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HomeMy WebLinkAbout8.a. Accept Bids and Award Sale - G.O. Water Utility Revenue Bonds, Series 2015A EXECUTIVE SUMMARY City Council Meeting Date: October 20, 2015 AGENDA ITEM: Accept Bids and Award Sale – G.O. Water Utility Revenue Bonds, Series 2015A AGENDA SECTION: Old Business PREPARED BY: Jeff May, Finance Director AGENDA NO. 8.a. ATTACHMENTS: Resolution and Official Statement APPROVED BY: ddj RECOMMENDED ACTION: Motion to adopt a Resolution Awarding the Sale of $1,525,000 General Obligation Water Utility Revenue Bonds, Series 2015A; and Providing for their Issuance. ISSUE Accept bids and award sale of revenue bonds for the construction of Well #16 and well house. BACKGROUND This item is on the agenda for Council to formally award the sale of the water utility revenue bonds. At 10:00 A.M. Tuesday, October 20, 2015, sealed bids for G.O. Water Utility Revenue Bonds, Series 2015A, will be opened and the results tabulated at the offices of Springsted, our financial advisors for the sale. A representative from Springsted will be at the Council meeting that evening to give their recommendation for the issuance of these bonds and to answer any questions that you may have. A bond rating conference call was held on Tuesday, October 6, 2015, with a representative from Moody’s and from Springsted speaking with me regarding the City of Rosemount. On Tuesday, October 13th, our rating was taken to a committee of Moody’s for evaluation and our Aa2 rating was affirmed at that meeting for our new debt as well as all of our existing debt. Because the bid opening is not until earlier in the day Tuesday, you will receive information regarding the bids at the meeting that evening. SUMMARY Recommend the above motion. 468491v2 JSB RS125-16 City of Rosemount Dakota County, Minnesota Resolution No. ______ A Resolution Awarding the Sale of $1,525,000 General Obligation Utility Revenue Bonds, Series 2015A; And Providing for Their Issuance BE IT RESOLVED By the City Council of the City of Rosemount, Dakota County, Minnesota (the “City”) as follows: Section 1. Sale of Bonds. 1.01 Authorization. It is hereby determined that: (a) the City is authorized by Minnesota Statutes, Section 444.075 and Minnesota Statutes, Chapter 475, as amended (collectively, the “Act”), to finance all or a portion of the cost of improvements to the water utility system of the City, including the drilling of a new water well and constructing a well house (the “Water Improvements”), by the issuance of general obligation bonds of the City payable from the net revenues of the water utility system of the City; and (b) it is necessary and desirable that the City issue its $1,525,000 General Obligation Utility Revenue Bonds, Series 2015A (the “Bonds”) to finance the Water Improvements. 1.02. Award to the Purchaser and Interest Rates. The proposal of _______________________ (the “Purchaser”) to purchase the Bonds described in the Terms of Proposal thereof is determined to be the most favorable offer and is accepted, the proposal being to purchase the Bonds at a price of $____________ plus accrued interest to date of delivery, if any, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2017 % 2022 % 2018 % 2023 % 2019 % 2024 % 2020 % 2025 % 2021 % 2026 % 1.03. Purchase. Any original issue premium and any rounding amount shall be credited to the Debt Service Fund hereinafter created or deposited in the Construction Fund hereinafter created, as determined by the City Finance Director and in consultation with the City’s municipal advisor. The City Finance Director is directed to retain the good faith check of the Purchaser, pending completion of the sale of the Bonds, and to return the good faith checks of the unsuccessful proposers. The Mayor and City Clerk are authorized to execute a contract with the Purchaser on behalf of the City. 1.04. Terms and Principal Amount of the Bonds. The City will forthwith issue and sell the Bonds pursuant to the Act in the total principal amount of $1,525,000, originally dated November 19, 2015, the Bonds being in fully registered form and issued in the denomination of $5,000 each or any RESOLUTION 2015-____ 2 468491v2 JSB RS125-16 integral multiple thereof, numbered No. R-1 and upward, bearing interest as above set forth, and which mature on February 1 in the years and amounts as follows: Year Amount Year Amount 2017 $140,000 2022 $155,000 2018 145,000 2023 155,000 2019 145,000 2024 160,000 2020 150,000 2025 160,000 2021 150,000 2026 165,000 As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provision of the applicable Bond(s). 1.05. Optional Redemption. The City may elect on February 1, 2024, and on any day thereafter to prepay Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 7 hereof) 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. Prepayments will be at a price of par plus accrued interest. Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2016, to the registered owners of record as of the close of business on the 15th day of the immediately preceding month, whether or not that day is a business day. 2.03. Registration. The City will appoint, and will maintain, a bond registrar, transfer agent, authenticating agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. RESOLUTION 2015-____ 3 468491v2 JSB RS125-16 (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing. (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes, and payments so made to a registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. (i) Redemption. In the event any of the Bonds are called for redemption, notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar and by publishing the RESOLUTION 2015-____ 4 468491v2 JSB RS125-16 notice if required by law. Failure to give notice by publication or by mail to registered owners, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 2.04. Appointment of Initial Registrar. The City appoints U.S. Bank National Association, St. Paul, Minnesota, as the initial Registrar. The Mayor and the City Clerk are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar upon 30 days’ notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and must deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the City Clerk must transmit to the Registrar monies sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the City Clerk and executed on behalf of the City by the signatures of the Mayor and the City Clerk., provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of any Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated, the City Finance Director will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3 with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be exchanged therefor and cancelled. Section 3. Form of Bond. 3.01. Form. The Bonds will be printed or typewritten in substantially the form attached hereto as Exhibit B. 3.02. Approving Legal Opinion. The City Clerk is authorized and directed to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which is to be complete except as to dating thereof and cause the opinion to be printed on or accompany each Bond. RESOLUTION 2015-____ 5 468491v2 JSB RS125-16 Section 4. Payment; Security; Pledges and Covenants. 4.01. Debt Service Fund. The Bonds will be payable from the General Obligation Utility Revenue Bonds, Series 2015A Debt Service Fund (the “Debt Service Fund”) hereby created. The Debt Service Fund shall be administered and maintained by the City Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The City will continue to maintain and operate its Water Fund, to which will be credited all gross revenues of the water utility system and out of which will be paid all normal and reasonable expenses of current operations of such water utility system. Any balances therein are deemed net revenues (the “Net Revenues”) and will be transferred, from time to time, to the Debt Service Fund hereby created, which fund will be used only to pay principal of and interest on the Bonds, and any other bonds similarly authorized. There will always be retained in the Debt Service Fund a sufficient amount to pay principal of and interest on all of the Bonds, and the Finance Director must report any current or anticipated deficiency in the Debt Service Fund to the City Council. If a payment of principal or interest on the Bonds becomes due when there is not sufficient money in the Debt Service Fund to pay the same, the City Finance Director is directed to pay such principal or interest from the general fund of the City, and the general fund will be reimbursed for the advances out of the proceeds of Net Revenues of the Water Fund and taxes when collected. There is also appropriated to the Debt Service Fund (i) capitalized interest financed from the Bond proceeds, if any; (ii) any amount over the minimum purchase price of the Bonds paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.03, if any; and (iii) the accrued interest paid by the Purchaser upon closing and delivery of the Bonds, if any. 4.02 Construction Fund. The City hereby creates the General Obligation Utility Revenue Bonds, Series 2015A Construction Fund (the “Construction Fund”) to be administered and maintained by the City Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. Proceeds of the Bonds, less the appropriations made in Section 4.01(a) hereof, together with any other funds appropriated during the construction of the Water Improvements financed by the Bonds will be deposited in the Construction Fund to be used solely to defray expenses of the Water Improvements. When the Water Improvements are completed and the cost thereof paid, the Construction Fund is to be closed and any funds remaining may be deposited in Debt Service Fund. 4.03. City Covenants. The City Council covenants and agrees with the holders of the Bonds that so long as any of the Bonds remain outstanding and unpaid, it will keep and enforce the following covenants and agreements: (a) The City will continue to maintain and efficiently operate the water utility system as a public utility and convenience free from competition of other like municipal utilities and will cause all revenues therefrom to be deposited in bank accounts and credited to the Water Fund as hereinabove provided, and will make no expenditures from that account except for a duly authorized purpose and in accordance with this resolution. (b) The City will also maintain the Debt Service Fund as a separate account and will cause money to be credited thereto from time to time, out of Net Revenues from the water utility system in sums sufficient to pay principal of and interest on the Bonds when due. (c) The City will keep and maintain proper and adequate books of records and accounts separate from all other records of the City in which will be complete and correct entries as to all RESOLUTION 2015-____ 6 468491v2 JSB RS125-16 transactions relating to the water utility system and which will be open to inspection and copying by any bondholder, or the bondholder's agent or attorney, at any reasonable time, and it will furnish certified transcripts therefrom upon request and upon payment of a reasonable fee therefor, and said account will be audited at least annually by a qualified public accountant and statements of such audit and report will be furnished to all bondholders upon request. (d) The City Council will cause persons handling revenues of the water utility system to be bonded in reasonable amounts for the protection of the City and the bondholders and will cause the funds collected on account of the operations of the water utility system to be deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance Law. (e) The City Council will keep the water utility system insured at all times against loss by fire, tornado and other risks customarily insured against with an insurer or insurers in good standing, in such amounts as are customary for like plants, to protect the holders, from time to time, of the Bonds and the City from any loss due to any such casualty and will apply the proceeds of such insurance to make good any such loss. (f) The City and each and all of its officers will punctually perform all duties with reference to the water utility system as required by law. (g) The City will impose and collect charges of the nature authorized by Minnesota Statutes, Section 444.075 at the times and in the amounts required to produce Net Revenues adequate to pay all principal and interest when due on the Bonds and to create and maintain such reserves securing said payments as may be provided in this resolution. (h) The City Council will levy general ad valorem taxes on all taxable property in the City, when required to meet any deficiency in pledged Net Revenues. (i) The City hereby determines that the estimated collection of Net Revenues herein pledged for the payment of principal and interest on the Bonds will produce at least 5% in excess of the amount needed to meet, when due, the principal and interest payments on such portion of the Bonds. 4.03. Debt Service Coverage. It is determined that estimated collection of Net Revenues of the water utility system will produce at least 5% in excess of the amount needed to meet, when due, the principal and interest payments on the Bonds and that no tax levy is needed at this time. 4.05. General Obligation Pledge. For the prompt and full payment of the principal and interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City will be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency will be promptly paid out of monies in the general fund of the City which are available for such purpose, and such general fund may be reimbursed with or without interest from the Debt Service Fund when a sufficient balance is available therein 4.06. County Auditor Certificate as to Registration. The City Clerk is authorized and directed to file a certified copy of this resolution with the County Auditor of Dakota County and to obtain the certificate required by Minnesota Statutes, Section 475.63. RESOLUTION 2015-____ 7 468491v2 JSB RS125-16 Section 5. Authentication of Transcript. 5.01. City Proceedings and Records. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 5.02. Certificate as to Official Statement. The Mayor and City Clerk are hereby authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. 5.03 Other Certificates. The Mayor and City Clerk are hereby authorized and directed to furnish to the Purchaser at the closing such certificates as are required as a condition of sale. Unless litigation shall have been commenced and be pending questioning the Bonds or the organization of the City or incumbency of its officers, at the closing the Mayor and the City Clerk shall also execute and deliver to the Purchaser a suitable certificate as to absence of material litigation and a certificate as to payment for and delivery of the Bonds. Section 6. Tax Covenant. 6.01. Tax Exempt Bonds. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 6.02. Rebate. The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds and the rebate of excess investment earnings to the United States. 6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. Qualified Tax -Exempt Obligations. In order to qualify the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not “private activity bonds” as defined in Section 141 of the Code; RESOLUTION 2015-____ 8 468491v2 JSB RS125-16 (b) the City hereby designates the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds, that are not qualified 501(c)(3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2015 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2015 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 7. Book-Entry System; Limited Obligation of City. 7.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (“DTC”). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 7.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the “Participants”) or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Clerk of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.,” will refer to such new nominee of DTC; and upon receipt of such a notice, the City Clerk will promptly deliver a copy of the same to the Registrar and Paying Agent. RESOLUTION 2015-____ 9 468491v2 JSB RS125-16 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Representation Letter”) which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 7.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this Resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and notices with respect to the Bond will be made and given, respectively in the manner provided in DTC’s Operational Arrangements as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution, failure of the City to comply with the Continuing Disclosure Certificate will not be considered an event of default with respect to the Bonds; however, such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. 8.02. Execution of Continuing Disclosure Certificate. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Mayor and City Clerk and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Section 9. Defeasance. 9.01. Defeasance. When all Bonds and all interest thereon, have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid RESOLUTION 2015-____ 10 468491v2 JSB RS125-16 when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. (The remainder of this page is intentionally left blank.) RESOLUTION 2015-____ 11 468491v2 JSB RS125-16 ADOPTED this 20th day of October, 2015, by the City Council of the City of Rosemount. ___________________________________ William H. Droste, Mayor ATTEST: _____________________________________ Clarissa Hadler, City Clerk RESOLUTION 2015-____ 468491v2 JSB RS125-16 CERTIFICATE STATE OF MINNESOTA ) COUNTY OF DAKOTA ) ss CITY OF ROSEMOUNT ) I am the duly appointed, acting and qualified City Clerk of the City of Rosemount, Dakota County, Minnesota do hereby certify that I have examined the City of Rosemount records and the Minute Book of said City for the meeting of the 20th of October, 2015 and that the attached copy of the Resolution 2015-___ A RESOLUTION AWARDING THE SALE OF $1,525,000 GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2015A; AND PROVIDING FOR THEIR ISSUANCE was approved and is a true and correct copy of the City Proceedings relating to said Resolution. IN WITNESS WHEREOF, I have hereunto set my hand and seal of said City this ____ day of ______________, 2015. City Clerk City of Rosemount Dakota County, Minnesota RESOLUTION 2015-____ A-1 468491v2 JSB RS125-16 EXHIBIT A PROPOSALS RESOLUTION 2015-____ 468491v2 JSB RS125-16 B-1 EXHIBIT B FORM OF BOND No. R -___ UNITED STATES OF AMERICA $___________ STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF ROSEMOUNT GENERAL OBLIGATION UTILITY REVENUE BOND, SERIES 2015A Rate Maturity Date of Original Issue CUSIP February 1, 20__ November 19, 2015 Registered Owner: Cede & Co. The City of Rosemount, Minnesota, a duly organized and existing municipal corporation in Dakota County, Minnesota (the “City”), acknowledges itself to be indebted and for value received promises to pay to the Registered Owner specified above, or registered assigns, the principal sum set forth above on the maturity date specified above without option of prior payment, with interest thereon from the date hereof at the annual rate specified above, payable February 1 and August 1 in each year, commencing August 1, 2016, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by U.S. Bank National Association, St. Paul, Minnesota, as Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue in the aggregate principal amount of $1,525,000 all of like original issue date and tenor, except as to number, maturity date, and interest rate, all issued pursuant to a resolution adopted by the City Council on October 20, 2015 (the “Resolution”), for the purpose of various utility improvements in the City pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters 444 and 475. The principal hereof and interest hereon are payable primarily from the net revenues of the water utility system of the City in a special debt service fund of the City, as set forth in the Resolution to which reference is made for a full statement of rights and powers thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy ad valorem taxes on all taxable property in the City, which taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. The City may elect on February 1, 2024, and on any date thereafter to prepay Bonds maturing on or after February 1, 2025. Redemption may be in whole or in part and if in part, at the option of the RESOLUTION 2015-____ 468491v2 JSB RS125-16 B-2 City and in such order as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify The Depository Trust Company (“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. Prepayments will be at a price of par plus accrued interest. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City Council has designated the issue of Bonds of which this Bond forms a part as “qualified tax exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED That in and by the Resolution, the City has covenanted and agreed that it will continue to own and operate the water utility system free from competition by other like municipal utilities; that adequate insurance on said systems and suitable fidelity bonds on employees will be carried; that proper and adequate books of account will be kept showing all receipts and disbursements relating to the Water Fund, into which it will pay all of the gross revenues from the water utility system; that it will also create and maintain the General Obligation Utility Revenue Bonds, Series 2015A Debt Service Fund, into which it will pay, out of the net revenues from the water utility system sums sufficient to pay principal of the Bonds and interest on the Bonds when due; and that it will provide, by ad valorem tax levies, for any deficiency in required net revenues of the water utility system. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, have happened and have been performed in regular and due form, time and manner, that prior to the issuance of this bond the City Council of the City has provided funds for the payment of principal and interest on the bonds of this issue as the same become due, but the full faith and credit of the City is pledged for their payment and taxes will be levied, if required for such purpose, without limitation as to the rate of amount; and that this bond, together with all other indebtedness of the City outstanding on the date of its issuance, does not exceed any constitutional or statutory limitation thereon. RESOLUTION 2015-____ 468491v2 JSB RS125-16 B-3 This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Rosemount, Dakota County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Clerk and has caused this Bond to be dated as of the date set forth below. Dated: November 19 2015 CITY OF ROSEMOUNT, MINNESOTA (Facsimile) (Facsimile) City Clerk Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. U.S.BANK NATIONAL ASSOCIATION By Authorized Representative _________________________________ The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants UNIF GIFT MIN ACT _________ Custodian _________ in common (Cust) (Minor) TEN ENT -- as tenants under Uniform Gifts or by entireties Transfers to Minors Act . . . . . . . . . . . . JT TEN -- as joint tenants with right of survivorship and not as tenants in common (State) Additional abbreviations may also be used though not in the above list. ________________________________________ RESOLUTION 2015-____ 468491v2 JSB RS125-16 B-4 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto ________________________________________ the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint _________________________ attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: Notice: The assignor’s signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: ____________________________ NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program (“SEMP”), the New York Stock Exchange, Inc. Medallion Signatures Program (“MSP”) or other such “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account.) Please insert social security or other identifying number of assignee RESOLUTION 2015-____ 468491v2 JSB RS125-16 B-5 PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Date of Registration Registered Owner Signature of Registrar Cede & Co. Federal ID #13-2555119 468491v2 JSB RS125-16 STATE OF MINNESOTA COUNTY AUDITOR’S CERTIFICATE AS TO COUNTY OF DAKOTA REGISTRATION WHERE NO AD VALOREM TAX LEVY I, the undersigned County Auditor of Dakota County, Minnesota, hereby certify that a resolution adopted by the City Council of the City of Rosemount, Minnesota, on October 20, 2015, relating to the City’s General Obligation Utility Revenue Bonds, Series 2015A, in the amount of $1,525,000 dated November 19, 2015, has been filed in my office and said obligations have been registered on the register of obligations in my office. WITNESS My hand and official seal this ____ day of ____________, 2015. County Auditor Dakota County, Minnesota (SEAL) Deputy * Preliminary; subject to change. Th e i n f o r m a t i o n c o n t a i n e d i n t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t i s d e e m e d b y t h e Ci t y a n d t h e A u t h o r i t y to b e f i n a l a s o f t h e d a t e h e r e o f ; h o w e v e r , t h e p r i c i n g a n d u n d e r w r i t i n g i n f o r m a t i o n i s s u b j e c t t o co m p l e t i o n o r a m e n d m e n t . U n d e r n o c i r c u m s t a n c e s s h a l l t h i s P r e l i m i n a r y O f f i c i a l S t a t e m e n t c o n s t i t u t e a n o f f e r t o s e l l o r t h e so l i c i t a t i o n o f a n o f f e r t o b u y, n o r s h a l l t h e r e b e a n y s a l e o f t h e s e s e c u r i t i e s i n a n y ju r i s d i c t i o n i n w h i c h s u c h o f f e r , s o l i c i t a t i o n o r s a l e w o u l d b e u n l a w f u l p r i o r t o r e g i s t r a t i o n o r q u a l i f i c a t i o n u n d e r t h e s e c ur i t i e s l a w s o f a n y s u c h j u r i s d i c t i o n . PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 