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HomeMy WebLinkAbout6.f. 2005C G.O Water Revenue Bonds Issue-Authorizing Issuance and Setting Bond SaleAGENDA ITEM: 2005C G.O. Water Revenue Bonds Issue Authorizing Issuance and Setting Bond Sale AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGENFTEM #5 ATTACHMENTS: Resolution and Recommendations APPROVED BY: RECOMMENDED ACTION: Motion to adopt A RESOLUTION PROVIDING F THE COMPETITIVE NEGOTIATED SALE OF $2,990,000 GENERAL OBLIGATION WATER REVENUE BONDS, SERIES 2005C 4 ROSEMOUNT CITY COUNCIL City Council Meeting Date: September 6, 2005 EXECUTIVE SUMMARY ISSUE The authorization to issue bonds for the construction of Water Tower #4. BACKGROUND This item is on the agenda for your consideration in authorizing the issuance and setting the sale of General Obhgation Water Revenue Bonds for the construction of Water Tower #4 Bids will be open until Tuesday, October 4, 2005, at 12:00 P.M at the offices of Sprmgsted Incorporated. The bids will be tabulated there and then consideration for award of the Bonds will be by the City Council at 7:30 P.M Central Time, of the same day. SUMMARY Recommend the above motion. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2005 RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $2,990,000 GENERAL OBLIGATION WATER REVENUE BONDS, SERIES 2005C WHEREAS, the City Council of the City of Rosemount, Minnesota, has heretofore determined that it is necessary and expedient to issue its $2,990,000 General Obligation Water Revenue Bonds, Senes 2005C (the "Bonds to finance the acquisition and construction of a water tower within the City, and WHEREAS, the City has retained Spnngsted Incorporated, in Saint Paul, Minnesota "Spnngsted as its independent financial advisor and is therefore authorized to sell these obligations by a competitive negotiated sale in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9), and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rosemount, Minnesota, as follows 1. Authorization; Findings. The City Council hereby authorizes Spnngsted to solicit bids for the competitive negotiated sale of the Bonds. 2. Meeting; Bid Opening. This City Council shall meet at the time and place specified in the Terms of Proposal attached hereto as Exhibit A for the purpose of considering sealed bids for, and awarding the sale of, the Bonds. The Administrator, or his designee, shall open bids at the time and place specified in such Terms of Proposal 3. Terns of Proposal The terns and conditions of the Bonds and the negotiation thereof are fully set forth in the "Terms of Proposal" attached hereto as Exhibit A and hereby approved and made a part hereof. 4. Official Statement. In connection with said competitive negotiated sale, the Administrator, Finance Director and other officers or employees of the City are hereby authorized to cooperate with Spnngsted and participate in the preparation of an official statement for the Bonds, and to execute and deliver it on behalf of the City upon its completion. 1794371v1 ADOPTED this 6th day of September, 2005. ATTEST: Linda J. Jentink, City Clerk Motion by: Seconded by: Voted in favor: Voted Against: Members Absent: 1794371v1 2 William H. Droste, Mayor THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: OR 1794371v1 EXHIBIT A TERMS OF PROPOSAL $2,990,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION WATER REVENUE BONDS, SERIES 2005C (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Tuesday, October 4, 2005, until 12:00 Noon, Central Time, at the offices of Sprmgsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time they will be opened and tabulated Consideration for award of the Bonds will be by the City Council at 7 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Sprmgsted will assume no liability for the inability of the bidder to reach Sprmgsted 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 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 Sprmgsted. Signed Proposals, without final pnce or coupons, may he submitted to Sprmgsted 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 (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 Bids submitted to PARITY Each bidder shall be solely responsible for making necessary arrangements to access PARITY for purposes of submitting its electronic Bid irz 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 m 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 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, 2 Floor, New York, New York 10018 Customer Support: (212) 849 -5000 2007 $325,000 2008 $270,000 2009 $275.000 2010 $285,000 1794371v] DETAILS OF THE BONDS The Bonds will be dated November 1, 2005, as the date of original issue, and will bear interest payable on August 1 and February 1 of each year, commencing August 1, 2006. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Bonds will mature February 1 in the years and amounts as follows: 2011 $295,000 2012 $305,000 2013 $315,000 BOOK ENTRY SYSTEM 2014 $325,000 2015 $335,000 2016 $350,000 Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds All tern bonds shall be subject to mandatory sinking fluid redemption and must conform to the maturity schedule set forth above at a price of par plus accrued interest to the date of redemption In order to designate term bonds, the proposal must specify "Years of Term Maturities" in the spaces provided on the Proposal Form. The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the 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 Bonds. Individual purchases of the Bonds may be made in the principal amount of 55,000 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 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 Bonds, will be required to deposit the 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, 2013, and on any day thereafter, to prepay Bonds due on or after February 1, 2014 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 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. SECURITY AND PURPOSE The 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 acquisition and