying values with the county auditor.
- 30-
. ,
Purpose:
Dated:
Original Amount:
\lalurity:
lnterest Rates:
1::'01,73
S280,OOO
1.Dec
5 50-5 75%
CITY OF PRIOR LiKE, JfliWiESOTA
GENERAL OBLIGATION DEBT
(as of October 16, 1998, Plus This lssue)
09/0 \077
S280,OOO
I-Jul
510-550%
06,01'88 03/01191 10/01192 10/0lin
S390.OOO S525,OOO S425,OOO S175,OOO
I-Dee 1.Dec I-Jul 1-A08
590.770% 4.90-6 80'/, 340.395% ) 60-4 80%
S35,OOO S45,OOO SO SO 1998
35,000 45,000 50,000 35,000 1999
::'0,000 45,000 35.000 0 ::'000
::'0,000 15,000 0 0 ::'IJ01
0 15,000 0 0 :002
0 15.000 0 0 ::'003
0 15,000 0 0 ::'004
0 15,000 0 0 ::'005
0 \0,000 0 0 2006
0 10,000 0 0 2007
0 10,000 0 0 ::'008
0 0 0 0 ::'009
0 0 0 ) 20\0
0 0 0 2011
0 0 0 0 :012
0 0 0 0 2013
0 0 0 0 ::'014
0 0 0 0 ::'015
0 0 0 0 2016
0 0 0 0 ::'0\7
SllO,ooo S24O,ooo S85,000 S35.000
(3) (3) (3) (4) (1) (5)
G,O, G.O, G.O, GO. G,O, G.O,
Park R.{Mnding 1"'1"01''''11111 1 mp'01'tlfltlll R.{Mnding Crossover
Bond. Park Bonds Bonds Bonds R.{Mnding
"f Bo,.tb of of of Bo,.ds
1973 of 1977 1988 1991 1992 of 1992A
1998
1999
::'000
2001
2002
2003
2004
::'005
2006
::'007
::'008
2009
20\0
2011
20\2
::'013
2014
2015
20\6
2017
S\O,OOO
15,000
15,000
15,000
\5,000
15,000
o
I)
o
o
o
o
o
o
o
o
o
o
o
o
S85,ooo
(I)
SO
15,000
15,000
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
S30,ooo
(1) (2)
G,O, G,O. G.O, G,O, G,O, G,O,
Cro$$over 1 mp'01'tlflt1ll Fi" SlJJIion 1 mp'01'tlfltlll 1mp'01'tlflt1ll Eqllipmm'
R.fiulding Bonds Bonds Bonds Bonds CemfiCJJlts
Bonds of of of of of
0[1992B 1993 1993 1994 1995 1995
Purpose:
Dated: 10/01/92 07/0 \193 0810\193 08/01/94 08/01195 09/0li95
Original AlDount: S860,OOO S3,ooo,ooo S2.IOO,ooo S800,OOO S950,ooo S400.ooo
\laturity: I-Dee 1.oec I-Dee I-Dee I-Dee I-Dee
Interest Rates: 3 60-4,80% 4,25-4375% 300.5,4011. 360-5,40% 4,00-49511. 4.40-480'10
1998 SI50,ooo S26O.OOO S70,OOO S80,ooo S85,OOO SI05,OOO 1998
1999 \ 50,000 275,000 75,000 80,000 85.000 \\ 0,000 1999
2000 0 295.000 75,000 85,000 90,000 0 2000
200\ 0 310,000 80,000 85,000 95,000 0 ::'001
2002 0 335,000 85,000 85,000 100,000 0 ::002
2003 0 370,000 95,.000 85,000 105,000 0 2003
2004 0 50,000 100,000 85,000 \\ 0.000 0 ::'004
2005 0 50.000 105,000 0 \ 20,000 0 ::'005
2006 0 50.000 110,000 0 0 0 ::'006
2007 0 50,000 120,000 0 0 0 2007
2008 0 50,000 125,000 0 0 0 ::'008
2009 0 0 \35,000 0 0 0 2009
2010 0 0 145,000 0 0 0 2010
20\\ 0 0 155.000 0 0 0 20\ 1
2012 0 0 175,000 0 0 0 :012
2013 0 0 190,000 0 0 0 2013
2014 0 0 0 0 0 0 2014
2015 0 0 0 0 0 0 2015
2016 0 0 0 0 0 0 20\6
20\7 0 0 0 0 0 0 20\ 7
S300,000 S2.095.OOO S1,84O,ooo S585.OOO S790,ooo S215.000
(3) (6) (3) (1) (3) (3) (1)
-31-
CITY OF PRIOR L.4KE, .11I.VNESOTA
GENERAL OBUGATlON DEBT
(lU ofOr:tob~"16, 19911, PbAs This Issu~)
G,O. G.O, G,O, G,O, G,O,
W4l". [ mp'OVo,"mI Roj'uftdiftl Par. lmprt1VmlCllt
<Uta SnI/". 80ft. 80ft. 80ft. 80ft.
Rrvett,.. of of of of
80ft. of 1995 1996 1996 1997 1997
PUrpOM:
Ooud:
OriKino' Amoun!:
\falurity:
Interest Ratn:
11,01/95
$2,:00,000
I-Dee
~ ~0-5.65%
'J6,01l96,
$935,000 j
I-Dee :
~ 00-4 90% !
10101/96
52.430,000
I-Dec
4.10-500%
05/01/97
$7,800,000
I-Dee
~50-5 90....
11I0I.97
51.065.000
I.Dec
3 85-465%
5100,000 1998
100,000 1999
100,000 :000
100,000 ZOO I
100,000 :002
100,000 :003
100,000 :004
115,000 :005
125,000 :006
125.000 2007
0 2008
0 :009
0 2010
0 2011
0 2012
0 2013
0 2014
0 2015
0 :t:'i6
0 2017
51,065,000
(J)
575,000 :
80,000 :
85,000 j
90.000 !
95.000 i
100,000 :
105,000 :
110,000 :
120,000 :
oj
oj
oj
0:
oj
0:
0:
0:
oj
oj
O!
585,000 i
90,000 :
100,000 j
110,000 :
115.000 i
120,000 :
120,000 :
125.000 :
200,000 :
0:
0:
oj
oj
0:
0:
0:
~I
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
:013
:014
:015
2016
2017
575,000
80,000
80,000
90,000
90,000
95,000
105,000
110.000
115,000
1 :0,000
130,000
140,000
150,000
160.000
170.000
180.000
195.000
o
o
o
5185,000
185.000
185.000
190,000
185,000
180,000
180,000
75,000
o
o
o
o
o
o
o
o
o
o
o
o
575,000
100,000
125,000
140,000
150,000
185.000
225.000
:50,000
275.000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
675,000
750,000 I
820,000
880.000
5860,000 ! 51.365,000 51,065,000 j
(J) ! (J) (10) j
[,............_...._.......fllL..........,............,...l
52.085.000
(7) (8) (9)
57,800.000
(1) (12)
Tlti,f..._
G,O. G.O. G.O.
CroutlHr Cro",,", fmpr..-
Roj'uftdbo, RoJlutdift' Boft.
Bo"a, BOft., of
Sma 199&4. Sma 19988 1998
PUrpoM:
OoUCI:
OriKlno. A_oun!:
Moturity:
Inurnt Rat..:
03/01/98
$1,885.000
I.Dee
385-4. 85Y.
03/01/98
57.165,000
I-Dee
4.10-4.9W.
12101/98
51.275.000
I-Dee
TOTALS:
50 51.435,000 1998
125,000 1,730.000 1999
125,000 1,475.000 ::000
125,000 1.565,000 2001
125,000' 1,595,000 2002
125,000 1,690,000 2003
125.000 1,705,000 2004
125,000 1,615,000 2005
125,000 1.555,000 :006
125,000 1,300.000 2001
150,000 1,325,000 2008
0 1,240,000 2009
0 1.370,000 2010
0 1.485,000 2011
0 1,630.000 2012
0 1,755,000 2013
0 1,715,000 :014
0 1.490,000 2015
0 1,630.000 2016
0 1.670,000 2017
51,275,000 530.975.000
(J)
L'II (8.875,000) (9) (12)
N,t G,o. D,ht: $22,100,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
so
o
o
100,000
100.000
100,000
110,000
115,000
125,000
125,000
135,000
140,000
150.000
160,000
175.000
175.000
175.000
o
~ I
50
o
o
o
o
o
275,000
300,000
300,000
325.000
375,000
425,000
475,000
510.000
560,000
610.000
670,000
740.000
810.000 I
790,000
51.885.000
(8)
(IS)
57.165,000
(I) (lJ) (14)
- 32-
"
CITY OF PRIOR LAKE. JfISSESOTA
GE.VERAL OBUGATlON DEBT
(as ofOcrober /6, /998, Plus This Issue)
II) These bonds are payable solely from ad valorem tarlS on all tarable property WIthin the City and ,"-,maul lImitation of amount
f2J These bonds aavfJ1'lc' ,efunded the S280. 000 General Obliganon Parle Bonds of I 976. dated February 1. 1976. which were caUed/or
r'ldemptron on Jun. 1. 1986. at a pn'. of par plus accrued interfSL
(31 These bonds are payable pnmanly from spmal asslSmtents agaInst all b.n.fitted property and addItionally secured by ad valorem tares
m .:zll farabl. property WlUun the City and W1thOUt limJtanon of amount
,.; These bonds refund.d S415,000 of the Sl.425, 000 General Obliganon Improvemrnt Bonds of 1979, dated July I, 1979. !4atuntres 1993
through 2000. rnclUStve. were cailed for redempnon On January I. 1993. at a pnce of par plus accrued mterut
15) Thes< bonds cross refuncied S165, 000 of ,h. S295, 000 G.neral Obligation Firr Hall Bonds of 1984, dated Apnll, 1984, ,Hatuntes 1994
through 1999. incluSIve. were calledfor redemption on August 1. 1993. at a price of par plus accrued int.rut.
161 Thes. bonds CrGU refunded S825, 000 of the S/,175, 000 General Obligation Improv.m.nt Bonds of 1989, dated August /, /989, Matuntres
1994 through /999, InciuStve. were called/or redemption an December I. 1993. at a pnce of par plus accrved interest.
(-oJ These bands are payable pnmanly from nd rennul! of the munlC1pal water and sewer utility systems and additronaLly secured by ad
valorem taxes on all taxable property WIthin th, City and WIthout Umrtanon of amount.
(8) These bonds have been addItionally secured by FinanCIal S.cunty Assuranc. Inc. (FSA).
(91 Thes. bonds w.re crosHefunded by the SI,880, 000 G.n<ral Obligation Crossover Refunding Bonds. Senes 199M dated March /, 1998,
,\fatunties 200 I through 2014. mclUSlv" m aggrrgal' of S1.850, 000. WIll be call.d for red.mptlon on December I, 2000, at a pnce of par
plus acc11Jed int,rest.
( 1 0) These bonds 3re payabl, pnmanly from net rrvenu,s of the muniCipal water utrlity system and additionally secured by ad valorem taxes
on all taxabi, property Wlthm th, City and WIthOut limrtatton of amount.
( / I) These bonds current refund.d S2, 405, 000 of the S4, 265, 000 Gen<ral Obligation Advanc. Refunding Bonds of 1992, dat.d February /,
1992, ,\Iatuntles /998 through 2007. inclUSlv" w.rr call.d for red.mptlon on December 1, 1996, at a pnc. of par plus accrued Interest
The Advance Refunding Bonds of t992. dal.d February 1, 1992, advance rrfund.d (i) /.950.000 ofth. S3,450,OOO G.nrral Obligation
Improvement Bonds of /986, dated February /, 1986. Matunties /995 through 2006, mclUSIV', w.re calledfor redemption on December /,
1994, at a pnce of par plus accru.d mterest and (II) /,/80,000 of the SI,500,OOO General Obligation Waler Revenu. Bonds of /987, dated
October /, 1987, Matunties /996 through 2007, InclUSlV<. WI" call.dfor red.mption on December /, /995, at a pnc. of par plus accru.d
mtlrest.
tI Ji Th.se bonds w<r' cross refund.d by the S7, 155,000 G.neral Obligation Crossover R.funding Bonds, S.rles I998B, dat.d March /, /998,
Jlaturltles 2004 through 2017. mclUSlV<. m aggrrgate ofS7, 025, 000. WIll b. calledfor rrd.mption on D.cember 1. 2003. at a pnc. of par
plus accrued int,rest.
( 1 J) .\fatunti's of th,s, bonds 2016 through 2017. inclunv" ar, sub}ect to mandatory redemption on December 1 of th,ir respective years.
(14) Thes. bonds cross refunded (i) SI.850,000 ofth. S2,200, 000 General Obligallon Water and S.wer Revenu. Bonds of /995, dated
Vovember /, 1995, Matuntles 2001 through 2014. inclUSIVe, WIll becalled for redemption on D.cembrr /. 2000. at a pnce of par plus
accrued mterest and (II) $7,025,000 ofth. S7.800, 000 Gen.ral Obligation Parle Bonds of 1997. daled May 1, 1997, Matunties 2004
through 20/7, mclUSlv,. WIll b. called for redemption on Dec.mber 1, 2003. at a pnc. of par plus accrued intrrest
(15) These bonds are addinonally secured by Amboc Assurance Corporation and carry a "Aaa"from Moodyls Investors Se1V1c,.
- 33-
OverlaDDinQ Debt
1997/1998
1997/1998 Net Tax
Net Tax Capacity Percentage City's
Capacity Value Applicable Share
Issuer Value{/) in Citv(/) in Citv Net Debt of Debt
County of Scott $ 56,579,201 $11,069,422 19.56% $ 9,245,000(2) $ 1,808,322
ISO No. 719,
Prior Lake 17,434,297 10,841,422 62.18 32,732,047(3) 20,352,787
ISO No. 720,
Shakopee 15,199,954 228,000 1.50 38,961,002(4) 584,415
Metropolitan
Council 2,161,233,611 11,069,422 .51 14,956,139(5) 76,276
Metro Transit 1,942,024,826 11,069,422 .57 64,857,394(6) 369.687
Total Overlapping Debt: $23.191.487
OverlaDDina Debt Future Financina
County of Scott
The County does not anticipate the issuance of any
additional general obligation bonding within the next
three months.
ISO No. 719, Prior Lake
The ~istrict does not anticipate the issuance of any
additional general obligation bonding within the next
three months.
ISO No. 720, Shakopee
The District does not anticipate the issuance of any
additional general obligation bonding within the next
three months.
Metropolitan Council
The Council does not anticipate the issuance of any
additional general obligation bonding within the next
two months.
Metro Transit
Metro Transit does not anticipate the issuance of any
additional general obligation bonding within the next
two months.
(1) Taxable Net Tax Capacity values are after the tax increment and fiscal disparity adjustments.
(2) Scott County reported bond indebtedness of $9.245,000 and sinking funds of $0 as of December 31, 1997,
(3) ISD No, 719, Prior Lake. reported bond indebtedness of $32.899,565 and sinking funds of$167.518 as of June 30, 1997,
(4) [SD No. 720. Shakopee. reported bond indebtedness of$39.583.910 and sinking funds of $622,908 as of April I, 1998.