30, 2015 NEW AND REFUNDING ISSUES Moody’s Ratings: Requested BANK QUALIFIED In the opinion of Kennedy & Graven, Chartered, Bond Counsel for the Bonds, based on present federal and Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), and assuming compliance with certain covenants, interest to be paid on the Bonds is excluded from gross income for federal income tax purposes and, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven 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. The Bonds will be designated as "qualified tax-exempt Bonds" for purposes of Section 265(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 allocable to carrying and acquiring tax-exempt Bonds. See "TAX EXEMPTION" and "OTHER FEDERAL AND STATE TAX CONSIDERATIONS" herein. City of Rosemount, Minnesota $1,525,000* General Obligation Utility Revenue Bonds, Series 2015A (the “Series 2015A City Bonds”) $1,445,000* General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B (the “Series 2015B City Bonds”) Rosemount Port Authority, Minnesota $3,460,000* General Obligation Tax Increment Refunding Bonds, Series 2015A (the “Authority Bonds”) (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing August 1, 2016 The Bonds (as defined herein) will mature as shown on the inside front cover of this Official Statement. The City Bonds (as defined herein) are general obligations of the City of Rosemount (the “City”) for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. The Authority Bonds are full faith and credit obligations of the City for which the City has consented to the Rosemount Port Authority, Minnesota ’s (the “Authority”) levy of general ad valorem taxes on all property within the City for their payment. The Bonds will be used for various purposes as discussed herein. Additional sources of security for the Bonds will be discussed herein . A separate proposal must be submitted for each issue subject to the minimum bid amounts shown below, plus accrued interest, if any. Proposals shall specify rates in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity of each issue must be 98.0% or greater. Following receipt of proposals, a good faith deposit for each issue will be required to be delivered to the City for each series of the City Bonds and to the Authority for the Authority Bonds, by the lowest bidder as described in each “Terms of Proposal” herein. Award of the Bonds will be made on the basis of True Interest Cost (TIC). Minimum Bid The Series 2015A City Bonds $1,508,225 The Series 2015B City Bonds 1,433,080 The Authority Bonds 3,420,210 The City and the Authority will designate the Bonds as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Inve stors will not receive physical certificates representing their interest in the Bonds purchased. (See “Book Entry System” herein.) U.S. Bank National Association, St. Paul, Minnesota will serve as registrar (the “Registrar”) for the Bonds. The Bonds will be available for delivery at DTC on or about November 19, 2015. PROPOSALS RECEIVED: October 20, 2015 (Tuesday) until 10:00 A.M., Central Time AWARD BY THE AUTHORITY: October 20, 2015 (Tuesday) at 6:00 P.M., Central Time AWARD BY THE CITY: October 20, 2015 (Tuesday) at 7:00 P.M., Central Time Further information may be obtained from SPRINGSTED Incorporated, Municipal Advisor to the City and the Authority, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887 (651) 223-3000. * Preliminary; subject to change. City of Rosemount, Minnesota $1,525,000* General Obligation Utility Revenue Bonds, Series 2015A The Series 2015A City Bonds will mature February 1 in the years and amounts* as follows: 2017 $140,000 2018 $145,000 2019 $145,000 2020 $150,000 2021 $150,000 2022 $155,000 2023 $155,000 2024 $160,000 2025 $160,000 2026 $165,000 The City may elect on February 1, 2024, and on any day thereafter, to prepay the Series 2015A City Bonds due on or after February 1, 2025 at a price of par plus accrued interest. $1,445,000* General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B The Series 2015B City Bonds will mature February 1 in the years and amounts* as follows: 2017 $150,000 2018 $155,000 2019 $155,000 2020 $155,000 2021 $160,000 2022 $160,000 2023 $165,000 2024 $170,000 2025 $175,000 The City may elect on February 1, 2023, and on any day thereafter, to prepay the Series 2015B City Bonds due on or after February 1, 2024 at a price of par plus accrued interest. Port Authority of Rosemount, Minnesota $3,460,000* General Obligation Tax Increment Refunding Bonds, Series 2015A The Authority Bonds will mature February 1 in the years and amounts* as follows: 2018 $20,000 2019 $20,000 2020 $20,000 2021 $25,000 2022 $25,000 2023 $25,000 2024 $ 60,000 2025 $375,000 2026 $380,000 2027 $390,000 2028 $400,000 2029 $410,000 2030 $425,000 2031 $435,000 2032 $450,000 The Authority may elect on February 1, 2024, and on any day thereafter, to prepay the Authority Bonds due on or after February 1, 2025 at a price of par plus accrued interest. Common to all Issues Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. CITY OF ROSEMOUNT, MINNESOTA CITY COUNCIL William Droste Mayor Mark DeBettignies Councilmember Vanessa Demuth Councilmember Shaun Nelson Councilmember Jeff Weisensel Councilmember CITY ADMINISTRATOR/ PORT AUTHORITY EXECUTIVE DIRECTOR Dwight Johnson FINANCE DIRECTOR Jeffrey May PORT AUTHORITY OF ROSEMOUNT, MINNESOTA BOARD OF COMMISSIONERS Jeff Weisensel Chair Daniel Wolf Vice Chair Mark DeBettignies Commissioner William Droste Commissioner Jamal Abdulahi Commissioner Tom Luing Commissioner Bob Smith Commissioner MUNICIPAL ADVISOR Springsted Incorporated St. Paul, Minnesota BOND COUNSEL Kennedy & Graven, Chartered Minneapolis, Minnesota For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City or the Authority from time to time, may be treated as a Preliminary Official Statement with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the City or the Authority. By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City and the Authority agree that, no more than seven business days after the date of such award, they shall provide without cost to the senior managing underwriter of the syndicate to which Bonds are awarded copies of the Final Official Statement in the amount specified in each Terms of Proposal. No dealer, broker, salesman or other person has been authorized by the City or the Authority to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City or the Authority and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE PRELIMINARY OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE PRELIMINARY OFFICIAL STATEMENT NOR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY OR THE AUTHORITY SINCE THE RESPECTIVE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. Any CUSIP numbers for the Bonds included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds are assigned by an organization unaffiliated with the City or the Authority. The City or the Authority are not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth in the Final Official Statement. No assurance can be given by the City or the Authority that the CUSIP numbers for the Bonds will remain the same after the delivery of the Final Official Statement or the date of issuance and delivery of the Bonds. ____________________________ * Preliminary; subject to change. TABLE OF CONTENTS Page(s) Terms of Proposal: $1,525,000* General Obligation Utility Revenue Bonds, Series 2015A ...................................... i-v $1,445,000* General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B.... vi-x $3,460,000* General Obligation Tax Increment Refunding Bonds, Series 2015A ...................... xi-xv Introductory Statement ....................................................................................................................... 1 Continuing Disclosure ....................................................................................................................... 1 The Bonds .......................................................................................................................................... 2 Rosemount Port Authority, Minnesota .............................................................................................. 5 The Series 2015A City Bonds ............................................................................................................ 5 The Series 2015B City Bonds ............................................................................................................ 6 The Authority Bonds .......................................................................................................................... 7 Future Financing ................................................................................................................................ 8 Litigation ............................................................................................................................................ 8 Legality .............................................................................................................................................. 8 Tax Exemption ................................................................................................................................... 8 Other Federal and State Tax Considerations ...................................................................................... 9 Bank-Qualified Tax-Exempt Obligations .......................................................................................... 10 Ratings ............................................................................................................................................... 10 Municipal Advisor ............................................................................................................................. 10 Certification ....................................................................................................................................... 10 City Property Values .......................................................................................................................... 11 City Indebtedness ............................................................................................................................... 12 City Tax Rates, Levies and Collections ............................................................................................. 16 Funds on Hand ................................................................................................................................... 17 Investments ........................................................................................................................................ 17 General Information Concerning the City ......................................................................................... 18 Governmental Organization and Services .......................................................................................... 24 Proposed Forms of Legal Opinions ........................................................................................ Appendix I Continuing Disclosure Certificates ......................................................................................... Appendix II Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ..................................................................................... Appendix III Excerpt of the City’s 2014 Comprehensive Annual Financial Report .................................... Appendix IV ________________________________ * Preliminary; subject to change. - i - THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $1,525,000* CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2015A (BOOK ENTRY ONLY) Proposals for the Series 2015A City Bonds will be received on Tuesday, October 20, 2015, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Series 2015A City Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2015A City Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Series 2015A City Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of proposal conflict with information provided by PARITY®, this Terms of proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 - ii - DETAILS OF THE SERIES 2015A CITY BONDS The Series 2015A City Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2016. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Series 2015A City Bonds will mature February 1 in the years and amounts* as follows: 2017 $140,000 2018 $145,000 2019 $145,000 2020 $150,000 2021 $150,000 2022 $155,000 2023 $155,000 2024 $160,000 2025 $160,000 2026 $165,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2015A City Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the ag gregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2015A City Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2015A City Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Series 2015A City Bonds will be issued by means of a book entry system with no physical distribution of Series 2015A City Bonds made to the public. The Series 2015A City Bonds will be issued in fully registered form and one Series 2015A City Bond, representing the aggregate principal amount of the Series 2015A City Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Series 2015A City Bonds. Individual purchases of the Series 2015A City 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 registrar to DTC or its nominee as registered owner of the Series 2015A City Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2015A City Bonds, will be required to deposit the Series 2015A City Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2024, and on any day thereafter, to prepay Series 2015A City Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Series 2015A City Bonds of a maturity are called for redemption, the City 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 b e redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. - iii - SECURITY AND PURPOSE The Series 2015A City Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge net revenues of the City’s water utility system. The proceeds will be used to finance the drilling of a water well. BIDDING PARAMETERS Proposals shall be for not less than $1,508,225 plus accrued interest, if any, on the total principal amount of the Series 2015A City Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2015A City Bonds is adjourned, recessed, or continued to another date without award of the Series 2015A City Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Series 2015A City Bonds of the same maturity shall bear a single rate from the date of the Series 2015A City Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the City in the amount of $15,250 (the “Deposit”) no later than 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form of either (i) a certified or cashier’s check payable to the City; or (ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely delivered to the City if it is made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time. Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted Incorporated following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the lowest bidder (the “purchaser”) will be retained by the City and no interest will accrue to the purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Series 2015A City Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2015A City Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. - iv - BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2015A City Bonds. If the Series 2015A City Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associat ed ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2015A City Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2015A City Bonds. CUSIP NUMBERS If the Series 2015A City Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2015A City Bonds, but neither the failure to print such numbers on any Series 2015A City Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2015A City Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about November 19, 2015, the Series 2015A City Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Series 2015A City Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2015A City Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Series 2015A City Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Series 2015A City Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Series 2015A City Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2015A City Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. A Final Official Statement (as that term is defined in Rule 15c2 -12) will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2015A City Bonds, together with any other information required by law. By awarding the Series 2015A City Bonds to an underwriter or underwriting syndicate, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate (the “Underwriter” for purposes of this paragraph) to which the Series 2015A City Bonds are - v - awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the Series 2015A City Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Series 2015A City Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated September 15, 2015 BY ORDER OF THE CITY COUNCIL /s/ Clarissa Hadler City Clerk - vi - THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $1,445,000* CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN REFUNDING BONDS, SERIES 2015B (BOOK ENTRY ONLY) Proposals for the Series 2015B City Bonds will be received on Tuesday, October 20, 2015, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Series 2015B City Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2015B City Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the City, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Series 2015B City Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of proposal conflict with information provided by PARITY®, this Terms of proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 ___________________________ * Preliminary; subject to change - vii - DETAILS OF THE SERIES 2015B CITY BONDS The Series 2015B City Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2016. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Series 2015B City Bonds will mature February 1 in the years and amounts* as follows: 2017 $150,000 2018 $155,000 2019 $155,000 2020 $155,000 2021 $160,000 2022 $160,000 2023 $165,000 2024 $170,000 2025 $175,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2015B City Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2015B City Bonds as that of the original proposal. Gross spread is the differential between the price paid to the City for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2015B City Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Series 2015B City Bonds will be issued by means of a book entry system with no physical distribution of Series 2015B City Bonds made to the public. The Series 2015B City Bonds will be issued in fully registered form and one Series 2015B Bond, representing the aggregate principal amount of the Series 2015B City Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Series 2015B City Bonds. Individual purchases of the Series 2015B City 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 registrar to DTC or its nominee as registered owner of the Series 2015B City Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2015B City Bonds, will be required to deposit the Series 2015B City Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable SEC regulations. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2023, and on any day thereafter, to prepay Series 2015B City Bonds due on or after February 1, 2024. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Series 2015B City Bonds of a maturity are called for redemption, the City 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. All prepayments shall be at a price of par plus accrued interest. - viii - SECURITY AND PURPOSE The Series 2015B City Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. The proceeds of the Series 2015B City Bonds will be used to refund the February 1, 2017 through February 1, 2025 maturities of the City’s General Obligation Capital Improvement Plan Bonds, Series 2005A, dated June 15, 2005. BIDDING PARAMETERS Proposals shall be for not less than $1,433,080 plus accrued interest, if any, on the total principal amount of the Series 2015B City Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2015B City Bonds is adjourned, recessed, or continued to another date without award of the Series 2015B City Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Series 2015B City Bonds of the same maturity shall bear a single rate from the date of the Series 2015B City Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the City in the amount of $14,450 (the “Deposit”) no later than 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form of either (i) a certified or cashier’s check payable to the City; or (ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the City nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely delivered to the City if it is made payable to the City and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time. Wire Transfer. A Deposit made by wire will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted Incorporated following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the lowest bidder (the “purchaser”) will be retained by the City and no interest will accrue to the purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Series 2015B City Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2015B City Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. - ix - BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2015B City Bonds. If the Series 2015B City Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be ins ured, and the name of the desired insurer must be set forth on the bidder’s proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2015B City Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2015B City Bonds. CUSIP NUMBERS If the Series 2015B City Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2015B City Bonds, but neither the failure to print such numbers on any Series 2015B City Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2015B City Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about November 19, 2015, the Series 2015B City Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Series 2015B City Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2015B City Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by the City by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Series 2015B City Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Series 2015B City Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Series 2015B City Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2015B City Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. A Final Official Statement (as that term is defined in Rule 15c2 -12) will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2015B City Bonds, together with any other information required by law. By awarding the Series 2015B City Bonds to an underwriter or underwriting syndicate, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate (the “Underwriter” for purposes of this paragraph) to which the Series 2015B City Bonds are - x - awarded up to 25 copies of the Final Official Statement. The City designates the Underwriter of the syndicate to which the Series 2015B City Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Series 2015B City Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated September 15, 2015 BY ORDER OF THE CITY COUNCIL /s/ Clarissa Hadler City Clerk - xi - THE AUTHORITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $3,460,000* ROSEMOUNT PORT AUTHORITY, MINNESOTA GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2015A (BOOK ENTRY ONLY) Proposals for the Authority Bonds will be received on Tuesday, October 20, 2015, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time proposals will be opened and tabulated. Consideration for award of the Authority Bonds will be by the Board of Commissioners at 6:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the Authority to purchase the Authority Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax (651) 223-3046 to Springsted. Signed proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final proposal price and coupons, by telephone (651) 223-3000 or fax (651) 223-3046 for inclusion in the submitted proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of proposal. Neither the Authority, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the Authority, its agents nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The Authority is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Authority Bonds, and PARITY® is not an agent of the Authority. If any provisions of this Terms of proposal conflict with information provided by PARITY®, this Terms of proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 ________________________________ * Preliminary; subject to change. - xii - DETAILS OF THE AUTHORITY BONDS The Authority Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 2016. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Authority Bonds will mature February 1 in the years and amounts* as follows: 2018 $20,000 2019 $20,000 2020 $20,000 2021 $25,000 2022 $25,000 2023 $25,000 2024 $ 60,000 2025 $375,000 2026 $380,000 2027 $390,000 2028 $400,000 2029 $410,000 2030 $425,000 2031 $435,000 2032 $450,000 * The Authority reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Authority Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Authority Bonds as that of the original proposal. Gross spread is the differential between the price paid to the Authority for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Authority Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a p rice of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Authority Bonds will be issued by means of a book entry system with no physical distribution of Authority Bonds made to the public. The Authority Bonds will be issued in fully registered form and one Authority Bond, representing the aggregate principal amount of the Authority Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Authority Bonds. Individual purchases of the Authority 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 registrar to DTC or its nominee as registered owner of the Authority Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Authority Bonds, will be required to deposit the Authority Bonds with DTC. REGISTRAR The Authority will name the registrar which shall be subject to applicable SEC regulations. The Authority will pay for the services of the registrar. OPTIONAL REDEMPTION The Authority may elect on February 1, 2024, and on any day thereafter, to prepay Authority Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the option of the Authority and in such manner as the Authority shall determine. If less than all Authority Bonds of a maturity are called for redemption, the Authority 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 inter ests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. - xiii - SECURITY AND PURPOSE The Authority Bonds are full faith and credit obligations of the City of Rosemount, Minnesota (the “City”) for which the City has consented to the Authority’s levy of general ad valorem taxes on all property within the City for their payment. In addition, the Authority will pledge tax increment revenue from the Downtown/Brockway Tax Increment District. The proceeds of the Authority Bonds will be used to refund the February 1, 2024 through February 1, 2032 maturities of the Authority’s General Obligation Tax Increment Bonds, Series 2008B, dated April 10, 2008. BIDDING PARAMETERS Proposals shall be for not less than $3,420,210 plus accrued interest, if any, on the total principal amount of the Authority Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the Authority scheduled for award of the Authority Bonds is adjourned, recessed, or continued to another date without award of the Authority Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98.0% or greater. Authority Bonds of the same maturity shall bear a single rate from the date of the Authority Bonds to the date of maturity. No conditional proposals will be accepted. GOOD FAITH DEPOSIT To have its proposal considered for award, the lowest bidder is required to submit a good faith deposit to the Authority in the amount of $34,600 (the “Deposit”) no later than 1:00 P.M., Central Time on the day of sale. The Deposit may be delivered as described herein in the form of either (i) a certified or cashier’s check payable to the Authority; or (ii) a wire transfer. The lowest bidder shall be solely responsible for the timely delivery of their Deposit whether by check or wire transfer. Neither the Authority nor Springsted Incorporated have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the Authority may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. Certified or Cashier’s Check. A Deposit made by certified or cashier’s check will be considered timely delivered to the Authority if it is made payable to the Authority and delivered to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101 by the specified time. Wire Transfer. A Deposit made by wire will be considered timely delivered to the Authority upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Springsted Incorporated following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the lowest bidder (the “purchaser”) will be retained by the Authority and no interest will accrue to the purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the Authority. AWARD The Authority Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the Authority. The Authority's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Authority will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Authority Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the Authority determines to have failed to comply with the terms herein. - xiv - BOND INSURANCE AT PURCHASER'S OPTION The Authority has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Authority Bonds. If the Authority Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The Authority specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the Authority. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the Authority) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Authority Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Authority Bonds. CUSIP NUMBERS If the Authority Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Authority Bonds, but neither the failure to print such numbers on any Authority Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Authority Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT On or about November 19, 2015, the Authority Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Authority Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Authority or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Authority Bonds has been made impossible by action of the Authority, or its agents, the purchaser shall be liable to the Authority for any loss suffered by the Authority by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the Authority will undertake, pursuant to the resolution awarding sale of the Authority Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Authority Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Authority Bonds OFFICIAL STATEMENT The Authority has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Authority Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the Authority, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000. A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the maturity dates, principal amounts and interest rates of the Authority Bonds, together with any other information required by law. By awarding the Authority Bonds to an underwriter or underwriting syndicate, the Authority agrees that, no more than seven business days after the date of such award, it shall provide without cost to the sole underwriter or to the senior managing underwriter of the syndicate (the “Underwriter” for purposes of this paragraph) to which the Authority Bonds are awarded up to - xv - 25 copies of the Final Official Statement. The Authority designates the Underwriter of the syndicate to which the Authority Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Such Underwriter agrees that if its proposal is accepted by the Authority, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Authority Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated September 15, 2015 BY ORDER OF THE BOARD OF COMMISSIONERS /s/ Clarissa Hadler City Clerk ________________________________ * Preliminary; subject to change. - 1 - OFFICIAL STATEMENT CITY OF ROSEMOUNT, MINNESOTA $1,525,000* GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2015A $1,445,000* GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN REFUNDING BONDS, SERIES 2015B ROSEMOUNT PORT AUTHORITY, MINNESOTA $3,460,000* GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2015A (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information relating to the City of Rosemount, Minnesota (the “City”) and its issuance of $1,525,000* General Obligation Utility Revenue Bonds, Series 2015A (the “Series 2015A City Bonds”), $1,445,000* General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B (the “Series 2015B City Bonds”), and, together with the Series 2015A Bonds, (the “City Bonds”). This Official Statement also contains certain information relating to the Rosemount Port Authority, Minnesota (the “Authority”) and its issuance of $3,460,000* General Obligation Tax Increment Refunding Bonds, Series 2015A (the “Authority Bonds”), and, together with City Bonds, the “Bonds”). The City Bonds are general obligations of the City for which it pledges its full faith and credit and power to levy direct general ad valorem taxes. The Authority Bonds are full faith and credit obligations of the City for which the City has consented to the Authority’s levy of general ad valorem taxes on all property within the City for their payment. Additional sources of security to the Bonds are discussed herein. Inquiries may be directed to Mr. Jeffrey May, Finance Director, City of Rosemount, 2875 145th Street West, Rosemount, Minnesota 55068-4997, by telephoning (651) 423 4411, or by e-mailing jeff.may@ci.rosemount.mn.us. Inquiries may also be made to Springsted Incorporated, 380 Jackson Street, Suite 300, St. Paul, Minnesota 55101-2887, by telephoning (651) 223-3000, or by e-mailing bond_services@springsted.com. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with SEC Rule 15c2-12 (the “Rule”), pursuant to the Awarding Resolutions, the City and the Authority have covenanted to comply with the continuing disclosure undertaking (the “Undertaking”) for the benefit of holders or beneficial owners of the Bonds to provide certain financial information and operating data relating to the City and the Authority to the Municipal Securities Rulemaking Board annually, and to provide notices of the occurrence of certain events enumerated in the Rule to 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 Undertaking in substantially the form attached hereto as Appendix II, subject to such modifications thereof or additions thereto as: (i) consistent with requirements under the Rule, (ii) required by the purchaser of the Bonds from the City and the Authority, and (iii) acceptable to the Mayor and Clerk of the City, and the Chair and Secretary of the Authority . - 2 - To the best of their knowledge, the City and the Authority have complied for the past five years in all material respects in accordance with the terms of its previous continuing disclosure undertakings entered into pursuant to the Rule. In the interest of full disclosure, the City and Authority notem the following, which is presented irrespective of materiality:  Within the past five years, Moody’s Investors Service has changed the credit ratings of certain municipal bond insurance firms, which resulted in the change of the insured ratings of certain debt issues of the City and the Authority. Material event notices regarding certain insurance rating changes have not been filed; however, the information was publicly available through other sources. THE BONDS General Description The Bonds are dated as of the date of delivery and will mature annually on February 1 as set forth on the inside front cover of this Official Statement. The Bonds are issued in book entry form. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2016. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Principal of and interest on the Bonds will be paid as described in the section herein entitled “Book Entry System.” U.S. Bank National Association, St. Paul, Minnesota will serve as Registrar for the Bonds, and the City and the Authority will pay for registrar services. Redemption Provisions Thirty days’ written notice of redemption shall be given to the registered owner(s) of the Bonds. Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Optional Redemption  The City may elect on February 1, 2024, and on any day thereafter, to prepay the Series 2015A City Bonds due on or after February 1, 2025.  The City may elect on February 1, 2023, and on any day thereafter, to prepay the Series 2015B City Bonds due on or after February 1, 2024.  The Authority may elect on February 1, 2024, and on any day thereafter, to prepay the Authority Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part at the option of the City or the Authority and in such manner as the City or the Authority shall determine. If less than all the Bonds of a maturity are called for redemption, the City or the Authority 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. All prepayments shall be at a price of par plus accrued interest. - 3 - Book Entry System The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of each series of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, 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 Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries)that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Secu rities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain - 4 - and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant i n such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City and the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City and the Authority or their agents on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City and the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City and the Authority or their agents, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City and the Authority or their agents. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City and the Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City and the Authority believe to be reliable, but the City and the Authority take no responsibility for the accuracy thereof. - 5 - ROSEMOUNT PORT AUTHORITY, MINNESOTA The Authority is a public body politic and corporate and a political subdivision of the State of Minnesota duly organized and existing under the laws of the State of Minnesota. The Authority was established on September 3, 1991 and is governed by a seven-member Board. The current Board members are as follows: Expiration of Term Jeff Weisensel* Chair December 31, 2016 Daniel Wolf Vice Chair December 31, 2016 Mark DeBettignies* Commissioner December 31, 2018 William Droste* Commissioner December 31, 2018 Jamal Abdulahi Commissioner December 31, 2018 Tom Luing Commissioner March 31, 2020 Bob Smith Commissioner March 31, 2017 * Chair Weisensel; Commissioner DeBettignies; and Commissioner Droste also serve on the City Council. Mr. Dwight Johnson serves as the City Administrator and Executive Director to the Authority. THE SERIES 2015A CITY BONDS Authority and Purpose The Series 2015A City Bonds are being issued pursuant to Minnesota Statutes, Chapters 444 and 475. The proceeds of the Series 2015A Bonds will be used to finance the drilling of a water well. Sources and Uses of Funds The composition of the Series 2015A City Bonds is estimated to be as follows: Sources of Funds: Principal Amount $1,525,000 Total Sources of Funds $1,525,000 Uses of Funds: Deposit to Project Fund $1,450,000 Costs of Issuance 58,225 Allowance for Discount Bidding 16,775 Total Uses of Funds $1,525,000 - 6 - Security and Financing The Series 2015A City Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes; however, the City does not anticipate the need to levy taxes for repayment of the Series 2015A City Bonds. Pursuant to Minnesota Statutes, Chapter 444, and the resolution awarding the sale of the Series 2015A City Bonds, the City will covenant to impose and collect charges for the service, use, ava ilability and connection to the Water Utility fund to produce net revenues in amounts sufficient to support the operation of the Water Utility fund to pay 105% of debt service on obligations to which it has pledged its Water Utility fund revenues, including the Series 2015A City Bonds. The City is required to annually review the budget of the utility to determine whether current rates and charges are sufficient and to adjust such rates and charges as necessary. THE SERIES 2015B CITY BONDS Authority and Purpose The Series 2015B City Bonds are being issued pursuant to Minnesota Statutes, Chapter 475. The Series 2015B City Bonds have been structured as a current refunding, and are being issued to achieve debt service savings. The proceeds of the Series 2015B City Bonds, along with available City funds, will be used to redeem the February 1, 2017 through February 1, 2025 maturities (the “Series 2005A Refunded Maturities”) of the City’s General Obligation Capital Improvement Plan Bonds, Series 2005A, dated June 15, 2005 (the “Series 2005A Bonds”). Specifically, it is anticipated that the Series 2005A Refunded Maturities will be called and prepaid at a price of par plus accrued interest on February 1, 2016, which is within 90 days of settlement of the Series 2015B City Bonds. Sources and Uses of Funds The composition of Series 2015B City Bonds is estimated to be as follows: Sources of Funds: Principal Amount $1,445,000 Available City Funds 100,000 Total Sources of Funds $1,545,000 Uses of Funds: Deposit for Refunding Purposes $1,490,000 Costs of Issuance 43,080 Allowance for Discount Bidding 11,920 Total Uses of Funds $1,545,000 Security and Financing The Series 2015B City Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. The City will make its first levy for the Series 2015B City Bonds in 2015 for collection in 2016. Each year’s collection of taxes, if collected in full, will be sufficient to pay 105% of the interest payment due August 1 of the collection year and the principal and interest payment due February 1 of the following year. - 7 - THE AUTHORITY BONDS Authority and Purpose The Authority Bonds are being issued pursuant to Minnesota Statutes, Chapters 469 and 475. The Authority Bonds have been structured as a crossover refunding, and are being issued to achieve debt service savings. The proceeds of the Authority Bonds will be used to redeem the February 1, 2024 through the February 1, 2032 maturities (the “Series 2008B Refunded Maturities”) of the Authority’s General Obligation Tax Increment Bonds, Series 2008B, dated April 10, 2008 (the “Series 2008B Bonds”). Specifically, the proceeds of the Authority Bonds will be placed in an escrow account with U.S. Bank National Association, St. Paul, Minnesota (the “Escrow Agent”). The amounts on deposit with the Escrow Agent will be (i) used to pay the costs associated with the issuance of the Authority Bonds; and (ii) will be invested in special obligations of the United States Treasury or other obligations of the United States or of its agencies, which shall mature in such amounts and at such times as to be available to:  pay the interest on the Authority Bonds to and including February 1, 2017, the anticipated call date of the Series 2008B Bonds;  redeem the Series 2008B Refunded Maturities on the anticipated call date of February 1, 2017 at a price of par plus accrued interest. Verification services necessary to insure the adequacy of the escrow account to provide timely payment of the principal and interest for which the escrow account is obligated will be performed by a certified public accounting firm. Sources and Uses of Funds The composition of the Authority Bonds is estimated to be as follows: Sources of Funds: Principal Amount $3,460,000 Total Sources of Funds $3,460,000 Uses of Funds: Deposit to Escrow Fund $3,368,514 Cost of Issuance 51,696 Allowance for Discount Bidding 39,790 Total Uses of Funds $3,460,000 Security and Financing The Authority Bonds are full faith and credit obligations of the City for which the City has consented to the Authority’s levy of general ad valorem taxes on all property within the City for their payment. However, the Authority does not anticipate the need to levy taxes for repayment of the Authority Bonds. The Authority will pledge tax increment revenue derived from the Downtown/Brockway Tax Increment District for repayment of the Authority Bonds. - 8 - The escrow account established with the proceeds of the Authority Bonds will make the interest payments due on the Authority Bonds through February 1, 2017. Thereafter, each year’s collection of tax increment revenue, if collected in full, will be sufficient to pay 105% of the debt service due on the Authority Bonds in each year. FUTURE FINANCING Neither the City nor the Authority anticipate issuing any additional long-term general obligation debt within the next 90 days. LITIGATION Neither the City nor the Authority are aware of any threatened or pending litigation affecting the validity of the Bonds or the City or the Authority’s ability to meet their financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass 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. Legal opinions in substantially the forms set out in Appendix I herein will be delivered at closing. TAX EXEMPTION At closing Kennedy & Graven, Chartered, of Minneapolis, Minnesota, Bond Counsel for the Bonds, 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 legislation which may have a retroactive effect), the interest on the Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, from taxable net income of individuals, estates and trusts for Minnesota income purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. No opinion will be expressed by Kennedy & Graven regarding other fe deral 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 City and the Authority 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. - 9 - The City and the Authority will covenant to comply with requirements necessary under the Code to establish and maintain the Bonds as tax-exempt under Section 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. OTHER FEDERAL AND STATE TAX CONSIDERATIONS Property and Casualty Insurance Companies 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 Bonds, 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 Section 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 corporation is passive investment income. Financial Institutions Financial institutions are generally not entitled to a deduction for interest expenses allocable to the owners of tax-exempt Bonds purchased after August 7, 1986. The City and the Authority will designate the Bonds as qualified tax-exempt Bonds pursuant to Section 265(b)(3) of the Code. General The preceding is not a comprehensive list of all federal or State tax consequences which may aris e from the receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may otherwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. 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. - 10 - BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The Bonds will be designated as “qualified tax-exempt obligations” for purposes of Section 265(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 allocable to carrying and acquiring tax-exempt obligations. RATINGS Application for ratings of the Bonds have been made to Moody’s Investors Service (“Moody’s”), 7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York. If ratings are assigned, they will reflect only the opinion of Moody’s. Any explanation of the significance of the ratings may be obtained only from Moody’s. There is no assurance that a rating, if assigned, will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of Moody’s, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Bonds. MUNICIPAL ADVISOR The City and the Authority have retained Springsted Incorporated, Public Sector Advisors, of St. Paul, Minnesota (“Springsted”), as municipal advisor in connection with certain aspects of the issuance of the Bonds. In preparing this Official Statement, Springsted has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for this Official Statement, and Springsted has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. Springsted is not a public accounting firm and has not been engaged by the City or the Authority to compile, review, examine or audit any information in this Official Statement in accordance with accounting standards. Springsted is an independent advisory firm, registered as a municipal advisor, and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CERTIFICATION The City and the Authority have authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The Purchaser(s) will be furnished with a certificate signed by the appropriate officers of the City and the Authority stating that the City and the Authority examined each document and that, as of the respective date of each and the date of such certificate, each document did not and does not contain any untrue statement of 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. - 11 - CITY PROPERTY VALUES Trend of Values(a) Assessment/ Assessor’s Market Value Adjusted Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value(c) Exclusion Market Value Tax Capacity 2014/15 $2,269,343,100 94.0% $2,410,722,215 $106,173,765 $2,127,597,965 $23,843,274 2013/14 2,092,544,000 91.3 2,284,831,130 115,891,793 1,948,614,357 22,216,867 2012/13 2,014,851,100 93.0 2,163,199,582 119,450,681 1,866,877,179 21,507,331 2011/12 2,060,480,700 96.1 2,132,239,231 115,495,251 1,914,176,616 22,124,926 2010/11 2,146,847,500 N/A N/A N/A 2,113,658,000 24,311,493 (a) For a description of the Minnesota property tax system, see Appendix III. (b) Sales Ratio Study for the year of assessment as posted by the Minnesota Department of Revenue, http://www.revenue.state.mn.us/propertytax/Pages/statistics-imv.aspx. Prior to 2011/12, a different methodology was used to calculate sales ratios. (c) Economic market values for the year of assessment as posted by the Minnesota Department of Revenue, http://www.revenue.state.mn.us/propertytax/Pages/statistics-imv.aspx. Source: Dakota County, Minnesota, May 2015, except as otherwise noted. 