HomeMy WebLinkAbout5B - Sale of $1,065,000 in General Obligation Bonds
.
Preliminary Official Statement
(Dated October 2, 1997)
I
Moody's Rating:
City of Prior Lake, Minnesota
(Scott County)
$1,065,000
General Obligation Improvement Bonds of 1997
Interest Payable: 6-1-98 and semiannaully thereafter Call Option: 12-1-04 @ 100
REGISTRA TIONIBOOK 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 prinicpal 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 mulitple
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 OPENING
Monday, October 20, 1997
11:30 A.M., C.T.
Juran & Moody
Minneapo lis
'" .
. St. Paul
Prior Lake
DATE, TIME and
PLACE of AWARD
Monday, October 20, 1997
7:30 P.M., c.T.
Fire Hall
1677 6 Fish Point Road SE
Prior Lake, Minnesota 55372
In the opinion of Briggs and Morgan, Professional Association, Bond Counsel, based on present federal 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 financial institutions). Interest on the bonds is not an item
of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, interest on the bonds is taken into account
in determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on corporations. No opinion will be
expressed by Bond Counsel 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. See 'Tax Exemption and Other Tax Considerations" herein.
~
JURAN & MOODY, a division of
MILLER, JOHNSON & KUEHN, INCORPORATED
1100 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, Minnesota 55101 (612) 224-1500
TABLE OF CONTENTS
Page
Summary of Offering. ....... ...... ....... ...... ............. ...... ... .... ... .......... ... ..... ....... 2
Principal City Officials......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Is sue r' s C e rt i f i cat e. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Terms of Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 - 10
Authority and Security for the Bonds............................................................ 11
Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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 - 25
Minnesota Valuations, Tax Credits and Levy Limitations.............................. ......26 - 28
The City of Prior Lake (Economic and Financial Information) .... ............. .... ........29 - 37
Summary of Debt and Debt Statistics........................ ........... ......................... 38
Worksheet........................... .............. .......................................... ............ 39
Proposal Form................................... ... ..... ....... ....................................... 41
Appendix A - Proposed Form of Legal Opinion
Appendix B - Form of Continuing Disclosure Undertaking
Appendix C - City's Financial Report
SUMMARY OF OFFERING
$1,065,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1997
(Book-Entry Only)
AMOUNT - $1,065,000.
ISSUER - City of Prior Lake, Minnesota.
SALE DATE - Monday, October 20.1997.
OPENING - 11:30 A.M. Central Time, at Juran & Moody, 1100 Minnesota World Trade Center. 30 East Seventh Street, St. Paul, Minnesota
55101-4901.
AWARD - 7:30 P.M., 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 1997. See Authority and Security for the Bonds and Estimated Source and
Application of Funds for additional information.
SECURITY & PURPOSE - These Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475 and 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 Account of this issue. 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.
In addition, the proceeds of the $1,065,000 General Obligation Improvement Bonds of 1997, dated November I,
1997, will be used to provide funds for the financing of assessable improvements within the City for the following
projects (i) Pike Lake Trail, (ii) Mush Town Road and (iii) County Road No. 42. Improvements include but are not
limited to streets, sanitary sewer, water main & line extensions, storm sewer, sidewalks, and curb and gutter.
DATE OF ISSUE - November I, 1997.
INTEREST PAYABLE DATES - June 1, 1998 and semiannually thereafter on December I and June I to registered owners of the Bonds ap-
pearing 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 -
12/01/98
12/01/99
$100,000
100,000
12/01/00
12/01/01
$100,000
100,000
12/01/02
12/01/03
$100,000
100,000
12/01/04
12/01/05
$100,000
115,000
12/01/06
12/01/07
$125,000
125,000
AVERAGE MATURITY - 5.80634 years.
REDEMPTION FEATURE - At the option of the Issuer, Bonds maturing after December I, 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 in
whole or in part 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 part of the Bonds having a common maturity date are
called for prepayment, the Issuer will notify DTC of the particular amount of such maturity to be prepaid. DTC
will determine by lot the amount of each participant's interest in such maturity to be redeemed and each partic-
ipant 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 of 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 general obligation bonds of 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 Bonds.
PA YING AGENT & REGISTRAR - First Trust National Association, St. Paul, Minnesota.
METHOD OF SALE - Sealed proposals only, accompanied by a good faith check in the amount of $21,300 at a price of not less than
$1,045,830 and accrued interest. See Official Terms of Bond Sale herein for additional information.
TAX DESIGNATIONS-
NOT Private Activity Bonds - These Bonds are not "private activity bonds" as defined in 9141 of the Internal Revenue Code of 1986, as
amended (the Code).
Oualified Tax-Exemnt Oblil!ations - The Issuer will designate these Bonds "qualified tax-exempt obligations" for purposes of
~265(b)(3) of the Code.
LEGAL OPINION - Briggs and Morgan, Professional Association, St. Paul and Minneapolis, Minnesota.
RATING - The City currently hn a general obligation bond rating of "A2" from Moody's Investors Service. The City ~ applying for a
rating on this issue to Moody's.
ESTIMATED CLOSING DATE - November 11, 1997.
PRIMARY CONTACTS - Frank Boyles, City Manager, (612) 447-4230.
Ralph Teschner, City Finance Director, (612) 447-4230.
Steven J. Manson, Vice President, Juran & Moody, (612) 224-1500 or (800) 950-4666.
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CITY OF PRIOR LAKE
PRINCIPAL CITY OFFICIALS
Elected Officials
City Council
Name
Position
Lydia Andren
Mayor
Tom Kedrowski
Council Member
Wes Mader
Council Member
Jeannie Robbins
Council Member
Peter Schenck
Council Member
Appointed Officials
Frank Boyles
City Manager
Ralph Teschner
City Finance Director
Campbell Knutson, P.A.-
Suesan Lea Pace
City Consulting Attorney
Greg Ilkka
City Engineer
Bond Counsel
Briggs and Morgan, Professional Association
St. Paul and Minneapolis, Minnesota
Bond Consultant
Juran & Moody
a division of Miller, Johnson & Kuehn, Incorporated
St. Paul, Minnesota
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Tenn Exvires
12/31/97
12/3 1/99
12/31/99
12/31/97
12/31/97
ISSUER'S CERTIFICATE
This Official Statement has been prepared in conformance with the Disclosure Guidelines for offer-
ings 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
financial advisor with respect to the securities being offered in this Official Statement. All state-
ments contained herein, while not guaranteed, have been compiled from sources believed to be re-
liable 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, 1996, along
with comparative December 31, 1995 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 in-
debtedness when due.
NO FINAL OFFICIAL STATEMENT WILL BE PREPARED.
THE ISSUER WILL PROVIDE THE SUCCESSFUL
UNDERWRITER WITH AN ADDENDUM THAT TOGETHER
WITH THIS PRELIMINARY OFFICIAL STATEMENT WILL
BE DEEMED THE FINAL OFFICIAL STATEMENT BY
THE ISSUER.
THE DATE OF THIS OFFICIAL STATEMENT IS OCTOBER 2, 1997.
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OFFICIAL TERMS OF
BOND SALE
$1,065,000
GENERAL OBLIGATION IMPROVEMENT
BONDS OF 1997
CITY OF PRIOR LAKE
scon COUNTY
MINNESOTA
(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 Monday,
October 20, 1997, at ll: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. Consideration 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
2-:~ R.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 ("DTC"), 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 DTC and its
participants. Principal and interest
are payable by the Issuer through First
Trust National Association, in St. Paul,
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Minnesota (the "Registrar") to DTC or
its nominee as registered owner of the
bonds. Transfer of principal and
interest payments to participants of DTC
will be the responsibility of 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. The Issuer will pay reasonable and
customary charges for the services of
the Registrar.
DATE OF ORIGINAL
ISSUE OF BONDS:
November 1, 1997.
PURPOSE:
For the purpose of providing money to
finance the construction of various
improvements in the Issuer.
INTEREST PAYMENTS:
June I, 1998, and semiannually
thereafter on June 1 and December 1 to
registered owners of the 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.
MATURITIES:
December 1 in each of the years and
amounts as follows:
Year
Amount
1998-2004
2005
2006-2007
$100,000
115,000
125,000
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
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redemption in each year conforms to the
maturity schedule set forth above.
REDEMPTION:
At the option of the Issuer, bonds
maturing after December 1, 2004, shall
be subject to prior payment on said
date, and any interest pay7,ent cate
thereafter, at a price of par and
accrued interest. Redemption may be in
whole or in part 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 part of the
bonds having a common maturity date are
called for prepayment, the Issuer will
notify DTC of the particular amount of
such maturity to be prepaid. DTC 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 WUMBERS:
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 be 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
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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
$1,045,830 and accrued interest on the
principal sum of $1,065,000 from date of
original issue of the bonds to date of
delivery must be filed with the
undersigned prior to the time of sale.
Proposals must be unconditional except
as to legality. A certified or
cashier's check (the "Deposit") in the
amount of $21,300, payable 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 & Moody, 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
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RATES:
INFORMATION FROM
PURCHASER:
QUALIFIED TAX
EXEMPT OBLIGATIONS:
CONTINUING DIS-
CLOSURE UNDERTAKING:
by that time, the Financial Surety Bond
may be drawn by the Issuer to satisfy
the Deposit requirement. The Issuer
will deposit the check of the purchaser,
the amount of which will be deducted at
settlement and no interest will accrue
to the purchaser. In ~he event the
purchaser 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
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 and no
rate of any maturity may be lower than
the highest rate applicable to bonds of
any preceding maturities.
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 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 of the
bonds and in a Continuing Disclosure
Undertaking to provide, or cause to be
provided, annual financial information,
including audited financial statements
of the Issuer, and notices of certain
-9-
material events, as required by SEC Rule
15c2-12.
AWARD:
Award will be made solely on the basis
of lowest dollar interest cost,
determined by addition of any discount
to and deduction of any premium from the
total interest on all bonds from their
date to their stated maturity.
The Issuer reserves the right to reject any and all proposals, to
waive informalities and to adjourn the sale.
Dated: September 2, 1997.
BY ORDER OF THE CITY COUNCIL
/s/ Frank Boyles
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
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AUTHORITY AND SECURITY FOR THE BONDS
$1,065.000 General Obligation Imvrovement Bonds of 1997
The $1,065,000 General Obligation Improvement Bonds of 1997, dated November 1, 1997, are
being issued pursuant to Minnesota Statutes, Chapters 429 and 475. At closing, Briggs and
Morgan, Professional Association, Bond Counsel, will render an opinion that the Bonds are valid
and binding general obligations of the City of Prior Lake, Minnesota. The Bonds will be payable
primarily from special assessments against all benefitted property. In addition, the full faith and
credit of the City is pledged to their payment and the City has validly obligated itself to levy addi-
tional ad valorem taxes in the event of any deficiency in the Debt Service Account of this issue.
Furthermore, 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 recipi-
ent 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
$1,065.000 General Obli~ation Imvrovement Bonds of 1997
The purpose of the $1,065,000 General Obligation Improvement Bonds, Series 1997, dated
November 1, 1997, is to provide funds for the financing of assessable improvements within the
City for the following projects (i) Pike Lake Trail, (ii) Mush Town Road and (iii) County Road
No. 42. Improvements include but are not limited to streets, sanitary sewer, water main & line
extensions, storm sewer, sidewalks, and curb and gutter.
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STATUTORY DEBT LIMIT
Minnesota Statutes, ~ 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
solely from ad valorem taxes.