(5) Deductions: (A) $501.611,659 Metropolitan Waste Control Commission Debt as of December 31, 1997.
(B) $34.090.000 Metropolitan Council Sports Facility Revenue Bonds as of December 31. 1997.
Note I: Debt Service on A above is 100% self supported from revenues of the Metro Sanitary Sewer System. although the
bonds are full faith and credit bonds, Sinking funds of $19,951,000 and escrow account funds of $67.623.664 have
not been deducted because said funds are attributable to A above. Fund balances are as of December 31. 1997.
Note 2: Debt Service on B (Metropolitan Council. Minneapolis-St. Paul Area Sports Facility Revenue Bonds) is not included
in the above debt as the bonds are supported by revenues generated from the sports facility although the "onds are
full faith and credit bonds.
Note 3: The only tax supported bond indebtedness is $30,990,000 withnking funds of $4,455,731 and escrow funds of
$11.S78, 130 as of December 31. 1997,
(6) Metro Transit reported bond indebtedness of $84,565,000 and sinking funds of $19,707,606 as of December 31, 1997,
- 34-
Cash and Investment Fund Balances as of September 30, 1998
(unaudited)
Fund
General Fund
City Store Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
Enterprise Funds
Agency Fund
Total Cash and Investment Fund Balances
$ 1,088,500
( 452)
621,751 (I)
3,531,034'
12,013,811 (2)
2,403,980 (3)
274,000
$ 19.932.624
(I) Includes the foUowinl!; Special Revenue Funds:
Capital Park Fund $ 3 10,352,95
Severance Compensation Fund 202,456,98
DAG Special Revenue Fund 53,360,10
EDA Loan Fund 55,580,55
(2) Consists of the foUowinl!; Capital Proiect Funds:
Tax Increment Fund $ 109,636,81
Equipment Acquisition Fund 964,502.65
Building Fund 14,500.29)
Construction Fund 245,924.17
CoUector Street Fund 1.167,197,58
Trunk Reserve Fund 2,101,861.95
Tax Increment No. 2-1 (Key land) Fund 93.29308
Tax Increment No. 2-2 (Becker) Fund 29,860,82
Tax Increment No, 2-3 (ArnerlMetro) Fund 22.761,00
Tax Increment No, 2-4 (Commercial) Fund 8 \'959,66
Tax Increment No. 2.5 (E.M. Products) Fund 42.193,14
Tax Increment No. 2-6 (NBC Products) Fund 26,401.36
Tax Increment No. 2-7 (Award Printing) Fund 16.833,53
Tax Increment No, 2-8 (Dave Hansen) Fund 340.40)
General Obligation Park Bonds of 1997 Fund 7,126,225,54
(3) Includes the foUowinl!; Enterprise Funds:
Utility (Sewer and Water) Fund $ 2,264,556,15'
Stonn Water Utility Fund 139.423.94
, Funds available for debt service on outstanding general obligation bond indebtedness. The total cash and investment fund balances available for debt
service is $5,795,590,
-35 -
SUMMARY OF DEBT AND DEBT STATISTICS
General Obliaation Debt
Bonds secured by ad valorem taxes
Bonds secured by special assessments (includes this issue)
Bonds secured by net water and sewer revenues
Bonds secured by net water revenues
$ 17,170,000
8,770,000
3,970,000
1.065.000
$ 30,975,000
( 8,875,000)
$ 22,100.000
( 3.531,034)
( 2.264.556)
$ 16,304,410
23.191.487
$ 39.495.897
Subtotal
Less refunded maturities I
Total General Obligation Direct Debt
Less: Debt Service Fund Balances
Utility (Sewer and Water) Fund
Net Direct General Obligation Debt
Add City's Share of Net Overlapping Debt
Total Net Direct and Net Overlapping Debt
Facts for Ratio ComDutations
1997/1998 Indicated Market Value (real and personal property)
1997/1998 Net Tax Capacity (real and personal property, after
fiscal disparity and tax increment adjustments)
Population ( 1998 Estimate)
$783,473,041
$11,069,422
14,700
Debt Ratios
Net Direct
Net Net and Net
Direct Direct Overlapping Overlapping
Debt Debt Debt Debt
To Indicated Market Value 2.82% 2.08% 2.96% 5.04%
Per Capita $1,503 $1,109 $1,578 $2.687
Per Capita Adjusted2 $1,360 $1,003 $1,427 $2,430
1 Refunded maturities in the amount of (i) $1.850,000 of the outstanding $2,085.000 of the $2,200.000 General Obligation Water and
Sewer Revenue Bonds of 1995, dated November I, 1995. Maturities 2001 through 2014, inclusive, will be called for redemption on
December I. 2000, at a price of par plus accrued interest and (ii) $7,025,000 of the outstanding $7.800,000 of the $7.800.000 General
Obligation Park Bonds of 1997, dated May I, 1997. Maturities 2004 through 2017, inclusive, will be called for redemption on
December 1,2003, at a price of par plus accrued interest.
2 The City's tax base is 9.23% commercial & industrial and ,31% public utility, which has been deducted.
-36-
.1
$1,275,000
GENERAL OBLlGA TION IMPROVEMENT BONDS OF 1998
CITY OF PRIOR LAKE, MINNESOTA
(SCOTT COUNTY)
CUMULATIVE BOND YEARS AND WORKSHEET
(DEe. 1) C UJI[ULA T/VE
YEAR AMOUNT BOND YEARS BOND YEARS
1999 $125.000 125.000 125.000
2000 125,000 250.000 375,000
2001 125,000 375.000 750.000
2002 125,000 500.000 1,250.000
2003 125,000 625.000 1,875.000
2004 125,000 750.000 2,625.000
2005 125,000 875.000 3,500.000
2006 125,000 1,000.000 4,500.000
2007 125,000 1,125.000 5,625.000
2008 150,000 1,500.000 7,125.000
AVERAGE MATURITY:
BONDS DATED:
INTEREST PAYMENTS:
5.58824 years.
December 1, 1998.
June 1, 1999, and semiannually thereafter on December 1 and June 1
to registered owners of the Bonds appearing on record in the bond
register as of the close of business on the fifteenth (15th) day
(whether or not a business day) of the immediately preceding month.
RATES:
Bonds maturing in 2005 and later years will be subject to redemp-
tion and prepayment, at the option of the City, on December I,
2004, or on any interest payment date thereafter, in inverse order of
maturity dates and by lot as selected by the Registrar (or, if applica-
ble, by the bond depository in accordance with its customary proce-
dures) for Bonds maturing on the same date, at a price equal to the
principal amount thereof to be redeemed plus interest accrued to the
date of redemption.
Sealed bids only for not less than $1,254,600. Good faith deposit for
$25,500 must accompany bid.
All rates must be in integral multiples of 1/20th or 1/8th of 1 %. No
limitation is placed upon the number of rates that may be used.
REDEMPTION:
BID:
ESTIMATED CLOSING DATE: December 2, 1998.
- 37-
PROPOSAL FORM
DATED: NOVEMBER l8, 1998
HONORABLE CITY COlJNCIL
CITY OF PRlOR LAKE
PRlOR LAKE, MINNESOTA
FOR ALL OF THE $1,275,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 1998, OF
YOUR CITY AS DESCRIBED IN THE OFFICIAL TERMS OF BOND SALE, WE \\-lLL PAY YOU
DOLLARS
($ ) (NOT LESS THAN $1,254,600)
PLUS ACCRUED rNTEREST FROM THE DATE OF SAID BONDS TO THE DATE OF
DELIVERY.
SAID BONDS SHALL BEAR INTEREST PAYABLE JUNE 1, 1999, AND SEMIANNUALLY
EACH DECEMBER 1 AND JUNE 1 THEREAFTER AS FOLLOWS:
% - 1999
% - 2000
% - 2001
% - 2002
% - 2003
% - 2004
% - 2005
% - 2006
% - 2007
% - 2008
DESIGNATION OF SERIAL AND TERM MATURITIES
LAST YEAR OF SERIAL MATURITIES
YEAR OF TERM MATURITIES
PRINCIP AL WILL BE PAY ABLE AT THE CITY OFFICES, PRlOR LAKE, MINNESOTA. CUSIP
NUMBERS WILL BE ISSUED AT THE COST OF THE SUCCESSFUL UNDERWRITER.
THIS PROPOSAL IS FOR PROMPT ACCEPTANCE AND SUBJECT TO ALL TERMS IN THE
OFFICIAL TERMS OF BOND SALE. WE ARE TO BE FURNISHED THE APPROVING LEGAL
OPINION OF BOND COUNSEL, TOGETHER WITH THE DELIVERY OF THE PRINTED AND
EXECUTED BONDS, WITHIN 40 DAYS AFTER A WARD OR AT OUR OPTION THEREAFTER.
DELIVERY WILL BE MADE AT
(SPECIAL INSTRUCTIONS-SEE OVER).
ACCOUNT MEMBERS:
ACCOUNT MANAGER
BY:
ACCEPTED FOR THE ADDRESSEE THIS
DAY OF NOVEMBER, 1998.
BY:
MAYOR
ATTEST:
CITY MANAGER
............. --.. -----............ ..--..-............ --...-........ -- ----.. -- --.. --........ --........................
WE COMPUTE OUR NET DOLLAR INTEREST COST TO BE $ FOR A
NET INTEREST RATE OF %. THESE COMPUTATIONS ARE NOT A PART OF
THIS OFFER.
IT IS NOT NECESSARY TO USE THIS FORM; HOWEVER, ANY BID MUST COMPLY WITH
THE TERMS STATED IN THIS OFFICIAL TERMS OF BOND SALE.
PLEASE SUBMIT THIS BID IN DUPLlCA TE
- 39-
SPECIAL INSTRUCTIONS:
SALE RESULTS WILL BE FURNISHED BIDDERS AT 8:30 A.M. ON DAY AFTER THE SALE
AT 224-1500. IF RESULTS ARE DESIRED IMMEDIATELY, PLEASE COMPLETE THE
FOLLOWING:
CONTACT:
TELEPHONE NUMBER:
.................................... -- --...... --- -- --- -- ----.. --- --.. --- -- --- ---............................
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT FOR THE GOOD FAITH
DEPOSIT IN THE AMOUNT OF $25,500 TO BE RETURNED TO THE UNSUCCESSFUL
BIDDER.
JURAN & MOODY
BY:
DATED: NOVEMBER 18, 1998
-40-
---~_._----~- --
,
BRIGGS A:-,'n ~IORG.A..N
::00 FIR~, ',~T10'~L R~\.I, ~V'-Dlv~
332 \\I'''E\OT, ""EOT
),'I\:T r,~L'L.I.\I'''ESOT,~ S5101
TELEPHO\:E 16121 223-"'600
FAOIMILE '6121 223-6450
PROFESSIO!\i.",L ,",SSOCIATION
WRITER'S DIRFCT DI."L
WRITER'S E-\I,'IL
PROPOSED FORM OF LEGAL OPINION
$1,275,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1998
CITY OF PRIOR LAKE
SCOTT COUNTY
MINNESOTA
We have acted as bond counsel in connection with the
issuance by the City of Frior Lake, Scott County, Minnesota (the
"Issuer"), of its $1,275,000 General Obligation Improvement 30nds
of 1998, bearir.g a date of original issue of December 1, 1998
(the "Bonds"). We have examined the law and such certified
proceedings and other documents as we deem necessary to render
this opinion.
We have not been engaged or undertaken to review the
accuracy, completeness or sufficiency of the Official Statement
or other offering material relating to the Bonds, and we express
no opinion relating thereto.
As to questions of fact material to our opinion, we
have relied upon the certified proceedings and other
certifications of public officials furnished to us without
undertaking to verify th~ same by independent investigation.
Based upon such examinations, and assuming the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the
originals of such documents, and the accuracy of the statements
of fact contained in such documents, and based upon present
Minnesota and federal laws (which excludes any pending
MINNEAPOLIS OFFICE' IDS CENTER' IX'\VWBRIGGS,COM
MEMBER - LEX MUNDI, ^ GLOBAL ^SSOCI.~T10N OF INDEPENDEST v-.w FIR,\\S
-..--
...,
BRIGGS "" .:'\IOTIGA~
PROPOSED FORM OF LEGAL OPINION
legislation which may have a retroactive effect on or before the
date hereof), regulations, rulings and decisions, it is our
8t:linion that:
(1) ~he proceedings show lawful authority for the issuance
of the Bonds according to their terms under the Constitution and
laws of the State of Minnesota now in force.
(2) The Bonds are valid and binding general obligations of
the Issuer and all of the taxable property within the Issuer's
jurisdiction is subject to the levy of an ad valorem tax to pay
the same without limitation as to rate or amount; orovided that
the enforceability (but not the validity) of the B~nds and the
pledge of taxes for the payment of the principal and interest
thereon is subject to the exercise of judicial discretion in
accordance with general principles of equity, to the
constitutional powers of the United States of America and to
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights heretofore or hereafter
enacted.
(3) At the time of the issuance and delivery of the Bonds
to the original purchaser, the interest on the Bonds is excluded
from gross income for United States income tax purposes and is
excluded, to the same extent, from both gross income and taxable
net income for State of Minnesota income tax purposes (other than
Minnesota franchise taxes measured by income and imposed on
corporations and financial institutions), and is not an item of
tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations or the Minnesota
alternative minimum tax applicable to individuals, estates or
trusts; it should be noted, however, that for the purpose of
computing the federal alternative minimum tax imposed on
coroorations, such interest is taken into account in determining
adj~sted current earnings. The opinions set forth in the
preceding sentence are subject to the condition that the Issuer
comply with all requirements of the Internal Revenue Code of
1986, as amended, that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or
continue to be, excluded from gross income for federal income tax
purposes and from both gross income and taxable net income for
State of Minnesota income tax purposes. Failure to comply with
certain of such requirements may cause the inclusion of interest
on the Bonds in gross income and taxable net income retroactive
to the date of issuance of the Bonds.
I3H,IGGS "0 .:\IORGA~
PROPOSED FORM OF LEGAL OPINION
We express no opinion regarding other state or federal tax
consequences caused by the receipt or accrual of interest on the
Bonds or arising with respect to ownership of the Bonds.
BRIGGS AND MORGAN
Professional Association
FORI.! OF
CONTIWJING DISCLOSURE L~DERTAKING
This Continuing Disclosure Undertaking (the "Disclosure
Undertaking") is executed and delivered by the City of Prior
Lake, Minnesota (the "Issuer"), in connection with the issuance
of $1,275,000 General Obligation Improvement Bonds of 1998 (the
"Bonds"). The Bonds are being issued pursuant to a Resolutio!1
adopted November 16, 1998 (the "Resolution"). Pursuant to the
Resolution and this Undertaking, the Issuer covenants and agrees
as follows:
SECTION 1. Puroose of the Disclosure Undertakinq. This
Disclosure Undertaking is being executed and delivered by the
Issuer for the benefit of the Owners and in order to assist the
Participating Underwriters in complying with SEC Rule
15c2-12 (b) (5) .
SECTION 2. Definitions. In addition to the definitions
set forth in the Resolution, which apply to any capitalized term
used in this Disclosure Undertaking unless otherwise defined in
this Section, the following capitalized terms shall have the
following meanings:
"Annual Report" shall mean any annual financial information
provided by the Issuer pursuant to, and as described in, Sections
3 and 4 of this Disclosure Undertaking.