2014/15 Adjusted Taxable Net Tax Capacity: $23,843,274* Real Estate: Residential Homestead $17,060,986 69.6% Commercial/Industrial, Railroad, and Public Utility 5,658,338 23.1 Residential Non-Homestead 501,789 2.1 Agricultural 485,331 2.0 Personal Property 797,258 3.2 2014/15 Net Tax Capacity $24,503,702 100.0% Less: Captured Tax Increment (700,911) Contribution to Fiscal Disparities (2,418,195) Plus: Distribution from Fiscal Disparities 2,458,678 2014/15 Adjusted Taxable Net Tax Capacity $23,843,274 * Excludes mobile home valuation of $23,136. - 12 - Ten of the Largest Taxpayers in the City 2014/15 Net Taxpayer Type of Property Tax Capacity Great Northern Oil Co./Flint Hills Resources/Koch Refining Oil Refinery $2,947,426 Xcel Energy Utility 345,068 Clarel Corporation Retail 185,686 146th Street Partners LP Commercial 168,254 CF Industries, Inc. (Cenex) Fertilizer 128,806 Northern Natural Gas Company Utility 127,292 Minnesota Pipeline Utility 111,575 Hawkins Inc. Industrial 102,642 MN Energy Resources Corp Utility 89,200 Rosemount Crossing LLC Retail 85,250 Total $4,291,199* * Great Northern Oil Co./Flint Hills Resources/Koch Refining represents 12.4% of the City’s 2014/15 adjusted taxable net tax capacity. The remaining nine taxpayers represent 5.6% of the City’s 2014/15 adjusted taxable net tax capacity. CITY INDEBTEDNESS Legal Debt Limit and Debt Margin* Legal Debt Limit (3% of 2014/15 Estimated Market Value) $68,080,293 Less: Outstanding Debt Subject to Limit (including the Series 2015B City Bonds) (2,690,000) Legal Debt Margin as of November 19, 2015 $65,390,293 * The legal debt margin is referred to statutorily as the “Net Debt Limit” and may be increased by debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. NOTES: Certain types of debt are not subject to the legal debt limit. See Appendix III – Debt Limitations. The 2013 Minnesota Legislature clarified the definition of estimated market value and established it as the basis for the calculation of the Net Debt Limit. Previously, the Net Debt Limit was calculated on Taxable Market Value. A large contributing factor to the change was to offset the effect of the Market Value Homestead Exclusion implemented by the 2012 Minnesota Legislature, which had a significant impact on taxable market values. - 13 - General Obligation Debt Supported Solely by Taxes(a) Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 11-19-15 6-15-05 $2,630,000 Fire Station 2-1-2016 $ 135,000(b) 11-1-05 1,115,000 Fire Station Refunding 2-1-2016 130,000 12-1-10 1,355,000 Public Facility Refunding 2-1-2022 980,000(c) 11-19-15 1,445,000 Fire Station Refunding (the Series 2015B City Bonds) 2-1-2025 1,445,000 Total $2,690,000 (a) These issues are subject to the legal debt limit. (b) Excludes the Series 2005A Refunded Maturities. (b) These bonds were issued by the Rosemount Port Authority and are being repaid from ad valorem taxes levied by the City. General Obligation Special Assessment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 11-19-15 6-1-06 $4,405,000 Local Improvements 2-1-2017 $ 915,000 11-15-11 2,080,000 Local Improvements 2-1-2017 845,000 9-1-12 810,000 Local Improvements 2-1-2018 495,000 10-1-13 1,500,000 Local Improvements 2-1-2019 1,210,000 10-16-14 1,820,000 Local Improvements 2-1-2025 1,820,000 Total $5,285,000 General Obligation Tax Increment Debt(a) (b) Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 11-19-15 4-10-08 $2,765,000 Taxable Tax Increment 2-1-2024 $2,545,000 11-19-15 3,460,000 Tax Increment Refunding (the Authority Bonds) 2-1-2032 3,460,000 Total $5,855,000 (a) These bonds were issued by the Rosemount Port Authority, but are secured by the general obligation pledge of the City. (b) Excludes the Series 2008B Refunded Maturities. - 14 - General Obligation Utility Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 11-19-15 9-1-00 $1,160,000 Water Revenue 2-1-2016 $ 110,000 10-15-07 1,210,000 Water Revenue 2-1-2018 420,000 12-1-10 1,545,000 Storm Water and Water Revenue Refunding 2-1-2018 460,000 10-16-14 580,000 Water Revenue 2-1-2018 580,000 11-19-15 1,525,000 Water Revenue (the Series 2015A City Bonds) 2-1-2026 1,525,000 Total $3,095,000 Estimated Calendar Year Debt Service Payments Including the Bonds and Excluding the Refunded Maturities G.O. Debt Supported G.O. Special Solely by Taxes Assessment Debt Principal Principal Year Principal & Interest* Principal & Interest 2015 (at 11-19) (Paid) (Paid) (Paid) (Paid) 2016 $ 390,000 $ 438,024 $1,665,000 $1,733,500 2017 285,000 331,188 1,690,000 1,729,716 2018 290,000 331,618 810,000 830,224 2019 295,000 331,023 655,000 666,440 2020 300,000 329,516 350,000 354,710 2021 305,000 327,334 20,000 22,245 2022 315,000 329,404 20,000 21,865 2023 165,000 173,689 25,000 26,438 2024 170,000 175,463 25,000 25,900 2025 175,000 176,881 25,000 25,300 Total $2,690,000 $2,944,140 $5,285,000 $5,436,338 * Includes the Series 2015B City Bonds at an assumed average annual interest rate of 1.70% and excludes the Series 2005A Refunded Maturities. - 15 - Estimated Calendar Year Debt Service Payments Including the Bonds and Excluding the Refunded Maturities G.O. G.O. Tax Increment Debt Utility Revenue Debt Principal Principal Year Principal & Interest(a) Principal & Interest(c) 2015 (at 11-19) (Paid) (Paid) (Paid) (Paid) 2016 $ 195,000 $ 448,260 $ 475,000 $ 528,336 2017 230,000 461,563 510,000 558,314 2018 265,000 455,295 450,000 487,389 2019 280,000 457,470 200,000 230,848 2020 290,000 453,831 210,000 238,088 2021 310,000 458,815 210,000 234,690 2022 325,000 457,365 215,000 235,765 2023 340,000 455,040 215,000 231,564 2024 355,000 452,103 220,000 231,925 2025 375,000 456,490 225,000 231,785 2026 380,000 453,315 165,000 167,063 2027 390,000 454,275 2028 400,000 454,516 2029 410,000 453,813 2030 425,000 456,928 2031 435,000 453,874 2032 450,000 454,984 Total $5,855,000(b) $7,737,973 $3,095,000(d) $3,375,767 (a) Includes the Authority Bonds at an assumed average annual interest rate of 2.75%, and excludes the Series 2008B Refunded Maturities. (b) 50.6% of this debt will be retired within ten years. (c) Includes the Series 2015A City Bonds at an assumed average annual interest rate of 2.03%. (d) 94.7% of this debt will be retired within ten years. Overlapping Debt 2014/15 Debt Applicable to Adjusted Taxable Est. G.O. Debt Tax Capacity in City Taxing Unit(a) Net Tax Capacity As of 11-19-15(b) Percent Amount Dakota County $ 428,390,275 $30,490,000 5.6% $ 1,707,440 I.S.D. No. 196 (Rosemount- Apple Valley-Eagan) 158,591,651 82,720,000 14.0 11,580,800 I.S.D. No. 199 (Inver Grove Heights) 26,694,505 64,175,000 5.9 3,786,325 I.S.D. No. 200 (Hastings) 29,921,691 39,225,000 0.1 39,225 Metropolitan Council 3,284,372,173 20,500,000(c) 0.7 143,500 Total $17,257,290 (a) Only those units with outstanding general obligation debt are shown here. (b) Excludes general obligation tax and aid anticipation certificates and revenue-supported debt. (c) Excludes general obligation debt supported by wastewater revenues and housing rental payments. Includes certificates of participation. - 16 - Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2014/15 Estimated Market Value ($2,269,343,100) 0.61% 1.37% Per Capita - (22,490- 2014 MN State Demographer’s Estimate) $615 $1,382 * Excludes general obligation utility revenue debt. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a Resident in City of Rosemount 2014/15 For 2010/11 2011/12 2012/13 2013/14 Total Debt Only Dakota County 29.149% 31.426% 33.421% 31.827% 29.633% 0.005% City of Rosemount 44.661 46.994 48.862 47.676 45.125 0.016 I.S.D. No. 196 (Rosemount-Apple Valley-Eagan)(a) 26.959 28.440 27.956 27.606 23.271 0.029 Special Districts(b) 3.984 4.187 4.436 4.161 3.741 0.194 Total 104.753% 111.047% 114.675% 111.270% 101.770% 0.243% (a) In addition, Independent School District No. 196 (Rosemount-Apple Valley-Eagan) has a 2014/15 market value tax rate of 0.25484% spread across the market value of property in support of an excess operating levy. (b) Special districts include Metropolitan Council, Metropolitan Mosquito Control, Dakota County Community Development Agency, Dakota County Light Rail, and Vermillion River Watershed District. NOTE: Taxes are determined by multiplying the net tax capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate. This table does not include the market value based rates. See Appendix III. - 17 - Tax Levies and Collections Collected During Collected and/or Abated Net Collection Year as of 4-30-15 Levy/Collect Levy* Amount Percent Amount Percent 2014/15 $10,827,747 (In Process of Collection) 2013/14 9,412,887 $9,374,606 99.7% $9,397,716 99.9% 2012/13 9,219,545 9,139,370 99.1 9,210,983 99.9 2011/12 9,074,162 9,003,979 99.2 9,068,760 99.9 2010/11 9,220,079 9,135,672 99.1 9,214,528 99.9 * The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy is the basis for computing tax capacity rates. See Appendix III. FUNDS ON HAND As of July 31, 2015 General Fund $10,045,485 Special Revenue Funds 921,051 Port Authority Fund 812,051 Debt Service Funds 4,521,237 Capital Project Funds 9,472,681 Enterprise Funds 18,921,569 Arena Fund 404,377 Total Cash and Investments $45,098,451 INVESTMENTS The City has a formal investment policy. City funds are invested in accordance with Minnesota Statutes, Section 118A and the City's investment policy which is more restrictive than State statutes. The City investment portfolio is managed in a manner to attain a market rate of return while preserving and protecting the capital of the overall portfolio. The Finance Director or the City Administrator is responsible for investing all funds, including making investment decisions on a daily basis and monitoring the portfolio. Pursuant to the City's investment policy the City is authorized to invest in the following: 1. Governmental Securities: Instruments such as bonds, notes, bills, mortgages and other securities which are direct obligations of the federal government or its agencies, with the principal fully guaranteed by the U.S. government or its agencies. The City will not invest in any mortgage or mortgage-related security unless a return of principal is completely guaranteed by a federal entity. 2. Certificate of Deposit. 3. Repurchase Agreement. 4. Reverse Repurchase Agreement. - 18 - 5. Prime Commercial Paper. 6. Any security which is a general obligation of the State of Minnesota or any of its municipalities. 7. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. Collateralization is required on two types of investments, certificates of deposit and repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level is 110% of the market value of principal and accrued interest. The City attempts to diversify its investments according to type and maturity. The portfolio, as much as possible, contains both short-term and long-term investments. The long-term portion of the portfolio, meaning longer than five years, should not exceed 35% of the total funds in the portfolio. This is done to reduce overall market risk of rates changing. As of July 31, 2015, the City had a total of $38,988,616 invested funds as follows: Amount Invested Type of Security Length of Investment as of 7-31-15 Money Market Savings N/A $11,997,867 Certificates of Deposit Less than 12 months 5,151,285 Certificates of Deposit One to fifteen years 8,666,120 Government Asset Backed Securities Ten years or less 13,173,344 Total $38,988,616 GENERAL INFORMATION CONCERNING THE CITY The City, located in northern Dakota County, is a southern suburb of the Minneapolis/Saint Paul metropolitan area, and encompasses an area of approximately 35.3 square miles (22,560 acres). Population The City’s population trend is shown below. Percent Population Change 2014 MN State Demographer’s Estimate 22,490 2.8% 2010 U.S. Census 21,874 49.6 2000 U.S. Census 14,619 69.6 1990 U.S. Census 8,622 69.6 1980 U.S. Census 5,083 -- Sources: Minnesota State Demographic Center, http://www.demography.state.mn.us/ and United States Census Bureau, http://www.census.gov/. - 19 - The City’s population by age group for the past three years is as follows: Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2014/15 6,645 4,873 10,116 2,240 2013/14 6,639 4,748 9,875 2,066 2012/13 6,818 4,507 9,589 1,950 Source: Claritas, Inc. Transportation U.S. Highway 52 runs north-south through the City. In addition, Minnesota Highways 3 and 55 and County Road 42 run through the City. Public transportation services are provided through the Minnesota Valley Transit Authority. The City is located approximately 18 miles from the Minneapolis/St. Paul International Airport. County Road 46 runs along the southern border and is as traveled as County Road 42. Tax Base and Economy A major contributor to the City's tax base and economy is an industrial complex sited on 6,200 acres in the northeastern portion of the City near the Mississippi River. Firms located there include Flint Hills Resources’ Pine Bend Refinery; CF Industries, Inc.; Continental Nitrogen & Resource Corporation; Endres Processing Ltd.; SKB (industrial waste containment facility); and Spectro Alloys Corporation. Mid-American Pipeline Company transports gas from southern states and operates a bottling station at Pine Bend. Minnesota Pipeline Company transports Canadian and North Dakota crude oil to the Flint Hills Resources’ Pine Bend Refinery. Flint Hills Resources’ Pine Bend Refinery is a leading producer of petroleum products in Minnesota converting 320,000 barrels of crude oil into gasoline each day. This company employs approximately 1,100 full-time workers. The University of Minnesota's Rosemount Research Center is located on a 7,500-acre tract of land of which approximately 3,200 acres are situated in the City. This facility is utilized by the University, other research agencies, and private firms for agricultural and other research projects. The University has complete the approval process to begin mining some of their land. - 20 - Major Employers Approximate Number Employer Product/Service of Employees Independent School District No. 196 (Rosemount-Apple Valley-Eagan) Public education 4,000 Flint Hills Resources’ Pine Bend Refinery Oil refinery 1,100 Wayne Transports General freight trucking 400 Intermediate School District No. 917 Education 390 Dakota County Technical College Education 294 Bay & Bay Transportation Truck transportation services 200 Cub Food’s Grocery store 140 Walbon & Company Freight shipping 130 Spectro Alloys Corporation Aluminum alloys 120 Endres Processing Ltd. Livestock feed 80 Greif Brothers Corporation Multiwall bags 85 City of Rosemount Government 79 Source: This does not purport to be a comprehensive list and is based on an September 2015 best efforts telephone survey of individual employers. Some employers do not respond to inquiries. Labor Force Data Annual Average August 2011 2012 2013 2014 2015 Labor Force: Dakota County 227,827 228,710 230,288 231,677 234,996 State of Minnesota 2,944,331 2,954,948 2,965,675 2,974,102 3,017,314 Unemployment Rate: Dakota County 6.1% 5.2% 4.5% 3.7% 3.2% State of Minnesota 6.5 5.6 4.9 4.1 3.5 Source: Minnesota Department of Employment and Economic Development, http://www.positivelyminnesota.com. 2015 data are preliminary. Retail Sales and Effective Buying Income (EBI) City of Rosemount Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2014/15 $136,258 $677,628 $70,189 2013/14 130,632 605,047 65,135 2012/13 93,961 599,317 65,021 - 21 - Dakota County Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2014/15 $7,887,872 $11,518,560 $59,260 2013/14 6,421,455 10,844,223 56,674 2012/13 5,794,034 10,770,815 55,539 2011/12 6,784,232 10,387,368 56,655 2010/11 6,786,831 10,287,060 56,964 The 2014/15 Median Household EBI for the State of Minnesota was $50,560. The 2014/15 Median Household EBI for the United States was $45,448. Source: Claritas, Inc. Permits Issued by the City New/Substantial New Single Commercial/Industrial Family Residential Public/Institutional Total Value* Year Number Value Number Value (All Permits) 2015 (to 7-31) 67 $17,083,613 13 $12,993,500 $35,631,804 2014 180 36,843,535 23 29,065,856 75,168,593 2013 96 26,136,626 11 8,771,350 42,084,362 2012 72 21,174,849 12 10,162,400 38,598,718 2011 53 14,240,000 11 6,580,535 28,753,846 2010 80 18,197,011 10 4,439,292 32,177,918 2009 88 19,190,195 7 1,749,865 31,839,499 2008 237 26,809,851 14 26,631,862 67,945,640 2007 143 27,084,690 14 23,648,245 63,085,633 2006 224 46,503,749 18 23,427,347 70,879,026 * In addition to building permits, the total value includes all other permits issued by the City (i.e. heating, lighting, plumbing, roof replacement, etc.). Source: The City. Recent and Proposed Development City building levels for 2014 improved over those in 2013, with more residential and commercial development than experienced in several years. The City is experiencing a steady increase in residential development, primarily single family residential units. Commercial and industrial development is increasing while the City is experiencing a decrease in public or institutional development. New dwelling unit construction increased in 2014 and 2015, fueled by a small single-family development in the Akron Avenue area. National and regional builders continue to be the primary source of construction although the City is experiencing some local builders purchasing individual lots from land developers. The biggest increase in units occurred in December 2014, when a 92-unit senior housing project pulled a building permit. The privately-owned senior assisted living complex is scheduled to be open in late fall of 2015. A public senior project started construction in June 2015 with a footings and foundation permit. The remainder of the permit was issued in August 2015. This 60-unit project will be an affordable senior rental building owned and operated by the Dakota County Community Development Agency. - 22 - Additional planning approvals indicate that there will be available lots for construction heading into the 2016 construction season. Bella Vista, a new Lennar subdivision provides an upscale neighborhood with higher anticipated unit and land valuations. Infrastructure is currently being installed and six lots are under construction. There appears to be some interest in finishing projects left unfinished during the economic downturn. The property owner of the Harmony townhome project has found a builder to continue constructing previously approved townhouse units. A builder has received approval to finish the GlenRose project, building out the approved townhome project with 44 attached units. In 2014, approximately $75,168,000 of new valuation was added in the community. Much of that value continues to come from residential development, through new construction and remodeling projects on existing units. Flint Hills, one of the largest employers in the community, is in the process of significant reinvestment to increase efficiencies and plant capacity. Their construction projects are the majority of the $24,345,000 industrial construction value experienced in 2014. In the first half of 2015, there was more commercial than experienced in the previous years. These values are a combination of new commercial construction and also rehabilitation and expansion of existing buildings. There has been a lot of reinvestment into the City’s historic Downtown. New growth is also occurring along the County Road 42 commercial corridor. For 2015, it is anticipated that new residential growth will meet or slightly exceed the number of units that occurred in 2014, which was 180. Similarly, for 2015 it is anticipated that industrial expansions will meet the new industrial valuations experienced in 2014, approximately $10,000,000. The following lists platted lots currently available for development. The majority of these lots are approved as attached housing parcels. Remaining Units Lots as of Development/Developer Housing Approved 7-31-15 Bella Vista 2nd Addition/Lennar Single Family 28 18 Glendalough 2nd/Lennar Single Family 7 0 Glendalough 3rd/Lennar Single Family 29 0 GlenRose of Rosemount/ Dean Johnson Homes Multi-Family 76 44 Greystone 1st Addition/Ryland Single Family 23 0 Greystone 2nd Addition/Ryland Single Family 31 2 Greystone 3rd Addition/Ryland Single Family 19 7 Greystone 4th Addition/Ryland Single Family 47 47 Harmony 2nd Addition/CPDC Multi-Family 81 5 Harmony 5th Addition/Rsmt Land Corp. Mixed 64 14 Harmony 6th Addition/Waconia Development Multi-Family 49 28 Prestwick Place 5th Addition/DR Horton Single Family 2 0 Prestwick Place 6th Addition/DR Horton Single Family 4 0 Prestwick Place 7th Addition/ US Home Corp. Single Family 37 0 Prestwick Place 8th Addition/ Anderson/Keyland Single Family 33 18 Prestwick Place 9th Addition/Lennar Single Family 8 2 Prestwick Place 10th Addition/Lennar Single Family 26 15 Rosewood Estates/Progress Land Single Family 55 1 Wilde Lake Estates/Friedges Single Family 14 14 - 23 - Financial Institutions* Full service banking is provided by the First State Bank of Rosemount, which had deposits of $55,526,000 as of June 30, 2015. In addition, branches of Merchants Bank, National Association, TCF National Bank, and Vermillion State Bank are also located in the City. * This does not purport to be a comprehensive list. Source: Federal Deposit Insurance Corporation, http://www2.fdic.gov/idasp/main.asp. Health Care Services The following is a summary of health care facilities located near the City: Facility Location No. of Beds Augustana HCC of Apple Valley City of Apple Valley 178 Augustana HCC of Hastings City of Hastings 91 Ebenezer Ridges Geriatric CC City of Burnsville 104 Fairview Ridges City of Burnsville 198 Northfield City Hospital City of Northfield Hospital 49 Nursing Home 40 Regina Senior Living City of Hastings 61 Regina Hospital City of Hastings 69 Southview Acres Health Care Center City of West St. Paul 241 Trinity Care Center City of Farmington 65 Woodlyn Heights Healthcare Center City of Inver Grove Heights 99 Source: Minnesota Department of Health, http://www.health.state.mn.us/. Education Public Education The following districts serve the residents of the City: 2014/15* School Grades Enrollment ISD No. 196 (Rosemount-Apple Valley-Eagan) K-12 27,221 ISD No. 199 (Inver Grove Heights) K-12 3,853 ISD No. 200 (Hastings) K-12 4,548 * 2015/16 enrollment figures are not yet available. The major portion of the City is part of Independent School District No. 196 (Rosemount-Apple Valley- Eagan) (the “District”), headquartered in the City. The District is one of the largest employers in the City with approximately 4,000 full-time and part-time employees District-wide. The physical plant of the District consists of 18 elementary schools, six middle schools, four senior high schools, and three special education schools. Of these schools, two elementary schools, one junior high school, and one senior high are located in the City. - 24 - Non-Public Education City residents are also served by the following private schools: 2014/15* School Grades Enrollment Faithful Shepherd Catholic K-8 464 Trinity School at River Ridge 7-12 293 St. Elizabeth Ann Seton K-8 242 St. Joseph’s Catholic K-8 215 First Baptist K-12 197 Good Shepherd Lutheran K-8 122 St. John the Baptist K-6 95 Christian Heritage Academy K-8 89 Pine Harbor Christian Academy K-6 76 Bereau Lutheran K-8 33 Heritage Lutheran School K 7 Woodpark Montessori K 2 * 2015/16 enrollment figures are not yet available. Post-Secondary Education The Dakota County Technical College (the “Technical College”) is located in the City. The Technical College, located on a 96-acre site, opened in 1973 and has a total enrollment of over 4,500 students. In addition, the Technical College offers an extensive adult education program. GOVERNMENTAL ORGANIZATION AND SERVICES Organization The City was established as a municipal corporation in 1858, and became a statutory City in 1974. The City has a Mayor-Council form of government, with the four Council members being elected to overlapping four-year terms of office. The following individuals comprise the current City Council: Expiration of Term William Droste Mayor December 31, 2018 Mark DeBettignies Councilmember December 31, 2018 Vanessa Demuth Councilmember December 31, 2016 Shaun Nelson Councilmember December 31, 2018 Jeff Weisensel Councilmember December 31, 2016 The City's chief administrative officer is the City Administrator, who is appointed by and serves at the discretion of the City Council. Mr. Dwight D. Johnson was appointed to the position of City Administrator in August 2008. Mr. Jeffrey A. May, who has served in the City's Finance Department since 1985, was appointed as the City's Finance Director in March 1991. Mr. May also serves as the City Treasurer. Ms. Clarissa Handler serves as the City Clerk. - 25 - Growth and development of the City is guided by the Comprehensive Land Use Plan, most recently adopted in 2009, covering development expectations until the year 2030. The Comprehensive Plan outlines the long-range land use plan and development policies of the community, and is designed to encourage and promote orderly development and growth, perpetuating a sound and steady growth in the City tax base. The City has 79 regular full-time and 150 seasonal full- and part-time employees. Services Police protection for the City is provided by 23 full-time officers, and five other police personnel. Fire protection is provided by 42 trained volunteers. The City has class 4, 5, and 10 insurance ratings, depending on the availability of hydrants and location in relation to a fire station. Municipal water, sanitary sewer and storm water services are provided to virtually all of the developed areas of the City. The municipal water service is provided by eight wells with four water towers having a total storage capacity of 3,500,000 gallons. The maximum pumping capacity is 12,096,000 gallons per day with an average demand of 2,233,593 gallons pumped daily in 2014. It is the City's policy to finance all of its lateral sanitary sewer and water improvements by special assessments filed against benefited property; however, there is a provision for deferred assessments, in which case it may be necessary to provide some tax support. Core facilities are intended to be financed from water and sewer connection charges, but these too may require some tax support in the event sufficient connections do not occur in a timely manner. To date, tax support has not been necessary. The City finances the construction and long-term maintenance of its storm water core facilities through the operation of a storm water utility. Each property in the City pays a quarterly “stormwater user fee” and an initial connection charge to support the program. Interceptor sewer lines and wastewater treatment plants in the seven -county metropolitan area, of which the City is a part, are under the jurisdiction of the Metropolitan Council Environmental Services (“MCES”). MCES finances its operations through user charges based on usage. The City is responsible for the construction and maintenance of sewer laterals. Labor Contracts The status of labor contracts in the City is as follows: Expiration Date Bargaining Unit No. of Employees of Current Contract AFSCME 22 December 31, 2015 Teamsters 17 December 31, 2015 LELS – Supervisory 5 December 31, 2015 LELS – Patrol Officers 17 December 31, 2015 Subtotal 61 Non-unionized employees 18 Total employees 79 * Does not include part-time AFSCME Employees. - 26 - Employee Pensions All full-time and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing multiple-employer public employees retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All employees of the City covered by GERF belong to the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by the PEPFF. The City’s contributions for the past five years are as follows: GERF PEPFF 2014 $264,550 $303,908 2013 259,654 275,788 2012 251,921 272,834 2011 268,848 256,236 2010 258,857 249,472 City Firefighter’s Association Volunteer firefighters of the City are eligible for pension benefits through membership in the Rosemount Fire Department Relief Association Pension Plan organized under Minnesota Statutes, Chapter 69, and administered by the Rosemount Fire Department Relief Association (the “Association”). The Association provides a lump-sum benefit to its members upon retirement, total disability, or death. The contribution requirements are established and may be amended by the Minnesota State Legislature. The Association is comprised of volunteers. Therefore, there are no covered payroll amounts or member contributions required. Individuals with at least 20 years of service who have reached age 50 are entitled to a lump-sum payment of $6,900 per year of service. In the event an otherwise qualified member has less than 20 years of service, the member is eligible for a pension payment of 60% after 10 ye ars of service, increasing 4% for each year of service after 10 years to a maximum of 100%. Members retiring before 50 years of age do not receive distributions until age 50, but interest at 5% per year is added to their retirement benefit until paid. The annual pension cost for the Rosemount Fire Department Relief Association Pension Plan for the past five years are as follows: State of Minnesota City Contribution Contribution 2014 $125,594 $171,000 2013 125,632 171,000 2012 91,845 171,000 2011 87,718 166,000 2010 73,399 161,200 For more information regarding the liability of the City with respect to its employees, please reference “Note V, Other Information – A. Employees’ Retirement System”, of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2014, included as Appendix IV of this Official Statement. Sources: City’s Comprehensive Annual Financial Reports. - 27 - Other Post-Employment Benefits The Governmental Accounting Standards Board (GASB) has issued Statement No. 