Computation of Legal Debt Margin as of October 2, 1997, plus this issue:
1996-1997 Estimated Market Value
Times 2% of Estimated Market Value
$ 627,072,200
x .02
Statutory Debt Limit
$ 12,541,444
Amount of debt applicable to debt limit:
Total debt applicable to debt limit
$ 22,615,000*
( 10,000)
( 6,595,000)
( 310,000)
( 2,745,000)
( 450,000)
( 2,145.000)
$ 10,360,000
$ 2,181 ,444
Total Bonded Debt (includes this issue)
Less: General Obligation Sanitary Sewer Bonds
General Obligation Improvement Bonds
General Obligation Advance Refunding Bonds
General Obligation Refunding Bonds
General Obligation Crossover Refunding Bonds
General Obligation Water and Sewer Revenue Bonds
Legal debt margin
* The outstanding $10,000 of the $180,000 General Obligation Sanitary Sewer Bonds of 1969, dated October 1,
1969, have not been deducted. The above-described issue will however be deducted from the bond indebtedness
ratios since the bonds are being assumed by the Metropolitan Waste Control Commission.
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ESTIMATED SOURCE AND APPLICATION OF FUNDS
$1,065,000 General Obligation Improvement Bonds of 1997
I. Source of Funds
General Obligation Improvement Bonds of 1997
II. Application of Funds
Estimated Costs to be Financed:
Pike Lake Trail
Mush Town Road
County Road No. 42
Total Estimated Costs to be Financed
Add Estimated Issuance Costs:
[Bond counsel, paying agent/bond
registrar (one time fee), bond rating
fee and financial advisory services]
Underwriter's Discount (1.80% of par)
Total Issuance Costs
Subtotal
Add Rounding Factor
Par Amount of Bond Issue
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$351,720
362,475
306,740
$ 24,625
19,170
$ 1,020,935
43,795
$1,064,730
270
$1,065,000
$1 ,065,000
FUTURE FINANCING
The City does not anticipate the need to finance any capital improvements with the issuance of gen-
eral obligation bonds for the remainder of 1997.
BOND RATING
The City currently has a general obligation bond rating of "A2" from Moody's Investors Service.
The City is applying for a rating on this issue to Moody's.
L1TIGA TION
The City Consulting Attorney, Campbell Knutson, P.A. (Suesan Lea Pace), indicated as of
September 22, 1997, that no litigation is pending or threatened that would jeopardize the creditwor-
thiness of the City of Prior Lake. Claims or other actions in which the City is a defendant are cov-
ered by insurance or of insignificant amounts.
CERTIFICATION
The City will furnish, upon request, a statement to the effect that this Official Statement to the best
of their knowledge and belief, as of the date of sale and the date of delivery, is true and correct in
all material respects, 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 Briggs and Morgan, Professional Association, Bond Counsel, as to validity and tax ex-
emption. 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.
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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 under-
takings 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 enforceable 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 recommending 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 informa-
tion, 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 information 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 deposi-
tory 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
S 17 A of the Securities 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 Participants 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 Participants").
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
records 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 repre-
senting 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
Beneficial Owners of Bonds. For every transfer and exchange of beneficial ownership of Bonds,
the beneficial 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
immediately credit the accounts of the DTC Participants in accordance with their respective hold-
ings 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 responsibility of DTC or the Issuer, subject to any statutory and regulatory
requirements as may be in effect from time to time.
- 16-
TAX EXEMPTION AND OTHER TAX CONSIDERATIONS
Tax Exemption
At closing Briggs and Morgan, Professional Association, 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 decisions (which excludes any pending legisla-
tion 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 corporations and financial institu-
tions), 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 alterna-
tive minimum tax applicable to individuals, estates or trusts; provided that interest on the Bonds is
subject to federal income taxation to the extent it is included as part of adjusted current 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 issuance 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 ~ 103 thereof, including without limitation, requirements
relating to temporary periods for investments and limitations on amounts invested at a yield greater
than the yield on the Bonds.
Proverty and Casualty Insurance Comvanies
Property and casualty insurance companies are required to reduce the amount of their loss reserve
deduction 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 are subject to a tax on
income which is effectively connected with their conduct of any trade or business in the United
States, including "net investment income." Net investment income includes tax-exempt interest
such as interest on the Bonds.
Branch Profits Tax
A foreign corporation is subject to a branch profits tax equal to 30% of the "dividend equivalent
amount" for the taxable year. The "dividend equivalent amount" is the foreign corporation's
"effectively connected earnings and profits," adjusted for increase or decrease in "U.S. net equity."
A branch's earnings and profits may include tax-exempt municipal bond interest, such as interest
on the Bonds.
Passive Investment Income of S Corporations
Passive investment income, including interest on the Bonds, may be subject to federal income
taxation under ~ 1375 of the 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.
- 17-
Qualified Financial Institutions
Prior to adoption of the Tax Reform Act of 1986 (the "Act"), financial institutions were generally
permitted to deduct 80% of their interest expense allocable to tax-exempt bonds. Under the Act,
however, financial institutions are generally not entitled to such a deduction for tax-exempt bonds
purchased after August 7, 1986. However, the Issuer will designate the Bonds as "qualified tax-
exempt obligations" pursuant to S265(b)(3) of the Code that will permit financial institutions to
deduct interest expenses allocable to the Bonds to the extent permitted under prior law. See
"Qualified Tax-Exempt Obligations" below.
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 obli-
gations, 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 in-
come of interest on bonds of Minnesota issuers. Hence, future federal and/or state laws could
cause the inclusion of interest on bonds, including the Bonds, in gross income of taxable net in-
come, or could otherwise cause such interest to be taxed or to be included in the calculation of
other income which is taxed.
Oualified Tax-Exempt Obligations
The Issuer will designate the Bonds as "qualified tax-exempt obligations" for purposes of
S265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial
institutions to deduct from income for federal income tax purposes, interest expense that is alloca-
ble to carrying 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
receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may oth-
erwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recip-
ient based on the particular taxes to which the recipient is subject and the particular tax status of
other items of income or deductions. Bond Counsel expresses no opinion regarding any such con-
sequences. All prospective purchasers of the Bonds are advised to consult their own tax advisors
as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds.
- 18-
THE CITY OF PRIOR LAKE
GENERAL INFORMATION
Access and Transportation
The City of Prior Lake, situated in north central Scott County, is located approximately 24 miles
southwest of Minneapolis and is part of the Twin Cities Metropolitan 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 residential streets within the City's corporate limits.
Tax Base
For taxes collectible in 1997, the tax breakdown is 73.11 % residential homestead
(non-agriculture), 1.15% agricultural, .37% public utility, 10.29% commercial & industrial,
10.61 % non-homestead residential, 1.42% seasonal recreational and 3.05% personal property.
Area
10,240 Acres
(16 Square Miles)
Population
1970 Census
1980 Census
1990 Census
01101/97 Estimate
1,114
7,284
11,682
14,000
Municipal Facilities
Revenue Producin~ Facilities:
The Waterworks System has approximately 4,534 municipal connections and consists of two ele-
vated water storage facilities with a combined total of 1,750,000 gallons. There are three municipal
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 4,544 municipal connections. The sanitary sewer disposal
needs are served by the Metropolitan Waste Control Commission with 27 lift stations. Average
demand is 23,000,000 gallons per day while peak demand reaches 60,000,000 gallons per day.
- 19-
The 1996 audited gross water and sewer utility operating revenues were $2,188,673 with the
average water and sewer utility charge per year per household and commercial connection at
approximately $482. The 1996 residential and industrial water rate is $1.15 per thousand gallons.
The 1996 sewage use charge for Metropolitan Council Environmental Service1 is 1.32 per thou-
sand gallons and the City residential charge is $2.85 per thousand gallons.
Other Municival Services:
Fire & Rescue Department. The City currently has a 38-member volunteer fire and rescue depart-
ment consisting of one tanker, two fire trucks, an aerial fire truck, two pumpers, two ambulances,
one rescue truck and other miscellaneous fire fighting and rescue equipment.
Police Department. The City operates its own police department with one chief of police, one lieu-
tenant, 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 oper-
ates a total of twelve utility, marked and unmarked police vehicles.
ParkslRecreation. The City currently operates approximately 464 acres of park space comprised of
31 designated park sites plus a 70-acre athletic complex. Facilities include an indoor swimming
pool, enclosed picnic shelters with picnic tables, walking/snowmobiling/cross-country ski trails,
hockey/skatinglbroomball rinks, basketball courts, baseball/softball fields, football fields and gen-
eral 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.
Employee Pension Programs
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
Association (PERA) under Minnesota Statutes, Chapter 353, which covers substantially all em-
ployees except those qualifying as temporary or seasonal employees. This plan is a state adminis-
tered plan 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 entities is not determinable.
The City's contributions to PERA for the past five years have been as follows:
1996
1995
1994
1993
1992
$ 177,354
170,012
152,499
146,149
129,744
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
administered by a separate Board elected by the membership. This plan is funded by state aids, in-
vestment 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 according 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 4,019 single-family homes and 908 multifamily units located within the
City. In addition, there have been 238 single-family homes and 19 multifamily units constructed
within the past twelve months.
The status of residential subdivisions constructed or planned within the past three years is as
follows:
Number of Year Status
Subdivision Name Dwellings Constructed (% Developed)
Cardinal Ridge-2nd Addition 47 1994 98% Complete
Raspberry Ridge-2nd Addition 27 1994 63% Complete
Sterling North 18 1994 22% Complete
Sterling South 88 1994 2 % Complete
Villas at the Wilds 15 1994 20% Complete
Cardinal Ridge-3rd Addition 39 1995 95% Complete
Cardinal Ridge-4th Addition 41 1995 85% Complete
Knob Hill 49 1995 39% Complete
Preserve at The Wilds 9 1995 0% Complete
Westbury Ponds-l st Addition 36 1995 61 % Complete
Westbury Ponds-2nd Addition 7 1995 88% Complete
Wilderness Ponds 49 1995 43% Complete
Windsong on the Lake-2nd Addition 7 1995 14% Complete
Woodridge Estates-3rd Addition 33 1995 15% Complete
Eagle Creek Villas 45 1996 58% Complete
Cardinal Ridge-4th Addition 35 1996 43% Complete
Pheasant Meadows 24 1996 8% Complete
The Wilds-2nd Addition 24 1996 8% Complete
West Edge Estates-2nd Addition 12 1996 100% Complete
Westbury Ponds-3rd Addition 17 1996 24% Complete
- 21 -
The following pending residential subdivisions that are either in the preliminary or final stages for
1997 are as follows:
Subdivision Name
Number of
Dwellings
Year
Constructed
Cardinal Ridge-5th Addition (final)
Knob Hill North (preliminary)
Maple Hills-2nd Addition (preliminary)
The Wilds-3rd Addition (final)
Wilderness Ponds-2nd Addition (final)
Windstar Addition (preliminary)
38
27
28
56
45
21
1997
1997
1997
1997
1997
1997
Industrial Park(s)
Status
(% Developed)
N/A
N/A
N/A
N/A
N/A
N/A
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 Development
Building construction and commercial/industrial growth completed within the past three years have
been as follows:
Description
of Construction
New Construction
Under Construction
New Construction
Office Expansion
Office Expansion
New Construction
New Construction
New Construction
New Construction
Store Expansion
Millwork Expansion
New Construction
New Construction
New Construction
New Construction
New Construction
New Clubhouse
Name
American GlasslMetro Cabinets
Award Printing1
Becker Arena Products
Carol's Furniture1
City of Prior Lake1
Commerce Building
E.M. Products
Fairview Medical Clinic
Great Clips Beauty Salon
Holiday Station!
Keyland Homesl
NBC Products
North Lake Office Complex
Prior Lake Mini-Storage
Speiker Building
Video Update
Wilds Clubhouse (permanent)!
Pending plans for commercial/industrial development include the construction of (i) Lemke Office
Building constructing additional office space and (ii) Park-Nicollet Medical Clinic, a provider of
medical services, constructing a new medical building.
Product/Service
Glass Replacement/Cabinets
Printing Publication Company
Ice Arena Mfg. Products
Retail
City Maintenance Garage
Office Space
Industrial Generator Muffler
Medical Services
Hair Products
Gas/Convenience
Construction Company
Air Filtration Systems
Office Space
Storage Facility
Office Space
Retail Video Store
Golf Course
1 New building construction completed within the past twelve months.
- 22-
.'