"Audited Financial Statements" shall mean the financial
staterr.ents of the Issuer audited annually by an independent
certified public accounting firm, prepared pursuant to generally
accepted accounting principles promulgated by the Financial
Accounting Standards Board, modified by governmental accounting
standards promulgated by the Government Accounting Standards
Board.
"Dissemination Agent" shall mean such party from time to
time designated in writing by the Issuer to act as information
dissemination agent and which has filed with the Issuer a written
acceptance of such designation.
"Fiscal Year" shall be the fiscal year of the Issuer.
"Governing Body" shall, with respect to the Bonds, have the
meaning given that term in Minnesota Statutes, Section 475.51,
Subdivision 9.
"MSRS" shall me.:;.:"'. the Municipal Securities Rulemaking Soard.
984293.1
'\ ~'.
"i;atio:1al Repository" shall mean any Nationally Recognized
Municipal Securities Information Repository for purposes of the
~ule. Currently, the following are National Repositories:
Bloomberg Municipal Repository
P.O. Box 840
Princeton, NJ 08542-0840
Phone ~ (609) 279-3200
Fax: ( 6 0 9 ) 2 7 9 - 5 9 6 2
Thomson Municipal Services
395 Hudson Street - Third Floor
New York, NY 10014
Attn: Municipal Disclosure
Phone: (800) 689-8466
Fax: (212) 989-2078
Kenny Information Systems Inc.
65 Broadway - 16th Floor
New York, NY 10006-2511
Attn: Repository Services
Phone: (212) 770-4595
Fax: ( 212 ) 7 97 - 79 94
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701; Fax:
E-Mail: Nrmsir@dpcdata.com
(201) 947-0107
"Occurrence(s)" shall mean any of the events listed in
Section 5.A. of this Disclosure Undertaking.
"Official Statement" shall be the Official
Preliminary Official Statement dated
together with any addendum thereto, prepared in
the Bonds.
Statement or
, 1998
connection with
"Owners" shall mean the registered holders and, if not the
same, the beneficial owners of any Bonds.
"Participating Underwriter" shall mean any or the original
underwriters of the Bonds required to comply with the Rule in
connection with offering of the Bond~.
"Repository" shall mean each National Repository and each
State Depository.
"Resolution" shall mean the resolution or resolutions
adopted by the Governing Body of the Issuer providing for, and
authorizing the issuance of, the Bonds.
984:'93.1
"Rule" shall mean Rule 15c2 -12 (b) (5) adopted by the
Securities and Exchange Commission under the Securities Exchange
Act of 1934, as the same may be amended from time to time or
interpreted by the Securities and Exchange Commission.
"State" shall mean the State of Minnesota.
"State Depository" shall mean any public or private
repository or entity designated by the State as a state
depository for the purpose of the Rule. As of the date of this
Disclosure Undertaking, there is no State Depository in
Minnesota.
SECTION 3.
Provision of Annual Reoorts.
A. Beginning in connection with the Fiscal Year
ending on December 31, 1998, the Issuer shall, or shall cause the
Dissemination Agent to, not later than December 31, 1999, and by
December 31 of each year thereafter, provide to each Repository
an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Undertaking.
B. If the Issuer is unable to provide to the
Re?ositories an Annual Report by the date required in subsection
A, the Issuer shall send a notice of such delay and estimated
date of delivery to each Repository or to the MSRB and to the
State Depository, if any.
SECTION 4. ContQ~t and Format of Annual Reoorts. The
Issuer's Annual Report s;~~ll contain or incorporate by reference
the financial information and operating data pertaining to the
Issuer listed below as of the end of the preceding Fiscal Year.
The Annual Report may be submitted to each Repository as a single
document or as separate documents comprising a package, and may
cross-reference other information as provided in this Disclosure
Undertaking.
The following financial information and operating data shall
be supplied:
A. an update of the type of information contained in
the Official Statement under the caption ECONOMIC AND
FINANCIAL INFORMATION;
B. an update of the type of information contained in
the Official Statement under the caption SUMMARY OF DEBT AND
DEBT STATISTICS;
C. an update of the type of information contained in
the Official Statement under the caption and subheadings
984~9J.1
.~.
GENERAL INFOR!'IlATION - "Major Employers" and "Building
Permits";
D. data extracted from preliminary, unaudited
financial statements of the Issuer and from past Audited
Financial Statements of the Issuer in the form and of the
type contained in the Appendix of the Official Statement;
and
E. Audited Financial Statements of the Issuer. The
Audited Financial Statements of the Issuer may be submitted
to each Repository separately from the balance of the Annual
Report. In the event Audited Financial Statements of the
Issuer are not available on or before the date for filing
the Annual Report with the appropriate Repositories as set
forth in Section 3.A. above, unaudited financial statements
shall be provided as part of the Annual Report. The
accounting principles pursuant to which the financial
statements will be prepared will be pursuant to generally
accepted accounting principles promulgated by the Financial
Accounting Standards Board, as such principles are modified
by the governmental accounting standards promulgated by the
Government Accounting Standards Board, as in effect from
time to time. If Audited Financial Statements are not
provided because they are not available on or before the
date for filing the Annual Report, the Issuer shall promptly
provide them to the Repositories when available.
SECTION 5.
Reoortinq of Siqnificant Events.
A. This Section 5 shall govern the giving of notices
of the occurrence of any of the following events with respect to
the Bonds, if material:
(1) principal and interest payment delinquency;
(2) non-payment related defaults;
(3) unscheduled draws on debt service reserves
reflecting financial difficulties;
(4) unscheduled draws on credit enhancements
reflecting financial difficulties;
(5) substitution of credit or liquidity providers, or
their failure to perform;
(6) adverse tax opinions or events affecting the tax-
exempt status or the security;
(7) modifications to rights of security holders;
9S~293,1
(8) optional or unscheduled redemption of any Bondsi
(9) defeasancesi
(10) release, substitution or sale of property securing
repayment of the Bonds; and
(11) rating changes.
3. Whenever an event listed in Section S.A. above has
occurred, the Issuer shall as soon as possible determine if such
event would constitute material information for Owners of Bonds.
If knowledge of the Occurrence would be material, the Issuer
shall promptly file a notice of such Occurrence with each
N~tional Repository or the MSRB and with the State Depository, if
any.
C. The Issuer agrees to provide or cause to be
provided, in a timely manner, to each National Repository or the
MSRB and to the State Depository, if any, notice of a failure by
the Issuer to provide the Annual Reports described in Section 4.
SECTION 6. Termination of Reoortinq Obliqation. The
Issuer's obligations under this Disclosure Undertaking shall
terminate upon the legal defeasance, prior redemption or payment
in full of all of the Bonds.
SECTION 7. Dissemination Aqent. The Issuer may, from
time to time, appoint or engage a Dissemination Agent to assist
it in carrying out its obligations under this Disclosure
Undertaking, and may discharge any such Agent, with or without
appointing a successor Dissemination Agent.
SECTION 8. Amendment: Waiver. Notwithstanding any other
provision of this Disclosure Under~aking, the Issuer may amend
this Disclosure Undertaking, and any provision of this Disclosure
Undertaking may be waived, if (a) a change in law or change in
the ordinary business or operation of the Issuer has occurred,
(b) such amendment or waiver would not, in and of itself, cause
the undertakings herein to violate the Rule if such amendment or
waiver had been effective on the date hereof but caking into
account any subsequent change in or official interpretation of
the Rule, and (c) such amendment or waiver is support~d by an
opinion of counsel expert in federal securities laws to the
effect that such amendment or waiver would not materially impair
the interests of Owners.
SECTION 9. Additional Information. Nothing in this
Disclosure Undertaking shall be deemed to prevent the Issuer from
disseminating any other information, using the means of
dissemination set forth in this Disclosure Undertakin; or any
other means of communication, or including any other information
9S~293,1
i~ any Annual Report or notice of an Occurrence, in additio~ to
that which is required by this Disclosure Undertaking. If the
Issuer chooses to include any information in any Annual Report or
notice of an Occurrence in addition to that which is specifically
required by this Disclosure Undertaking, the Issuer shall have ~o
obligation under this Disclosure Undertaking to update such
information or include it in any future Annual Report or notice
of an Occurrence.
S3CTION 10. Default. In the event of a failure of the
Issuer to provide information required by this Disclosure
Undertaking, any Owner may take such actions as may be necessary
and appropriate, including seeking mandamus or specific
performance by court order, to cause the Issuer to comply with
its obligations to provide information under this Disclosure
Undertaking. A default under this Disclosure Undertaking shall
not be deemed an Event of Default under the Resolution, and the
sole remedy under this Disclosure Undertaking in the event of any
failure of the Issuer to comply with this Disclosure Undertaking
shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Undertaking
shall inure solely to the benefit of the Issuer, the Participa-
ting Underwriters and Owners from time to time of the Bonds, and
shall create no rights in any other person or entity.
SECTION 12. Reserved Riohts. The Issuer reserves the
right to discontinue providing any information required under the
Rule if a final determination should be made by a court of
competent jurisdiction that the Rule is invalid or otherwise
unlawful or, subject to the provisions of Section 8 hereof, to
modify the undertaking under this Disclosure Undertaking if the
Issuer determines that such modification is required by the Rule
or by a court of competent jurisdiction.
9S429J.l
Date: December
(SEAL)
9S~293,1
1998.
CITY OF PRIOR LAKE, t-lINNESOTA
By
Its Mayor
By
Its Manager
APPENDIX C
City's Financial Statements
The following financial statements are excerpts from the annual financial report for the year ended
December 31. 1997. The complete financial report for the year 1997 and the prior two years are
available for inspection at the Prior Lake City Hall and the St. Paul office of Juran & /'vfoody. The
reader of this Official Statement should be aware that the complete financial report may have further
data relating to the excerpts presented in the appendix which may provide additional explanation,
interpretation or modification of the excerpts.
Excerots from the Financial Reoort
. Combined Balance Sheet - All Fund Types and Account Groups
. Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental
Fund Types
. Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund - Budget and
Actual
. Combined Statements of Revenues, Expenses and Changes in Retained Earnings - All Proprietary
Fund Types
. Combined Statements of Cash Flows - All Proprietary Fund Types
. Notes to Combined Financial Statements
Cln' OF PRlOR LAKE, MJl\'NESOT A
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 1997
(With Comparative Totals for December 31, 1996)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
ASSETS AND OTHER DEBrTS
ASS ETS
Cash and investments S 1.967,277 S 518,125 S 3.205,569 $ 12.06\).062
Deposit with trustee 0 0 0 0
Receivables
Taxes
Unremined 0 0 0 0
Delinquent 72,396 0 17,907 0
Accounts 0 0 0 0
Special assessments receivable
Unremitted 0 0 0 0
Delinquent 0 0 48.186 0
Deferred 0 0 1,484,084 12.515
Other (Green Acres) 0 0 1,153,165 16.030
Due from other governments 0 0 0 0
Property. plant and equipment, net 0 0 0 0
OTHER DEBITS
Amount available in debt service funds 0 0 0 0
Amount to be providej for debt 0 0 0 0
TOTAL ASSETS AND OTIiER DEBITS S 2,039,673 S 518,125 S 5,908,911 $ 12.094,607
LIABILITIES. EQUITY AND OTHER CREDITS
LIABILITIES
Accounts payable S 152,155 S 7,397 $ 0 $ 5,255
Compensated absences 0 0 0 0
Deposits payable 0 0 0 0
Deferred revenue 72,396 0 2,703,342 28.545
Leases payable 0 0 0 0
Bonds payable 0 0 0 0
TOTAL LIABrLITlES 224.551 7.397 2,703.342 33,800
EQUITY AND OTHER CREDITS
Investment in fixed assets 0 0 0 0
Contributed capital 0 0 0 0
Retained earnings
Unreserved 0 0 0 0
Fund balance
Reserved 0 194,616 3.205.569 0
tJ nreserved
Designated 1,815,122 316,\12 0 1\.965.869
Undesignated 0 0 0 94,938
TOTAL EQUITY AND OTHER CREDITS 1,815.122 510.728 3,205.569 12.060.S0~
TOT AL LIABILITIES, EQUITY
AND OTHER CREDITS $ 2.039,673 S 518,\25 $ 5.908.911 $ 12,094,607
See Notes to Financial SJatements.
'-"'-""-
r-iduciJrY
PropflcIHY Fund TOlals
r'Jnd Tyres Type Accounl Groups (.'vl em orandum Unly)
General
General long-term
En [err rise ,\ geney Fixed Assets Debt 1997 1996
1,845.789 250.000 S 0 S 0 S 19,352,822 1 \,914.69 I
0 2,588,873 0 0 2.588,873 2.135.298
0 0 0 0 0 ~:,267
0 0 0 0 90.303 88,293
492,655 0 0 0 492,655 577,678
0 0 0 0 0 0
0 0 0 0 48.186 261,581
0 0 0 0 \,496.599 1.539.522
0 0 0 0 1.169.195 1.054.023
11.824 0 0 0 11.824 26,830
12.150.655 0 10.212,747 0 22.363.402 20,560, \88
0 0 0 3.205.569 3.205,569 3.531.462
0 0 0 18.345.819 18.345.819 11.233,622
S 14,500.923 S 2.838,873 S 10.212,747 S 21.551.388 S 69.665.247 52.945,455
S 38,534 S 0 S 0 S 0 S 203.341 S 473.949
55.989 0 0 366.388 422.377 355,635
0 2,838.873 0 0 2.838.873 2.384.798
0 0 0 0 2.804.283 2,943,419
0 0 0 0 0 5,669
0 0 0 21.185.000 21.185.000 14,455.000
94,523 2,838.873 0 21,551.388 27.453.874 20.618,470
0 0 10,212.747 0 10.212.747 10.880.583
12.586.120 0 0 0 12.586.120 9.869.507
1.820.280 0 0 0 1.820,280 1.822.002
0 0 0 0 3,400.185 3.717,979
0 0 0 0 14.097.103 5,809,613
0 0 0 0 94,938 227,30 \
14.406,400 0 10,212.747 0 42.211,373 32.326,985
S 14.500.923 S 2,838,873 S \0,212.747 S 21.551.388 S 69.665,247 S 52,945,455
CITY OF PRlOR LAKE, MI},'NESOT A
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED DECEMBER 31, 1997
With Comparative Totals for Year Ended December 31, 1996
REVENUES
General property laxes
Licenses and permits
Inlcq;overnmcntal
Charges for services
Fines Ind forfetls
Specill assessments
Interest on investments
M iscelllneous
Gene..1 Speclll Debt
Revenue Service
3,164.046 0 663,157
366,341 0 0
1,622.5H 3,857 0
603,372 335.IJS 148.261
78.582 0 0
0 0 9:!2.911
74.134 22,084 143,570
184,212 6,100 0
6,093,231 367,179 1,877,899
TOTAL REVENUES
EXPENDITURES
Current expenditures
General Government
Public Slfety
Police
Fire Ind Rescue
Other
Public Works
Culture Ind Recreltion
Econom ic Development
Contingency
Trlnsit
Capital oullay
Generll Government
Public SlfelY
Police
Fire Ind Rcscue
Other
Publie Works
Culture Ind Recreation
Construction and Improvements
Property and equipment purchase
Othcr charGes and services
Debt service
Principal
IntereSllnd other
1.229,790
1,462,937
218.506
300,369
733.802
946,569
52.4 SS
151.964
301,171
39,02\
90.816
1.205
3.974
3.930
21,491
o
o
o
TOTAL EXPENDITURES
5,558.000
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES
535.231
OTHER FINANCING SOURCES (USES)
Opentin; transfers in
Bond proceeds
Operating lrlnsfe.. oul
175,000
o
(934.589)
TOTAL OTHER FINANCING SOURCES (USES)
(759,589)
EXCESS (DEFICIENCY) OF REVENUES AND OTHLOR
FINANCING SOURCES OVER (UNDER)
EXI'ENDITURES AND OTHER FINANCING USES
(224)58)
FUND BALANCE. JANUARY I
2.039,480
FUND BALANCE, DECEMBER 31
1.815,122
See Notes to Financial Statements.