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions (GASB 45), which addresses how state and local governments must account for and report their obligations related to post employment healthcare and other non-pension benefits (referred to as Other Post-Employment Benefits or “OPEB”). The City does not fund health insurance for retired City employees. All former employees who were eligible to participate in the City’s health insurance program while employed with the City are allowed to continue their coverage after employment has ended through COBRA. However, this coverage is to be paid in full at the former employee’s expense. The only cost to the City comes from the implicit rate subsidy. Under GASB 45 such costs must be accounted for on an annual basis, however; management has determined that any liability related to postemployment benefits is immaterial and is not reported the City’s Comprehensive Annual Financial Report. Sources: City’s Comprehensive Annual Financial Reports. General Fund Budget Summary 2014 Budget 2014 Actual 2015 Budget Revenues: General Property Taxes $ 8,688,800 $ 8,645,713 $ 8,827,500 Licenses and Permits 438,300 730,765 535,800 Intergovernmental 580,800 756,579 670,200 Charges for Services 848,300 1,037,621 900,800 Fines and Forfeits 125,000 116,384 125,000 Special Assessments 1,000 4,457 1,000 Recreational Fees 253,600 217,377 248,000 Miscellaneous Revenues 159,300 505,734 111,700 Transfers In 3,500 3,500 3,500 Total Revenues $11,098,600 $12,018,130 $11,423,500 Expenditures: General Government $ 2,591,500 $ 2,950,084 $ 2,507,300 Public Safety 3,787,000 3,769,187 3,955,500 Public Works 3,363,300 3,234,114 3,457,400 Parks and Recreation 1,356,800 1,304,867 1,373,300 Capital Outlay 0 0 0 Transfers Out 0 475,000 130,000 Total Expenditures $11,098,600 $11,733,252 $11,423,500 Sources: City’s Comprehensive Annual Financial Reports and 2015 Budget. - 28 - Major General Fund Revenue Sources Revenue 2010 2011 2012 2013 2014 General Property Taxes $8,737,430 $9,032,354 $8,673,013 $8,865,223 $9,060,134 Charges for Services 955,534 1,006,614 1,080,023 1,021,977 1,253,601 Licenses and Permits 453,900 388,615 484,644 522,131 730,765 Intergovernmental 306,892 306,727 340,218 318,986 342,158 Fines and Forfeits 113,675 123,245 129,343 106,617 116,384 Sources: City’s Comprehensive Annual Financial Reports. (The Balance of This Page Has Been Intentionally Left Blank) APPENDIX I I-1 PROPOSED FORMS OF LEGAL OPINIONS The Series 2015A City Bonds $1,525,000 General Obligation Utility Revenue Bonds, Series 2015A City of Rosemount Dakota County, Minnesota We have acted as bond counsel to the City of Rosemount, Dakota County, Minnesota (the “Issuer”) in connection with the issuance by the Issuer of its General Obligation Utility Revenue Bonds, Series 2015A (the “Bonds”), originally dated the date hereof and issued in the original aggregate principal amount of $1,525,000. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from revenues of the water utility systems of the Issuer, but if necessary for the payment thereof additional valorem taxes are required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net inco me of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative mnimum tax base. The opinion set forth in this paragraph is 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, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for I-2 Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated ______________, 2015 at Minneapolis, Minnesota. I-3 The Series 2015B City Bonds $1,445,000 General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B City of Rosemount Dakota County, Minnesota We have acted as bond counsel to the City of Rosemount, Minnesota (the “Issuer”) in connection with the issuance by the Issuer of its General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B (the “Bonds”), originally dated the date hereof and issued in the original aggregate principal amount of $1,445,000. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from ad valorem taxes levied by the Issuer, but if necessary for the payment thereof additional ad valorem taxes are required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative mi nimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative minimum tax base. The opinion set forth in this paragraph is 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, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by I-4 bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated _______________, 2015 at Minneapolis, Minnesota. I-5 The Authority Bonds $3,460,000 General Obligation Tax Increment Refunding Bonds, Series 2015A Rosemount Port Authority Dakota County, Minnesota We have acted as bond counsel to the Rosemount Port Authority, Dakota County, Minnesota (the “Issuer”) in connection with the issuance by the Issuer of its General Obligation (the “Bonds”), originally dated the date hereof and issued in the original aggregate principal amount of $3,460,000. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from tax increments resulting from increases in the taxable value of real property in a tax increment financing district of the Issuer, but if necessary for the payment thereof ad valorem taxes are required by la w to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative mnimum tax base. The opinion set forth in this paragraph is 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, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. I-6 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights generally and by equitable principles, whether considered at law or in equity. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated ______________, 2015 at Minneapolis, Minnesota. APPENDIX II II-1 CONTINUING DISCLOSURE CERTIFICATES The Series 2015A City Bonds $1,525,000 City of Rosemount, Minnesota General Obligation Utility Revenue Bonds, Series 2015A ______, 2015 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Rosemount, Minnesota (the “Issuer”) in connection with the issuance of its General Obligation Utility Revenue Bonds, Series 2015A, (the “Bonds”) in the original aggregate principal amount of $1,525,000. The Bonds are being issued pursuant to resolutions adopted by the City Council of the Issuer (the “Resolutions”). The Bonds are being delivered to ________ (the “Purchaser”) on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means the Issuer’s annual financial statements, prepared in accordance with generally accepted accounting principles (“GAAP”) for Governmental Units as Prescribed by the Governmental Accounting Standards Board (“GASB”). “Bonds” means the General Obligation Utility Revenue Bonds, Series 2015A, issued by the Issuer in the original aggregate principal amount of $1,525,000. “Disclosure Certificate” means this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. “Final Official Statement” means the deemed final official statement dated __________, 2015, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. II-2 “Fiscal Year” means the fiscal year of the Issuer. “Holder” means the person in whose name a security is registered or a beneficial owner of such a security. “Issuer” means the City of Rosemount, Minnesota, which is the obligated person with respect to the Bonds. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means ________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means the Securities and Exchange Commission. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2015, the Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values 2. City Indebtedness 3. City Tax Rates, Levies and Collections II-3 In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to u ndertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and 15. Failure of an issuer or obligated person to provide annual financial information as required. II-4 (b) The Issuer shall file a notice of such occurrence with the Repository or with the MSRB within 10 business days of the occurrence of the Material Event. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information. Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, the redemption in full of all Bonds, or payment in full of all the Bonds. Section 8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer with the Rule. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds 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 under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. II-5 Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF ROSEMOUNT, MINNESOTA Mayor City Clerk II-6 The Series 2015B City Bonds $1,445,000 City of Rosemount, Minnesota General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B ______, 2015 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Rosemount, Minnesota (the “Issuer”) in connection with the issuance of its General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B, (the “Bonds”) in the original aggregate principal amount of $1,445,000. The Bonds are being issued pursuant to resolutions adopted by the City Council of the Issuer (the “Resolutions”). The Bonds are being delivered to ________ (the “Purchaser”) on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means the Issuer’s annual financial statements, prepared in accordance with generally accepted accounting principles (“GAAP”) for Governmental Units as Prescribed by the Governmental Accounting Standards Board (“GASB”). “Bonds” means the General Obligation Capital Improvement Plan Refunding Bonds, Series 2015B, issued by the Issuer in the original aggregate principal amount of $1,445,000. “Disclosure Certificate” means this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. “Final Official Statement” means the deemed final official statement dated __________, 2015, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. “Fiscal Year” means the fiscal year of the Issuer. II-7 “Holder” means the person in whose name a security is registered or a beneficial owner of such a security. “Issuer” means the City of Rosemount, Minnesota, which is the obligated person with respect to the Bonds. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means ________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means the Securities and Exchange Commission. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2015, the Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values 2. City Indebtedness 3. City Tax Rates, Levies and Collections In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. II-8 Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and 15. Failure of an issuer or obligated person to provide annual financial information as required. (b) The Issuer shall file a notice of such occurrence with the Repository or with the MSRB within 10 business days of the occurrence of the Material Event. II-9 (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information. Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, or upon the redemption or payment in full of all the Bonds. Section 8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer with the Rule. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds 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 under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. II-10 IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF ROSEMOUNT, MINNESOTA Mayor City Clerk II-11 The Authority Bonds $3,460,000 Rosemount Port Authority, Minnesota General Obligation Tax Increment Refunding Bonds, Series 2015A, ______, 2015 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Rosemount Port Authority, Minnesota (the “Issuer”) and the City of Rosemount, Minnesota (the “City”) in connection with the issuance of its General Obligation Tax Increment Refunding Bonds, Series 2015A, (the “Bonds”) in the original aggregate principal amount of $3,460,000. The Bonds are being issued pursuant to resolutions adopted by the Board of Commissioners of the Issuer (the “Resolutions”). The Bonds are being delivered to ________ (the “Purchaser”) on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the City has adopted a resolution, authorizing, among other things, the execution of this Continuing Disclosure Certificate. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer and the City for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means the City’s annual financial statements, prepared in accordance with generally accepted accounting principles (“GAAP”) for Governmental Units as Prescribed by the Governmental Accounting Standards Board (“GASB”). “Bonds” means the General Obligation Tax Increment Refunding Bonds, Series 2015A, issued by the Issuer in the original aggregate principal amount of $3,460,000. “City” means the City of Rosemount, Minnesota, which together with the Issuer are the obligated persons with respect to the Bonds. “Disclosure Certificate” means this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. II-12 “Final Official Statement” means the deemed final official statement dated __________, 2015, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. “Fiscal Year” means the fiscal year of the City. “Holder” means the person in whose name a security is registered or a beneficial owner of such a security. “Issuer” means the Rosemount Port Authority, Minnesota, which together with the City are the obligated persons with respect to the Bonds. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means ________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means the Securities and Exchange Commission. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer or the City shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2015, the Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer or the City are unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer or the City shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values II-13 2. City Indebtedness 3. City Tax Rates, Levies and Collections In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer or the City shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and II-14 15. Failure of an issuer or obligated person to provide annual financial information as required. (b) The Issuer or the City shall file a notice of such occurrence with the Repository or with the MSRB within 10 business days of the occurrence of the Material Event. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer or the City shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information. Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer and the City shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer’s and the City’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, the redemption in full of all Bonds, or payment in full of all the Bonds. Section 8. Agent. The Issuer and the City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer and City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer and City deliver to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer and City to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer and the City with the Rule. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer and City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer and City choose to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer and City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer or City to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or City to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer or City to comply with this Disclosure Certificate shall be an action to compel performance. II-15 Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the City, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. ROSEMOUNT PORT AUTHORITY, MINNESOTA ___________________________________ Chair ___________________________________ Secretary CITY OF ROSEMOUNT, MINNESOTA Mayor City Clerk APPENDIX III III-1 SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION Following is a summary of certain statutory provisions relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the “Estimated Market Value.” The 2013 Minnesota Legislature established the Estimated Market Value as the value used to calculate a municipality’s legal debt limit. Economic Market Value. The Economic Market Value is the value of locally assessed real property (Assessor’s Estimated Market Value) divided by the sales ratio as pro vided by the State of Minnesota Department of Revenue plus the estimated market value of personal property, utilities, railroad, and minerals. Taxable Market Value. The Taxable Market Value is the value that Net Tax Capacity is based on, after all reductions, limitations, exemptions and deferrals. Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are the sum of the amounts determined by (i) multiplying the Net Tax Capacity by the tax capacity rate, and (ii) multiplying the referendum market value by the market value rate. Market Value Homestead Exclusion. In 2011, the Market Value Homestead Exclusion Program (MVHE) was implemented to offset the elimination of the Market Value Homestead Credit Program that provi ded relief to certain homesteads. The MVHE reduces the taxable market value of a homestead with an Assessor’s Estimated Market Value up to $413,800 in an attempt to result in a property tax similar to the effective property tax prior to the elimination of the homestead credit. The MVHE applies to property classified as Class 1a or 1b and Class 2a, and causes a decrease in the Issuer’s aggregate Taxable Market Value, even if the Assessor’s Estimated Market Value on the same properties did not decline. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279-282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. III-2 The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One-half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty on homestead property of 2% until May 31 and increased to 4% on June 1. The penalty on nonhomestead property is assessed at a rate of 4% until May 31 and increased to 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, a penalty of 2% on homestead property and 4% on nonhomestead property is assessed. The penalty for homestead property increases to 6% on November 1 and again to 8% on December 1. The penalty for nonhomestead property increases to 8% on November 1 and again to 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax -exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the county auditor files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks but in no event is the rate less than 10% or more than 14%. Property owners subject to a tax lien judgment generally have three years (3) to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40%; town or city - 20%; and school district - 40%. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the homestead credit refund and the renter’s property tax refund, which relate property taxes to income and provide relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The homestead credit refund, the renter’s property tax refund, and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, county program aid and disparity reduction aid. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory “net debt” limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements that are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. 3. Obligations payable wholly from the income from revenue producing conveniences. III-3 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. 11. Obligations issued to pay judgments against the municipality. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) “Fiscal Disparities Law” The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as “Fiscal Disparities,” was first implemented for taxes payable in 1975. Forty percent of the increase in commercial-industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis/St. Paul seven-county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area-wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area-wide tax base shall be distributed back to each assessment district. III-4 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Local Tax Payable Local Tax Payable Property Type 2011-2014 2015 Residential Homestead (1a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Residential Non-homestead Single Unit (4bb1) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% 1-3 unit and undeveloped land (4b1) 1.25% 1.25% Market Rate Apartments Regular (4a) 1.25% 1.25% Low-Income (4d) 0.75% Up to $100,000 0.75% Over $100,000 0.25% Commercial/Industrial/Public Utility (3a) Up to $150,000 1.50%(a) 1.50%(a) Over $150,000 2.00%(a) 2.00%(a) Electric Generation Machinery 2.00% 2.00% Commercial Seasonal Residential Homestead Resorts (1c) Up to $600,000 0.55% 0.55% $600,000 - $2,300,000 1.00% 1.00% Over $2,300,000 1.25%(a) 1.25%(a) Seasonal Resorts (4c) Up to $500,000 1.00%(a) 1.00%(a) Over $500,000 1.25%(a) 1.25%(a) Non-Commercial (4c12) Up to $500,000 1.00%(a)(b) 1.00%(a)(b) Over $500,000 1.25%(a)(b) 1.25%(a)(b) Disabled Homestead (1b) Up to $50,000 0.45% 0.45% Agricultural Land & Buildings Homestead (2a) Up to $500,000 1.00% 1.00% Over $500,000 1.25% 1.25% Remainder of Farm Up to $1,900,000(c) 0.50%(b) 0.50%(b) Over $1,900,000(c) 1.00%(b) 1.00%(b) Non-homestead (2b) 1.00%(b) 1.00%(b) (a) State tax is applicable to these classifications. (b) Exempt from referendum market value based taxes. (c) Legislative increases, payable 2015. Historical valuations are: Payable 2014 - $1,500,000; Payable 2013 - $1,290,000; Payable 2012 - $1,210,000; and Payable 2011 - $1,140,000. NOTE: For purposes of the State general property tax only, the net tax capacity of non-commercial class 4c(1) seasonal residential recreational property has the following class rate structure: First $76,000 – 0.40%; $76,000 to $500,000 – 1.00%; and over $500,000 – 1.25%. In addition to the State tax base exemptions referenced by property classification, airport property exempt from city and school district property taxes under M.S. 473.625 is exempt from the State general property tax (MSP International Airport and Holman Field in St. Paul are exempt under this provision). APPENDIX IV IV -1 EXCERPT OF THE CITY’S 2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2014. The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. The City’s comprehensive annual financial reports for the years ending 1996 through 2013 were awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. The City has submitted its CAFR for the 2014 fiscal year to GFOA. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR), whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council City of Rosemount Rosemount. Minnesota Report on the Financial Statements We have audited the accompanying financial statements of lhe governmental achvities. 1he business~type activities. each major fund. and the aggregate remaining h.md information of the City of Rosemount. Minnesota as of and for the year ended December 31. 