Building Permits
Building permits issued for the past five 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
1997
(as of 08/31/97) 72 394 466 $ 22,263,221
1996 60 600 660 49,578,102
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 First Bank National Association (branch of Minneapolis),
Marquette Bank, National Association (branch of Golden Valley), Prior Lake State Bank and
South Metro Federal Credit Union. Prior Lake State Bank's reported deposits as of December 31,
1996, are $71,050,000. Reported deposits for First Bank National Association and Marquette
Bank, National Association are not available at this time. Total assets for South Metro Federal
Credit Union are $10,764,000 as of December 31, 1996. All deposits and assets were reported
from the latest edition (Spring 1997) of the McFadden Upper Midwest Financial DirectoryTM.
Schools
The City of Prior Lake is served by Independent School District No. 0719, Prior Lake and
Independent School District No. 0720, Shakopee. Independent School District No. 0719, Prior
Lake, operates one early childhood and kindergarten school, Ponds Edge, with a 1996/1997
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. The 1996/1997 combined enrollment at the five schools is ap-
proximately 3,697.
Independent School District No. 0720, 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. The 1996/1997
combined enrollment at the five schools is approximately 3,162.
In addition, there are three parochial schools located within Prior Lake-(i) Prior Lake Christian,
(ii) St. Michael's Catholic and (iii) St. Paul's Lutheran. Prior Lake Christian consists of grades
kindergarten through twelve and has 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 through six with an enrollment of 33. Furthermore, 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 St. Thomas
~
Technical College
Community College
Public University
Private University
Location
Distance
from
Prior Lake
9 Miles
9 Miles
20 Miles
28 Miles
Eden Prairie, Minnesota
Bloomington, Minnesota
Minneapolis, Minnesota
St. Paul, Minnesota
Major Employers
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
Product/Service
Entertainment
Public Education
Grocery Store
City Government
Real Estate
Financial Services
Grocery Store
Computer Sales
Communications
Noise Abatement
Number of
Employees
3,700
549
155
71
40
40
40
36
31
29
Mystic Lake Casino
ISD No. 0719, Prior Lake
County Market
City of Prior Lake1
Edina Realty
Prior Lake State Bank
Radermacher's Super Value
Norex Corp.
Scott Rice Telephone2
E.M. Products2
(Remainder of page left intentionally blank.)
1 Constitutes 65 full-time and 6 part-time employees.
2 Located within one of the City's industrial parks.
- 24-
Largest Taxpayers
The following is a list of the ten largest taxpayers within the City as reported by Scott County:
Percent of
1996-1997 Real Property
Estimated 1996-1997 To Net
Property Market Net Tax Tax Capacity
Name Class Value Caoacity ($9,967,539)t
MN Valley Electric Cooperative Gas Utility $2,297,800 $175,918 1.76%
Northern State Power Company Gas Utility 2,108,500 154,942 1.55
Minnesota Gas Company Water Utility 2,161,900 139,464 1.40
Individual Industrial 1,685,600 106,510 1.07
Midway National Bank Apartment 1,700,000 81,144 .81
Individual Industrial 1,249,800 78,420 .79
David Carlson Companies ResidentialJ
Industrial 2,277,800 73,382 .74
Kestrel Properties LLP Apartment 2,618,500 66,124 .66
Prior Lake State Bank Residential 1,028,400 63,968 .64
Restan LLP Agricultural 1,059,400 62,824 .63
(Remainder of page left intentionally blank.)
t Before the tax increment and fiscal disparity adjustments.
- 25-
MINNESOTA VALUATIONS. TAX CREDITS AND LEVY LIMITATIONS
Market Value
According to Minnesota Statutes, Chapter 273, all real property subject to taxation is to be ap-
praised at maximum intervals of four years. All real property becoming taxable in any year is listed
at its estimated 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 Study to
accomplish equalization of property valuation in the State of Minnesota and to determine the prob-
able selling price of a property. The study is a three-year average of sale prices as related to the lat-
est assessor's estimated market value. The indicated market value is determined by dividing the es-
timated market 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
taxable 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 di-
viding each taxing district's levy by its net tax capacity. One percentage point of local tax rate rep-
resents 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 capac-
ity ratios. Delinquent property taxes are penalized at various rates depending on the type of prop-
erty and the length of delinquency.
Tax Credits
Prior to 1990, taxes on homestead residential and agricultural property were reduced by a direct
subsidy 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.
- 26-
Tax Leviesfor General Obligation Bonds
(Minnesota Statutes, ($475.61)
The governing body of any municipality issuing general obligations shall, prior to delivery of the
obligations, levy by resolution a direct general ad valorem tax upon all taxable property in the mu-
nicipality 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 collec-
tions 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 in-
terest payments on the obligations. Such resolution shall irrevocably appropriate the taxes so levied
and any special assessments 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
information regarding the obligations for which the tax is levied. No further action by the munici-
pality is required to authorize the extension, assessment and collection of the tax, but the munici-
pality'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 interest. 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 located 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 municipal-
ity 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 sur-
plus remaining 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 of levy limits were determined by the Commissioner of
Revenue and will 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 1997/1998 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.
- 27-
The following is a partial summary of these factors:
Property Tax Classifications
1994/1995 1995/1996 1996/1997 1997/1998
Class Rate Class Rate Class Rate Class Rate
Type of Prooerty Percent Percent Percent Percent
Residential Homestead
Under $72,000 1.000% 1.000% 1.000%
Over $72,001 2.000 2.000 2.000
Under $75,000 1.000%
Over $75,001 1.850
CommerciallIndustrial Public Utility
Under $100,000 3.000 3.000 3.000
Over $100,001 4.600 4.600 4.600
Under $150,000 2.700
Over $150,001 4.000
Agricultural Property
Homestead:
House, Garage & 1 Acre
Under $72,000 1.000 1. 000 1.000
Over $72,001 2.000 2.000 2.000
Under $75,000 1. 000
Over $75,001 1.850
Remainder to 320 Acres
Under $115,000 .450 .450 .450 .400
Over $115,001 1. 000 1. 000 1.000 .900
Over 320 Acres
Under $115,000 .450 .450 .450 .400
Over $115,001 1.500 1.500 1.500 1. 400
Non-Homestead:
House, Garage, 1 Acre 2.300 2.300 1.500 1.400
LandfTimberland 1.500 1.500 1.500 1.400
Residential Non-Homestead
Apartments:
1 to 3 units 2.300 2.300 2.300
1 Unit 1.900
2 or 3 units 2.100
4 or more units 3.400 3.400 3.400 2.900
Small cities less than 5,000
population with 4 or more units 2.300 2.300 2.300
Seasonal Recreational
Non-Commercial:
Under $72,000 2.000 2.000 1.750
Over $72,001 2.500 2.500 2.500
Under $75,000 1.400
Over $75,001 2.500
Commercial (i.e. resorts) 2.300 2.300 2.300 2.100
Vacant Land * (See Footnote) *(See Footnote) * (See Footnote) 2.100
* (All vacant land is reclassified to highest and best use pursuant to local zoning ordinance).
- 28-
THE CITY OF PRIOR LAKE
ECONOMIC AND FINANCIAL INFORMATION
Valuations
Real Property
Personal Property
(Tax Increment Deduction)
Fiscal Disparities*
(Contribution to Pool)
Distribution from Pool
Estimated
Market Value
1996-1997
$ 620,250,800
6,821,400
Net Tax
Capacity
1996-1997
$ 9,967,539
313,784
140,028)
(
(
454,017)
1.236.663
$10,923,941
Total Valuation
$ 627,072,200
Market Value After Sales Assessment Ratio
The Minnesota Department of Revenue conducts the Real Estate Sales Assessment Ratio Study to
accomplish 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 asses-
sor's market value. In Prior Lake the latest (1996) assessment sales ratio is 86.3% meaning the
County Auditor's recorded real property market value of $620,250,800 is 86.3% of the probable
resale market value. We have made the following computations in deriving the market value figure
used in the "Summary of Debt and Debt Statistics."
$ 620,250,800
County Auditor's recorded real property market value.
86.3%
Latest Composite Ratio from the Real Estate Sales
Assessment Ratio Study of the Minnesota Department of
Revenue.
$ 718,714,716
6.821.400
Indicated market value of real property.
+
Personal property.
= $ 725,536,116
Indicated market value of real and personal property used in
"Summary of Debt and Debt Statistics."
* Fiscal Disparities Law
The 1971 Legislature enacted a "fiscal disparities law" which allows all the Twin City Metropolitan Area
Municipalities to share in commerciallindustrial growth, regardless of where the growth occurred geographically.
Forty percent (40%) of every metropolitan municipality's growth in commerciallindustrial assessed valuation is
pooled, then redistributed to all municipalities on the basis of population and per capita valuation after the tax
increment and fiscal disparity adjustments.
- 29-
The Sales Assessment Ratio for the City of Prior Lake over the past eight years have been as
follows:
Year Ratio Year Ratio
1996 86.3% 1992 84.7%
1995 83.3 1991 87.1
1994 82.5 1990 85.6
1993 82.4 1989 84.6
Valuation Trends (Real and Personal Property)
Net Tax Net Tax
Capacity Capacity
Levy Yearl Estimated Before Fiscal After Fiscal
Collection Year Market Value Disparities] Disparities2
1996/1997 $627,072,200 $10,281,323 $10,923,941
1995/1996 543,216,800 8,783,063 9,491,811
1994/1995 470,730,200 7,460,535 8,120,280
1993/1994 429,291,100 6,732,031 7,605,330
1992/1993 410,883,900 6,550,066 7,559,705
1991/1992 390,094,100 6,533,845 7,589,193
1990/1991 373,981,900 6,655,988 7,597,611
1989/1990 353,259,200 6,397,500 7,264,095
Breakdown of Valuations
1996-1997 Estimated Market Value, Real and Personal Property:
Total
$ 526,949,200
10,355,900
819,700
26,155,800
48,478,600
7,491,600
6.821.400
$ 627,072,200
84.03%
1.65
.13
4.17
7.73
1.20
1.09
Residential Homestead
Agricultural
Public Utility
Commercial & Industrial
Non-Homestead Residential
Seasonal Recreational
Personal Property
100.00%
1996-1997 Net Tax Capacity, Real and Personal Property (before the tax increment andfiscal dis-
parity adjustments):
Residential Homestead $ 7,517,299 73.11%
Agricultural 118,065 1.15
Public Utility 37,706 .37
Commercial & Industrial 1,058,157 10.29
Non-Homestead Residential 1,090,510 10.61
Seasonal Recreational 145,802 1.42
Personal Property 313.784 3.05
Total $ 10,281 ,323 100.00%
1 Also before the captured tax capacity of tax increment distribution.
2 Also after the captured tax capacity of tax increment distribution.
- 30-
Net Tax Capacity
Levy Year! 1992/93 1993/94 1994/95 1995/96 1996/97
Collection Year Net Tax Net Tax Net Tax Net Tax Net Tax
Capacity Capacity Capacity Capacity Capacity
Rates Rates Rates Rates Rates
County of Scott 45.564% 48.475% 50.217% 45.775% 41.683%
City of Prior Lake 29.656 36.509 36.707 33.962 32.721
City of Prior Lake (Rural) 21.889 25.556 25.695 23.774 -----
City of Prior Lake (IV) 29.220 36.509 ----- ----- -----
ISD No. 0719, Prior Lake 50.116 57.925 61.810 52.4 72 60.710
ISD No. 0720, Shakopee 61.499 65.540 70.685 64.535 64.052
Metropolitan Council .435 .495 .577 .718 .718
Metro Transit 3.004 3.465 3.612 2.845 1.837
Light Rail Transit Authority .289 .389 .268 .247
Mosquito Abatement .347 .411 .405 .244 .249
Scott County HRA .280 .785 .721 .698 .630
Prior Lake/Spring Lake
Watershed 2.215 1 .400 2.195 1.591 2.085
Tax Levies and Collections
Levy Yearl 1992/ 1993/ 1994/ 1995/
Collection Year 1993 1994 1995 1996
Original Gross Tax Levy $ 3,053,705 $ 2,794,465 $3,125,210 $3,237,700
Property Tax Credits * 850,183) N/A N/A N/A
Levy Adjustments 5.287) 10.406) 2.718) ( 3.967)
Net Tax Levy $ 2, 198,235 $2,784,059 $3,122,492 $ 3,233,733
Amount Collected during
Collection Year $ 2,133,829 $2,743,611 $3,075,179 $ 3,177,413
Percent of Net Tax Levy
Collected 97.07% 98.55% 98.48% 98.26%
Amount Delinquent at end
of Collection Year $ 64,406 $ 40,448 $ 47,313 $ 56,320
Delinquencies Collected
as of (12/31/96) 33,085) 27,393) ( 25,095) 0)
Delinquencies Abated or
Cancelled as of (12/31/96) ( 28.526) ( 4.343) 10.740) ( 0)
Total Delinquencies $
Outstanding as of (12/31/96) $ 2,795 $ 8,712 $ 11,478 56,320
Percent of Net Tax Levy
Collected 99.87% 99.69% 99.63% 98.26%
Note: 1996/1997 Gross Tax Levy $3,787,522
1996/1997 Net Tax Levy 3,787,522
* Property tax credits are aids provided by the State of Minnesota and paid directly to the City.