0 0
0 0
0 0
0 0
79,516 0
0 0
3,857 0
0 0
0 0
o
o
o
o
220.505
o
o
o
o
o
o
o
303,878
63,301
63.301
447,427
510,728
o
o
o
o
o
39,875
o
o
2.13 5 ,000
978,051
3,152.926
(1,275.027)
o
o
o
1,279,937
11,099
(341.902)
949,134
(325,893)
3.531.462
3,205,569
.i
(Memorandum Onlv)
Cap.!>1 1997
!'roJcc:s 1996
175 ,a 5 g 4.00~,661 },494,759
0 ] 66 .J4 1 506,258
0 1.6"6,aOI 1,660.824
1,390.879 2,477,650 2,227,487
0 73,582 61,119
0 92".911 80a.971
481,451 721,239 470.332
7,75 I 198.063 211,051
2,055,539 10,393.848 9,436,80 I
0 1,229,790 1,111,611
0 1,462,937 1.404,533
0 218.506 204,838
0 300.369 237,342
0 g 1 3,3 18 674.160
0 946.569 878.654
0 56.312 92,143
0 151.964 110,911
0 301,171 0
0 39,021 55.871
0 90,816 47,34 2
0 1.205 7,768
0 3,974 4.913
0 3,930 16.002
0 241.996 361.952
3,030.917 3.070,792 4.213.940
0 0 136.525
7i2 772 18,546
0 2,135.000 4.515,000
0 978.051 789.345
3.031,689 12,046.493 14.931.396
(976,150) ( 1,652,645) (5.494,595)
717,873 2,172,810 1,545,178
8,853,901 8.865,000 J.J 11,752
(271.342) (1.547.833) (1,181.249)
9.300,4.32 9,489,977 3,675.681
8.324,282 7,837,332 ( I ,818,914)
3,736.525 9.754,893 11,573,807
12,060.807 17,592,225 9,754,893
CITY OF PRlOR LAKE. MfNNESOT A
STATEMENT OF REVENUES. EXPEJ'..'DITURES AND CHANGES IN FUND BALANCE
GENERAL FUND - BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31. 1997
Yariance .
Favorable
8udget Actual (Unfavorable)
REVENUES
General rroperty laxes S 3,171.148 S 3.164.046 S (7,102)
Licenses and permits 426.500 366.341 (60,159)
Intergovernmenlal 1.592.120 1.622.544 30.424
Charges for services 599.750 603.372 3.622
Fines and forfeitures 60.000 78.582 18,582
Interest on investments 65,000 74,134 9.134
Miscellaneous 64,200 184,212 120,012
TOTAL REVENUES 5.978,718 6,093.231 114,513
EXPENDITURES
Current
General Government 1.232.758 1.229,790 2,968
Public Safety
Police 1,482,341 1,462.937 19,404
Fire and Rescue 180.993 218.506 (37.513 )
Other 372,389 300.369 72,020
Public Works 773,805 733,802 40.003
Culture and Recreation 935,205 946,569 (11,364)
Econom ic Development 52,146 52,455 (309)
Contingency 150,000 151.964 ( 1,964)
Transit 301,171 301.171 0
Capital Outlay
General Government 47.000 39,021 7.979
Police 96.000 90.816 5,184
Fire and Rescue 10,000 1,205 8,795
Other 5,000 3,974 1.026
Public Works 8,000 3.930 4,070
Culture and Recreation 21.950 21.491 459
TOTAL EXPENDITURES 5.668.758 5,558.000 110,758
EXCESS OF REVENUE OVER 309,960 535,231 225,271
UNDER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Operating transfers in 175,000 175.000 0
Operating transfers out 0 (934.589) (934.589)
TOTAL OTHER FINANCING SOURCES (USES) 175.000 (759.589) (934.589)
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES AND OTHER FINANCING USES S 484.960 (224.358) S (709,318)
FUND BALANCE. JANUARY I 2.039,480
FUND 8ALANCE. DECEMBER 31 S 1,815.122
See Notes to Financial Statements.
).
crn' OF PRJOR LAKE, M[}i?\iESOTA
CO:-.1Br>:ED STA. TE:\,jENTS OF REVENUES, EXPENSES AND CHANGES fN RETAINED EAR..'i[}.lGS
ALL PROPRJET AR Y FUND 1l'PES
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
OPERA TI:'-lG REVE:'-lUES
Sewer cn:1rges S 1,313,145 S 1,247,549
\l.,';,lter charges 510,667 ~i6.5J-+
Slorm "ater charges 136,510 133,144
Capital facility cha..-ges 199,968 138,92::
:Vlcter sales 32,949 29,523
Connection fees 118,236 :: 1 3.300
TOTAL OPERATING REVENUES 2.311,475 ::.::38,982
OPERA TING EXPENSES
Personal services 397,073 365,277
Supplies 36,605 39,729
Repairs and maintenance 238,603 235,::37
Other services and charges 26,358 17,991
Insurance 2,660 3,1 ::0
Utilities 68,058 79,495
Metropolitan Waste Control Commission 753,192 695,80 I
Miscellaneous 39,084 20,071
Depreciation 240.206 371,000
TOT AL OPERATING EXPENSES 1,801,839 1,8::7,721
OPERA TING INCOME 509,636 461,::61
NONOPERA TlNG REVENUES (EXPENSES)
Interest income 75,051 65.713
City store (693) (763)
~liscellaneous revenue 39,261 44,534
TOTAL NONOPERATING REVENUES (EXPENSES) 113,619 109,539
INCOME BEFORE OPERATING TRANSFERS 623,255 570,300
OPERA TING TRANSFERS OUT (624,977) (363,929)
NET INCOME (LOSS) (1,72::) :::06,87\
RETAINED EARNINGS, JANUARY 1 1,822.002 1,615,131
RETAINED EARNINGS, DECEMBER 31 S 1,320,280 S 1.3::2,00::
See Notes to Financial Statements.
CITY OF PRlOR LAKE, Mlr-iNESOT A
COMBrNED STATEMENTS OF CASH FLOWS
ALL PROPRlETARY FUND TYPES
YEARS ENDED DECEMBER 31,1997 AND 1996
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income S 509,636 S 461.261
Adjustments to reconcile operating income to net
cash provided by operating activities
Other income related to oreralions 38.568 44.584
Depreciation 240.206 371,000
(I ncrease) decrease in:
Account; receivable 52,098 (192,461 )
Due from other governments 2,184 0
Increase (decrease) in:
Accounts payable ( 13.139) (44,471)
Accrued expenses (192) (763)
Severance compensation 4,769 5,198
NET CASH PROVIDED BY OPERATING ACTIVITIES 834,130 644.348
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating transfers in 0 0
Operating transfers out (624,977) (363,929)
NET CASH USED BY NONCAPIT AL FINANCING ACTIVITIES (624,977) (363,929)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Disposal of equipment (66,543) 0
Contributed capital 1,705,537 0
Acquisition of proper!)' and equipment ( 1.633,637) (21)
NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES 5.357 (21 )
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on cash and investments 75.051 65.71 S
NET INCREASE IN CASH AND CASH EQUIVALENTS 289,561 346,116
CASH AND CASH EQUIVALENTS, JANUARY 1 1.556,228 1.210,112
CASH AND CASH EQUIVALENTS, DECEMBER 31 S 1,845,789 S 1.556.228
See Notes to Financial Statements.
'TT-'-
CITY OF PRiOR LAKE, Y!f}.;-";ESOTA
NOTES TO FINANCIAL ST A TE:V1ENTS
DECEMBER 3l, 1997
:'>Iote1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. City Structure and Scope of the Entity
The City of Prior Lake, operates under "Optional Plan g" as defined in the State of \1innesora Statutes, Under
this Plan, the government of the City is directed by a Council composed of an elected mayor and four elected
council members, The Council exercises legislative authority and determines all maners of policy, Tne
Council appoints personnel responsible for the proper administration of all affairs relating to the City.
The City of Prior Lake was incorporated under the laws of tile State of Minnesota. As required by generally
accepted accounting principles, the financial statements of the reporting entity include those of L1e City of P~ior
Lake (the primary government) and its component units. The City does not have any component units.
The accounting policies of the City of Prior Lake, Minnesota, conform to generally accepted accounting
principles as applicable to governments. The following is a summary of the more significant policies.
B. Measurement Focus, Basis of Accounting and Basis of Presentation
The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an
independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates
funds according to their intended purpose and is used to aid management in demonstrating compliance with
finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with
legal and managerial requirements. Account groups are a reporting device to account for certain assets and
liabilities of the governmental funds not recorded directly in those funds.
The City has the following fund types and account groups:
Covernmenta/funds are used to account for the City's general government activities. Governmental fund
types use the flow of current financial resources measurement focus and the modified accrual basis of
accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to
accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction
can be determined, and "available" means collectible within the current period or soon enough thereafter to pay
liabilities of the current period. The City considers all revenues available if they are collected within 60 days
after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured
interest on general long-term debt which is recognized when due, and certain compensated absences and claims
and judgments which are recognized when the obligations are expected to be liquidated with expendable
available financial resources.
The preparation of general purpose financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect certain amounts and disclosures,
Accordingly, actual results cnuld differ from those estimates.
Property taxes, franchise taxes, licenses, interest and special assessments are susceptible to accrual. Other
receipts and taxes become measurable and available when cash is received by the government and are
recognized as revenue at that time.
Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible [0 accrual
criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have
been incurred and all other grant requirements have been met.
Governmental funds include the following fund types:
The genera/fund is the City's primary operating fund. It accounts for all fmancial resources of the City, except
those required to be accounted for in another fund.
CITY OF PRJOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The special rl!Venuefunds account for revenue sources that are legally restrictl:d to expenditures for specified
purposes (not including major capital projects).
The debt service funds account for the servicing of general long-term debt not being financed by proprietary
iunds.
The capital projects funds account for the acquisition of fixed assets or construction of major capital projects
not being financed by proprietary funds.
ProprietQry' funds are accounted for on the flow of economic resources measurement focus and use the accrual
basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the
time liabilities are incurred. The City applies all applicable FASB pronouncements in accounting and reponing
for its proprietary operations. Proprietary funds include the following fund type:
Enterprisefunds are used to account for those operations that are financed and operated in a manner similar to
private business or where the Council has decided that the determination of revenues earned, costs incurred
and/or net income is necessary for management accountability.
Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of
others. Trust funds account for assets held by the government under the terms of a formal trust agreement.
The agency funds are custodial in nature and does not present results or operations or have a measurement
focus. Agency funds are accounted for using the modified accrual basis of accounting.
Account Groups. The genera/fIXed assets account group is used to account for fixed assets not accounted for
in proprietary funds. The genera/long-term debt account group is used to account for general long-term debt
and certain other liabilities th at are not specific liabilities of proprietary funds.
C. Assets, Liabilities and Equity
Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation
by each of the funds.
State statutes authorize the City to invest in obligations of the U.S. Treasury, commercial paper, corporate
bonds, repurchase agreements, the State Treasurer's Investment Pool and shares of investment companies
registered under the Federal Investment Company Act of 1940 and whose only investments are obligations
guaranteed by the United States or its agencies.
Property Taxes
The City Council annually adopts a tax levy and certifies it to the County for collection. The County is
responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable
property within the City on January I and are payable by the property owners in two installments. The taxes
are coilected by the County Treasurcr and tax settlements are made to the City during January, June, and
Dccember each year.
Taxes payable on homestead property, as defined by State statutes, are partially reduced by a homestead and
agricultural credit aid. The credit is paid to the City by the State of Minnesota in lieu of taxes levied against
h;mestead property. The State remits this credit in two equal installments in July and December each year.
.r
CITY OF PRlOR LAKE, :VlrN"NESOTA
1"OTES TO FINANCIAL STATEMENTS
DECEMBER 3 I, 1997
:'late I: SCi\1;\1ARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset bv
a deferred revenue liability for delinquent taxes not received within 60 days after year end, .
Special Assessments
Special assessments are recognized as revenue when they are received in cash or within 60 davs after vear end
All other special assessments receivable are offset by a deferred revenue liability, ..'
Fixed Assets
Fixed assets used in governmental fund types of the City are recorded in the general fixed assets account group
at cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their
estimated fair value at the date of donation. Assets in the general fixed assets account group are not
depreciated. Interest incurred during construction is not capitalized on general fixed assets.
Public domain (infrastructure) general fixed assets (e.g., roads, bridges, sidewalks and other assets that are
immovable and of value only to the City) are not capitalized.
The cost of nonnal maintenance and repairs that do not add to the value of the asset or materially extend assets'
lives are not included in the general fixed assets group or capitalized in the proprietary funds.
Property, plant and equipment in the proprietary funds of the City are recorded at cost. Property, plant and
equipment donated to these proprietary fund type operations are recorded at their estimated fair value at the
date of donation.
Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are
constructed. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the
capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period,
Property, plant and equipment are depreciated in the proprietary funds of the City using the straight line method
over the following estimated useful lives:
Assets
Buildings and structures
Equipment
Automotive
Distribution and recovery system
Years
30-50
8-10
5-8
65
Compensated Absences
It is the City's policy to pennit employees to accumulate earned but unused vacation and sick leave. Vacation
and 50% of sick pay if employed greater than five years are paid to the employee upon separation.
Vacation and sick leave are computed at year end and personal services expenditures/expenses are adjusted to
properly reflect the increase or decrease in expenses. Accrued vacation and sick leave totaled $422.377 at year
end. Vacation and sick pay are accrued when incurred in proprietary funds and reported as long-tenn liability,
Vacation and sick pay of the general fund are reported in the generallong-tern1 account group.
Long-term Obligations
The City reports long-tenn debt of governmental funds at face value in the general long-term debt account
group. Cenain other governmental fund obligations not expected to be financed with current available financial
r~sources are also reported in the generallong-tenn debt account group. Long-tenn debt and other obligations
financed by proprietary funds are reported as liabilities in the appropriate funds.