2014. and the related notes to the financial statements. which collectively comprise the City of Rosemount's basic f1nanc1a1 statements as listed 1n the table of contents Management's Responsibility for the Financial Statements Management 1s responsible for the preparation and fair presentation of these financial statements in accordance with accountmg principles generally accepted 1n the United States of America: this includes the design. implementation. and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. \Nhether due to fraud or error. Auditors' Responslbll/ty Our responsibility ls to express optn1ons on these financial statements based on our audit. We conducted our audit 1n accordance with auditing standards generally accepted m the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment. including the assessment of the nsks of material misstatement of the financial statements. whether due lo fraud or error In making those risk assessments, the auditor considers internal control relevant to the City of Rosemount's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an op1mon on the effectiveness of the Cdy of Rosemount's internal control. Accordingly, we express no such op1n1on. An audit also includes evaluating lhe appropnateness of accounting pohcies used and the reasonableness of s1gn1ficant accounting esbmates made by management. as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained Is sufficient and appropriate to provide a basis for our audit opinions. To the Honorable Mayor and Members of the City Council City of Rosemount Opinions In our opinion, the financial statements referred to above present fairly, In all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund. and the aggregate remaining fund infonnation of the City of Rosemount, Minnesota, as of December 31, 2014 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information and schedule of funding progress as listed in the table of contents be presented to supplement the basic financial statements. Such infonnation. although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers It to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required suppiementary Information in accordance With auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limlted procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of fonning opinions on the financial statements that collectively comprise the City of Rosernount's basic financial statements. The combining and individual fund financial statements and schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such infonnation directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in aH material respects, in relation to the basic financial statements as a whole. Other Information Our audit was conducted for the purpose of fonning opinions on the financial statements that collectively comprise the City of Rosemount's basic financial statements. The introductory and statistical sections are presented for purposes of addltional analysis and are not a required part of the basic financial statements. Such Information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Prior-Year Comparatiw Information We have previously audited the City of Rosemount's 2013 financial statements, and we expressed unmod~ied audit opink>ns on the respective financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund infonnation in our report dated May 12, 2014. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2013, is consistent, in all material respects, With the audited financial statements from which it has been derived. Minneapolis, Minnesota June 9, 2015 IV-2 CITY OF ROSEMOUNT STATEMENT OF NET POSITION As of December 31, 2014 (With Summarized Information as of December 31, 2013) Business- Governmental Type Totals Activities Activities 2014 2013 ASSETS Cash and investments $ 26,036,186 $ 18,018,833 $ 44,055,019 $ 38,461,166 Receivables Taxes 688,001 688,001 696,006 Delinquent taxes 71,655 71,655 126,838 Accounts 246,064 915,809 1, 161,873 1,474,508 Special assessments 3,108,959 320,239 3,429,198 3,149,176 Due from other governmental units 434,404 351,694 786,098 669,753 Internal balances (85,103) 85,103 Prepaid items 191,815 115.419 307,234 288,174 Capital assets Land 9,003,127 2,651,767 11,654,894 13,747,233 Construction in progress 1,923,887 3,350,466 5,274,353 3,502,975 Land improvements 4,997,104 4,997,104 3,293,796 Buildings 14,415,644 11,085,341 25,500,985 25,277,856 Machinery and equipment 10,651,996 3,503,715 14,155,711 13,017,783 Infrastructure 56,364,470 131,455,129 187,819,599 183,535,003 Less: accumulated depreciation (22,802,826) (52,452,010) (75,254,836) (71,624,345) Total Assets 105,245,383 119,401,505 224,646,888 215,615,922 LIABILITIES Accounts payable 1,155,643 180,327 1,335,970 909,528 Accrued payroll and payroll taxes 155,676 43,556 199,232 170,990 Other accrued liabilities and deposits 402,491 19,478 421,969 411,600 Noncurrent liabilities Due within one year 2,312,499 513,343 2,825,842 2,679,775 Due in more than one year 14,776,073 1,101,956 15,878,029 15,726,837 Total Liabilities 18,802,382 1,858,660 20,661,042 19,898,730 DEFERRED INFLOWS OF RESOURCES Unearned revenue 392,551 392,551 576,127 Total Deferred Inflows of Resources 392,551 392,551 576,127 NET POSITION Net investment in capital assets 58,438,402 98,194,408 156,632,810 153,517,523 Restricted 6,687,958 6,687,958 7,148,774 Unrestricted 20,924,090 19,348,437 40,272,527 34,474,768 Total Net Position $ 86,050,450 $ 117,542,845 $ 203,593,295 $ 195,141,065 See accompanying notes to financial statements. IV-3 CITY OF ROSEMOUNT STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 (With Summarized Information for the Year Ended December 31, 2013) Net (Expense) Revenue and P!!!!!ram Revenues Changes In Net Position Operating Capital Prima!}'. Government Charges for Grants and Grants and Governmental Business-Type Totals Functions/Proorams ~nses Services Contributions Contributions Activities Activities 2014 2013 Primary Government: Governmental activities: General government $ 2,961,500 $ 3,202,744 $ -$ 1,988,610 $ 2,229,854 $ -$ 2,229,854 $ (117,576) Public safety 4,233,610 146,973 283,095 18, 131 (3,785,411) -(3,785,411) (3,648.405) Public works 5,764,176 59,417 53,515 4,318,692 (1,332,552) (1,332,552) (1,393,595) Culture, education and recreation 1,613,600 571,222 3,736 (1,038,642) -(1,038,642) (1,238, 108) Conservation and economic development 1,032,304 -22,536 740,660 (269,108) -(269,108) 340,176 Interest and fiscal charges 501,682 !501,682) -!501,682) (517,067) Total Governmental Activities ~106,872 3,980,356 362,882 7,Q66,Q_9~ (4,697,541) -(4,697,541) (6,574,575) Business-Type activities Water 1,962,833 2,379,147 9,901 180,588 -606,783 606,783 636,016 Sewer 2,522,913 1,733,646 -98,863 (690,404) (690,404) (625,980) Storm Water 1,122,839 1,350,259 19,680 193,402 -440,502 440,502 720,355 Arena 493,943 392,631 --!101,312) (101,312) (202,287) Total Business-Type Activities 6,102,528 5,855,683 29,581 -472,833 255,569 255,569 528,104 Total Primary Government $ 22,209,400 s 9,836,039 $ 392,463 s 7,538,926 (4,697,541) 255,569 (4,441,972) (6,046,471) General revenues: Taxes Property taxes, levied for general purposes 10,328,709 10,328,709 10,123,158 Property taxes, levied for debt service 1,022,258 1,022,256 1,037,524 Other taxes 288,425 -288,425 259,064 Interest earnings 221.243 333,929 555,172 331,113 Change in fair value of investments 319,644 276,379 596,023 (849,194) MlsceUaneous 103,615 -103,615 116,123 Gain on sale of capital assets --12,883 Transfers !2,314,720) 2,314,720 Total general revenues and transfers 9,969,174 2,925,028 12,894,202 11,030,671 Change In net position 5,271,633 3,180,597 8,452,230 4,984,200 Net position -beginning ~ 80,778,817 $ 114,362,248 $ 195,141,065 $ 190,156,865 Net Position -Ending $ 86,050,450 $ 117,542,845 $ 203,593.~95 $ 195,141,065 See accompanying notes to financial statements. I V - 4 CITY OF ROSEMOUNT BALANCE SHEET-GOVERNMENTAL FUNDS As of December 31, 2014 Port Nonmajor Total Authority Governmental Governmental General Debt Service CaE!ital Pro~cts TIF Funds Funds ASSETS Cash and investments $ 9,145,098 $ 5,094,409 $ 9,945,837 $ 1,009,662 $ 207,106 $ 25,402,112 Receivables from: Taxes 747,588 12,068 759,656 Accounts 68,399 156,270 224,669 Special assessments 1,908,447 1,192,920 3,101,367 Delinquent special assessments 5,670 1,922 7,592 Due from other governmental units 12,772 333,754 87,878 434,404 Prepaid items 66,238 10,000 549 76,787 Total assets $ 10,040,095 $ 7,008,526 $ 11,640,703 $ 1,021,730 $ 295,533 $ 30,006,587 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $ 376,050 $ -$ 763,411 $ -$ 4,150 $ 1,143,611 Accrued payroll and payroll taxes 155,676 155,676 Deposits payable 200,550 200,550 Advances from other funds 85,103 85,103 Total liabilities 732,276 848,514 4,150 1,584,940 Deferred Inflows of Resources Unavailable revenue 144,172 1,913,977 1,188,939 3,247,088 Unearned revenue 118,412 274,139 392,551 Total deferred inflows of resources 144172 2,032,389 1,463,078 3,639,639 Fund Balances Nonspendable 66,238 10,000 549 76,787 Restricted 4,976,137 1,988,610 1,021,730 7,986,477 Committed 290,834 290,834 Assigned 2,808,794 7,330,501 10,139,295 Unassigned 6,288,615 6,288,615 Total fund balances 9,163,647 4,976,137 9,329,111 1,021,730 291,383 24,782,008 Total liabilities, deferred inflows of resources, and fund balances $ 10,040,095 $ 7,0081526 $ 11,640?03 $ 1,021?30 $ 295.533 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. 74,553,402 Some receivables that are not currently available are reported as deferred inflows of resources in the fund financial statements but are recognized as revenue when earned in the government-wide statements. 3,247,088 Internal service funds are reported in the statement of net position as governmental activities. 758,465 Some liabilities, including long-term debt, are not due and payable in the current period and, therefore, are not reported in the funds. See Note II.A. (17,290,513) NET POSITION OF GOVERNMENTAL ACTMTIES s 86,050,450 See accompanying notes to financial statements. IV-5 CITY OF ROSEMOUNT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES· GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Port Non major Total Authority Governmental Governmental General Debt Service Ca~ital Projects TIF Funds Funds REVENUES Taxes $ 9,060,134 $ 375,622 $ 1,254,000 $ 646,636 $ 58,000 $ 11,394,392 Intergovernmental 342,158 1,427, 106 740,660 2,509,924 Public charges for services 1,253,601 1,873,663 5,292 3,132,556 Licenses and permits 730,765 730,765 Fines and forfeitures 116,384 116,384 Special assessments 4,652 1,528,454 590,093 2,123,199 Interest earnings 176,321 6,806 33,089 800 217,016 Change in fair value of investments 231,871 87,773 319,644 Donations/contributions 1,988,610 1,988,610 Miscellaneous 100,972 507,731 1,422 610,125 Total Revenues 12,016,858 1,910,882 7,762,065 647,436 805,374 23,142,615 EXPENDITURES Current: General government 2,509,554 8,448 158,910 75,241 2,752,153 Public safety 3,762,826 3,762,826 Public works 3,165,615 26,872 3,192,487 Parks and recreation 1,304,867 1,304,867 Conservation and development 376,496 376,496 Capital Outlay 8,777,373 40,278 652,781 9,470,432 Debt Service: Principal retirement 1,470,000 110,000 1,580,000 Interest and fiscal charges 219,725 19,595 269,285 508,605 Total Expenditures 10,742,862 1,689,725 8,832,288 954,969 728,022 22,947,866 Excess (deficiency) of revenues over expenditures 1,273,996 221,157 (1,070,223) (307,533) 77,352 194,749 OTHER FINANCING SOURCES (USES) Issuance of long-term debt 2,400,000 2,400,000 Sale of capital assets 65,290 283,045 348,335 Transfers in 3,500 200,000 1,705,255 1,908,755 Transfers out (475,000) (24,617) (499,617) Total Other Financing Sources (Uses) (471,500) 200,000 4,145,928 283,045 4,157,473 Net Change In Fund Balances 802,496 421, 157 3,075,705 (24,488) 77,352 4,352,222 FUND BALANCES -Beginning 8,361,151 4,554,980 6,253,406 1,046,218 214,031 20.429,786 FUND BALANCES -ENDING $ 9,163,647 $ 4,976,137 $ 9,329,111 $ 1,021,730 $ 291,383 $ 24,782,008 See accompanying notes to financial statements. IV-6 CITY OF ROSEMOUNT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Net change in fund balances -total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of net position the cost of these assets is capitalized and they are depreciated over their estimated useful lives with depreciation expense reported in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements Some items reported as capital outlay but not capitalized Some items reported as operating expenditures in the fund financial statements but are capitalized in the government-wide statements Depreciation is reported in the government-wide statements Utility infrastructure constructed by capital projects funds not reported as governmental activities In the statement of activities, the loss of ($1,833, 139) on the disposal of capital assets is reported. In the fund financial statements, proceeds from the sale of capital assets $348,335 are reported because the proceeds increase financial resources Internal service funds are reported in the statement of activities. Receivables not currently available are reported as unavailable revenue in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. Issuing debt provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. This is the amount of debt issued during the year. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. This is the amount of principal payments paid. Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. This is the change in the following liabilities. Compensated absences Accrued interest on debt CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements. $ 4,352,222 9,470,432 (940,385) 786,731 (1,902,760) (3,723,858) (2,181,474) (67,755) 301,474 (2,400,000) 1,580,000 (9,919) 6,925 $ 5,271,633 IV-7 CITY OF ROSEMOUNT STATEMENT OF NET POSITION -PROPRIETARY FUNDS As of December 31, 2014 Business-T~ Activities -Enterl!rise Funds Governmental Activities - Storm Non-major Internal Service Water Sewer Water Arena Totals Fund ASSETS Current assets: Cash and investments $ 6,929,741 $ 5,285,438 $ 5,498,362 $ 305,292 $ 18,Q18,833 $ 634,074 Accounts receivable 349,893 340,790 196,149 28,977 915,809 21,395 Special assessments receivable 122,053 91,908 106,278 320,239 Due from other governments 351,694 351,694 Prepaid and other assets 7,856 97,661 4,548 5,354 115,419 115,028 Total current assets 7,409,543 5,815,797 6,157,031 339,623 19,721,994 770,497 Non-current assets: Advance to other funds 120,563 120,563 Property and equipment: Land 1,008,628 547,158 1,095,981 2,651,767 Construction in progress 828,755 2,005,665 516,046 3,350,466 Buildings 6,794,504 401,414 1,489,523 2,399,900 11,085,341 Mains and lines 21,191,244 17,417,434 26,855,162 65,463,840 Other improvements 16,528,701 36,927,459 12,535,129 65,991,289 Machinery and equipment 1,906,993 743,320 716,802 136,600 3,503,715 Less accumulated depreciation (14,169,558) (28,222,220) (8,981,375) (1,078,857) (52,452,010) Net property and equipment 34,089.267 29,820,230 34,227,268 1,457,643 99,594,408 Total non-current assets 34,089,267 29,940,793 34,227,268 1,457,643 99,714,971 Total Assets 41,498,810 35,756,590 40,384,299 1,797,266 119,436,965 770,497 LIABILITIES Current liabilities: Accounts payable 94,414 20,798 38,432 26.683 180,327 12,032 Accrued liabilities 26,612 7,412 4,325 5,207 43,556 Accrued interest 13,960 5,518 19,478 Current portion of long term obligations 273,146 38,146 190,055 11,996 513,343 Total current liabilities 408,132 66,356 238,330 43,886 756,704 12,032 Noncurrent liabilities: Accrued compensated absences 41,325 41,325 16,310 12,996 111,956 General obligation debt 530,000 460,000 990,000 Advances from other funds 35,460 35,460 Total noncurrent liabilities 606,785 41,325 476,310 12,996 1,137,416 Total Liabilities 1,014,917 107,681 714,640 56,882 1,894,120 12,032 NET POSITION Net investment in capital assets 33,324,267 29,820,230 33,592,268 1,457,643 98,194,408 Unrestricted 7,159,626 51828,679 6,077,391 282.741 19,348,437 758,465 TOTAL NET POSITION $ 40,483,893 $ 35,648,909 $ 39,669,659 $ 1,740,384 $ 1171542,845 $ 758,465 See accompanying notes to financial statements. IV-8 CITY OF ROSEMOUNT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-T:t(!!! Activities -Ente!Erise Funds Governmental Activities- Storm Non-major Internal Service water Sewer Water Arena Totals Funds OPERATING REVENUES Charges for services $ 1,576,742 $ 1,533,518 $ 1,044,770 $ 392,631 $ 4,547,661 $ Water meters 37,385 37,385 Miscellaneous 2,800 2,800 Total Operating Revenues 1,616,927 1,533,518 1,044,770 392,631 4,587,846 OPERATING EXPENSES Personnel services 452,813 452,012 189,489 203,133 1,297,447 Supplies 177,496 8,274 8,150 21,932 215,852 28,417 Professional services and charges 170, 107 26,008 98,423 35,154 329,692 27,244 Other services and charges 342,773 80,118 167,014 176,109 766,014 261,230 Metro sewer charges 1,090,261 1,090,261 Depreciation 782,249 866,240 645,747 57,615 2,351,851 Total Operating Expenses 1,925,438 2,522,913 1,108,823 493,943 6,051,117 316,891 Operating Loss (308,511) (989,395) (64,053) (101,312) ( 1,463,271) (316,891) NONOPERATING REVENUES (EXPENSES) Connection fees 467,164 188,024 298,912 954,100 Taxes 245,000 Intergovernmental 9,901 19,680 29,581 Interest earnings 105,515 147,534 80,427 453 333,929 4,136 Change in fair value of investments 96,607 104,600 75,172 276,379 Surcharges and penalties 295,056 12, 104 6,577 313,737 Interest expense and fiscal agent fees {37,395) {14,016) {51,411) Total Nonoperating Revenues 936,848 452,262 466,752 453 1,856,315 249,136 Income (loss) before contributions and transfers 628,337 (537,133) 402.699 (100,859) 393,044 (67,755) Capital contributions, including special assessments 1,086,998 2,126,844 982,849 4,196,691 Transfers in 176,617 115,000 291,617 Transfers out {356,796) {1,152,551) {187,908) {3,500) {1,700,755) Change in Net Position 1,358,539 437,160 1,374,257 10,641 3,180,597 (67,755) TOTAL NET POSITION -Beginning 39,125,354 35,211,749 38,295,402 1,729,743 114,362,248 826,220 TOTAL NET POSITION ·ENDING $ 40,483,893 $ 35,648,909 $ 39,669,659 $ 1,740,384 $ 117,542,845 $ 758,465 See accompanying notes to financial statements. IV-9 CITY OF ROSEMOUNT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2014 Buslness-T:te! Activities -Ente!]!rise Funds Governmental Activities - Storm Non major Internal Water Sewer Water Arena Totals Service Fund CASH FLOWS FROM OPERA TING ACTIVITIES Cash received from customers $ 2,457,243 $ 1,750,106 $ 1,375,490 $ 419, 168 $ 6,002,007 $ Cash paid to suppliers for goods and services (673,482) (1, 187,856) (284,199) (226,587) (2,372, 124) (354,984) Cash paid for employees (452,813) (452,012) (189,489) (203,133) (1,297,447) Net Cash Flows From (Used by) Operating Activities 1,330,948 110,238 901,802 (10,552) 2,332,436 (354,984) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property taxes 245,000 Repayment of advance to other funds 26,639 26,639 Repayment of advance from other funds (7,835) (7,835) Repayment of advance to other governmental units 29,686 29,686 Transfers from other funds 176,617 115,000 291,617 Transfers to other funds (356,796) (1,152,551) (187,908) (3.500) (1,700,755) Net Cash Rows From (Used by) Noncapital Financing Activities (364,631) (1, 125,912) 18,395 111,500 (1.360,648) 245,000 CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities purchased (1,339,089) (619,321) (1,033,070) (100,000) (3,091,480) (96,000) Marketable securities sold 546,000 1,696,000 725,000 2,967,000 150,000 Interest earnings 105,515 147,534 80,427 453 333,929 4,136 Net Cash Flows From (Used by) Investing Activities (687,574) 1,224,213 (227,643) (99,547) 209,449 58,136 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Debt retired (225,000) (310,000) (535,000) Interest paid (41,645) (15,759) (57,404) Capital contributions 233,470 134,849 226,304 594,623 Acquisition and construction of capital assets (123,401) (189,151) (190,311) (13,952) (516,815) Net Cash Flows From (Used by) Capital and Related Financing Activities (156,576) (54,302) (289,766) (13,952) (514,596) Net Increase (Decrease) in Cash and Cash Equivalents 122,167 154,237 402,788 (12,551) 666,641 (51,848) CASH AND CASH EQUIVALENTS -Beginning of Year 1,955,881 851,095 1,063,197 217,843 4,088,016 341,922 CASH AND CASH EQUIVALENTS -END OF YEAR $ 2,078,048 $ 1,005,332 s 1,465,985 $ 205,292 $ 4,754,857 s 2901074 RECONCILIATION OF CASH ANO CASH EQUIVALENTS Cash and Investments per Statement of Net Position s 6,929,741 $ 5,285,438 $ 5,498,362 $ 305,292 $ 18.018,833 s 634,074 Less: Non Cash Equivalents (4,851,693) (4,280.106) (4,032,377) (100,000) (13.264, 176) (344,000) Cash and Cash Equivalents Per Statement of Cash Flows $ 2,078,048 $ 1,005,332 $ 1.465,985 $ 205,292 $ 4,754,657 $ 290,074 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES Operating loss s (308,511) $ (989,395) $ (64,053) $ (101,312) $ ( 1,463,271) (316,891) Non-operating income 772,121 200,128 325,169 1,297,418 Adjustments to Reconcile Operating Loss to Net Cash Flows From (Used by) Operating Activities Noncash Items included in income Oepreciation 782,249 866.240 645,747 57,615 2,351,851 Change in assets and liabilities Accounts receivable 51,669 16,460 5,551 73,680 (21,395) Other receivables 26,537 26,537 Prepaid items (984) 86 (215) (306) (1,419) (18,120) Accounts payable 27,789 12,353 (12,479) 10,476 38,139 1,422 Other current liablfities 4,004 1,755 585 1,169 7,513 Accrued llablllUes 2,611 2.611 1,497 (4,731) 1,988 NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES $ 1,330,948 $ 110,238 $ 901,802 $ (10,552) $ 2,332,436 $ (354,984) Non-cash capital, Investing and financing activities: The Water Utility received contributed plant of $906,431 during the year. The Sewer Utility received contributed plant of $2,027 ,981 during the year. The Storm Water utility received contributed plant of $789,447 during the year. Unrealized gains on investments were $96,607 for the Water UUUty, $104,600 for the Sewer Utility, and $75, 172 for the Storm Water Utility for the year. See accompanying notes to financial statements. IV-10 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Rosemount, Minnesota (the "City") was formed and operates pursuant to applicable Minnesota laws and statutes. The governing body consists of a fJVe-member City Council elected at large by voters of the City. City Council members serve four-year staggered terms and the mayor serves a four-year term coinciding with the terms of two of the Council members. Elections take place every two years. The accounting policies of the City conform to accounting principles generally accepted in the United States of America, as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles in the Governmental Accounting Standards Board (GASB). A. REPORTING ENTITY This report includes all of the funds of the City. The reporting entity for the City consists of the primary government and its component unit. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading. The primary government is financially accountable if (1) it appoints a voting majority of the organization's governing body and it is able to impose its will on that organization, (2) it appoints a voting majority of the organization's governing body and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government, (3) the organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Certain legally separate, tax exempt organizations should also be reported as a component unit if all of the following criteria are met: (1) the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; (2) the primary government or its component units, is entitled to, or has the ability to access. a majority of the economic resources received or held by the separate organization; and (3) the economic resources received or held by an individual organization that the primary government, or its component units, is entttied to, or has the ability to otherwise access, are significant to the primary government. Component units are reported using one of two methods, discrete presentation or blending. Generally, component units should be discretely presented in a separate column in the financial statements. A component unit should be reported as part of the primary government using the blending method if it meets any one of the following criteria: (1) the primary government and the component unit have substantially the same governing body and a financial benefit or burden relationship exists, (2) the primary government and the component unit have substantially the same governing body and management of the primary government has operational responsibility for the component unit, (3) the component unit serves or benefits, exclusively or almost exclusively, the primary government rather than its citizens, or (4) the total debt of the component unit will be paid entirely or almost entirely from resources of the primary government. The financial statements include the Rosemount Port Authority as a blended component unit. The Port Authority serves all the citizens of the government and is governed by a board comprised of three of five of the primary government's elected council and four citizens appointed at large. The bond issuance authorizations are approved by the primary government's council and the legal liability for the general obligation portion of the Port Authority's debt remains with the primary government. The Port Authority is reported in a special revenue fund and debt service fund. The Rosemount Port Authority does not issue separate financial statements. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 8. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The statement of activities demonstrates the degree to which the direct expenses of a given function, or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of seif-balancing accounts, which constitute its assets, deferred outflows or resources, liabilities, deferred inflows of resources, net position/fund equity, revenues, and expenditures/expenses. Funds are organized as major funds or non-major funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and. b. The same element of the individual governmental fund or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterprise fund that the City believes is particularly important to financial statement users may be reported as a major fund. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. I V - 1 1 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) The City reports the following major governmental funds: General Fund -accounts for the City's primary operating activities. It is used to account for and report all financial resources except those accounted for and reported in another fund. Debt Service Fund -used to account for and report financial resources that are restricted, committed, or assigned to expenditure for the payment of general long-term debt principal, interest, and related costs, other than enterprise debt. Capital Projects Fund -used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The capital projects fund consists of one primary fund and three separate internal funds maintained by the City. Port Authority TIF Fund -used to account for and report financial resources that are restricted, committed, or assigned to expenditures related to the activities of the City's Downtown - Brockway TIF District. The City reports the following major enterprise funds: Water Utility-accounts for operations of the water system. Sewer Utility -accounts for operations of the sewer system. Storm Water Utility-accounts for operations of the storm water drainage system. The City reports the following non-major governmental and enterprise funds: Special Revenue Funds -used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects). Fire Safety Education Fund GIS Fund Port Authority General Fund Enterprise Funds -may be used to report any activity for which a fee is charged to external uses for goods or services, and must be used for activities which meet certain debt or cost recovery criteria. Arena Fund -accounts for the activities of the City's ice arena operations. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE,_ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) In addition, the City reports the following fund types: Internal service funds are used to account for the financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost- reimbursement basis. Insurance Fund -accumulates resources to pay deductibles and uninsured claims, and pays for a majority of the general liability insurance and workers compensation insurance premiums for the City. c. MEASUREMENT Focus, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions lo this general rule are charges between the City's water and sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. I V - 1 2 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT AcCOUNTING POLICIES (cont.) c. MEASUREMENT Focus, BASIS OF ACCOUNTING ANO FINANCIAL STATEMENT PRESENTATION (cont.) Fund Financial Statements (cont.) Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus. The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water, sewer, storm water, and arena funds are charges to customers for sales and services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. D. ASSETS, LIABIUTIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY 1. Deposits and Investments For purposes of the statement of cash flows, the City considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of City funds is restricted by state statutes. Available investments are limited to: 1. Direct obligations or obligations guaranteed by the United States or its agencies, commercial paper, repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. Government Securities to the Federal Reserve Bank of New York or certain Minnesota brokers/dealers. 2. General obligations of the State of Minnesota or any of its municipalities. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE , _ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIAS/UT/ES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmON OR EQUITY (cont.) 1. Deposits and Investments (cont.) 3. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. 4. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are direct obligations guaranteed by the United States or its agencies. The City has adopted an investment policy. The policy contains the following guidelines: Credit Risk -The policy follows state statutes for allowable investments except that it does not permit the purchase of shares of investment companies registered under the Federal Investment Company Act of 1940 whose only investments are direct obligations guaranteed by the United States or its agencies. Concentration of Credit Risk -The policy does not limit the amount the City may invest in any one issu,er. Interest Rate Risk -As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the amount of investments with maturities of more than five years to 35% of the City's total investment portfolio (including certificates of deposit). Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit. See Note IV.A. for further information. 2. Receivables Property tax levies are set by the City Council in the fall each year and are certified to Dakota County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The County spreads all levies over taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Property taxes are accrued and recognized as revenue in the year collectible, net of delinquencies. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal property taxes may be paid on February 28 and June 30. The County provides tax settlements to the City three times per year, in January, July, and December. Taxes which remain unpaid 60 days after year end are classified as delinquent taxes receivable and are fully offset by unavailable revenue (deferred inflow of resources) because they are not known to be available to finance current expenditures. I V - 1 3 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSE7S, LIABIUTIES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmoN OR EQUITY (cont.) 2. Receivables (cont.) Special assessments are levied against the benefited properties for the assessable costs of special assessments improvement projects in accordance with state statutes. The City usually adopts the assessment rolls when the individual projects are complete. The assessments are collectible over a term of years generally consistent with the term of years of the related bond issue. Collection of annual installments (including interest) is handled by the County in the same manner as property taxes. Property owners are allowed to prepay total future installments without interest or prepayment penalties. Special assessments receivable includes the following components: > Current -amount collected by Dakota County and not remitted to the City. > Delinquent -amounts billed to property owners but not paid. > Unavailable -assessment installments, which will be billed to property owners in future years. > Other -assessments for which payment has been postponed based on council action. Accounts receivable are considered to be 100% collectible. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds.· Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds: lnterfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type actiVities are reported in the government-wide financial statements as internal balances. In the governmental fund financial statements, advances to other funds are offset equally by a nonspendable fund balance account which indicates that they do not constitute expendable available financial resources and, therefore, are not available for appropriation or by a restricted fund balance account, if the funds will ultimately be restricted when the advance is repaid. 3. Inventories and Prepaid Items Governmental fund inventory items are charged to expenditure accounts when purchased. Year-end inventory was not significant. Proprietary fund inventories are generally used for construction and for operation and maintenance work. They are not for resale. They are valued at cost based on weighted average, and charged to construction and/or operation and maintenance expense when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements and expensed as the items are used (consumption method). CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILmES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmoN OR EQUITY (cont.) '· Capital Assets Government -Wide Statements Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $5,000 for general capital assets and infrastructure assets, and an estimated useful life in excess of one year. All capital assets are valued at historical cost or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net position. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Machinery and equipment Other improvements Utility system Infrastructure Fund Financial Statements 30-65 Years 4-20 Years 60Years 65 Years 35-50 Years In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. 5. Compensated Absences Under terms of employment, employees are granted vacation, sick and comp time benefits In varying amounts. These benefits are based upon union contracts and City actions as applicable. Amounts carried forward for vacation and comp time accruals are governed by these contracts and actions. Sick pay accruals may be carried forward indefinitely. I V - 1 4 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABIUTIES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmoN OR EQUITY (cont.) 5. Compensated Absences (cont.) All vested vacation, sick leave and comp time pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, and are payable with expendable available resources. Payments for vacation, sick and comp time leave will be made at rates in effect when the benefits are used. Accumulated vacation, sick and comp time leave liabilities at December 31, 2014 are determined on the basis of current salary rates and include salary related payments. 6. Long· Term Obligations/Conduit Debt All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as another financing source and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. The City has approved the issuance of industrial revenue bonds (IRS) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the City. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. At year end, the aggregate principal amount for the four issues outstanding could not be determined; however, their original issue amounts totaled $13,094,720. 7. Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position that applies to a future period and therefore will not be recognized as inflow of resources (revenue) until that future time. 8. Equity Classifications Government-Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets -Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIASIUTIES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmoN OR EQUITY (cont.) 8. Equity Classifications (cont.) Government-Wide Statements (cont.) b. Restricted net position -Consists of net position with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position -All other net positions that do not meet the definitions of ·restricted" or "net investment in capital assets." When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Fund Statements Governmental fund equity is classified as fund balance and displayed as follows: a. Nonspendable -Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted -Consists of fund balances with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed -Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the City Council. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the City Council that originally created the commitment. d. Assigned -Includes spendable fund balance amounts that are intended to be used for specific purposes that are not considered restricted or committed. Fund balance may be assigned through the following: 1) The City Council has authorized the Finance Director and/or Administrator to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted or committed. Assignments may take place after the end of the reporting period. e. Unassigned -Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those purposes. I V - 1 5 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE , _ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILmES, DEFERRED INFLOWS OF RESOURCES, AND NET PosmoN OR EQUfTY (cont.) 8. Equity Classifications (cont.) Fund Statements (cont.) Proprietary fund equity is classified the same as in the government-wide statements. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents I contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has a formal minimum fund balance policy. That policy is to maintain a working capital fund of 45 to 55 percent of the subsequent year's general fund expenditures. The balance at year end was $6,288,615, or 55 percent, and is included in unassigned general fund balance. 9. Prior Period lnfonnatlon The basic financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the government's financial statements for the year ended December 31, 2013, from which the summarized information was derived. 10. Basis for Existing Rates Current utility rates were approved by the City Council on December 17, 2013. NOTE II -RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. ExPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND THE STATEMENT OF NET POSITION The governmental fund balance sheet includes a reconciliation between fund balance -total governmental funds and net position -governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that "Some liabilities, including long- term debt, are not due and payable in the current period and, therefore, are not reported in the funds". The details of this $17,290,513 difference are as follows: CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE II -RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) A. ExPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND THE STATEMENT OF NET POSITION (cont.) Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities -both current and long-term -are reported in the statement of net position. Bonds and notes payable (excluding unspent capital related proceeds) Compensated absences Accrued interest Combined Adjustment for Long-Term Liabilities NOTE Ill -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARYINFORMATION $ 16,115,000 973,572 201,941 $ 17,290,513 Annual budgets have been adopted for the general fund and the capital project fund that is created by the following sub-funds, Building CIP, Street CIP and Equipment CIP. The remaining capital project sub funds adopt project-length budgets and therefore are not included in the annual budgeting process. Formal budgetary integration is not employed for debt service funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. The budgeted amounts presented include any amendments made. The appropriated budget is prepared by fund, department and function. The legal level of budgetary control is at the department level. The City Council may authorize department heads to transfer budgeted appropriations within departments. The Council approved several supplemental budgetary appropriations during the year, but they were not considered material. Appropriations lapse at year end unless specifically carried over. Carryovers to the following year were $2,689,322. I V - 1 6 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOT£S ON ALL FUNDS A. DEPOSITS ANO INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and balance sheet as cash and investments. In addition, investments are separately held by several of the City's funds. The City's cash and investments at year end were comprised of the following: Carrying Statement Associated Value Balances Risks Petty cash and cash on hand $ 2,400 $ 2,400 N/A Demand deposits 30,461,318 32,109,232 Custodial credit, credit, concentration of credit, U.S. instrumentalities 13,591,301 13,591,301 interest rate Total Cash and Investments $ 44,055,019 $ 45,702,933 Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearing and noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts. The Securities Investor Protection Corporation (SIPC), created by the Securities Investor Protection Act of 1970, is an independent government-sponsored corporation (not an agency of the U.S. government). SIPC membership provides account protection up to a maximum of $500,000 per customer, of which $100,000 may be in cash. Custodia/ Credit Risk Deposits Custodial credit risk is the risk that in the event of a financial institution failure, the City's deposits may not be returned to the City. The City maintains collateral agreements with its banks. At December 31, 2014, the banks had pledged various government securities in the amount of $25,856, 192 to secure the City's deposits. The City has no custodial credit risk in regards to deposits at December 31, 2014. Investments For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have any investments exposed to custodial credit risk. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV-DETAILED NOTES ON ALL FUNDS (cont.) A. DEPOSITS AND INVESTMENTS (cont.) Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As of December 31, 2014, all of the City of Rosemount's investments were U.S. agency obligations which received AAA ratings from Standard & Poor's and/or Moody's Investors Service, respectively. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. As of December 31, 2014, all of the City of Rosemounl's investments were U.S. agency obligations. as follows: Issuer Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal Farm Credit Bank Federal National Mortgage Association Treasury Notes Interest Rate Risk $ Fair Value 8,063,062 3,062,916 1,748,594 394,416 322,313 $ 13,591,301 Percentage of Total 59% 23% 13% 3% 2% Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment. As of December 31, 2014, the City of Rosemounl's investments were as follows: Investment Maturities (in years) More Investment Type Total Fair Value Less than 1 ~ 6-10 than10 U.S. Agency Obligations s 13,591,301 s -s 1,502,131 s 12.08e,564 ... s ___ _ At December 31, 2014, the City held $9, 152,057 in U.S. Agency Obligations that are callable at increasing stepped interest rates. See Note l.D.1 for further information on deposit and investment policies. I V - 1 7 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) 8. RECENABLES Receivable amounts not expected to be collected within one year are listed below: Debt Capital Governmental Activities General Service ___l!Qiects Totals Amounts not expected to be collected within one year $ • $ 820,632 ~.956 $ 1,333,588 Water Sewer Storm Water Business-Type Activities Utili~ Ulil~ ~ Totals Amounts not expected to be collected within one year $ 52,483 $ 39,520 $ 318,114 $ 410,117 Governmental funds report unavailable or unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Totals Delinquent property taxes receivable $ 71,655 $ . $ 71,655 Delinquent special assessments 7,451 . 7,451 Special assessments not yet due 3,095,464 392,551 3,488,015 Donations receivable for future projects 72,518 . 72,518 Total Deferred/Unearned Revenue for Governmental Funds $ 3,247,088 $ 392,551 $ 3,639,639 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2014 was as follows: Governmental Activities Capital assets not being depreciated Land Land improvements Construction in progress Total Capital Assets Not Being Depreciated Capital assets being depreciated Improvements Buildings Machinery and equipment Infrastructure Roads Bridges Parking lots Beginning Balance $ 11,103,466 $ 622,770 1,983,060 13,709,296 2,671,026 14,192,515 9,718,650 90,941 51,496,028 1,887,923 580,449 on "~7.532 Total Capital Assets Being Depreciated-----""'= Less: Accumulated depreciation for Improvements Buildings Machinery and equipment Infrastructure Roads Bridges Parking lots Total Accumulated Depreciation Net Capital Assets Being Depreciated Total Governmental Activities Capital Assets, Net of Accumulated Depreciation (1,033,623) (4,390,440) (6,389,998) (1,865) (8,891,291) (384,828) (210,067) (21,302,112) 59,335,420 $ 73,044,716 $ Depreciation expense was charged to functions as follows: Governmental Activities General government Public safety Additions 12,900 $ 1,212,317 2,356,366 3,581,583 490,991 223,129 1,396,291 118,096 2,191,033 4 419,540 (118,407) (285,181) (576,980) (2,055) (858,089) (47,198) {14,850) {1,902,760) 2,516,780 ~$ Public works, which includes the depreciation of roads, bridges and parking lots Leisure activities T otai Governmental Activities Depreciation Expense Deletions Ending Balance 2,113,239 $ 9,003,127 1,835,087 1,923,887 2,415,539 4,528.778 462,945 462,945 402,046 402,046 60,899 12,762,101 3,162,017 14,415,644 10,651,996 209,037 53,687,061 1,887,923 580,449 84,594,127 (1, 152,030) (4,675,621) (6,564,932) (3,920) (9,749,380) (432,026) (224,917) {22,802,826) 61,791,301 ~ $ 74,553,402 $ 194,273 293,371 1,166,602 248,514 $ 1,902,760 I V - 1 8 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) c. CAPITAi. ASSETS (cont.) Beginning Balance Business-Type Activities Capital assets not being depreciated land $ 2,643,767 $ Construction in progress 1,519,915 Total Capital Assets Not Being Depreciated 4,163,682 Capital assets being depreciated Buildings 11,085,341 Machinery and equipment 3,299,133 Mains and lines 129,479,662 Total Capital Assets Being Depreciated 143,864, 136 less: Accumulated depreciation for Buildings (2,933,518) Machinery and equipment (2,018,580) Mains and lines !45,370,135) Total Accumulated Depreciation !50,322,233) Net Capital Assets Being Depreciated 93,541,903 Total Business-Type Capital Assets, Net of Accumulated Depreciation $ 97. 705,585 $ Depreciation expense was charged to functions as follows: Business-Type Activities Water Sewer Storm water Arena Total Business-type Activities Depreciation Expense Additions 8,000 $ 3,695,050 3,703,050 426,656 1,975,467 2,402,123 (236,588) (116,602) p ,998,661) !2,351,851) 50,272 3,753,322 $ Deletions -$ 1,864,499 1,864,499 222,074 222,074 222,074 222,074 1,864,499 $ $ Ending Balance 2,651,767 3,350,466 6,002,233 11,085,341 3,503,715 131,455,129 146,044, 185 (3,170,106) (1,913,108) !47,368,796) !52,452,010) 93,592,175 99,594,408 782,249 866,240 645,747 57,615 $ 2,351,851 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV-DETAILED NOTES ON ALL FUNDS (cont.) 0. INTERFUND RECEIVABl.Es/PAYABl.ES AND TRANSFERS The following is a schedule of interfund receivable/advances as of December 31, 2014: Receivable Fund Sewer Sewer Subtotal -Fund financial statements Less: Fund eliminations Pavable Fund BuildingCIP Water Total -Government-Wide Statement of Net Position Am~ $ 85,103 35,460 120,563 (35,460) $ 85,103 Amount Not Due Within One Year $ 65,338 27,242 g2,580 (27,242) $ 65,338 The principal purpose of these interfund loans was to finance the public works building expansion in 1999, and to purchase and renovate a building in the Downtown-Brockway Tax Increment Financing District in 2005. For the statement of net position, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. The sewer fund advanced funds to the water fund and capital projects fund. The sewer fund is charging the other funds interest on the advance based on the average outstanding advance balance during the year at a rate of 5%. Following is a detailed repayment schedule for the sewer fund advance: 2015 2016 2017 2018 Total $ $ Princil!al 27,972 $ 29,370 30,839 32,382 120,563 $ Interest Totals - 6,028 $ 34,000 4,630 34,000 3,161 34,000 1 618 34,000 15,437 $ 136,000 I V - 1 9 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) o. INTERFUND RECEIVABLESIPAYABLES AND TRANSFERS (cont.) The following is a schedule of interfund transfers: Fund Transferred To General Debt Service Capita! Projects Enterprise Storm Waler Storm Water Arena Less: Fund eliminations Fund Transferred From Arena Water Sewer Storm Water Water General Water Capital Projects General Less: Contributed plant reclassified to a transfer in the government-wide statements Total Transfers -Government-Wide Statement of Activities $ Amount Principal Purpose 3,500 Building and grounds maintenance 200,000 1,152,551 187,908 4,796 360,000 152,000 24,617 115,000 2,200,372 (791,233) (3,723,859) Waler share of debt payment Sewer share of project Storm water share of project Water share of project Future improvements Water share of debt payments Share of capital project costs Operating expenses $ (2,314,720) The contributed plant figure above includes a slight difference from the amount disclosed in the non- cash section of the statement of cash flows due to final cost allocation adjustments for the various capital projects. Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for In other funds in accordance with budgetary authorizations. For the statement of activities, interfund transfers within the governmental activities or business-type activities are netted and eliminated. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) E. LONG-TERM OBUGATIONS Long-term obligations activity for the year ended December 31, 2014 was as follows: Amounts Beginning Ending DueWtthin Balance Increases Decreases Balance One Year GOVERNMENTAL ACTIVITIES Bonds and Notes Payable General obligation debt $ 15,295,000 $ 2,400,000 $ 1,580,000 $ 16,115,000 $ 1,845,000 Other Liabilities Vested compensated absences 963,300 472,657 462,385 973,572 ~499 Total Governmental Activities Long-Term Liabilities $ 16.~fil!,300 ~_2,872,65? $ _2,042,385 $ . 