- 31 -
CITY OF PRIOR lAKE, MINNESOTA
GENERAL OBLIGATION DEBT
(as of October 2,1997, Plus This Issue)
Purpose:
G.O. G.O. G.O. G.O. G.O. G.O.
Sanitary Improvement Improvement Park Improvement Refunding
Sewer Bonds Bonds Bonds Bonds Park
Bonds of of of of 1977, Bonds
of 1969 1973 1973 1973 Series B of 1977
Dated: 10/01/69 07/01n3 1O/01n3 I2I01n3 06/01n7 09lOln7
Original Amount: $180.000 $2,122,000 $575.000 $280,000 $1,400,000 $280,000
Maturity : I.Oct I.Jul I.Oet I.Dee I.Jun I.Jul
Interest Rates: 6.90.7.00% 5.00-5.50% 5.10-5.50% 5.50-5.75% 4.00-5.70% 5.10.5.50%
1997 $0 $0 $0 $10.000 $0 $0 1997
1998 10.000 105,000 35,000 10,000 11 0,000 15,000 1998
1999 0 0 0 15.000 0 15,000 1999
2000 0 0 0 15.000 0 15,000 2000
2001 0 0 0 15.000 0 0 2001
2002 0 0 0 15.000 0 0 2002
2003 0 0 0 15.000 0 0 2003
2004 0 0 0 0 0 0 2004
2005 0 0 0 0 0 0 2005
2006 0 0 0 0 0 0 2006
2007 0 0 0 0 0 0 2007
2008 0 0 0 0 0 0 2008
2009 0 0 0 0 0 0 2009
2010 0 0 0 0 0 0 2010
2011 0 0 0 0 0 0 2011
2012 0 0 0 0 0 0 2012
2013 0 0 0 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 2016
2017 0 0 0 0 0 0 2017
$10.000 $105,000 $35,000 $95.000 $110,000 $45.000
(1) (2) (2) (3) (2) (3) (4)
Purpose:
G.O. G.O. G.O. G.O. G.O.
Improvement Improvement Improvement Improvement Advance
Bonds Bonds Bonds Bonds Refunding
of of of of Bonds
1978 1987 1988 1991 of 1992
Dated: 05/01n8 09/01/87 06/01/88 03/01/91 1 02101/92
Original Amount: $220,000 $225.000 $390.000 $525.000 : $4,265,000
Maturity: I-May I.Dee I.Dee I.Dee 1 I.Dee
Interest Rates: 4.90.5.80% 5.75.7.10% 5.90.7.70% 4.90.6.80% 1 3.00.6.00%
1997 $0 $30,000 $35.000 $45.000 1 $201.500 $108.500 1997
1998 10.000 0 35.000 45,000 : 0 0 1998
1999 0 0 35,000 45.000 : 0 0 1999
2000 0 0 20.000 45.000 : 0 0 2000
2001 0 0 20,000 15.0001 0 0 2001
2002 0 0 0 15.000 : 0 0 2002
2003 0 0 0 15.000 : 0 0 2003
2004 0 0 0 15.000 : 0 0 2004
2005 0 0 0 15,000 : 0 0 2005
2006 0 0 0 10,000 : 0 0 2006
2007 0 0 0 10.000 : 0 0 2007
2008 0 0 0 10,000 1 0 0 2008
2009 0 0 0 0: 0 0 2009
2010 0 0 0 0: 0 0 2010
2011 0 0 0 0: 0 0 2011
2012 0 0 0 o! 0 0 2012
2013 0 0 0 0: 0 0 2013
2014 0 0 0 0: 0 0: 2014
2015 0 0 0 0: 0 o! 2015
2016 0 0 0 0: 0 0: 2016
2017 0 0 0 01 0 01 2017
! !
$10.000 $30.000 $145.000 $285.000 1 $201,500 $108.500 :
(2) (2) (2) (2) i (2) (5):
.....................(~J..(?!.........m...mm.:
-32-
Purpose:
Dated :
Original Amount:
Maturity:
Interest Rates:
Purpose:
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
CITY OF PRIOR LAKE, MINNESOTA
GENERAL OBLIGATION DEBT
(as 01 October 2,1997, Plus This Issue)
G.O. G.O. G.O. G.O. G.O.
Refunding Crossover Crossover Refunding Equipment
Bonds Refunding Refunding Bonds CerlifUales
of Bonds Bonds of of
1992 of 1992A of 1992B 1993 1993
10/01/92
$425.000
I-Jul
3.40-3.95%
10/01/92
$175.000
I.Aug
3.60-4.80%
10/01/92 :
$860.000 i
I-Dee:
3.60-4.80% ;
03/01/93
$1.100,000
l-Oe!
330.4.60%
I-Apr
03/01/93
$500.000
I-Dee
3.40-4.35%
$0 $0 $150.000 : $0 $0 $135.000 1997
60,000 30.000 150,000 : 120.000 50,000 0 1998
50,000 35.000 150.000 i 0 0 0 1999
35,000 0 0: 0 0 0 2000
0 0 oj 0 0 0 2001
0 0 0: 0 0 0 2002
0 0 Oi 0 0 0 2003
0 0 0: 0 0 0 2004
0 0 0 0 0 0 2005
0 0 0 0 0 0 2006
0 0 0 0 0 0 2007
0 0 0 0 0 0 2008
0 0 0 0 0 0 2009
0 0 0 0 0 0 2010
0 0 0 0 0 0 2011
0 0 0 0 0 0 2012
0 0 0 0 0 0 2013
0 0 0: 0 0 0 2014
0 0 oj 0 0 0 2015
0 0 oj 0 0 0 2016
0 0 0: 0 0 0 2017
$145.000 $65.000 $450.000 : $170,000 $135.000
(2) (8) (3) (9) (2) (10) L..................PW!.I.................... (3)
G.O. G.O. G.O. G.O. G.O. G.O.
Improvement Fire Station Improvement Improvement Equipment Waler
Bonds Bonds Bonds Bonds CerlifUales and Sewer
of of of of of Revenue
1993 1993 1994 1995 1995 Bonds of 1995
Dated: 07/01/93 08/01/93 08/01/94 08/01/95 09/01/95 11/01/95
Original Amount: $3.000,000 $2.100.000 $800,000 $950,000 $400.000 $2.200.000
Maturity: I-Dee I-Dee I-Dec I-Dee I-Dee I-Dee
Interest Rates: 4.25-4.375% 3.00-5.40% 3.60-5.40% 4.00-4.95% 4.40-4.80% 4.40-5.65%
1997 $245.000 $70.000 $80,000 $80.000 $95.000 $60,000 1997
1998 260.000 70.000 80.000 85.000 105,000 75.000 1998
1999 275.000 75,000 80.000 85.000 110.000 80.000 1999
2000 295.000 75.000 85.000 90.000 0 80,000 2000
2001 310.000 80,000 85.000 95.000 0 90,000 2001
2002 335.000 85,000 85.000 100.000 0 90.000 2002
2003 370.000 95.000 85,000 105.000 0 95.000 2003
2004 50.000 100.000 85,000 1J 0,000 0 105,000 2004
2005 50.000 105.000 0 120,000 0 110,000 2005
2006 50,000 110.000 0 0 0 115.000 2006
2007 50.000 120.000 0 0 0 120.000 2007
2008 50,000 125.000 0 0 0 130,000 2008
2009 0 135,000 0 0 0 140,000 2009
2010 0 145.000 0 0 0 150.000 2010
2011 0 155.000 0 0 0 160.000 2011
2012 0 175,000 0 0 0 170.000 2012
2013 0 190.000 0 0 0 180.000 2013
2014 0 0 0 0 0 195,000 2014
2015 0 0 0 0 0 0 2015
2016 0 0 0 0 0 0 2016
2017 0 0 0 0 0 0 2017
$2,340,000 $1.910,000 $665,000 $870,000 $310,000 $2,145.000
(2) (3) (2) (2) (3) (12) (13)
-33-
Dated:
Original Amount:
Maturity:
Interest Rates:
CITY OF PRIOR LAKE, MINNESOTA
GENERAL OBliGATION DEBT
(as of October 2,1997, Plus This Issue)
This Issue:
G.O. G.O. G.O. G.O.
Improvement Refunding Park Improvement
Bonds Bonds Bonds Bonds
of of of of
1996 1996 1997 1997
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
06/01/96 ,
$935,000 :
I-Dee :
4.00-4.90% ~
10/01/96
$2,430.000
I-Dee
4.10-5.00%
$75,000 : $0 $0
75,000 : 185,000 85.000
80.000 : 185.000 90.000
85,000 ! 185,000 100,000
90.000 ! 190.000 110.000 ,
95.000 ! 185.000 115.000 :
100,000 ~ 180.000 120.000 !
105.000 : 180,000 120.000 !
110,000 : 75.000 125,000 .
120,000 : 0 200,000
0' 0 0
0: 0 0
0: 0 0
O! 0 0
0: 0 0
0: 0 0
0: 0 0,
O! 0 0'
0: 0 0:
O! 0 0:
O~ 0 O~
$935.000 ~ $1.365.000 $1.065,000 !
(2) : (2) (5) :
L.....................!.{iL.......................:
-34-
05/0 1/97
$7.800.000
I-Dec
450-5.90%
$0
75.000
100,000
125,000
140.000
150.000
185,000
225.000
250.000
275.000
300.000
350,000
400.000
450.000
500,000
550,000
600,000
675.000
750,000
820.000
880.000
$7,800,000
(3)
11101/97
$1,065,000
1-Dec
TOTALS:
$0 $1,420,000 1997
100,000 1.980.000 1998
100.000 1,605,000 1999
100.000 1.350,000 2000
100.000 1,340.000 2001
100.000 1,370,000 2002
100,000 1,465.000 2003
100.000 1.195.000 2004
115.000 1.075.000 2005
125,000 1.005.000 2006
125.000 725.000 2007
0 665.000 2008
0 675,000 2009
0 745.000 2010
0 815.000 2011
0 895.000 2012
0 970,000 2013
0 870.000 2014
0 750,000 2015
0 820.000 2016
0 880,000 2017
$1.065.000 $22,615,000
(2)
Less (10,000) (1)
Net G.O. Debt: $22.605,000
CITY OF PRIOR LAKE, MINNESOTA
GENERAL OBLIGATION DEBT
(as of October 2, 1997, Plus This Issue)
(I) These bonds were assumed by the Metropolitan Waste Control Commi.uion and therefore are no longer considered part of the Cit)' debt.