CrTY OF PRJOR LAKE, Mf},'NESOT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1"otel: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during
the current period. Bond proceeds are reported as an other financing source net of the applicable premium or
discount. Issuance costs, even if withheld from the actual net proceeds received, arc reported as project
expenditures,
Fund Equity
Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific
purpose. Reservations of retained earnings are limited to outside third-parry restrictions. Designations of fund
balance represent tentative management plans that are subject to change. The proprietary fund's contributed
capital represents equity acquired through capital grants and capital contributions from developers, customers
or other funds.
Memorandum Only - Total Columns
Total columns on the general purpose financial statements are captioned as "memorandum only" because they
do not represent consolidated financial information and are presented only to facilitate financial analysis. The
columns do not present information that reflects financial position, results of operations or cash flows in
accordance with generally accepted accounting principles. Interfund eliminations have not been made in the
aggregation of this data.
Comparative Data/Reclassifications
Comparative total data for the prior year have been presented in the selected sections of the accompanying
financial statements in order to provide an understanding of changes in the City's financial position and
operations. Also, certain amounts presented in the prior year data have been reclassified in order to be
consistent with the current year's pr,:sentation.
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the general
fund. All annual appropriations lapse at fiscal year end.
In June of each year, all departments of the City submit :;:quests for appropriations to the Finance Officer so
that a budget may be prepared. Before September 1.5, the proposed budget is presented to the City's council for
review. The council holds public hearings and a final budget is prepared and adopted in early December.
The appropriated budget is prepared by fund, function and department. TIle City's department heads may make
transfers of appropriations within a department. Transfers of appropriations between departments require the
approval of the City Council. The legal level of budgetary control is the department level.
11. Deficit Fund Equity
The following funds had fund balance deficits at December 31, 1997:
Fund Amount
TIF 112-8 (D Hansen) S 340
Building 13,205
City Store 1,456
The City plans to eliminate these deficits through future revenues.
T-
CITY OF PRJOR L.-\KE. MI:,0iESOTA
NOTES TO FINANCIAL STA TEMENTS
DECEMBER 3 I, 1997
;-';ote 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
A. Deposits and Investments
At ye:J.l' end, the City's carrying amount of deposits was S200,842 and the bank balance was S569,424 Of the
bank balance, $ i 00,000 was covered by federal depository insurance or by collateral held by the City's agent in
the City's name, The remaining balance of $469.424 was collateralized with securities held by the pledging
financial institution's trust department or agent in the City's name.
Checking
Certificates of deposits
Total deposits
5200,842
o
$200,842
Investments are categorized into these three categories of credit risk:
(1) Insured or registered, or securities held by the City or its agent in the City's name.
(2) Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the
City's name.
(3) Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but
not in the City's name.
At year end, the city's investment balances were as follows:
CategorY
-L
$ 0
o
-.Q
$ 0
3
Carrying
Amount!
Market Value
512,946,566
1.033,380
5.672.034
S 19,651.980
U.S. Government Securities
Certificates of Deposit
Commercial Paper
Total Investments
I
512,946,566
1,033,380
o
$13.979.946
S 0
o
5.672.034
55,672.034
The following is a reconciliation of cash and investments as shown on the Combined Balance Sheet as of
December 3 I, 1997:
Carrying amount of deposits
Carrying amount of investments
Total
S 200,842
19,651.980
519.352.822
B. Due From Other Governments
Amounts due from other governments as of December 31, 1997 is as follows:
Proprietary Fund
MWCC - current value credit
$ 11.824
C. Fixed Assets
A summary of general fixed assets for the year ended December 31, 1997 follows:
Balance Balance
Januarv I Changes December 31
5 977,888 S 21.016 S 998,904
5,631.840 28,197 5,660,037
3.259,779 294,027 3.553,806
S 9,869.507 5 343.240 510,212.747
L:md and improvements
Buildings
Equipment
Total
CITY OF PRlOR LAKE, MJ}..'NESOT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
The following is a summary of proprietary fund type fixed assets at December 31, 1997:
Land
Buildings
1 n frastructure
Machinery and equipment
Vehicles
S 603
1,313,811
13,687,754
173,440
379.181
15,554,789
0.404.134 )
S 12.150.655
Accumulated depreciation
D. Deferred Revenue
Deferred revenue at December 3 I, 1997 is comprised of the following:
Debt Capital
General Service Projects Total
Taxes
Delinquent $ 72,396 $ 17,907 $ 0 $ 90,303
Special assessments
Delinquent 0 48,186 0 48,186
Deferred 0 1,484,084 12,515 1,496,599
Other (Green Acres) 0 1.153.165 16.030 1.169.195
Total $ 72.396 52.703.342 $ 28.545 52.804.283
E. Operating Leases
The City leases equipment under non-cancelable operating leases. Total costs for the lease were S11,031 for
the year ended December 31, 1997. The future minimum le.::.s: payments for these leases are as follows:
Year End in l! Decem ber 3 I,
1998
1999
Total
Amount
S 6,441
4.590
$ 11.031
F. Long-term Debt
The following is a summary of changes in general long-term debt for the year ended December 31, 1997.
Balance Balance
January I Add ilions Deletions December 31
Bonds Payable
Special assessment bonds S 8,746.000 S 1.065,000 S 1.611,500 S 8,199,500
General obligation bonds 2,160.000 7,800,000 125,000 9.835.000
Equipment certificates 535,000 0 320,000 215,000
Revenue bonds.
Advancc refunding bongs 108.500 0 108.500 0
VI' ater and sewer bonds 2.995,500 0 60,000 2.935,500
Total bonds payable 14.545.000 U6S,OOO 2.225,000 21.18).000
Equipment leascs payable 5.669 0 5.669 0
Compensatcd abscnccs 304.415 61.973 0 J66,J8S
Total S 14.8)).084 S 8,926.9i3 S 2,230,669 S 21,))!.JoS
CITY OF PRiOR LAK.E, ,'vll}iNESOT A
NOTES TO FfNANCIAL STA TEMENTS
DECEMBER 31, ] 997
Notc J: DETAILED NOTES ON ALL FUND Ai";o ACCOUNT GROUPS (Continued)
Long-term debt at December 3 I, 1997 is comprised of the following types of issues:
Description
Srccial Asscssment bonds
GO, Improvement Bonds of 1973
G,O. Improvement Bonds of 1973
G,0. Improvement Bonds of 1977
G,O, Improvement Bonds of 1978
G,O. Improvement Bonds of 1988
G.O. Improvement Bonds of 1991
G.O. Refunding Bonds of 1992
G ,0, Crossover Refunding Bonds of 1992B
G,O, Refunding Bonds of 1993
G,O. Improvement Bonds of 1993
G.O. Improvement Bonds of 1994
G.O. Improvement Bonds of 1995
G.O. Improvement Bonds of 1996
G.O, Improvement Bonds of 1997
G.O, Improvement Bonds of 1996
G ,0. Improvement Bonds of 1996 (65%)
Total Special Assessment Bonds
General Obligation Bonds
G.O. Park Bonds of 1973
G,O. R~funding Park Bonds of 1977
G,O. Crossover Refunding Bonds of 1992A
G,O, Fire Station Bonds of 1993
G.O. Park Bonds of 1997
Total General Obligation Bonds
Equipment Certificates
G,O, Equipment Certificates of 1995
G.O. Revenue Bonds
G.O. Water and Sewer Bonds of 1995
G,O, Refunding Bonds of 1996 (35%)
Total Revenue Bonds
Total Bonds Payable
Interest Issue Maturity Balance
r3tes date date Outstanding
5.00-5,50% 07/01/73 07/01/98 S 105,000
5,10-5,50 10101/73 1010 1/98 35,000
4.00-5,70 06/01/77 06/01/98 110.000
4,90-5.80 05/0 I /78 05/01/98 ]0,000
5.90-7.70 06/0 !l88 12/0 110 I 110,000
4,90-6.80 03/01/91 12/01/08 240,000
3.40-3,95 1 % 1/92 07/01/00 145,000
3.60-4.80 I % 1/92 12/01/99 .300,000
3.60-4,60 03/0 1/93 12/01/98 250,000
4,25-4.3 8 07/01/93 12/0 !l08 2,095,000
3.60-5,40 08/0 I /94 12/01/04 585,000
4.00-4,95 08/01/95 12/01/05 790,000
4.00-4.90 06/0 1/96 12/01/06 860,000
4.10-5.90 11/01/97 12/01/ I 7 1,065,000
4.00-4.90 06/01/96 I 2/0 !l96 860,000
4.10-5.00 1 % 1/96 I 2/0 1/06 1.579.500
8,199.500
5.50-5.75
4.80-5.10
3.60-4.80
3.00-5.40
4.10-4.90
4.40-4.80
440-5.65
4.10-5,00
12/01/73
09/01/77
1 % 1/92
08/0 1/93
05/01/97
12/01/03
09/0 1/00
08/01/99
12/0 1/13
12/01/14
85,000
45,000
65,000
1,840,000
7,800.000
9335.000
215.000
2,085,000
350,500
2.935.500
52!.1 85,000
The annual requirement to amortize all bonds outstanding at December 31, 1997 including interest ;'1aymenrs
totaling 510,368,141 are as follows:
Y~ar Ending Special General
Decem ber 31, A ssessm ent Obligation
1998 ) 1,875,554 S 739.UUS
1999 1,389.767 770,127
2000 1.20 I ,973 748.985
2001 1,128.880 743,073
2002 1,102,352 746,820
Thereafter 3,181,586 13,408,460
TOlal 9,8~0.112 17.1)0.473
Less Interest 1,680,612 7,321,473
Principle 8,1 '7'7.)UO S '7,3j).ovO
Equipment
Certilicales
S 115,215
115,280
23U,ol'7)
15.495
S 21).000
09/01/95
I 2/0 I /99
11/01195
10/01/96
I 2/0 1/1 5
12/01/06
Revenue
[30 nds
~ j15,2~5
314,860
310.702
318,043
309,313
2,717,858
4,2~o,Ob I
1.350,561
2.93).)uO
~
TOlal
3.\H5,062
2,590,034
2.26 I ,660
2,189,996
2,158,485
19,307,904
31.))3.141
10,368,141
2I,I~),uOU
CITY OF PRJOR LAKE, MD\'NESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
Amounts Available/or Long-term Debt. Available fund balance in the debt service funds for repayment of
long-term debt totaled $3,205,569 at year end.
Amounts to be Provided/or Long-term Debt, This represents future revenue to be generated for debt payments,
generally including interest earnings, tax increments, scheduled tax levies and deferred (future) special
assessment levies.
G, Tax Increment Districts
The City of Prior Lake is the administering authority for the following tax increment districts:
Tax Increment Tax Increment Tax Increment Tax Increment Tax Increment
District 1-1 District 1-2 Di~trict 2-1 District 2-2 District2-3
Type Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment
Authorizing law MSA 273 MSA 273 MSA 273 MSA 273 MSA 273
Year established 1985 1988 1993 1994 1994
Duration of district 15
Tax Capacity Valuation:
Original S 3,464 S 4,049 S 81 S 900 S 72
Current 23,463 12,651 18,226 6,468 9,358
Captured S 19,999 S 8,602 S 18,145 S 5,568 S '1,286
Total bonds issued:
Bonds retired S 150,000 N,--, None None None
Bonds Payable 150,000
S 0
Tax Increment Tax Increment Tax Increment Tax Increment Tax Increment
District 2-4 District 2-5 District 2-6 District 2-7 District 2-8
Type Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment
Authorizing law MSA 273 MSA 273 MSA 273 MSA 273 MSA 273
Year established 1994 1995 1995 1996 1997
Tax Capacity Valuation:
Original S 11,953 S 159 S 87 S 0 S 0
Current 38,016 28.341 21,400 0 0
Captured S 26,1.103 S 28.182 S 21.313 S 0 S I.!
TOlal bonds issued: Nonc None None None N~Jnc
.. -
~'ITY OF PRJOR LAKE. .\lf~~ESOT:\
NOTES TO Fr.-;ANCIAL ST A TE.\lE~TS
DECEMBER 31, 1997
H. Contributed Capital
"'ote J: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
The changes in the City's contributed capital accounts for its proprietary funds were as follows:
Beginning balance
Contributing sources:
Projects completed
Ending balance
I. Fund Equity
Utilities
S I 0,880,583
1.705,537
S12,586.120 S
Certain reserves and designations have been made in the following funds:
Reserved
Governmental Funds
Special Revenue Funds
Severance Compensation
Debt Service Funds
Total Reserved Fund Balance
Unreserved - designated
General Fund
Special Revenue Fund
Capital Park
DAG
EDC Revolving Loan
Capital Projects Funds
Total Unreserved - Designated
Purpose
Severance compensation
Debt service
Working capital
Improvements
Improvements
Development loans
Capital improvements
Note 4: SEGMENT INFORMATION FOR ENTERPRISE FUNDS
Enterprise
Storm
Water
s
o
Total
S 10,880.583
o
o
1,705,537
S 12.586,120
Amount
S 194,616
3,205.569
S 3.400.185
$ 1.815,122
260,717
44,781
10,614
11.965,869
$14,097,103
The City provides services which are accounted for in the Enterprise Funds. The segment information for these
Enterprise Funds for December 3 I, 1997 is as follows:
Operating revenues
Depreciation expense
Operating income (loss)
Operating transfers out
Net income (loss)
Net working capital
Totals assets
Total equity
Storm
Sewer
Utility
S 136,510
o
15,252
o
20.657
148.162
153,391
145.604
Utility
S 2,174,965
240.206
494,384
624.947
(22,379 )
2.151,747
14,347,532
14.260,796
Total
$2.311,475
240,206
509,636
624,947
(1,722)
2,299,909
14,500,923
14,500,923
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
:"ote 5: DEFINED BENEFIT PENSION PLAN. STATEWIDE
A. Plan Description
A 11 full-time and certain part-time employees of the City of Prior Lake are covered by defined benefit pension
plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers
the Public Employees Retirement Fund (PERF) which is a cost-sharing multiple-employer retirement plan,
These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356.
PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are
covered by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon
death of eligible members. Benefits are established by State Statute, and vest after three years of credited
service. The defined retirement benefits are based on a member's highest average salary for any five successive
years of allowable service, age, and years of credit at termination of service.
Two methods are used to compute benefits for Coordinated and Basic Plan members. The retiring member
receives the higher of step-rate benefit accrual formula (Method I) or a level accrual formula (Method 2).
Under Method I, the annuity accrual rate for a Basic Plan member is 2.0 percent of average salary for each of
the first 10 years of service and 2.5 percent for each remaining year. For a Coordinated Plan member, the
annuity accrual rate is 1.0 percent of average salary for each of the first 10 years and 1.5 percent for each
remaining year. Using Method 2, the annuity accrual rate is 2.5 percent of average salary for Basic Plan
members and 1.5 percent for Coordinated Plan members. For PERF members whose annuity is calculated
using Method I, a full annuity is available when age plus years of service equal 90. A reduced retirement
annuity is also available to eligible members seeking early retirement.
B. Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are
established and amended by the state legislature. The City makes annual contributions to the pension plans
equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are
required to contribute 8.23% and 4.23%, respectively, of their annual covered salary. PEPF members are
required to contribute 7.60% of their annual covered salary. The City of Prior Lake is required to contribute the
following percentages of annual covered payroll: 10.73% for Basic Plan PERF members, 4.48% for
Coordinated Plan PERF members, and 11.40% for PEPFF members. The City's contributions to the Public
Employees Retirement Fund for the years ending December 31, 1997 and 1996 were $79,091 and $68,954,
respectively. The City's contributions to the Public Employees Police and Fire fund for the years ending
December 31, 1997 and 1996 were $ 115,534 and S 1 05,850, respectively. The City's contributions were equal
to contractually required contributions for each year as set by state statute.
r-lote 6 OTHER INFORMATION
A. Risk Management
The City is exposed to various risks of loss related to tortS: theft of, damage to and destruction of assets; crrors
and omissions; injuries to employees; and natural disasters for which the City carries commercial insurance,
Settled claims have not exceeded this commercial coverage in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
cstimated. An insurance policy covers individual claims to a maximum of $600,000. Liabilitics, if any,
include an amount for claims that have been incurred but not reported (lBNRs), The City's management is not
aware of any incurred but not reported claims.
CITY OF P:<-.10R L.-\KE. ~1[~~ESOTA
NOTES TO FINANCrAL STA TEME~TS
DECEMBER31,1997
Note 6 OTHER INFORMA TION (Continued)
n. Legal Debt Margin
The City's statutory debt limit is equal to 2,0% of estimated market value of5627,754,700 or 512,555,094
Debt financed partially or entirely by special assessments is not applied against the City's debt limit, nor is debt
financed by Proprietary Fund revenues, Currently the City has 510,050,000 of general obligation debt
outstanding leaving a debt margin of 52,505,094.
C. Volunteer Fire Department Relief Association
The Prior Lake Firemen's Relief Association is the administrator of a single-employer Public Employee
Retirement System (PERS) established to provide benefits for members of the Prior Lake Fire Department.
The Firemen's Relief Association maintains a separate Special Fund to accumulate assets to fund the retirement
benefits earned by the Fire Department's membership. Funding for the Relief Association is derived primarily
from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing
Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980).
The financial requirements of the Special Fund are determined in accordance with Section 69,772 of the
Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual
installments. The benefits are payable after age 50, 5 years of service, and 5 years of Association membership,
or upon death. Benefits are accumulated at 52,200 per year of active service in the Fire Department. The
accrued liability for these accumulated benefits is computed using increasing percentages based on years of
service. At 20 years of service, the liability is equal to the number of years of service times benefits per year.
Association members are fully vested after 20 years.
At December 31,1997, the liability of the Special Fund exceeded the assets of the Association.
11/16/98 17:15 ET REF:
ATTN: Ralph Teschner
City of Prior Lake
NOOD0919.0000 FR:MOODYS
TO:6124474245
Page 1 of 2
~,
MOODY'S ASSIGNS A2 RATING TO PRIOR LAKE'S (MN) SERIES 1998 G.O. BONDS
$21 MILLION DEBT AFFECTED
Prior Lake (City of) MN
Municipality
Minnesota
Moody's Rating
Issue
Rating
General Obligation Improvement Bonds of 1998
Sale Amount $1,275,000.00
Expected Sale Date 11/18/98
Rating Description General obligation
A2
NEW YORK, November 16, 1998 -- Moody's has assigned an A2 rating and positve
outlook to Prior Lake's $1,275,000 General Obligation Improvement Bonds of'
1998 based on the city's rapid tax base growth, strong finances evidenced by
healthy General Fund reserves, and above average, though manageable, debt
levels.
SUBURB SOUTH OF TWIN CITIES WILL CONTINUE RAPID RESIDENTIAL TAX BASE GROWTH;
HOUSING VALUES AND WEALTH LEVELS ABOVE AVERAGE:
Moody's expects Prior Lake's tax base to continue growing rapidly because the
opening of the Bloomington Ferry Bridge has improved access to the
Minneapolis/Saint Paul area job market and has accelerated demand for city
land. The city's tax base has grown at an average annual rate of 10.7% since
1992. The Metropolitan Council approved expansion of the Metropolitan Urban
Service Area to 170 recently annexed acres, which extends the boundaries for
development. Residential and commercial development is planned for this land,
which is next to a city-owned industrial office park. Prior Lake's primarily
new and expanding housing stock is valued, on average, well above that of the
state, at $100,000. city officials report that current average residential
building permits are valued at $150,000. Resident wealth levels are also at
least 1257. of state averages, with per capita income and median family income
averaging $18,182 and $47,908, respectively. County unemployment, at 1.6% in
July 1998, is below the state unemployment level of 2.1%.
STRONG FINANCES EVIDENCED BY SIZABLE GENERAL FUND RESERVES:
Moody's expects the city to maintain a strong financial position due to
demonstrated prudent management. The city had a planned operating deficit in
fiscal 1997 due to pay-as-you-go financing for equipment purposes. The fiscal
1997 General Fund balance remained healthy at 29.87. of General Fund revenues.
City officials anticipate an operating surplus approximating $200,000 in
fiscal 1998. The city currently levies below tax levy limits and officials do
not anticipate having to raise the tax rate because of increased property tax
revenues derived from significant tax base growth.
ABOVE AVERAGE DEBT LEVELS REFLECT GROWTH PRESSURES:
tl/16/98 17:15 ET
REF:
NOODO~l~.UUQQ tK:~UUUY~
IU;g1~~~/~~~~
Moody's believes the city's moderate debt burden, at 5.67., is manageable
because of substantial tax base growth, above average principal amortization
and limited future borrowing needs. while borrowings made by Independent
School District No. 719 (Prior Lake) increased the city's debt burden in
recent years, no other borrowing by this school district is anticipated.
Although debt service dominates the city's budget. comprising over 367. of 1997
expenditures, a sizable amount of debt obligations are supported by special
assessments and utility revenues, thereby alleviating the impact on the
property tax levy. The city is retiring existing debt at an above average
amortization rate of over 607. in ten years. The city has a policy of not
borrowing more than is retired annually.
ANALYSTS:
Edward Damutz. Analyst, Public Finance Group, Moody'S Investors Service
patricia South, Backup Analyst, Public Finance Group, Moody'S Investora
Service
Dianne Golub, Senior Credit Officer, Public Finance Group, Moody's Investors
Service
CONTACTS:
Journalists: (212) 553-0376
Research Clients: (212) 553-1625
Q&M)
Juran & Moody
:\ nl\'I"]o:" OF :-'11111'.1\, )011:""0:" & KUEH:--:, I:"COI\POlv\Tl-:n
TABULATION OF BIDS
CITY OF PRIOR LAKE, MINNESOTA
$1,275,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1998
AWARD:
DA IE OF SALE:
MOOD'S RATING:
SALOMON SMITII BARNEY
WEDNESDAY, NOVEMBER 18, 1998
A2
BIDDER
INTEREST RA IE
NET INTEREST COST
(RA IE)
SALOMON SMITII BARNEY
CRONIN & CO., INC.) CO-MANAGER
3.50% - 1999/00
3.65% - 2001
3.75% - 2002
4.00% - 2003/06
4.10% - 2007
4.20% - 2008
PURCHASE PRICE:
$1,264,576,25
$295,111.25
(4.1419%)
DAlN RAUSCHER, INC.
3.200% - 1999
3.400% - 2000
3.550% - 2001
3.650% - 2002
3.750% - 2003
3.850% - 2004
3.950% - 2005
4.000% - 2006
4.100% - 2007
4.125%-2008
PURCHASE PRICE:
$1,255,875.00
$298,062.50
(4.1833%)
PIPER JAFFRA Y INC.
3.30% - 1999
3.50% - 2000
3.60% - 2001
3.70% - 2002
3.80% - 2003
3.90% - 2004
4,00% - 2005/06
4.10% - 2007
4.20% - 2008
PURCHASE PRICE:
$1,256,716,00
$300,284.00
(4.2145%)
BERNARDI SECURITIES, INC.
3.75% - 1999
3.80% - 2000
3.85% - 2001
3.90% - 2002
4.00% - 2003
4.10% - 2004
4.20% - 2005
4.25% - 2006
4.30% - 2007
4.35% - 2008
PURCHASE PRICE:
$1,263,525.00
$308,225.00
(4.3443%)
I 100 World TLhk ('c'llIcr
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S,- l';ll1l. .\ 1:--: :;:; 101
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Houston, T.\
MINNESOTA MUNICIPAL BOND SALES
NOVEMBER 1998
DATE MATURITY MUNlCIP ALITY AMOUNT TYPE RATING NIC
11- 2 11 Moorhead $ 1,245,000 G. O. Bonds A3 4.22
11- 4 17 St. Paul Metro Airport 38,750,000 G.O. Refunding AAA 4.65
11- 4 11 Sauk Centre 405,000 G.O. Bonds NR 4.94
11- 5 21 ISD 333, Ogilvie 2,070,000 G.O. Bonds AA+ 4.51
11- 9 30 Madison City 1,875,000 G.O. Bonds NR 5.28
11- 9 12 Mankato 4,535,000 G.O. Bonds, Series A AAA 4.01
FSA
11- 9 11 Mankato 500,000 G.O. Bonds, Series B A3 4.23
11- 9 11 Mankato 700,000 G.O. Bonds, Series C A3 6.09
11- 9 10 Mankato 4,375,000 G. O. Refunding, Series D AAA 4.03
FSA
11- 9 6 Monticello 515,000 G. O. Refunding, Series B A3 3.99
11- 9 11 La Crescent 1,805,000 G. O. Improvement AAA 4.26
FSA
11- 10 19 ISD 535, Rochester 10,000,000 . G.O. Refunding AA+ 4.59
11- 10 20 ISD 542, Battle Lake 6,290,000 G.O. Bonds Aa 1 4.51
11-10 11 Independence 820,000 G.O. Improvement Refunding NR 4.39
11-10 14 Oakdale 1,345,000 G.O. Bonds, Series A Al 4.11
11- 10 5 Oakdale 390,000 G. O. Bonds, Series B Al 3.86
11-12 19 ISD 138, North Branch 10,000,000 G.O. Refunding AAA 4.62
FSA
11- 12 6 Metropolitan Council 5,300,000 G. O. Bonds, Series C AAA 3.85
11- 12 15 Metropolitan Council 1,365,000 G.O. Bonds, Series D AAA 4.29
11- 16 15 Marshall City 5,085,000 G.O. Refunding AAA 4.31
MBIA
11- 16 17 ISD 280, Richfield 10,000,000 G. O. Refunding AAA 4.55
11- 16 16 Farmington 2,325,000 G.O. Improvement AAA 4.39
MBIA
11- 16 22 ISD 281, Robbinsdale 9,500,000 G.O. Bonds Aa 1 4.53
(15-20 MBIA)
11- 16 10 Bloomington 1,270,000 G.O. Bonds, Series 33 AA+ 3.97
11- 16 8 Bloomington 790,000 G.O. Bonds, Series A AA+ 3.90
11- 16 8 St. Louis Park 4,290,000 G.O. Refunding Aa 1 3.85
11-16 26 ISD 550, Underwood 8,100,000 G.O. Bonds AAA 4.73
MBIA
11- 17 14 St. James Hospital 610,000 G. O. Refunding Baa 2 4.67
JURAN & MOODY, a division of
MILLER, JOHNSON & KUEHN, INCORPORATED
MINNESOTA MUNICIPAL BOND SALES
NOVEMBER 1998
DATE MATURITY MUNICIP ALITY AMOUNT TYPE RATING NIC
11-17 12 Shakopee 2,375,000 G.O. Bonds A2 4.20
11-17 21 Hennepin County 30,000,000 G.O. Bonds AAA 4.52
Fitch
11- 18 16 Plymouth 4,500,000 G.O. Bonds AAA 4.21
11- 18 10 Prior Lake 1,275,000 G.O. Improvement A2 4.14
JURAN & MOODY, a division of
MILLER. JOHNSON & KUEHN, INCORPORATED
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EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
PRIOR LAKE, MINNESOTA
HELD: November 18, 1998
Pursuant to due call and notice thereof, a special
meeting of the City Council of the City of Prior Lake, Scott
County, Minnesota, was duly called and held at the Fire Hall in
said City on Wednesday, the 18til day of November, 1998, at 5:00
P.M., for the purpose of considering proposals for, and awarding
the sale of, $1,275,000 General Obligation Improvement Bonds of
1998 of the City.
The following members were present:
and the following were absent:
Member
and moved its adoption:
introduced the following resolution
Resolution Number 98-133
RESOLUTION PROVIDING FOR ISSUANCE OF
$1,275,000 GENERAL OBLIGATION IMPROVEMENT
BONDS OF 1998
A. WHEREAS, on October 19, 1998, the City Council of
the City of Prior Lake, Minnesota (the "City"), adopted a
resolution (the "Preliminary Resolution"), which provided for the
private negotiation of $1,275,000 General Obligation Improvement
Bonds of 1998 (the "Bonds") i and
B. WHEREAS, proposals to purchase the Bonds have been
solicited by Juran & Moody ("Juran") in accordance with the
Preliminary Resolution; and
C. WHEREAS, the proposals set forth on Exhibit A
attached hereto were received and opened pursuant to the Official
Terms of Bond Sale established for the Bonds in the presence of
the Manager, or designee, at the offices of Juran at 11:30 A.M.,
Central Time, this same day; and
D. WHEREAS, the City Council of the City has
heretofore determined and declared that it is necessary and
expedient to issue the Bonds of the City, pursuant to Minnesota
Statutes, Chapters 429 and 475, to finance the construction of
various improvements in the City (the "Improvements"), including
996083.1
but not limited to sanitary sewer and water line connections,
storm sewer, streets, sidewalks, and curb and gutter: and
E. WHEREAS, the Improvements and all their components
have been ordered prior to the date hereof, after a hearing
thereon for which notice was given describing the Improvements or
all their components by general nature, estimated cost, and area
to be assessed; and
F. WHEREAS, 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
of the City (or individually, a "Bond"), in accordance with the
Official Terms of Bond 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 and is hereby
accepted, and the Bonds are hereby awarded to said proposal
maker. The City Manager is directed to retain the deposit of
said proposal maker and to forthwith return to the unsuccessful
proposal makers their good faith checks and drafts.
2. Bond Terms.
(a) Title: Original Issue Date: Denominations:
Maturities. The Bonds shall be titled "General Obligation
Improvement Bonds of 1998", shall be dated December 1, 1998, as
the date of original issue and shall be issued forthwith on or
after such date as fully registered bonds. The Bonds 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"). The Bonds shall mature on
December 1 in the years and amounts as follows:
Year
Amount
Year
Amount
1999-2007
$125,000
2008
$150,000
All dates are inclusive.
(b) 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
996083.1
2
single fully registered Bond for each maturity of the Bonds;
and for purposes of complying with this requirement under
paragraphs 5 and 10 Authorized Denominations for any Bond
shall be deemed to be limited during the Book Entry Only
Period to the outstanding principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds
shall be registered in a bond register maintained by the
Bond Registrar (as hereinafter defined) in the name of CEDE
& CO., as the nominee (it or any nominee of the existing or
a successor Depository, the "Nominee").