17,088,572 $ 2,312,499 BUSINESS-TYPE ACTIVITIES Bonds and Notes Payable General obligation debt $ 1,935,000 $ -$ 535,000 $ 1,400,000 $ 410,000 Other Liabilities: Vested compensated absences 213,312 104,377 102,390 215,299 ~343 Total Business-type Activities Long-Term Liabilities $ 2,148,312 $ 104,377 $ 637,390 $ 1,615,299 ~343 Genera/ Ob/lgaUon Debt All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in the governmental funds will be retired by future property tax levles or tax increments accumulated by the debt service fund. Business-type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. Governmental Activtties Date of Final Interest Original Balance General Obligation Debt Issue Maturi!l-: Rates Indebtedness 12-31-14 Fire Station CIP Bonds, Series 2005A 2005 2025 3.5%to4.3% $ 2,630,000 $ 1,755,000 Fire Station Refunding Bonds, Series 20050 2005 2016 3.2%to3.8% 1,115,000 255,000 Improvement Bonds, Series 2006B 2006 2017 4.0% 4,405,000 1,365,000 Port Authority TIF. Series 2008A 2008 2024 5.0%to5.5% 2,765,000 2,545,000 Port Authority TIF, Serles 2008B 2008 2032 4.0%to4.1% 3.275,000 3,275,000 Crossover Refunding Bonds, Series 201 OB 2010 2022 1.2%to3.7% 1,355,000 1,105,000 Improvement Bonds, Series 2011A 2011 2017 0.45% to 1.35% 2,080,000 1,260,000 Improvement Bonds, Series 2012A 2012 2018 0.4% to 1.0% 810,000 655,000 Improvement Bonds, Series 2013A 2013 2019 0.5% to 1.65% 1,500,000 1,500,000 Improvement Bonds, Series 2014A 2014 2025 0.35% to 2.4% 2,400,000 ~000 Total Governmental Activities -General Obligation Debt $ 16,115,000 I V - 2 0 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV-DETAILED NOTES ON ALL FUNDS (cont.) E. LONG-TERM 08LIGA710NS (cont.) Getlflra/ Obl/9atlon Debt (cont.) Business-type Activities Date of General Obligation Debi Issue Water Revenue Bonds, Series 2000A Water Revenue Bonds, Series 2007 A Utility Rev Refunding Bonds, Series 201 DA 2000 2007 2010 Final Maturity 2016 2018 2018 Total Business-type Actlvtlies -General Obligation Debt Debt service requirements to maturity are as follows: Governmental Activities General Obligation Debi Interest Rates 4.4%105.4% 4.0% 0.8% lo2.6% Original Balance Indebtedness 12-31-14 $ 1,160,000 $ 215,000 1,210,000 550,000 1.545,000 635,000 $ 1,400,000 Business-Type Activities General Obligation Debi Year Princil!al Interest Princif)a! Interest 2015 $ 1,845,000 2016 2.300.000 2017 2,250,000 2018 1,390,000 2019 1,260,000 2020-2024 3,545,000 2025-2029 2,185,000 2030-2032 1,340.000 Totals $ 16,115,000 Other Debt lnfonnetlon $ 465,738 424,383 375,496 333,235 301.501 1,056,725 474,236 82,823 $ 3,516,136 $ $ 410,000 $ 425,000 315,000 250,000 39,921 25,625 13,343 4.265 ~ $ 83,154 Estimated payments of compensated absences are not included in the debt service requirement schedules. The compensated absences liability attributable to governmental activities will be liquidated primarily by the general fund. There are a number of limitations and restrictions contained in the various bond indentures and loan agreements. The City believes it is in compliance with all significant limitations and restrictions, including federal arbitrage regulations. The water and storm water utilities have pledged future water and storm water revenues, net of specified operating expenses, to repay revenue bonds issued in 2000, 2007, and 2010. Proceeds from bonds provided financing for utility improvements. The bonds are payable solely from water and storm water revenues and are payable through 2018. Annual principal and interest payments on the bonds are expected to require 16% of net revenues. The total principal and interest remaining to be paid on the bonds is $1,509, 123. Principal and interest paid for the current year and the gross customer revenues were $588,940 and $4,103,375, respectively. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV-DETAILED NOTES ON ALL FUNDS (cont.) F. NET PosmoNIFUND BALANCES Net position reported on the government-wide statement of net position at December 31, 2014 includes the following: Governmental Activities Net Investment in Capital Assets Land Construction in progress Other capital assets, net of accumulated depreciation Less: related long-term debt outstanding (excluding unspent capital related debt proceeds) Total Net Investment in Capital Assets Restricted Debt service Future construction donations Total Restricted Unrestricted Total Governmental Activities Net Position $ 9,003,127 1,923,887 63,626,388 (16, 115,000) 58,438,402 4,699,348 1,988,610 6,687,958 20,924,090 $ 86,050,450 I V - 2 1 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV -DETAILED NOTES ON ALL FUNDS (cont.) F. NET PosmoNIFUND BALANCES (cont.) Governmental AcUvities (cont.) Governmental fund balances reported on the fund financial statements at December 31, 2014 include the following: Port General Debt Capital Authority Nonmajor Fund Service ProJects TIF Funds Totals Fund Balances Nonspendable: Prepaid items 66,238 10,000 549 76,787 Restricted for: Debt service 4,976,137 4,976,137 capital Projects 1,988,610 1,988,610 Port Authority TIF 1,021,730 1,021,730 Committed for: Fire safety education 1,836 1,836 GIS 18,893 18,893 POr! authority -general 270,105 270,105 Assigned for: Compensated absences 973,572 973,572 Armory debt payments 345.612 345,612 Health insurance 225,000 225,000 Building maintenance 67,834 67,834 Park maintenance 185,544 185,544 Election equipment 131,733 131,733 Various projects I equipment 879,499 5,656,185 6,535,684 BuildingCIP 849,652 849,652 StreetCIP 429,203 429,203 Equipment CIP 595,461 595,461 Unuslgned: 6,288,615 6,288.615 Total Fund Balances $ 9,163,847 $ 4,976,137 $ 9.329,111 $ 1,021,730 $ 291,363 $ 24,782,008 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE IV-DETAILED NOTES ON ALL FUNDS (cont.) F. NET PosmoNIFUND BALANCES (cont.) Business-Type Activities Net Investment in Capital Assets Land $ 2,651,767 3,350,466 93,592,175 Construction in progress Other capital assets, net of accumulated depreciation Less: related long-term debt outstanding (excluding unspent capital related debt proceeds) (1,400,000) 98,194,408 Total Net Investment in Capital Assets Unrestricted 19,348,437 Total Business-Type Activities Net Position $ 117,542,845 NOTE V -OTHER INFORMATION A. EMPLOYEES' RETIREMENT SYSTEM City employees and firefighters participate in the pension plans administered by the Public Employees Retirement Association of Minnesota (PERA) and the Rosemount Volunteer Fire Relief Association. In accordance with GASB Statement No. 27, the PERA plans are classified as multiple-employer, cosl- sharing plans, and the Association's plan is classified as a single-employer plan. 1. Public Employees Retirement Association a. Pian Description All full-time and certain part-time employees of the City of Rosemount, Minnesota are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, mulliple- employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. GERF members belong lo 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, firefighters and peace 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 five 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. I V - 2 2 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE V -OTHER INFORMATION A. EMPLOYEES' RETIREMENT SYSTEM(cont.) 1. Publlc Employees Retirement Association (cont.) a. Plan Description (cont.) Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a 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 2.2 percent of average salary for each of the first 10 years of service and 2. 7 percent for each remaining year. The annuity accrual rate for Coordinated Plan member is 1 .2 percent of average salary for each of the first 1 O years and 1. 7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1. 7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF members and for GERF 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 single-life 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 be 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. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the Internet at www.mnoera.org, by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651 ) 296-7 460 or 1-800-652-go26. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE V-OTHER INFORMATION (cont.) A. EMPLOYEES' RETIREMENT SYSTEM (cont.) 1. Publlc Employees Retirement Association (cont.) 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. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.25%, respectively, of their annual covered salary in 2014. PEPFF members were required to contribute 10.2% of their annual covered salary in 2014. In 2014, the City of Rosemount was required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members, 7.25% for Coordinated Plan members, and 15.3% for PEPFF members. The City's contributions to the GERF for the years ending December 31, 2014, 2013 and 2012 were $264,550, $259,654 and $251,921, respectively. The City's contributions to the PEPFF for the years ending December 31, 2014, 2013 and 2012 were $303,908, $275,788 and $272,834, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. Contribution rates will increase on January 1, 2015 in the Coordinated Plan (6.5% for members and 7.5% for employers) and the Police and Fire Fund (10.8% for members and 16.2% for employers). 2. Rosemount Fire Department Relief Association-Defined Benefit Pension Plan a. Plan Description The City of Rosemount contributes to the Rosemount Fire Department Relief Association Pension Plan; a single-employer retirement system administered by the Rosemount Fire Department Relief Association. The Rosemount Fire Department Relief Association provides a lump-sum benefit to its members upon retirement, total disability or death. These benefit provisions are established and can be amended by the Rosemount Fire Department Relief Association's Board of Trustees with approval by the Rosemount City Council. The Rosemount Fire Department Relief Association issues a publicly available financial report that includes financial statements and required supplementary information for the Rosemount Fire Department Relief Association Pension Plan. That report may be obtained by writing to City of Rosemount, 2875 1451" Street West, Rosemount, Minnesota 55068-4997, or by calling (651) 423-4411. b. Funding Policy The contribution requirements are established and may be amended by the Minnesota State Legislature. The Rosemount Fire Department Relief Association is comprised of volunteers. Therefore, there are no covered payroll amounts or member contributions required. Individuals with at least 20 years of service who have reached age 50 are entitled to a lump- sum payment of $6,900 per year of service. In the event an otherwise qualified member has less than 20 years of service, the member is eligible for a pension payment of 60 percent after 1 O years of service, increasing 4 percent for each year of service after 1 O years to a maximum of 100 percent. Members retiring before 50 do not receive distributions until age 50, but interest at 5% per year is added to their retirement benefit until paid. I V - 2 3 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE V-OTHER INFORMATION (cont.) A. EMPLOYEES' RETIREMENT SYSTEM (cont.) 2. Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.) c. Annual Pension Cost and Net Pension Obligations Financial requirements of the Association are determined based on a formula prescribed in Minnesota Statues 69.772. Those statutes prescribe a set amount offunding, per $100 of lump-sum benefits payable per year of service. For associations with assets exceeding the statutory pension liability, the financial requirements shall be the increase in the statutory pension liability for the next year over the current year, reduced by an amount equal to one- tenth of the surplus. For associations with a deficit of assets to fund the statutory pension liability, the financial requirements shall be the increase in the statutory pension liability for the next year over the current year, Increased by an amount equal to one-tenth the deficit. The City's minimum obligation is the financial requirement for the year less anticipated state aids and interest on investments calculated at a rate of 5 percent. The value of assets was determined using fair value. Securities traded on national exchanges are valued at the last reported sales price. Investments that do not have an established market value are reported at estimated fair value. The annual pension cost for the Rosemount Fire Department Relief Association Pension Plan for the year ended December 31, 2014 was as follows: State of Minnesota contribution City of Rosemount contribution $ $ Amount 125,594 171,000 296,594 The City recognizes the State of Minnesota's contributions to the Rosemount Fire Department Relief Association Pension Plan as revenue and expense. Three Year Trend Information Percentage Fiscal Year Annual Pension ofAPC Net Pension Ending Cost(APC) Contribution ~!ion 2014 $ 296,594 100.0% $ 0 2013 296,632 100.0% 0 2012 262,845 100.0% 0 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE v -OTHER INFORMATION (cont.) A. EMPLOYEES' RETIREMENT SYSTEM (cont.) 2. Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.) d. Required Supplementary Information, Schedule of Funding Progress Ten-year historical trend information is presented in the Rosemount Firefighters Relief Association's Annual Financial Report. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefrts as they become due. The following historical trend information was obtained from the Association's financial report for the year ended December 31, 2014: Assets as a Overfunded Percentage of (Underfunded) Accrued Accrued Accrued Date Assets Liabilities Liabilities Liabilities 12-31-14 $ 3,348,776 $ 2,609,887 128% $ 738,889 12-31-13 2,874,130 2,468,808 116% 405,322 12-31-12 2,504,97g 2,523,870 99% (18,891) Computations of the unfunded net pension obligation and employer contributions as a percent of covered payroll are not applicable since the fire department is a volunteer organization and no covered payroll exists. The accrued liabilities were determined pursuant to state statutes. Significant assumptions include: the entry age normal actuarial cost method was used to determine the normal cost of all benefits, level dollar amortization method, the rate of investment return used in making the valuation was 5% per annum compounded annually, age and service at retirement was assumed to occur at age 50, no turnover or early retirements, projected salary increases and inflationary increases do not apply, no postretirement benefit increases, and the amortization period is 20 years for normal cost and 10 years for prior service cost. The equivalent single amortization period was not made available. e. Related Party Transactions As of December 31, 2014 and for the year then ended, the Association held no securities issued by City or other related parties. 8. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and health care of its employees. The City purchases commercial insurance and participates in a public entity risk pool called the Minnesota League of Cities Insurance Trust to provide coverage for these various risks of loss. Settled claims have not exceeded coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. I V - 2 4 CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE V-OTHER INFORMATION (cont.) B. RISK MANAGEMENT(cont.) The City has established an internal service fund (Insurance Fund) to account for and finance uninsured risks of loss related to torts, theft of, damage to and destruction of assets, including deductibles. The majority of the City's general liability and workers compensation insurance premiums are paid for by this fund. At December 31, 2014, there are no claims liabilities in the Insurance Fund based on the requirements of Governmental Accounting Standards Board Statement Number 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. C. COMMITllENTS AND CONTINGENCIES Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments are only reported in governmental funds if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. From time to time, the City is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the City attorney that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the City's financial position or results of operations. The City has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. The City has active construction projects as of December 31, 2014. Work that has been completed on these projects but not yet paid for (including contract relainages) is reflected as accounts payable and expenditures. In 2007, the City committed to a municipal revenue obligation as part of a development agreement with 146'" Street Partners, Limited Partnership. The amount of the obligation is $1,500,000, and is payable to the developer solely from available lax increments collected from a specific portion of the development. Payments are scheduled through the year 2032, and carry an interest rate of 4.96%. The obligation does not constitute a charge upon any funds of the city. In the event that future tax Increments are not sufficient to pay off the obligation, the obligation terminates with no further liability to the city. Since the amount of future payments Is contingent on the collection of future TIF increments, the obligation is not reported as a liability in the accompanying financial statements. The balance of the commitment outstanding at year end has not been determined. CITY OF ROSEMOUNT NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2014 NOTE V-OTHER INFORMATION (cont.) D. RELATED ORGANIZATION The City entered into an agreement with SKB Environmental, Inc. for the purpose of providing for the construction and maintenance of facilities for public recreation, to improve living and working conditions within the City, further public educational opportunities, and to provide for the charitable needs of the City. This agreement created a trust called the City of Rosemount -SKB Environmental Trust Fund. Beginning in 2011, the amount of distributions to the City would be equal to the excess of the trust value over $1,525,000. The trust agreement states the funds can be used by the City for any lawful public purpose. During 2014, the trust was liquidated and the City received a total of $1,588,610. In addition, SKB Environmental, Inc. donated $400,000 to the City to be used toward the Rosemount Activity Center project. E. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASS) has approved the following: > Statement No. 68, Accounting and Financial Reporting for Pensions -en amendment of GASB Statement No. 27 > Statement No. 71, Pension -Transition for Contributions Made Subsequent to the Measurement Date -an amendment of GASB No. 68 When they become effective, application of these standards may restate portions of these financial statements. I V - 2 5 CITY OF ROSEMOUNT CITY OF ROSEMOUNT REQUIRED SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET (BUDGETARY BASIS) -BUDGET AND ACTUAL SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS)-BUDGET AND ACTUAL For the Year Ended December 31, 2014 For the Year Ended December 31, 2014 Budgeted Amounts Variance with Budgeted Amounts Variance with REVENUES Original Final Actual Final Budget CURRENT EXPENDITURES Original Final Actual Final Budget TAXES GENERAL GOVERNMENT General property tax $ 7,480,265 $ 7,480.265 $ 7,550,917 $ 70,652 Mayor and council $ 346,200 $ 346,200 $ 740,961 $ (394,761) Fiscal disparities 1,208,535 1,208,535 1,208,535 Executive 502,000 502,000 482,980 19,020 Other 280,000 280,000 300.682 20.682 Elections 40,000 40,000 27.562 12.438 Total Taxes 8,968,800 8,968,800 ~.060,134 91.334 Finance 464,800 464,800 460,919 3,881 Community development 929.300 929,300 894,997 34,303 INTERGOVERNMENTAL REVENUES General government 374,200 374,200 348.418 25,782 State aid -police 150,000 150,000 160,347 10,347 TOTAL GENERAL GOVERNMENT 2,656,500 2,656,500 2,955,837 (299,337) State aid -general government 30,000 30,000 58,620 28,620 State aid -highway 32,600 32,600 32,790 190 PUBLIC SAFETY Other 88,200 88,200 90,401 2.201 Total Intergovernmental Revenues 300,800 300,800 342,158 41,358 Police department 3,352,042 3,358,109 3,334,014 24,095 Fire department 434,958 443,670 433,812 ___ 9_,858 PUBLIC CHARGES FOR SERVICES General government 792,900 792,900 947,615 154,715 TOTAL PUBLIC SAFETY 3,787,000 3,801,779 3,767,826 ~953 Public safety 37,400 37.400 30,589 (6,811) Highways and streets 16,000 16,000 57,108 41,108 PUBLIC WORKS Parks and recreation 247.800 247,800 215,980 (31,820) Government building maintenance 555,200 555,200 513,951 41,249 SAC 2,000 2,000 2,309 309 Fleet maintenance 675,500 675,500 625,398 50,102 Total Charges for Services 1,096,100 1,096,100 1,253,601 157,501 Street maintenance 1,348,300 1,348,300 1,302.271 46,029 Park maintenance 833.400 833,400 793,855 ~545 LICENSES AND PERMITS Business 57,000 57,000 57,185 185 TOT AL PUBLIC WORKS 3,412,400 3.412,400 3,235.475 176,925 Non-business 381,300 381,300 673,580 292,280 Total Licenses and Permits 438,300 438,300 730,765 292.465 PARKS AND RECREATION 1,307,700 1,321,677 1,304,867 ___ 16_,810 FINES AND FORFEITURES County 125,000 125,000 116,384 (8,616) OTHER FINANCING USES Transfers out 11:1000 115000 475000 (360.000) SPECIAL ASSESSMENTS 1,000 1,000 4,652 3,652 INVESTMENT INCOME AND MISCELLANEOUS TOTAL EXPENDITURES $ 11,278,600 $ 11,307 ,356 11,739,005 $ (431,649) Interest earnings 85,500 85,500 176,321 90,821 Beginning of year budget basis encumbrances 1.273,464 Change in fair value of investments 231,871 231,871 Miscellaneous general revenues 57,600 57,600 50,045 (7,555) End of year budget basis encumbrances (1,794,607) Donations 28,756 28,756 Rents ~2000 22,000 22171 171 GAAP basis expenditures and other financing uses $ 11,217.862 Total Investment income and miscellaneous 165,100 193.856 509,164 315,308 Total Revenues 11,095,100 11.123.856 12,016,858 ~002 OTHER FINANCING SOURCES Transfers in 3,500 3,500 3,500 ---- Total Revenues and Other Financing Sources $ 11,098,600 $ 11,127.358 $ 12,020,358 $ 893,002 See auditors' report and accompanying notes to required supplementary information. See auditors' report and accompanying notes to required supplementary information. I V - 2 6 CITY OF ROSEMOUNT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION As of and for the Year Ended December 31, 2014 Budgetary Information Budgetary information is derived from the annual operating budget and is presented using generally accepted accounting principles and the modified accrual basis of accounting with departures from generally accepted accounting principles for encumbrances. Excess expenditures over appropriations are as follows: General Fund Final Budget Expenditures Excess Mayor and council $ 256,200 $ 740,961 $ 484,761 Rosemount Fire Department Relief Association-Defined Benefit Pension Plan Required Supplementary Information, Schedule of Funding Progress The following historical trend information was obtained from the Association's financial report for the year ended December 31, 2014. Assets as a Overfunded Percentage of (Underfunded) Accrued Accrued Accrued Date Assets Liabilities Liabilities Liabilities 12-31-14 $ 3,348,776 $ 2,609,887 128% $ 738,889 12-31-13 2,874,130 2,468,808 116% 405,322 12-31-12 2,504,979 2,523,870 99% (18,891) Computations of the unfunded net pension obligation and employer contributions as a percent of covered payroll are not applicable since the fire department is a volunteer organization and no covered payroll exists. See auditors' report IV-27 PROPOSAL SALE DATE: October 20, 2015 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bond_services@springsted.com Website: www.springsted.com City of Rosemount, Minnesota $1,525,000* General Obligation Utility Revenue Bonds, Series 2015A For the Series 2015A City Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $1,508,225) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2017 % % % 2022 % % % 2018 % % % 2023 % % % 2019 % % % 2024 % % % 2020 % % % 2025 % % % 2021 % % % 2026 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of October 20, 2015 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated September 30, 2015 including the City’s right to modify the principal amount of the Series 2015A City Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these Series 2015A City Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder  will not  will purchase municipal bond insurance fro m . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ ........................................................................................................................................................................................................................... PROPOSAL SALE DATE: October 20, 2015 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bond_services@springsted.com Website: www.springsted.com City of Rosemount, Minnesota $1,445,000* General Obligation Capital Improvement Plan Bonds, Series 2015B For the 2015B City of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $1,433,080) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2017 % % % 2022 % % % 2018 % % % 2023 % % % 2019 % % % 2024 % % % 2020 % % % 2025 % % % 2021 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of October 20, 2015 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated September 30, 2015 including the City’s right to modify the principal amount of the Series 2015B City Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these Series 2015B City Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying i t will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder  will not  will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ ........................................................................................................................................................................................................................... PROPOSAL SALE DATE: October 20, 2015 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bond_services@springsted.com Website: www.springsted.com Rosemount Port Authority, Minnesota $3,460,000* General Obligation Tax Increment Refunding Bonds, Series 2015A For the Authority Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offe r a price of $_________________ (which may not be less than $3,420,210) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2018 % % % 2026 % % % 2019 % % % 2027 % % % 2020 % % % 2028 % % % 2021 % % % 2029 % % % 2022 % % % 2030 % % % 2023 % % % 2031 % % % 2024 % % % 2032 % % % 2025 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of October 20, 2015 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated September 30, 2015 including the Authority’s right to modify the principal amount of the Authority Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these Authority Bonds in accordance w ith said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder  will not  will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................................... The foregoing proposal has been accepted by the Authority. Attest: _______________________________ Date: ________________________________ ...........................................................................................................................................................................................................................