(2) These bonds are payable primarily from special assessmentI against all benefitted property and additionally secured by ad valorem taxes on all taxable
propert)' within the Cify and without limitation of amount.
(3) These bonds are payable .wle/y from ad valorem taxes on all taxable property within the City and without limitation of amount.
(4) These bonds advance refUnded the $280,000 General Obligation Park Bonds of 1976, dated February 1,1976, which were calledfor redemption on June 1,
1986, at a price of par plus accrued interest.
(5) These bonds aTe payable primaril.yfrom net revenues a/the municipal water utility system and additional!:}' secured by ad valorem taxes on all taxable
properry within the Ciry and without limitation of amount.
(6) These bonds advance refUnded (i) 1,950,000 of the $3,450,000 General Obligation Improvement Bonds of 1986, dated February 1,1986. Maturities 1995
through 2006, inclusive, were calledJor redemption on December 1. 1994, at a price of par plus accrued interest, and (ii) 1,180,000 of the $1,500,000
General Obligation Water Revenue Bonds of 1987, dated October 1,1987. Maturitie., 1996 through 2007, inclusive, were called for redemption on
December 1, 1995, at a price of par plus accrued interest.
(7) A ponion of these bonds were current refunded by the $2,440,000 General Obligation RefUnding Bonds of 1996, dated October 1. 1996. Maturities 1998
through 2007. inclusive, in aggregate of $2.405,000, were called for redemption on December I, 1996, at a price of par plus accrued interest. The breakdown
of the remaining $3 J 0,000 principal amount due December 31, 1997, consists of $220,000 from special assessments and $90,000 from net water revenues.
(8) These bonds refUnded $415,000 of the $1,425,000 General Obligation Improvement Bonds of 1979, dated July 1,1979. Maturities 1993 through 2000,
inclusive, were called for redemption on January I, 1993, at a price of par plus accrued interest.
(9) These bonds cross refUnded $165,000 of the $295,000 General Obligation Fire Hall Bonds of 1984, dated April I, 1984. Maturites 1994 through 1999,
inclusive, were called for redemption on August 1, 1993. at a price afpar plus accrued interest.
(JO) These bonds cross refUnded $825.000 of the $1,175,000 General Obligation Improvement Bonds of 1989, dated Augu.\.t I, 1989. Maturities 1994 through
1999, inclusive. were calledfor redemption on December I, 1993. at a price of par plus accrued interest.
(11) These bonds refUnded (i) $515.000 of the $2,370,000 General Obligation RefUnding Bonds of 1976, dated October I, 1976. Maturities1994 through 1998,
inclusive, were called for redemption on April I, 1993, at a price of par plus accrued interest, and (ii) $560.000 of the $2,025,000 General Obligation
Improvement Bonds of 1978, Series A, dated October I, 1978. Maturities 1993 through 1999, inclusive, were calledfor redemption on April 1, 1993, at a
price a/par plus accrued interest.
(12) These bonds are payable primarily from net revenues of the municipal water and sewer utility .'ystem.\' and additionally secured by ad valorem taxe.\' on all
taxable property within the City and without limitation of amount.
( 13) These bonds have been additionally secured by Financial Security Assurance Inc. (FSA).
(14) These bonds current refUnded $2,405.000 of the $4,265.000 General Obligation Advance RefUnding Bonds of 1992, dated February I, 1992. Maturities
1998 through 2007, inclusive, were called for redemption on December I. 1996, at a price of par plus accrued interest. The Advance RefUnding Bonds of
1992, dated February I, 1992, advance refunded (i) 1,950.000 of the $3,450,000 General Obligation Improvement Bonds of 1986, dated February I, 1986.
Maturities 1995 through 2006, inclusive. were called for redemption on December I, 1994, at a price of par plus accrued interest, and (ii) 1,180,000 of the
$1,500.000 General Obligation Water Revenue Bonds of 1987. dated October 1,1987. Maturities 1996 through 2007, inclusive, were called for redemption
on December 1, 1995. at a price of par plus accrued interest.
-35-
OverlaDping Debt
1996/1997
1996/1997 Net Tax
Net Tax Capacity Percentage City's
Capacity Value Applicable Share
Issuer Value(l) in City(l) in City Net Debt of Debt
County of Scott $ 55,318,068 $10,923,941 19.75% $ 9,770,000(2) $ 1,929,575
ISD No. 0719,
Prior Lake 16,802,499 10,686,911 63.60 32,732,047(3) 20,817,582
ISD No. 0720,
Shakopee 14,888,358 237,030 1.59 9,979,002(4) 158,666
Metropolitan
Council 2,161,233,611 10,923,941 .51 24,290,551 (5) 123,882
Metro Transit 1,942,024,826 10,923,941 .56 66,107,631 (6) 370.203
Total Overlapping Debt: $23,399,908
Overlapping Debt Future Financing
County of Scott
The County does not antIcIpate the issuance of
any additional general obligation bonding within
the next three months.
ISD No. 0719, Prior Lake
The District does not anticipate the issuance of any
additional general obligation bonding within the
next three months.
ISD No. 0720, Shakopee
The District will hold a bond election on
November 4, 1997, for the issuance of
approximately $29,650,000 in general obligation
bonds. No other general obligation bonding
within the next three months is anticipated.
Metropolitan Council
The Council does not anticipate the issuance of
any additional general obligation bonding within
the next three months.
Metro Transit
Metro Transit does not anticipate the issuance of
any additional general obligation bonding within
the next three months.
(1) Taxable Net Tax Capacity values are after the tax increment and fiscal disparity adjustments.
(2) Scott County reported bond indebtedness of $9,770,000 and sinking funds of $0 as of December 31, 1996.
(3) ISD No. 0719, Prior Lake, reported bond indebtedness of $32,899,565 and sinking funds of $167,518 as of June 30,
1997.
(4) ISD No. 0720, Shakopee, reported bond indebtedness of $10,601,910 and sinking funds of $622,908 as of June 30,
1997.
(5) Deductions: (A) $236,380,000 Metropolitan Waste Control Commission Debt as of March 31, 1997.
(B) $36,080,000 Metropolitan Council Sports Facility Revenue Bonds as of March 31, 1997.
Note 1: 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 $17,485,519 and escrow account
funds of $88,553,000 have not been deducted because said funds are attributable to A above. Fund
balances are as of March 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 bonds are full faith and credit bonds.
Note 3: The only tax supported debt as of March 31, 1997 is $25,690,000 with sinking funds of $1,399,449.
(6) Metro Transit reported bond indebtedness of $70,065,000 and sinking funds of $3,957,369 as of March 31, 1997.
- 36-
Cash and Investment Fund Balances as of August 31. 1997
(unaudited)
Fund
General Fund
City Store Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
Enterprise Funds
Agency Fund
Total
(1) Includes the following Special Revenue Funds:
Capital Park Fund
Severance Compensation Fund
DAG Special Revenue Fund
EDA Loan Fund
(2) Consists of the following Caoital Proiect Funds:
Tax Increment Fund
Equipment Acquisition Fund
Building Fund
Construction Fund
Collector Street Fund
Trunk Reserve Fund
Tax Increment No. 2-1 (Keyland) Fund
Tax Increment No. 2-2 (Becker) Fund
Tax Increment No. 2-3 (Keyland) Fund
Tax Increment No. 2-4 (Commercial) Fund
Tax Increment No. 2-5 (E.M. Products) Fund
Tax Increment No. 2-6 (NBC Products) Fund
Tax Increment No. 2-7 (A ward Printing) Fund
Tax Increment No. 2-8 (Dave Hansen) Fund
General Obligation Park Bonds of 1997 Fund
(3) Includes the following Enter:prise Funds:
Utility (Sewer and Water) Fund
Storm Water Utility Fund
$ 1,273,496
( 777)
575,552 (1)
3,504,474*
12,814,789 (2)
1,869,614 (3)
269.000
$20,306,148
$
278,453.07
189,838.85
98,921. 71
8,338.00
$
54,943.99
1,015,811.21
53,657.19
676,072.05
1,036,236.52
2,069,276.81
61,513.55
13,413.79
6,495.57
52,445.54
20,184.39
6,012.72
2,367.76
267.40)
7,746,625.24
$
1,725,206.13 *
144,407.52
* Funds available for debt service on outstanding general obligation bond indebtedness. The total cash and investment fund balances available
for debt service is $5,229,680.
- 37-
SUMMARY OF DEBT AND DEBT STATISTICS
General Obligation Debt
Bonds secured by net sewer revenues
Bonds secured by special assessments (includes this issue)
Bonds secured by net water revenues
Bonds secured by ad valorem taxes
Bonds secured by net water and sewer revenues
Subtotal
$ 10,000
8,926,500
1,173,500
10,360,000
2.145.000
$22,615,000
Less Bonds assumed by the Metropolitan Council1
Total General Obligation Direct Debt
(
10.000)
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
$22,605,000
( 3,504,474)
( 1.725.206)
$17,375,320
23.399.908
$40,775,228
Facts for Ratio Computations
1996-1997 Indicated Market Value (real and personal property)
1996-1997 Net Tax Capacity (real and personal property, after
the tax: increment adjustment)
Population (01/01/97 Estimate)
$725,536,116
$10,923,941
14,000
Debt Ratios
Net Direct
Net Net and Net
Direct Direct Overlapping Overlapping
Debt Debt Debt Debt
To Indicated Market Value 3.12% 2.39% 3.23% 5.62%
Per Capita $1,615 $1,241 $1,671 $2,912
Per Capita Adjusted2 $1,443 $1,109 $1,493 $2,602
1 These bonds were assumed by the Metropolitan Waste Control Commission and therefore are no longer
considered part of the City's debt.
2 The City's tax base is 10.29% commercial & industrial and .37% public utility, which has been deducted.
- 38-
$1,065,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1997
CITY OF PRIOR LAKE, MINNESOTA
(SCOTT COUNTY)
CUMULATIVE BOND YEARS AND WORKSHEET
(DEe. 1) CUMULATIVE
YEAR AMOUNT BOND YEARS BOND YEARS
1998 $100,000 108.333 108.333
1999 100,000 208.333 316.667
2000 100,000 308.333 625.000
2001 100,000 408.333 1,033.333
2002 100,000 508.333 1,541.667
2003 100,000 608.333 2,150.000
2004 100,000 708.333 2,858.333
2005 115,000 929.583 3,787.917
2006 125,000 1,135.417 4,923.333
2007 125,000 1,260.417 6,183.750
A VERAGE MATURITY:
BONDS DATED:
INTEREST PAYMENTS:
5.80634 years.
November 1, 1997.
June 1, 1998, and semiannually thereafter on December 1 and
June 1 to registered owners of the 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.
REDEMPTION:
At the option 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 ac-
crued interest. Redemption may be in whole or in part of the Bonds
subject to prepayment. If redemption is in part, the Bonds remain-
ing unpaid which have the latest maturity date shall be prepaid first.
If only part of the Bonds having a common maturity date are
called for prepayment, the Issuer will notify DTC of the particular
amount of such maturity to be prepaid. DTC will determine by lot
the amount of each participant's interest in such maturity to be re-
deemed 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 of
certified mail at least thirty (30) days prior to the date fixed for re-
demption to the registered owner of each bond to be redeemed at
the address shown on the registered books.
PROPOSAL:
Sealed proposals of not less than $1,045,830 and accrued interest.
Good faith check or a Financial Surety Bond for $21,300 must ac-
company the proposal.
Each rate must be in integral multiples of 1I20th or 1I8th 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 and no rate of any maturity may
be lower than the highest rate applicable to Bonds of any preceding
maturities.
RATES:
ESTIMATED CLOSING DATE: November 11, 1997.
- 39-
(This page has been intentionally left blank.)