(iii) With respect to the Bonds neither the City nor
the Bond Registrar shall have any responsibility or
obligation to any broker, dealer, bank, or any other
financial institution for which the Depository holds Bonds
as securities depository (the "Participant") or the person
for which a Participant holds an interest in the Bonds shown
on the books and records of the Participant (the "Beneficial
Owner"). Without limiting the immediately preceding
sentence, neither the City, nor the Bond Registrar, shall
have any such responsibility or obligation with respect to
(A) the accuracy of the records of the Depository, the
Nominee or any Participant with respect to any ownership
interest in the Bonds, or (B) the delivery to any
Participant, any Owner or any other person, other than the
Depository, of any notice with respect to the Bonds,
including any notice of redemption, or (C) the payment to
any Participant, any Beneficial Owner or any other person,
other than the Depository, of any amount with respect to the
principal of or premium, if any, or interest on the Bonds,
or (D) the consent given or other action taken by the
Depository as the Registered Holder of any Bonds (the
"Holder"). For purposes of securing the vote or consent of
any Holder under this Resolution, the City may, however,
rely upon an omnibus proxy under which the Depository
assigns its consenting or voting rights to certain
participants to whose accounts the Bonds are credited on the
record date identified in a listing attached to the omnibus
proxy.
(iv) The City and the Bond Registrar may treat as and
deem the Depository to be the absolute owner of the Bonds
for the purpose of payment of the principal of and premium,
if any, and interest on the Bonds, for the purpose of giving
notices of redemption and other matters with respect to the
Bonds, for the purpose of obtaining any consent or other
action to be taken by Holders for the purpose of registering
transfers with respect to such Bonds, and for all purpose
whatsoever. The Bond Registrar, as paying agent hereunder,
shall pay all principal of and premium, if any, and interest
on the Bonds only to the Holder or the Holders of the Bonds
as shown on the bond register, and all such payments shall
be valid and effective to fully satisfy and discharge the
City'S obligations with respect to the principal of and
996083.1
3
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 15 calendar
days in advance of such special record date to the extent
possible.
(ix) Any successor Bond Registrar in its written
acceptance of its duties under this Resolution and any
paying agency/bond registrar agreement, shall agree to take
any actions necessary from time to time to comply with the
requirements of the Letter of Representations.
(x) In the case of a partial prepayment of a Bond, the
Holder may, in lieu of surrendering the Bonds for a Bond of
996083.1
4
a lesser denomination as provided in paragraph 5 hereof,
make a notation of the reduction in principal amount on the
panel provided on the Bond stating the amount so redeemed.
(c)
Discontinuance
termination of
follows:
Termination of Book-Entry Only System.
of a particular Depository's services and
the book-entry only system may be effected as
(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 hereof. To the extent that the Beneficial Owners are
designated as the transferee by the Holders, in accordance
with paragraph 10 hereof, the Bonds will be delivered to the
Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or
restrict the provisions of paragraph 10 hereof.
(d) Letter of Representations. The provisions in the
Letter of Representations are incorporated herein by reference
and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of
this resolution, the provisions in the Letter of Representations
shall control.
3. Purpose. The Bonds shall provide funds to finance
the Improvements. The total cost of the Improvements, 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. Work on the Improvements shall proceed with due diligence
to completion. The City covenants that it shall do all things
and perform all acts required of it to assure that work on the
996083.1
5
Improvements proceeds with due diligence to completion and that
any and all permits and studies required under law for the
Improvements are obtained.
4. Interest. The Bonds shall bear interest payable
semiannually on June 1 and December 1 of each year (each, an
"Interest Payment Date"), commencing June 1, 1999, calculated on
the basis of a 360-day year of twelve 30-day months, at the
respective rates per annum set forth opposite the maturity years
as follows:
Maturity Interest Maturity Interest
Year Rate Year Rate
1999 ~ 2004 %
0
2000 2005
2001 2006
2002 2007
2003 2008
5. Redemption. All Bonds maturing in the years 2005
to 2008, both inclusive, shall be subject to redemption and
prepayment at the option of the City on December 1, 2004, and on
any Interest Payment 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, those
Bonds remaining unpaid which have the latest maturity date shall
be prepaid first; and if only part of the Bonds having a common
maturity date are called for prepayment, the specific Bonds to be
prepaid shall be chosen by lot by the Bond Registrar. Bonds or
portions thereof called for redemption shall be due and payable
on the redemption date, and interest thereon shall cease to
accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each
affected registered holder of the Bonds at least thirty (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 discre-
tion, 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 his, her or its attorney duly authorized in
writing) and the City shall execute (if necessary) and the Bond
996083.1
6
Registrar shall authenticate and deliver to the Holder of such
Bond, without service charge, a new Bond or Bonds of the same
series having the same stated maturity and interest rate and of
any Authorized Denomination or Denominations, as requested by
such 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. The Finance Director of the City
is appointed to act as bond registrar and transfer agent with
respect to the Bonds (the "Bond Registrar"), and shall do so
unless and until a successor Bond Registrar is duly appointed,
all pursuant to any contract the City and Bond Registrar shall
execute which is consistent herewith. The Bond Registrar shall
also serve as paying agent unless and until a successor paying
agent is duly appointed. Principal and interest on the Bonds
shall be paid to the registered holders (or record holders) of
the Bonds in the manner set forth in the form of Bond and
paragraph 12 of this resolution.
7. Form of Bond. The Bonds, together with the Bond
Registrar's Certificate of Authentication, the form of Assignment
and the registration information thereon, shall be in
substantially the following form:
996083.1
7
UNITED STATES OF AMERICA
STATE OF MINNESOTA
SCOTT COUNTY
CITY OF PRIOR LAKE
R-
$
GENERAL OBLIGATION IMPROVEMENT
BOND OF 1998
INTEREST
RATE
MATURITY
DATE
DATE OF
ORIGINAL ISSUE
CUSIP
DECEMBER I, 1998
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
KNOW ALL PERSONS BY THESE PRESENTS that the City of
Prior Lake, Scott County, Minnesota (the "Issuer"), certifies
that it is indebted and for value received promises to pay to the
registered owner specified above, or registered assigns, unless
called for earlier redemption, in the manner hereinafter set
forth, the principal amount specified above, on the maturity date
specified above, and to pay interest thereon semiannually on June
1 and December 1 of each year (each, an "Interest Payment Date"),
commencing June I, 1999, 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 the
Finance Director of the Issuer (the "Bond Registrar"), acting as
paying agent, or any successor paying agent duly appointed by the
Issuer. Interest on this Bond will be paid on each Interest
Payment Date by check or draft mailed to the person in whose name
this Bond is registered (the "Holder" or "Bondholder") on the
registration books of the Issuer maintained by the Bond Registrar
and at the address appearing thereon at the close of business on
the fifteenth day of the calendar month next preceding 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
996083.1
8
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 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.].
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL
FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE.
IT IS HEREBY CERTIFIED AND RECITED that all acts,
conditions and things required by the Constitution and laws of
the State of Minnesota to be done, to happen and to be performed,
precedent to and in the issuance of this Bond, have been done,
have happened and have been performed, in regular and due form,
time and manner as required by law, and that this Bond, together
with all other debts of the Issuer outstanding on the date of
original issue hereof and the date of its issuance and delivery
to the original purchaser, does not exceed any constitutional or
statutory limitation of indebtedness.
IN WITNESS WHEREOF, the City of Prior Lake, Scott
County, Minnesota, by its City Council has caused this Bond to be
executed on its behalf by the facsimile signatures of its Mayor
and its Manager, the corporate seal of the Issuer having been
intentionally omitted as permitted by law.
Include only until termination of the book-entry only
system under paragraph 2 hereof.
996083.1
9
Date of Registration:
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described in the
Resolution mentioned
within.
THE CITY OF PRIOR LAKE,
MINNESOTA
Bond Registrar
By
Authorized Signature
996083.1
Registrable by: THE FINANCE DIRECTOR
OF THE CITY OF PRIOR LAKE,
MINNESOTA
Payable at: OFFICE OF THE FINANCE
DIRECTOR OF THE CITY OF PRIOR
LAKE, MINNESOTA
CITY OF PRIOR LAKE,
SCOTT COUNTY, MINNESOTA
/s/ Facsimile
Mayor
Isl Facsimile
Manager
10
ON REVERSE OF BOND
Redemption. All Bonds of this issue (the "Bonds")
maturing in the years 2005 to 2008, both inclusive, are subject
to redemption and prepayment at the option of the Issuer on
December 1, 2004, and on any Interest Payment 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, those Bonds remaining unpaid which have the latest
maturity date shall be prepaid first; 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 Holder of the Bonds at least 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 his, her or its attorney duly
authorized in writing) and the Issuer shall execute (if
necessary) and the Bond Registrar shall authenticate and deliver
to the Holder of such Bond, without service charge, a new Bond or
Bonds of the same series having the same stated maturity and
interest rate and of any Authorized Denomination or Denomina-
tions, as requested by such 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 Obliqation. This Bond is
one of an issue in the total principal amount of $1,275,000, all
of like date of original issue and tenor, except as to number,
maturity, interest rate, denomination and redemption privilege,
which Bond has been 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 of the
Issuer on November 18, 1998 (the "Resolution"), for the purpose
of providing money to finance the construction of various
996083.1
11
improvements within the jurisdiction of the Issuer. This Bond is
payable out of the General Obligation Improvement Bonds of 1998
Fund of the Issuer. This Bond constitutes a general obligation
of the Issuer, and to provide moneys for the prompt and full
payment of its principal, premium, if any, and interest when the
same become due, the full faith and credit and taxing powers of
the Issuer have been and are hereby irrevocably pledged.
Denominations: Exchanqe: Resolution. The Bonds are
issuable solely as fully registered bonds in Authorized
Denominations (as defined in the Resolution) and are exchangeable
for fully registered Bonds of other Authorized Denominations in
equal aggregate principal amounts at the principal office of the
Bond Registrar, but only in the manner and subject to the
limitations provided in the Resolution. Reference is hereby made
to the Resolution for a description of the rights and duties of
the Bond Registrar. Copies of the Resolution are on file in the
principal office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in
person or by his, her or its attorney duly authorized in writing
at the principal office of the Bond Registrar upon presentation
and surrender hereof to the Bond Registrar, all subject to the
terms and conditions provided in the Resolution and to reasonable
regulations of the Issuer contained in any agreement with the
Bond Registrar. Thereupon the Issuer shall execute and the Bond
Registrar shall authenticate and deliver, in exchange for this
Bond, one or more new fully registered Bonds in the name of the
transferee (but not registered in blank or to Ilbearer" 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 Reqistered 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 on the
reverse side hereof 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.
Not Qualified Tax-Exemot Obliqation. This Bond has not
been designated by the Issuer as a "qualified tax-exempt
996083.1
12
obligationll for purposes of Section 265 (b) (3) of the Internal
Revenue Code of 1986, as amended.
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
TEN ENT
JT TEN -
- as tenants in common
- as tenants by the entireties
as joint tenants with right of
and not as tenants in common
as custodian for
survivorship
UTMA -
(Minor)
Uniform
(Cust)
under the
(State)
Transfers to Minors Act
Additional abbreviations may also be used
though not in the above list.
996083.1
13
ASSIGNMENT
For value received, the undersigned hereby sells,
assigns and transfers unto
the within Bond and does
hereby irrevocably constitute and appoint
attorney to transfer the Bond on the books kept for the
registration thereof, with full power of substitution in the
premises.
Dated:
Notice:
The assignor's signature to this
assignment must correspond with the name
as it appears upon the face of the
within Bond in every particular, without
alteration or any change whatever.
Signature Guaranteed:
Signature(s) must be guaranteed by a national bank or trust
company or by a brokerage firm having a membership in one of the
major stock exchanges or any other "Eligible Guarantor
Institution" as defined in 17 CFR 240.17 Ad-15(a) (2).
The Bond Registrar will not effect transfer of this Bond
unless the information concerning the transferee requested below
is provided.
Name and Address:
(Include information for all joint owners
if the Bond is held by joint account.)
996083.1
14
[Use only for Bonds when they are
Registered in Book Entry Only System)
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and
in the amount(s) as follows:
DATE
AMOUNT
AUTHORIZED SIGNATURE
OF HOLDER
996083.1
15
8. Execution; Temporary Bonds. The Bonds shall be
printed (or, at the request of the Purchaser, typewritten) and
shall be executed on behalf of the City by the signatures of its
Mayor and Manager and be sealed with the seal of the City;
provided, however, that the seal of the City may be a printed
(or, at the request of the Purchaser, photocopied) facsimile; and
provided further that both of such signatures may be printed (or,
at the request of the Purchaser, photocopied) facsimiles and the
corporate seal may be omitted on the Bonds as permitted by law.
In the event of disability or resignation or other absence of
either such officer, the Bonds may be signed by the manual or
facsimile signature of that officer who may act on behalf of such
absent or disabled officer. In case either such 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, such signature or facsimile shall nevertheless be valid
and sufficient for all purposes, the same as if he or she had
remained in office until delivery. The City may elect to
deliver, in lieu of printed definitive bonds, one or more
typewritten temporary bonds in substantially the form set forth
above, with such changes as may be necessary to reflect more than
one maturity in a single temporary bond. Such temporary bonds
may be executed with photocopied facsimile signatures of the
Mayor and Manager. Such temporary bonds shall, upon the printing
of the definitive bonds and the execution thereof, be exchanged
therefor and canceled.
9. Authentication. No Bond shall be valid or
obligatory for any purpose or be entitled to any security or
benefit under this resolution unless a Certificate of
Authentication on such Bond, substantially in the form
hereinabove set forth, shall have been duly executed by an
authorized representative of the Bond Registrar. Certificates of
Authentication on different Bonds need not be signed by the same
person. The Bond Registrar shall authenticate the signatures of
officers of the City on each Bond by execution of the Certificate
of Authentication on the Bond and by inserting as the date of
registration in the space provided the date on which the Bond is
authenticated, except that for purposes of delivering the
original Bonds to the Purchaser, the Bond Registrar shall insert
as a date of registration the date of original issue, which date
is December 1, 1998. The Certificate of Authentication so
executed on each Bond shall be conclusive evidence that it has
been authenticated and delivered under this resolution.
10. Reqistration; 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
996083.1
16
(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 ln
blank or in the name of "bearer" or similar designation.
At the option of the Holder, Bonds may be exchanged for
Bonds of any Authorized Denomination or Denominations of a like
aggregate principal amount and stated maturity, upon surrender of
the Bonds to be exchanged at the principal office of the Bond
Registrar. Whenever any Bonds are so surrendered for exchange,
the City shall execute (if necessary), and the Bond Registrar
shall authenticate, insert the date of registration of, and
deliver the Bonds which the Holder making the exchange is
entitled to receive.
All Bonds surrendered upon any exchange or transfer
provided for in this resolution shall be promptly canceled by the
Bond Registrar and thereafter disposed of as directed by the
City.
All Bonds delivered in exchange for or upon transfer of
Bonds shall be valid general obligations of the City evidencing
the same debt, and entitled to the same benefits under this
resolution, as the Bonds surrendered for such exchange or
transfer.
Every Bond presented or surrendered for transfer or
exchange shall be duly endorsed or be accompanied by a written
instrument of transfer, in form satisfactory to the Bond
Registrar, duly executed by the Holder thereof or his, her or its
attorney duly authorized in writing.