construction of a water tower within the City. 1794371v1 TYPE OF PROPOSALS Proposals shall be for not less than $2,966,080 and accrued interest on the total principal amount of the Bonds Proposals shall be accompanied by a Good Faith Deposit "Deposit m the form of a certified or cashier's check or a Financial Surety Bond in the amount of S29,900, payable to the order of the City. If a check is used, it must accompany the proposal If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City 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 Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be m integral multiples of 5 /100 or 1/8 of 1% Rates must be in level or ascending order. Bonds of the saline maturity iii shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (u) reject all proposals without cause. and (in) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser Within 40 days following the date of their award, the 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 Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the 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 Bonds has been made impossible by action of the City, or its agents, the purchaser shall be liable to the City 1794371v1 CUSIP NUMBERS SETTLEMENT iv for any loss suffered by the City by reason of the purchaser's non compliance with said terms for payment. CONTINUING DISCLOSURE On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking (the "Undertaking whereunder the City will covenant for the benefit of the owners of the Bonds to provide certain financial and other information about the City and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2- 12(b)(5). OFFICIAL STATEMENT The City has authonzed the preparation of an Official Statement containing pertinent information relative to the Bonds, and said 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 Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds. together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2 -12 By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 120 copies of the Official Statement and the addendum or addenda described above. The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (r) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated September 6, 2005 BY ORDER OF THE CITY COUNCIL 1794371v1 v /s/ Linda Jentink City Clerk STATE OF MINNESOTA COUNTY OF DAKOTA ss CITY OF ROSEMOUNT I, Linda J. Jentink, duly appointed, acting and qualified City Clerk of the City of Rosemount do hereby certify that I have examined the City of Rosemount records and the Minute Book of said City for the meeting of the 6th of September, 2005 and that the attached copy of the RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $2,990,000 GENERAL OBLIGATION WATER REVENUE BONDS, SERIES 2005C 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 September, 2005. 1794371v1 CERTIFICATE Linda J. Jentrnk, City Clerk City of Rosemount Dakota County, Minnesota Presented to: Honorable William H. Droste, Mayor Members, City Council Mr Jamie Verbrugge, City Administrator Mr Jeffrey May, Finance Director City of Rosemount 2875 —145 Street West Rosemount, MN 55068 -4941 Study No.: R0704P505 SPRINGSTED Incorporated August 29, 2005 Recommendations For City of Rosemount, Minnesota $2,990,000 General Obligation Water Revenue Bonds, Series 2005C $1,120,000 General Obligation Fire Station Refunding Bonds, Series 2005D 5 springsted We recommend the following for the Bonds. 2 Sale Date and Time 3 Method of Sale 5 Principal Amount of the Bonds RECOMMENDATIONS Re Recommendations for the Issuance of $2,990,000 General Obligation Water Revenue Bonds, Series 2005C (the "Revenue Bonds $1 120,000 General Obligation Fire Station Refunding Bonds, Series 2005D (the "Refunding Bonds (collectively, the "Bonds' or Issues We respectfully request your consideration of our recommendations for the above -named Issues. Proceeds of the Revenue Bonds will be used to finance the construction of a water tower within the City Proceeds of the Refunding Bonds will be used to refund the February 1, 2007 through February 1, 2016 maturities of the City's General Obligation Fire Station Bonds Series 1996A (the "Refunded Bonds dated July 1, 1996. 1. Action Requested To establish the date and time of receiving bids and establish the terms and conditions of the offerings Tuesday, October 4, 2005 at 12 00 Noon, with consideration for award by the City Council at 7 30 P M that same day The Bonds will be sold using a competitive bidding process In the interest of obtaining as many bids as possible, we have included a provision in the attached Terms of Proposal for underwriters to submit their bid electronically through the electronic bidding platform of PARITY In addition, physical bids (by phone or fax) will be accepted at the offices of Spnngsted 4. Authority for the Issues The Bonds are being issued pursuant to Minnesota Statutes, Chapter 475 The Revenue Bonds are further authorized pursuant to Minnesota Statutes, Chapter 444 The Revenue Bonds $2,990.000 The Refunding Bonds $1,120,000 Included in the attached Terms of Proposal is a provision that permits the City to increase or reduce the principal amount of the Refunding Bonds in any of the maturities This allows for any necessary adjustments required based on final interest rates and issuance costs. City of Rosemount, Minnesota August 29, 2005 6 Repayment Term 8. Prepayment Provisions 9 Credit Rating Comments 10 Term Bonds The Revenue Bonds will mature annually February 1, 2007 through 2016. Interest will be payable semi annually each February 1 and August 1, commencing August 1, 2006. The Refunding Bonds will mature annually February 1, 2007 through 2016. Interest will be payable semi- annually each February 1 and August 1, commencing August 1, 2006. 