-40-
PROPOSAL FORM
HONORABLE CITY COUNCll...,
CITY OF PRIOR LAKE
PRIOR LAKE, MINNESOTA
FOR ALL OF THE $1,065,000 GENERAL OBLIGATION IMPROVEMENT BONDS OF 1997,
OF YOUR CITY AS DESCRIBED IN THE OFFICIAL TERMS OF BOND SALE, WE WILL
PAY YOU
DOLLARS ($ ) (NOT LESS THAN $1,045,830) PLUS
ACCRUED INTEREST FROM THE DATE OF SAID BONDS TO THE DATE OF DELIVERY.
SAID BONDS SHALL BEAR INTEREST PAYABLE JUNE 1, 1998, AND SEMIANNUALLY
EACH DECEMBER 1 AND JUNE 1 THEREAFTER AS FOLLOWS:
DATED: OCTOBER 20, 1997
% - 1998
% - 1999
% - 2000
% - 2001
% - 2002
% - 2003
% - 2004
% - 2005
% - 2006
% - 2007
DESIGNATION OF SERIAL AND TERM MATURITIES
LAST YEAR OF SERIAL MATURITIES
YEAR OF TERM MATURITIES
PRINCIPAL WILL BE PAYABLE AT FIRST TRUST NATIONAL ASSOCIATION,
ST. PAUL, 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 TERMS OF PROPOSALS. 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 AWARD 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 OCTOBER, 1997.
BY:
MAYOR
ATTEST:
CITY MANAGER
WE COMPUTE OUR TOTAL NET 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 PROPOSAL MUST
COMPLY WITH THE TERMS STATED IN THIS OFFICIAL TERMS OF BOND SALE.
PLEASE SUBMIT THIS PROPOSAL IN DUPLlCA TE
-41 -
SPECIAL INSTRUCTIONS:
SALE RESULTS WILL BE FURNISHED TO PROPOSAL MAKERS AT 8:30 A.M. ON THE
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
CHECK IN THE AMOUNT OF $21,300 TO BE RETURNED TO THE UNSUCCESSFUL
PROPOSAL MAKER.
JURAN & MOODY
BY:
DATED: OCTOBER 20, 1997
-42-
.'
APPENDIX A
Proposed Form of Legal Opinion
BRIGGS AND MORGAN
2200 FIRST NATIONAL BANK BUILDING
332 MINNESOTA STREET
SAINT PAUL. MINNESOTA 55101
TELEPHONE (612) 22.3-6600
FACSIMILE (612) 223-6450
PROFESSIONAL ASSOCIATION
WRITER'S DIRECT DIAL
WRITER'S E-MAIL
PROPOSED FORM OF LEGAL OPINION
$1,065,000
GENERAL OBLIGATION IMPROVEMENT BONDS OF 1997
CITY OF PRIOR LAKE
SCOTT COUNTY
MINNESOTA
We have acted as bond counsel in connection with the
issuance by the City of Prior Lake, Scott County, Minnesota (the
"Issuer"), of its $1,065,000 General Obligation Improvement Bonds
of 1997, bearing a date of original issue of November 1, 1997
(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 the 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
legislation which may have a retroactive effect on or before the
date hereof), regulations, rulings and decisions, it is our
opinion that:
MINNEAPOLIS OFFICE. IDS CENTER. www.BRIGGS.COM
MEMBER - LEX MUNDI. A GLOBAL ASSOCIATION OF INDEPENDENT L\W FIlU,\S
BRIGGS A...'lD MORGAN
PROPOSED FORM OF LEGAL OPINION
(1) The 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; provided that
the enforceability (but not the validity) of the Bonds 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 mininum
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
corporations, such interest is taken into account in determining
adjusted 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.
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
(This page was left blank intentionally.)
APPENDIX B
Form of Continuing Disclosure Undertaking
[Appendix __ to Official Statement]
FORM OF
CONTINUING DISCLOSURE UNDERTAKING
This Continuing Disclosure Undertaking (the "Disclosure
Undertakingll) is executed and delivered by the City of Prior
Lake, Minnesota (the II Issuerll) , in connection with the issuance
of $1,065,000 General Obligation Improvement Bonds of 1997 (the
"Bondsll). The Bonds are being issued pursuant to a Resolution
adopted October 20, 1997 (the IIResolutionll). Pursuant to the
Resolution and this Undertaking, the Issuer covenants and agrees
as follows:
SECTION 1. Purpose of the Disclosure Undertaking. 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:
IIAnnual 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.
IIAudited Financial Statementsll shall mean the financial
statements 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.
IIFiscal Year" shall be the fiscal year of the Issuer.
IIGoverning Body" shall, with respect to the Bonds, have the
meaning given that term in Minnesota Statutes, Section 475.51,
Subdivision 9.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"National Repository" shall mean any Nationally Recognized
Municipal Securities Information Repository for purposes of the
Rule. CUrrently, the following are National Repositories:
Bloomberg Municipal Repository
P.O. Box 840
Princeton, NJ 08542-0840
Phone: (609) 279-3200
Fax: (609) 279 -5962
Thomson Municipal Services
395 Hudson Street - Third Floor
New York, NY 10014
Attn: Municipal Disclosure
Phone: (800) 689-8466
Fax: (212) 989-2078
Disclosure, Inc.
5161 River Road
Bethesda, MD 20816
Attn: Document Acquisitions/Municipal Securities
Phone: (301) 215-6015
Fax: (301) 718-2329
Kenny Information Systems Inc.
65 Broadway - 16th Floor
New York, NY 10006-2511
Attn: Repository Services
Phone: (212) 770-4595
Fax: (212) 797-7994
Moody's NRMSIR
Public Finance Information Center
99 Church Street
New York, NY 10007
Phone: (800) 339-6306
Fax: (212) 553-1460
R.R. Donnelly Financial
Municipal Securities Disclosure Archive
559 Main Street
Hudson, MA 01749
Phone: (800) 580-3670
Fax: (508) 562-1969
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: ( 201) 346 - 0701 j Fax :
E-Mail: Nrmsir@dpcdata.com
(201) 947-0107
1l0ccurrence(s)II shall mean any of the events listed in
Section 5.A. of this Disclosure Undertaking.
1l0fficial Statementll shall be the Official
Preliminary Official Statement dated
together with any addendum thereto, prepared in
the Bonds.
Statement or
I 1997
connection with
1l0wnersll shall mean the registered holders and, if not the
same, the beneficial owners of any Bonds.
IlParticipating Underwriterll shall mean any of the original
underwriters of the Bonds required to comply with the Rule in
connection with offering of the Bonds.
IlRepositoryll shall mean each National Repository and each
State Depository.
IlResolutionll shall mean the resolution or resolutions
adopted by the Governing Body of the Issuer providing for, and
authorizing the issuance of, the Bonds.
II Rule II 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.
IlStatell shall mean the State of Minnesota.
IlState Depositoryll 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 Reports.
A. Beginning in connection with the Fiscal Year
ending on December 31, 1996, the Issuer shall, or shall cause the
Dissemination Agent to, not later than December 31, 1997, 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
Repositories 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. Content and Format of Annual Reports. The
Issuer's Annual Report shall 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
GENERAL INFORMATION - "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.
Re?ortinq of Significant 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 of the security;
(7) modifications to rights of security holders;
(8) optional or unscheduled redemption of any Bonds;
(9) defeasances;
(10) release, substitution or sale of property securing
repayment of the Bonds; and
(11) rating changes.
B. Whenever an event listed in Section 5.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
National Repository or the MSRB and with the State Depository, if
a~.
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 Undertaking, 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 taking into
account any subsequent change in or official interpretation of
the Rule, and (c) such amendment or waiver is supported 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 Undertaking or any
other means of communication, or including any other information
in any Annual Report or notice of an Occurrence, in addition 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 no
obligation under this Disclosure Undertaking to update such
information or include it in any future Annual Report or notice
of an Occurrence.
SECTION 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 Rights. 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.
Date: November __I 1997.
CITY OF PRIOR ~KE, MINNESOTA
By
Its Mayor
By
Its Manager
(SEAL)
APPENDIX C
City's Financial Statements
The following financial statements are excerpts from the annual financial report for the year ended
December 31, 1996. The complete financial report for the year 1996 and the prior two years are
available for inspection at the Prior Lake City Hall and the St. Paul office of Juran & Moody. 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.
Excerpts from the Financial Report
· Combined Balance Sheet - All Fund Types and Account Groups
· Combined Statement of Revenues, Expenditures and Changes m 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
CITY OF PRIOR LAKE, MINNESOTA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 1996
(With Comparative Totals for December 31, 1995)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
ASSETS
Cash and investments $ 2,259,938 $ 444,509 $ 3,527,962 $ 3,861,054
Deposit with trustee
Taxes receivable
Unremitted 22,267
Delinquent 71,567 16,726
Accounts receivable 16,875 4,250 3,500 6,800
Special assessments receivable
Unremitted
Delinquent 261,581
Deferred 1,539,124 398
Other (Green Acres) 1,040,125 13,898
Due from other governments 12,822
Property, plant and equipment, net
Amount available in debt service funds
Amount to be provided for debt
TOTAL ASSETS $ 2,383,469 $ 448,759 $ 6,389,018 $ 3,882,150
LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts payable $ 272,422 $ 1,333 $ $ 131,329
Compensated absences
Deposits payable
Deferred revenue 71,567 2,857,556 14,296
Leases payable
Bonds payable
TOT AL LIABILITIES 343,989 1,333 2,857,556 145,625
FUND EQUITY
Contributed capital
Investment in fixed assets
Retained earnings
Unreserved
Fund balance
Reserved 186,517 3,531,462
Unreserved
Designated 1,846,000 260,909 3,702,704
Un designated 193,480 33,821
TOTAL FUND EQUITY 2,039,480 447,426 3,531,462 3,736,525
TOTAL LIABILITIES
AND FUND EQUITY $ 2,383,469 $ 448,759 $ 6,389,018 $ 3,882,150
Fiduciarv
Proprietary Fund Totals
Fund Tvpes Type Account Groups (Memorandum Only)
General
General Long-term
Enterprise Agencv Fixed Assets Debt 1996 1995
$ 1,556,228 -S 265,000 $ $ $ 11,914,691 $ 13,598,341
2,135,298 2,135,298 1,803,481
22,267 23,560
88,293 79,289
577,588 1,500 610,513 395,909
7,145
261,581 349,741
1,539,522 1,948,043
1,054,023 884,109
14,008 26,830 14,008
10,690,681 9,869,507 20,560,188 18,172,148
3,531,462 3,531,462 3,873,347
11,233,622 11,233,622 12,058,744
$ 12,838,505 $ 2,401,798 $ 9,869,507 $ 14,765,084 $ 52,978,290 $ 53,207,865
$ 51,865 $ 17,000 $ $ $ 473,949 $ 758,600
51,220 304,415 355,635 354,466
2,384,798 2,384,798 2,029,981
2,943,419 3,261,182
5,669 5,669 18,647
14,455,000 14,455,000 15,605,000
103,085 2,401.798 14,765,084 20,618,470 22,027,876
10,880,583 10,880,583 6,115,902
9,869,507 9,869,507 11,875,149
1,854,837 1,854,837 1,615,131
3,717,979 3,989,138
5,809,613 7,223,388
227,301 361.281
12,735,420 9,869.507 32,359,820 31,179.989
$ 12,838,505 S 2,401.798 $ 9,869,507 $ 14,765,084 $ 52,978,290 S 53,207,865
CITY OF PRIOR LAKE, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED DECEMBER 31, 1996
With Comparative Totals for Year Ended December 31, 1995
REVENUES
General property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeits
Special assessments
Interest on in vestments
Miscellaneous
TOTAL REVENUES
EXPENDITURES
Current expenditures
General Government
Public safety
Police
Fire and Rescue
Other
Public Works
Culture and Recreation
Economic Development
Contingency
Capital outlay
General Government
Public Safety
Police
Fire and Rescue
Other
Public Works
Culture and Recreation
Construction and improvements
Property and equipment purchase
Other charges and services
Debt service
Principal
Interest and other
1,100,699
10,912
1,401,684
204,838
287,342
651,777
878,654
46,000
110,911
2,849
22,383
46,143
55,871
47,342
7,768
4,913
16,002
10,420
351,532
64,161
4,515,000
789,345
4,824,221 433,819 5,368,506
720,084 (43,658) (3,428,354)
175,000 100,000 776,149
2,408,917
(823,623) (98,597)
(648,623 ) 100,000 3,086,469
71,461 56,342 (341,885)
1,968,019 391,084 3,873,347
$ 2,039,480 $ 447,426 $ 3,531,462
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Operating transfers in
Bond proceeds
Operating transfers out
TOTAL OTHER FINANCING SOURCES (USES)
EXCESS (DEFICIENCY) OF REVENUES OVER
EXPENDITURES AND OTHER SOURCES (USES)
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
Totals
(Memorandum Onlv)
Capital
Projects 1996 1995
$ 111,701 $ 3,494,759 $ 3,148,153