The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable
regulations of the City contained in any agreement with the Bond
Registrar, including regulations which permit the Bond Registrar
to close its transfer books between record dates and payment
dates. The Manager is hereby authorized to negotiate and execute
the terms of said agreement.
996083.1
17
11. Rights Upon Transfer or Exchange. Each Bond
delivered upon transfer of or in exchange for or in lieu of any
other Bond shall carryall the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any
Bond shall be paid on each Interest Payment Date by check or
draft mailed to the person in whose name the Bond is registered
(the "Holder") on the registration books of the City maintained
by the Bond Registrar and at the address appearing thereon at the
close of business on the fifteenth (15th) day of the calendar
month next preceding 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 Reqistered 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 above) 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; Aoplication of Proceeds. The Bonds when
so prepared and executed shall be delivered by the Finance
Director to the Purchaser upon receipt of the purchase price, and
the Purchaser shall not be obliged to see to the proper
application thereof.
15. Fund and Accounts. There is hereby created a
special fund to be designated the "General Obligation Improvement
Bonds of 1998 Fund" (the "Fund") to be administered and
maintained by the Finance Director as a bookkeeping account
separate and apart from all other funds maintained in the
official financial records of the City. The Fund shall be
maintained in the manner herein specified until all of the Bonds
and the interest thereon have been fully paid. There shall be
maintained in the Fund two (2) separate accounts, to be
designated the "Construction Account" and "Debt Service Account",
respectively.
(a) Construction Account. To the Construction Account
there shall be credited the proceeds of the sale of the Bonds,
less accrued interest received thereon, and less any amount paid
for the Bonds in excess of $1,254,600, plus any special assess-
ments levied with respect to the Improvements and collected prior
to completion of the Improvements and payment of the costs
996083.1
18
thereof. From the Construction Account there shall be paid all
costs and expenses of making the Improvements listed in paragraph
16, including the cost of any construction contracts heretofore
let and all other costs incurred and to be incurred of the kind
authorized in Minnesota Statutes, Section 475.65; and the moneys
in said account shall be used for no other purpose except as
otherwise provided by law; provided that the proceeds of the
Bonds may also be used to the extent necessary to pay interest on
the Bonds due prior to the anticipated date of commencement of
the collection of taxes or special assessments herein levied or
covenanted to be levied; and provided further that if upon
completion of the Improvements there shall remain any unexpended
balance in the Construction Account, the balance (other than any
special assessments) 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 Construction Account shall only be
applied towards payment of the costs of the Improvements upon
adoption of a resolution by the City Council determining that the
application of the special assessments for such purpose will not
cause the City to no longer be in compliance with Minnesota
Statutes, Section 475.61, Subdivision 1.
(b) Debt Service Account. There are hereby irrevocably
appropriated and pledged to, and there shall be credited to, the
Debt Service Account: (i) all collections of special assessments
herein covenanted to be levied with respect to the Improvements
and either initially credited to the Construction Account and not
already spent as permitted above and required to pay any
principal and interest due on the Bonds or collected subsequent
to the completion of the Improvements and payment of the costs
thereof; (ii) all accrued interest received upon delivery of the
Bonds; (iii) all funds paid for the Bonds in excess of
$1,254,600; (iv) any collections of all taxes herein or hereafter
levied for the payment of the Bonds and interest thereon; (v) all
funds remaining in the Construction Account after completion of
the Improvements and payment of the costs thereof, not so
transferred to the account of another improvement; (vi) all
investment earnings on funds held in the Debt Service Account;
and (vii) any and all other moneys which are properly available
and are appropriated by the governing body of the City to the
Debt Service Account. The Debt Service Account shall be used
solely to pay the principal and interest and any premiums for
redemption of the Bonds and any other general obligation bonds of
the City hereafter issued by the City and made payable from said
account as provided by law.
No portion of the proceeds of the Bonds shall be used
directly or indirectly to acquire higher yielding investments or
to replace funds which were used directly or indirectly to
acquire higher yielding investments, except (1) for a reasonable
temporary period until such proceeds are needed for the purpose
for which the Bonds were issued and (2) in addition to the above
in an amount not greater than the lesser of five percent (5%) of
the proceeds of the Bonds or $100,000. To this effect, any
996083.1
19
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. Assessments. It is hereby determined that no less
than twenty percent (20%) of the cost to the City of each
Improvement financed hereunder within the meaning of Minnesota
Statutes, Section 475.58, Subdivision 1(3), shall be paid by
special assessments to be levied against every assessable lot,
piece and parcel of land benefitted by any of the Improvements.
The City hereby covenants and agrees that it will let all
construction contracts not heretofore let within one (1) year
after ordering each Improvement financed hereunder unless the
resolution ordering the Improvement specifies a different time
limit for the letting of construction contracts. The City hereby
further covenants and agrees that it will do and perform as soon
as they may be done all acts and things necessary for the final
and valid levy of such special assessments, and in the event that
any such assessment be at any time held invalid with respect to
any lot, piece or parcel of land due to any error, defect, or
irregularity in any action or proceedings taken or to be taken by
the City or the City Councilor any of the City officers or
employees, either in the making of the assessments or in the
performance of any condition precedent thereto, the City and the
City Council will forthwith do all further acts and take all
further proceedings as may be required by law to make the
assessments a valid and binding lien upon such property. The
special assessments have not heretofore been authorized, and
accordingly, for purposes of Minnesota Statutes, Section 475.55,
Subdivision 3, the special assessments are hereby authorized.
Subject to such adjustments as are required by the conditions in
existence at the time the assessments are levied, it is hereby
determined that the assessments shall be payable in equal,
consecutive, annual installments, with general taxes for the
years shown below and with interest on the declining balance of
all such assessments at a rate per annum not greater than the
maximum permitted by law and not less than the rate per annum set
forth opposite the collection years specified below:
996083.1
20
Improvement
Desiqnation
Amount
Collection
Levy Years Years
Rate
1998 Improvement
Projects
$594,000
1998-2007 1999-2008
8.00%
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.
17. Tax Levy; Coverage Test. To provide moneys for
payment of the principal and interest on 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 Year of Tax
Levy Collection Amount
1998 1999 $
1999 2000
2000 2001
2001 2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
The tax levies are such that if collected in full they,
together with estimated collections of special assessments and
other revenues herein pledged for the payment of the Bonds, will
produce at least five percent (5%) in excess of the amount needed
to meet when due the principal and interest payments on the
Bonds. The tax levies shall be irrepealable so long as any of
the Bonds are outstanding and unpaid, provided that the City
reserves the right and power to reduce the levies in the manner
and to the extent permitted by Minnesota Statutes, Section
475.61, Subdivision 3.
18. Defeasance. When all Bonds have been discharged
as provided in this paragraph, all pledges, covenants and other
rights granted by this resolution to the registered holders of
the Bonds shall, to the extent permitted by law, cease. The City
may discharge its obligations with respect to any Bonds which are
due on any date by irrevocably depositing with the Bond Registrar
on or before that date a sum sufficient for the payment thereof
in full; or if any Bond should not be paid when due, it may
nevertheless be discharged by depositing with the Bond Registrar
a sum sufficient for the payment thereof in full with interest
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accrued to the date of such deposit. The City may also discharge
its obligations with respect to any prepayable Bonds called for
redemption on any date when they are prepayable according to
their terms, by depositing with the Bond Registrar on or before
that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given.
The City may also at any time discharge its obligations with
respect to any Bonds, subject to the provisions of law now or
hereafter authorizing and regulating such action, by depositing
irrevocably in escrow, with a suitable banking institution
qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67,
Subdivision 8, bearing interest payable at such times and at such
rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become
due thereon to maturity or, if notice of redemption as herein
required has been duly provided for, to such earlier redemption
date.
19. Compliance With Reimbursement Bond Requlations.
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 IIReimbursement Regulationsll)
applicable to the "reimbursement proceedsll 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 IIReimbursement
Expenditure") .
The City hereby certifies and/or covenants as follows:
(a) Not later than 60 days after the date of payment of a
Reimbursement Expenditure, the City (or person
designated to do so on behalf of the City) has made or
will have made a written declaration of the City's
official intent (a "Declarationll) which effectively (i)
states the City's reasonable expectation to reimburse
itself for the payment of the Reimbursement Expenditure
out of the proceeds of a subsequent borrowing; (ii)
gives a general and functional description of the
property, project or program to which the Declaration
relates and for which the Reimbursement Expenditure is
paid, or identifies a specific fund or account of the
City and the general functional purpose thereof from
which the Reimbursement Expenditure was to be paid
(collectively the "Project"); and (iii) states the
maximum principal amount of debt expected to be issued
by the City for the purpose of financing the Project;
provided, however, that no such Declaration shall
necessarily have been made with respect to: (i)
"preliminary expenditures" for the Project, defined in
the Reimbursement Regulations to include engineering or
architectural, surveying and soil testing expenses and
similar prefatory costs, which in the aggregate do not
exceed 20% of the "issue price" of the Bonds, and (ii)
996083.1 22
a de minimis amount of Reimbursement Expenditures not
in excess of the lesser of $100,000 or 5% of the
proceeds of the Bonds. Notwithstanding the foregoing,
with respect to any Declaration made by the City
between January 27, 1992 and June 30, 1993, with
respect to a Reimbursement Expenditure made prior to
March 2, 1992, the City hereby represents that there
exists objective evidence, that at the time the
Expenditure was paid the City expected to reimburse the
cost thereof with the proceeds of a borrowing (taxable
or tax-exempt) and that expectation was reasonable.
(b) Each Reimbursement Expenditure is a capital expenditure
or a cost of issuance of the Bonds or any of the other
types of expenditures described in Section 1.150-
2 (d) (3) of the Reimbursement Regulations.
(c) The "reimbursement allocation" described in the
Reimbursement Regulations for each Reimbursement
Expenditure shall and will be made forthwith following
(but not prior to) the issuance of the Bonds and in all
events within the period ending on the date which is
the later of three years after payment of the
Reimbursement Expenditure or one year after the date on
which the Project to which the Reimbursement
Expenditure relates is first placed in service.
(d) Each such reimbursement allocation will be made in a
writing that evidences the City's use of Bond proceeds
to reimburse the Reimbursement Expenditure and, if made
within 30 days after the Bonds are issued, shall be
treated as made on the day the Bonds are issued.
Provided, however, that the City may take action contrary to any
of the foregoing covenants in this paragraph 19 upon receipt of
an opinion of its Bond Counsel for the Bonds stating in effect
that such action will not impair the tax-exempt status of the
Bonds.
20. Continuinq 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
IIRulell), promulgated by the Securities and EXChange Commission
(the IICommissionll) pursuant to the Securities EXChange Act of
1934, as amended, and a Continuing DisClosure Undertaking (the
"Undertakingll) hereinafter described to:
(a) Provide or cause to be provided to each nationally
recognized municipal securities information repository ("NRMSIR")
and to the appropriate state information depository ("SID"), if
any, for the State of Minnesota, in each case as designated by
the Commission 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.
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(b) Provide or cause to be provided, in a timely manner, to
(i) each NRMSIR or to the Municipal Securities Rulemaking Board
(IIMSRBII) and (ii) the SID, notice of the occurrence of certain
material events with respect to the Bonds in accordance with the
Undertaking.
(c) Provide or cause to be provided, in a timely manner, to
(i) each NRMSIR or to the MSRB and (ii) the SID, notice of a
failure by the City to provide the annual financial information
with respect to the City described in the Undertaking.
(d) The City agrees that its covenants pursuant to the Rule
set forth in this paragraph 20 and in the Undertaking is intended
to be for the benefit of the Holders of the Bonds and shall be
enforceable on behalf of such Holders; provided that the right to
enforce the provisions of these covenants shall be limited to a
right to obtain specific enforcement of the City's obligations
under the covenants.
The Mayor and Manager of the City, or any other officer of
the City authorized to act in their place with 1I0fficersll are
hereby authorized and directed to execute on behalf of the City
the Undertaking in substantially the form presented to the City
Council subject to such modifications thereof or additions
thereto as are (i) consistent with the requirements under the
Rule, (ii) required by the Purchaser of the Bonds, and (iii)
acceptable to the Officers.
21. General Obliqation 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.
22. Certificate of Registration. The Manager is
hereby directed to file a certified copy of this resolution with
the County Auditor of Scott County, Minnesota, together with such
other information as he or she shall require, and to obtain the
County Auditor's certificate that the Bonds have been entered in
the County Auditor's Bond Register, and that the tax levy
required by law has been made.
23. Records and Certificates. The officers of the
City are hereby authorized and directed to prepare and furnish to
the Purchaser, and to the attorneys approving the legality of the
issuance of the Bonds, certified copies of all proceedings and
records of the City relating to the Bonds and to the financial
condition and affairs of the City, and such other affidavits,
certificates and information as are required to show the facts
996083.1
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relating to the legality and marketability of the Bonds as the
same appear from the books and records under their custody and
control or as otherwise known to them, and all such certified
copies, certificates and affidavits, including any heretofore
furnished, shall be deemed representations of the City as to the
facts recited therein.
24. Neqative Covenant as to Use of Proceeds and
Improvements. The City hereby covenants not to use the proceeds
of the Bonds or to use the Improvements, or to cause or permit
them to be used, or to enter into any deferred payment
arrangements for the cost of the Improvements, in such a manner
as to cause the Bonds to be IIprivate activity bonds" within the
meaning of Sections 103 and 141 through 150 of the Code.
25. 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 (1) requirements relating to temporary periods
for investments, (2) limitations on amounts invested at a yield
greater than the yield on the Bonds, and (3) the rebate of excess
investment earnings to the United States, if the Bonds (together
with other obligations reasonably expected to be issued and
outstanding at one time in this calendar year) exceed the
small-issuer exception amount of $5,000,000.
For purposes of qualifying for the exception to the
federal arbitrage rebate requirements for governmental units
issuing $5,000,000 or less of bonds, the City hereby finds,
determines and declares that (1) the Bonds are issued by a
governmental unit with general taxing powers, (2) no Bond is a
private activity bond, (3) ninety-five percent (95%) or more of
the net proceeds of the Bonds are to be used for local
governmental activities of the City (or of a governmental unit
the jurisdiction of which is entirely within the jurisdiction of
the City), and (4) the aggregate face amount of all tax-exempt
bonds (other than private activity bonds) issued by the City (and
all subordinate entities thereof, and all entities treated as one
issuer with the City) during the calendar year in which the Bonds
are issued and outstanding at one time is not reasonably expected
to exceed $5,000,000, all within the meaning of Section
148 (f) (4) (D) of the Code.
26. No Desiqnation of Qualified Tax-Exempt
Obliqations. The Bonds exceed in amount those which may be
qualified as IIqualified tax-exempt obligations" within the
meaning of Section 265(b) (3) of the Code, and hence are not
designated for such purposes.
27. 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.
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28. Headinqs. 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:
adopted.
Whereupon said resolution was declared duly passed and
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STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting
Manager of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY
that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that
the same is a full, true and complete transcript of the minutes
of a meeting of the City Council of said City, duly called and
held on the date therein indicated, insofar as such minutes
relate to considering proposals for, and awarding the sale of,
$1,275,000 General Obligation Improvement Bonds of 1998 of said
City.
WITNESS my hand this 18th day of November, 1998.
Manager
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