506,258 367,182
58,659 1,660,824 2,383,017
1,138,365 2,227,487 2,002,165
61,119 70,602
804,971 1,121,320
181,297 439,554 457,009
72,161 241,829 499,328
1,562,183 9,436,801 10,048,776
1,11l,611 1,066,486
1,404,533 1,311,734
204,838 183,462
287,342 237,258
674,160 676,965
878,654 758,395
92,143 37,068
110,911 38,930
55,871 30,675
47,342 46,312
7,768 10,086
4,913
16,002 8,710
361,952 89,061
.U49,779 4,213,940 4,222,544
46,048 46,048 751,251
109.023 109,023 107,478
4,515,000 2,392,279
789,345 718,561
4,304,850 14,931,396 12,687,255
(2,742,667) (5,494,595) (2,638,479)
.194.029 1,545,178 1,440.963
902.835 3,311,752 3,507,690
(259,029) (1,181,249) (685.401 )
1.137.835 3,675,681 4.263.252
(1.604,832 ) (1,818,914) 1,624,773
5341.357 11.573,807 9.949.034
$ 3.736.525 S 9,754.893 $ 11,573.807
CITY OF PRIOR LAKE, MINNESOTA
STATEMENT OF REVENUES. EXPENDITIJRES AND CHANGES IN FUND BALANCE
GENERAL FUND - BUDGET AND ACTIJAL
YEAR ENDED DECEMBER 31, 1996
Variance -
Favorable
Budget Actual (Unfavorable)
REVENUES
General property taxes $ 2,728,210 $ 2,720,824 $ (7,386)
Licenses and permits 371,710 506,258 134,548
Intergovernmental 1,447,655 1,556,022 108,367
Charges for services 560,230 515,734 (44,496)
Fines and forfeitures 60,000 61,119 1,119
Interest on investments 40,000 81,145 41,145
Miscellenous revenues 64,200 103,203 39,003
TOT AL REVENUES 5,272,005 5,544,305 272,300
EXPENDITURES
Current expenditures
General government 1,164,890 1,100,699 64,191
Public safety
Police 1,442,970 - 1,40 I ,684 41,286
Fire and rescue 175,060 204,838 (29,778)
Other 280,710 287,342 (6,632)
Public works 725,400 651,777 73,623
Culture and recreation 850,850 878,654 (27,804)
Economic development 51,560 46,000 5,560
Contingency 140,000 110,911 29,089
Capital outlay
General government 44,500 55,871 (11,371)
Police 48,300 47,342 958
Fire and rescue 9,500 7,768 1,732
Other 5,000 4,913 87
Public works 8,500 16,002 (7,502)
Culture and recreation 10,950 10,420 530
TOT AL EXPENDITURES 4,958,190 4,824,221 138,164
EXCESS OF REVENUE (EXPENDITURES) 313,815 720,084 406,269
OTHER FINANCING SOURCES (USES)
Operating transfers in 175,000 175,000
Operating transfers out ( 488,815) (823,623 ) (334,808)
TOTAL OTHER FINANCING SOURCES (USES) (313,815) (648,623 ) (334,808)
EXCESS OF REVENUES OVER EXPENDITURES
AND OTHER SOURCES (USES) $ 71,461 $ 71,461
FUND BALANCE, BEGINNING OF YEAR 1,968,019
FUND BALANCE, END OF YEAR $ 2,039,480
CITY OF PRIOR LAKE, MINNE50T A
COMBINED 5T ATEMENTS OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS
ALL PROPRIETARY FUND TYPES
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
$ 1,247,549 $ 1,072,919
476,544 409,838
133,144 125,272
221,757 180,921
29,523 23,430
213,300 154,950
2,321,817 1,967,330
OPERA TING REVENUES
Sewer charges
Water charges
Storm water charges
Capital facility charges
Meter sales
Connection fees
TOTAL OPERATING REVENUES
OPERA TING EXPENSES
337,341
60,723
54,584
27,555
6,231
59,684
712,437
392
246,133
1,505,080
462,250
61,150
400
(375)
61,175
523,425
5,375
(760,937)
(755,562)
(232,137)
1,490,495
356,773
S 1,615,131
Personal services
Supplies
Repairs and maintenance
Other servi.ces and charges
Insurance
Utilities
Metropolitan Waste Control Commission
Miscellaneous
Depreciation
365,277
39,729
235,237
17,991
3,120
79,495
695,801
20,071
371,000
TOTAL OPERATING EXPENSES
1,827,721
OPERATING INCOME
494,096
NONOPERATING REVENUES (EXPENSES)
Interest
City store
~1iscellaneous revenue
Interest and service charges
65,718
(763)
44,584
TOTAL NONOPERATING REVENUES (EXPENSES)
109,539
INCOME BEFORE OPERATING TRANSFERS
OPERA TING TRANSFERS
Operatmg transfer in
Operating transfer out
603,635
TOT AL OPERATING TRANSFERS
NET INCOME (LOSS)
RET AINED EARNINGS, BEGINNING OF 'yeAR
PRIOR PERIOD ADJUSTMENT
RETAINED EARNINGS, END OF YEAR
(363,929)
(363,929)
239,706
1,615,131
$
1,854,837
CITY OF PRIOR LAKE, MINNESOTA
COMBThffiDSTATEMENTSOFCASHFLOWS
ALL PROPRIETARY FUND TYPES
YEARS ENDED DECEMBER 31, 1996 AND 1995
19% 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income $ 494,096 $ 462,250
Other income related to operations 44,584 400
Adjustments to reconcile operating income to net
cash provided by operating activities
Depreciation 371,000 246,133
Change in assets and liabilities
(Increase) decrease in:
Accounts receivable (225,2%) (48,194)
Due from other governments 1,826
lncrease (decrease) in:
Accounts payable (44,471) (16,517)
Accrued expenses (763) (1,274)
Severance compensation 5,198 8,338
NET CASH PROVIDED BY OPERATING ACTIVITIES 644,348 652,%2
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating transfers in 5,375
Operating transfers out (363,929) (760,937)
NET CASH USED BY NONCAPITAL FINANCING ACITVITIES (363,929) (755,562)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Principal paid on revenue bonds payable (5,000)
Interest and fees paid on revenue bonds payable (375)
Acquisition of property and equipment (21) (7,386)
NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (21) (12,761)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on cash and investments 65,718 61,150
INCREASE IN CASH AND CASH EQUIVALENTS 346,116 (54,211)
CASH AND CASH EQUIVALENTS, JANUARY 1 1,210,112 1,264,323
CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 1,556,228 $ 1,210,112
NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES
Contributions of fixed assets
$
$
465,330
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEtvrnER 31, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. City Structure and Scope of the Entity
The City of Prior Lake, operates under "Optional Plan B" as defined in the State of Minnesota 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 matters of policy. The
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 the State of Minnesota. As required by generally
accepted accounting principles, the financial statements of the reporting entity include those of the City of
Prior 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:
Governmentalfunds are used to account for the City's general government activities. Governmental fund
types use the flow of cunent 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 esumates and assumptions that affect certain amounts and
disclosures. Accordingly, actual results could 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 to 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.
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Governmental funds include the following fund types:
The general fund is the City's primary operating fund. It accounts for all financial resources of the City, except
those required to be accounted for in another fund.
The special revenue funds account for revenue sources that are legally restricted 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
funds.
The capital projects funds account for the acquisition of fixed assets or construction of major capital projects
not being financed by proprietary funds.
Proprietllry 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 F ASB pronouncements in accounting and
reporting for its proprietary operations. Proprietary funds include the following fund type:
Enterprise funds 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 general fixed assets account group is used to account for fixed assets not accounted for
in proprietary funds. The general long-term debt account group is used to account for general long-term debt
and certain other liabilities that 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 Federallnvesunent Company Act of 1940 and whose only investments are obligations
guaranteed by the United States or its agencies.
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Prope~' 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 collected by the County Treasurer and tax settlements are made to the City during January, June, and
December 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
homestead property. The State remits this credit in two equal installments in July and December each year.
Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by
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 days after year 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 normal 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.
During 1996, the City used an independent service organization to conduct a physical inventory, appraisal and
insurance values study. All General Fixed Assets and Proprietary Fund assets and related depreciation were
restated. The portion of the study which values assets at actual or estimated acquisition cost were used for
accounting purposes. Some changes in depreciable lives were applied retroactively.
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
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Compensated Absences
It is the City's policy to permit 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 $355,635 at year
end. Vacation and sick pay are accrued when incurred in proprietary funds and reported as long-term liability.
Vacation and sick pay of the general fund are reported in the general long-term account group.
Long-term Obligations
The City reports long-term debt of governmental funds at face value in the general long-term debt account
group. Certain other governmental fund obligations not expected to be financed with current available
financial resources are also reported in the general long-term debt account group. Long-term debt and other
obligations financed by proprietary funds are reported as liabilities in the appropriate funds.
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, are reported as debt service
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-party 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 infonnation 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 D atalReclassifications
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 presentation.
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31.1996
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 requests for appropriations to the Finance Officer so
that a budget may be prepared. Before September 15, 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 The 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.
B. Deficit Fund Equity
None of the City funds had a fund equity deficit at December 31. 1996.
Note 3: DETAll..ED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
A. Deposits and Investments
At year end, the City's carrying amount of deposits was $1,600,213 and the bank balance was $2,343,287. Of
the bank balance, $872,707 was covered by federal depository insurance or by collateral held by the City's
agent in the City's name. The remaining balance of $1,470,580 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
$ 72.833
1.527.380
$1 600213
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:
U.S. Government Securities
Commercial Paper
Total
Investments not subjected
to categorization:
Investment fund
Total investments
1
$8,115,740
Categorv
-L
$
3
Carrying
Amount!
Market Value
$ 8,115,740
198.738
8,314,478
$
$8 155740
L-:..
198,738
$ 198738
2,000.000
$10 3 14 478
CITY OF PRIOR LAKE, MINNESOTA
NOlES TO FINANCIAL ST A lEMENTS
DECEMBER 31, 1996
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
The following is a reconciliation of cash and investments as shown on the Combined Balance Sheet as of
December 31,1996:
Carrying amount of deposits
Carrying amount of investments
Total
$ 1,600,213
10.314.478
$11 914691
B. Due From Other Governments
A summary of all amounts due from other governments as of December 31,1996 is as follows:
General Fund
Scott County
State of Minnesota
$10,290
2.532
12,822
Proprietary Fund
MWCC - current value credit
Total
14.008
$26 830
C. Fixed Assets
A summary of general fixed assets for the year ended December 31, 1996 follows:
Land and improvements
Buildings
Equipment
Construction in progress
Total
Balance
January 1
S 2,185,797
3,581,371
3,341,703
2.766.278
$11 875 149
Changes
$(1,207,909)
2,050,469
(81,924 )
(2,766,278 )
$(2 005 642)
Balance
December 31
$ 977,888
5,631,840
3,259,779
$ 9 869 507
During 1996, the City used an independent service organization to conduct a physical inventory, appraisal and
insurance values study. All General Fixed Assets and Proprietary Fund assets and related depreciation were
restated. The portion of the study which values assets at actual or estimated acquisition cost were used for
accounting purposes. Some changes in depreciable lives were applied retroactively.
The following is a summary of proprietary fund type fixed assets at December 31, 1996:
Accumulated depreciation
$ 603
1,313,811
12,008,442
169,904
428.393
13.921,153
(3.230.472)
$ 10690681
Land
Buildings
Infrastructure
Machinery and equipment
Vehicles
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 3: DETAILED NOTES ON ALL FUND AND ACCOUNT GROUPS (Continued)
D. Deferred Revenue
Deferred revenue at December 31, 1996 is comprised of the following:
Debt Capital
General Service Proiects Total
Taxes
Delinquent $ 71,567 $ 16,726 $ $ 88,293
Special assessments
Delinquent 261,581 261,581
Deferred 1,539,124 398 1,539,522
Other (Green Acres) 1.040,125 13,898 1.054,023
Total $ 71 567 $2 857 556 $ 14296 $2943419
E. Operating Leases
The City leases equipment under non-<:ancelable operating leases. Total costs for such leases were $10,205 for
the year ended December 31, 1996. The future minimum lease payments for these leases are as follows:
Year Ending December 31.
1997
1998
1999
Total
Amount
$ 13,999
6,441
4.590
$ 25 030
F. Long-term Debt
The following is a summary of changes in general long-term debt for the year ended December 31, 19%.
Balance Balance
J anuarv 1 Additions Deletions December 31
Bonds payable
Special assessment bonds $ 9,401,250 $ 935,000 $ 3,169,750 $ 7,166,500
General obligation bonds 2,280,000 2,430,000 120,000 4,590,000
Equipment certificates 665,000 220,000 445,000
Revenue bonds -
Advance refunding bonds 1,058,750 950,250 108,500
Water and sewer bonds 2.200.000 55.000 2.145.000
Total bonds payable 15,605,000 3,365.000 4.515.000 14.455,000
Equipment leases payable 18,647 12.978 5.669
Compensated absences 308.444 4.029 304.415
Total $15932091 $3 365 000 $ 4 532 007 $14765084
CITY OF PRIOR LAKE, MINNESOTA
NOlES TO FINANCIAL ST A lEMENTS
DECEMBER 31, 1996
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
Long-term debt at December 31, 1996 is comprised of the following types of issues:
Interest Issue Maturity Balance
Description rates date date Outstanding
Special Assessment bonds
G.O. Improvement Bonds of 1973 5.00-5.50 07/01/73 07/01/98 $ 210,000
G.O.lmprovement Bonds of 1973 5.10-5.50 1 % 1/73 1 % 1/98 70,000
G.O. Improvement Bonds of 1977 4.50-5.75 03/01/77 03/01/97 160,000
G.O. Improvement Bonds of 1977 4.00-5.70 06/01/77 06/01/98 220,000
G.O. Improvement Bonds of 1978 4.90-5.80 05/01/78 05/01/98 20,000
G.O. Improvement Bonds of 1987 5.75-7.10 09/01/87 12/01/97 30,000
G.O. Improvement Bonds of 1988 5.90-7.70 06/01/88 12/01/01 145,000
G.O. Improvement Bonds of 1991 4.90~.80 03/01/91 12/01/08 285,000
G.O. Advance Refunding Bonds of 1992 3.00~.00 02/01/92 12/01/07 201,500
G.O. Refunding Bonds of 1992 3.40-3.95 10/01/92 07/01/00 195,000
G.O. Crossover Refunding Bonds of 1992B 3.60-4.80 10/01/92 12/01/99 450,000
G.O. Refunding Bonds of 1993 3.60-4.60 03/01/93 12/01/98 370,000
G.O. Improvement Bonds of 1993 4.25-4.38 07/01/93 12/01/08 2,340,000
G.O. Improvement Bonds of 1994 3.60-5.40 08/01/94 12/01/04 665,000
G.O. Improvement Bonds of 1995 4.00-4.95 08/01/95 12/01/05 870,000
G.O. Improvement Bonds of 1996 4.00-4.90 06/01/96 12/01/06 935.000
Total Special Assessment Bonds 7.166.500
General Obligation Bonds
G.O. Park Bonds of 1973 5.50-5.75 12/01/73 12/01/03 95,000
G.O. Refunding Park Bonds of 1977 5.10 09/01/77 09/01/00 60,000
G.O. Crossover Refunding Bonds of 1992A 3.60-4.80 10/01/92 08/01/99 95,000
G.O. Fire Station Bonds of 1993 3.00-5.40 08/01/93 12/01/13 1,910,000
G.O. Refunding Bonds of 1996 4.10-5.00 10/01/96 12/01/06 2.430.000
Total General Obligation Bonds 4.590.000
Equipment Certificates
G.O. Equipment Certificates of 1993 3.40-4.25 03/01/93 12/01/97 135,000
G.O. Equipment Certificates of 1995 4.40-4.80 09/01/95 12/01/99 310.000
Total Equipment Certificates 445.000
G.O. Revenue Bonds
G.O. Advance Refunding Bonds of 1992 3.00~.00 02/01/92 12/01/07 108.500
G.O. Water and Sewer Bonds of 1995 4.40-5.65 11/01/95 12/01/15 2.145.000
Total Bonds Payable $14455000
The annual requirement to amortize all bonds outstanding at December 31, 1996 including interest payments
totaling $4,537,018 are as follows:
Year Ending Special General Equipment Revenue
December 31. Assessment Obligation Certificates Bonds Total
1997 $ 1,962,983 $ 360,438 $ 250,458 $ 283,054 $ 2,856,933
1998 1,478,076 609,597 115,215 181,923 2,384,811
1999 1,064,916 613,022 115,280 183,623 1,976,841
2000 821,310 569,755 180,103 1,571,168
2001 750,716 557,303 186,582 1,494,601
Thereafter 2.550.142 3.646.387 2.511.135 8.707.664
Total $ 8628 143 $6 356 502 $ 480 953 $ 3 526 420 $18992018
CITI' OF PRIOR LAKE, tv1INNESOT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
Amounts Available for Long-term Debt. Available fund balance in the debt service funds for repayment of
long-term debt totaled $3,531,462 at year end.
Amounts to be Provided for 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. Fund Equity
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
Purpose
Severance compensation
Debt service
Unreserved - designated
General Fund
Special Revenue Fund
Capital Park
Capital Projects Funds
Total Unreserved - Designated
Working capital
Improvements
Capital improvements
Note 4: SEGMENT INFORMA nON FOR ENTERPRISE FUNDS
Amount
$ 186,517
3,531.462
$ 3717979
$ 1,846,000
260,909
3,702,704
$ 5 809 613
The City provides services which are accounted for in the Enterprise Funds. The segment information for these
Enterprise Funds for December 31, 1996 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 133,144
Utility
$ 2,188,673
371,000
533,945
363,929
275,333
1,956,875
12,712,641
12,610,473
(39,849 )
(34,864 )
125,839
125,864
124,947
Note 5: DEFINED BENEFIT PENSION PLAN - STATEWIDE
A. Plan Description
Total
$ 2,321,817
371,000
494,096
363,929
240,469
2,082,714
12,838,505
12,735,420
All 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) and the Public Employees Police and Fire Fund (pEPFF)
which are cost-sharing, multiple-employer employee retirement plans. These plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356.
CITY OF PRIOR LAKE, 11INNESOT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 5: DEFINED BENEFIT PENSION PLAN - STATEWIDE (Continued)
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. All police officers who qualify for membership by statute are covered by the PEPFF.
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 PERF's Coordinated and Basic Plan members. The retiring
member receives the higher of step-rate benefit accrual formula (Method 1) or a level accrual formula (Method
2). Under Method 1, 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 ofaverage 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 PEPFF members, the annuity accrual rate is
2.65 percent for each year of service. For all PEPFF members and for PERF members whose annuity is
calculated using Method 1, 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.
There are different types of annuities available to members upon retirement. A nonnaI annuity is a lifetime
annuity that ceases upon the death of the retiree-no survivor annuity is payable. There are also various types
of joint and survivor annuity options available which will reduce the monthly nonnaI annuity amount, because
the annuity is payable over joint lives. Members may also leave their contributions in the fund upon
termination of public service, in order to qualify for a deferred annuity at retirement age. Refunds of
contributions are available at any time to members who leave public service, but before retirement benefits
begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to
active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them
yet, are bound by the provisions in effect at the time they last terminated their public service.
PERA issues a publicly available financial report that includes financial statements and required
supplementary infonnation for PERF and PEPFF. 1bat report may be obtained by writing to PERA, 514 St.
Peter Street #200, St. Paul, Minnesota, 55102 or by calling (612) 296-7460 or 1-800-652-9026.
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 for the years
ending December 31, 1996 and 1995 were $174,805 and $170,656, respectively, equal to the contractually
required contributions for each year as set by state statute.
{ ,
CITY OF PRIOR LAKE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 5: 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; errors
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 estimated. An excess coverage insurance policy covers individual claims in excess ofSloo,ooo.
Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's
management is not aware of any incurred but not reported claims.
B. Legal Debt Margin
The City's statutory debt limit is equal to 2.0% of estimated market value of $543,216,800 or $10,864,336.
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 $2,160,000 of general obligation debt
outstanding leaving a debt margin of $8,706,496.
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 DepartmenL
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 $2,000 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, 1996, the liability of the Special Fund exceeded the assets of the Association.
D. Prior Period Adjustment
The 1995 Utility Fund statement of revenues, expenses and changes in retained earnings contains a prior
period adjustment due to recognition of contributed capital. These amount were modified in 1996 for the
physical fixed asset valuation performed City-wide.
IBONDSIA97BONDS.DOC
DATE:
INTRODUCTION:
BACKGROUND:
DISCUSSION:
STAFF AGENDA REPORT
5B
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF RESOLUTION
AUTHORIZING PUBLIC SALE OF $1,065,000
IMPROVEMENT BONDS OF 1997
SEPTEMBER 15, 1997
97-XX
G.O.
The City's bond and fiscal consultant Steve Mattson from Juran &
Moody will be present during the Council meeting to request
Council approval for a public sale of bonds in the amount of
$1,065,000 to finance improvements associated with Pike Lake Trail
(Project 97-17), Mushtown Road (Project 95-07) and the city's
cooperative agreement share of County Road 42 improvements.
The City Council approved Resolution 97-11 on March 3, 1997
which accepted the feasibility report for a number of projects
identified for construction during 1997 which were to be financed by
a combination of general obligation bonds and various fund
appropriations. A summary of those improvements are listed below:
Project Description
Project Financing
1. Pike Lake Trail
G.O. Bonds
(Trunk Reserve)
(MSA Funds)
G.O. Bonds
G.O. Bonds
(Trunk Reserve)
$366,000.00
$33,000.00
$118,000.00
$378,000.00
$321,000.00
$318,000.00
2. Mushtown Road
3. CSAH 42 Upgrade
Bond Total... $1,065,000.00
Subsequently, the public hearing for these 1997 improvement
projects was conducted on April 7, 1997 and Resolution 97-24
ordering the respective improvements was approved. Also,
Resolution 97-70 was approved by the City Council on August 18,
1997 which awarded the construction bid to McNamara Contracting
Inc.
The structure of the bond issue itself would be based upon the
following components:
Pike Lake Trail
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
H:\BONDS\A97SALE.DOC
ACTION REQUIRED:
1t
Approved by:
(
Attachments\~
successful bidder with the lowest net effective interest rate based
upon Steve Mattson's bid tabulation.
Motion and second to approve Resolution 97-xx Providing for
Issuance of $1,065,000 General Obligation Improvements Bonds of
1997.
A
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