7. Security and Source of Payment The Issues will be general obligations of the City, secured by its full faith and credit and taxing power Source of payment and payment cycle for each issue can be found in the Discussion section The City may elect on February 1, 2013. and on any date thereafter. to prepay the Revenue Bonds due on or after February 1, 2014, at a price of par plus accrued interest To maximize the potential for savings. the Refunding Bonds will not be subject to prepayment prior to their stated maturity dates An application will be made to Moody's Investors Service for ratings on the Bonds The City's current general obligation credit rating is "Al' We have included a provision that permits the underwriters to combine multiple maturity years into a term bond, subject to mandatory redemption on the same maturity schedule provided in the Terms of Proposal The advantage to the underwriter is that it provides large blocks of bonds, which are more attractive to bond funds, and certain pension funds This in turn is a benefit to the City since selling larger blocks of bonds reduces the risk to the underwriter, allowing them to lower their costs and the interest coupons Since the Bonds are being offered on a competitive bid basis and awarded on the lowest true interest cost the City will award the Bonds to the best bid regardless of whether term bonds are chosen or not Page 2 City of Rosemount, Minnesota August29 2005 11 Federal Treasury Regulations Concerning Tax Exempt Obligations (a) Bank Qualification (b) Rebate Requirements Under Federal Tax Law, financial institutions cannot deduct from income for federal income tax purposes, expense that is allocable to carrying and acquiring tax exempt bonds There is an exemption to this for "bank qualified" bonds, which can be so designated if the issuer does not issue more than $10 million of tax exempt bonds in a calendar year. Issues that are bank qualified generally receive slightly lower interest rates than issues that are not bank qualified Since the City expects to issue less than $10 million of tax exempt obligations in 2005, the Bonds are designated as bank qualified All tax exempt issues are subject to the federal arbitrage and rebate requirements, which require all excess earnings created by the financing to be rebated to the U S Treasury The requirements generally cover two categories: bond proceeds and debt service funds There are exemptions from rebate in both of these categories Bond proceeds defined generally as both the original principal of the issue and the investment earnings on the principal, have 6, 18 and 24 month spend down exemption periods If all of the proceeds are expended during one of those exemption periods, the issuer is exempt from rebate and may retain the excess earnings The Revenue Bonds The City expects to meet the 18 month spend down exemption, in which case no rebate of construction fund interest earnings will be required The City should be aware that this test is an "actual" test, not one of "reasonable expectations" and you will need to determine if the spend down was met or if rebate may be required In any event, bond proceeds, if any, not set aside for project expenditures may still be subject to rebate. Page 3 City of Rosemount, Minnesota August 29, 2005 (c) Bona Fide Debt Service Fund (d) Economic Life (e) Federal Reimbursement Regulations The Refunding Bonds Proceeds of the Refunding Bonds will be expended within 90 days of closing, thereby meeting the six -month expenditure exception to rebate Springsted currently provides arbitrage rebate services for the City under a separate contract An amendment to that contract adding these Issues has been provided to City staff The City must maintain a bona fide debt service fund for the Bonds or be subject to yield restriction This requires restricting the investments held in the debt service fund to the yield on the Bonds and/or paying back excess investment earnings in the debt service fund to the federal government A bona fide debt service fund is a fund for which there is an equal matching of revenue to debt service expense with carry over permitted equal to the greater of the investment earnings in the fund during that year or 1/12 the debt service of that year The average life of the Bonds cannot exceed 120% of the economic life of the projects to be financed The average life of the Revenue Bonds is 6 058 years, and the useful life of the project to be financed is 50 years Therefore, the Revenue Bonds are within the economic lice requirements The original financing for the Refunding Bonds was for building projects that have an average life of 40 -50 years Because the average life of the Refunding Bonds is shorter than the remaining average life of the Refunded Bonds, the Refunding Bonds are within the economic life requirements Federal reimbursement regulations require the City to make a declaration, within 60 days of the actual payment, of its intent to reimburse itself from expenses paid prior to the receipt of proceeds of the Revenue Bonds It is our understanding the City has taken whatever actions are necessary to comply with the federal reimbursement regulations in regards to the Revenue Bonds Page 4 City of Rosemount, Minnesota August 29, 2005 12 Continuing Disclosure 13. Attachments The Revenue Bonds DISCUSSION The Bonds are subject to continuing disclosure requirements set forth by the Securities and Exchange Commission The SEC rules require the City to undertake an annual update of certain Official Statement information and report any material events to the national repositories Springsted currently provides continuing disclosure services for the City under a separate contract An amendment to that contract adding these Issues has been provided to City staff The Revenue Bonds Sources and Uses of Funds Debt Service Schedule The Refunding Bonds Refunding Schedules Terms of Proposals Proceeds of the Revenue Bonds will be used to finance the construction of a water tower within the City The sources and uses of funds for the Revenue Bonds are shown on page 8 The debt service schedule for the Revenue Bonds is shown on page 9 The Revenue Bonds have been structured over a term of 10 years with even annual payments of principal and interest The Revenue Bonds will be repaid from net revenues of the City's Water Fund Pursuant to Minnesota Statutes, Chapter 444 and the resolution awarding the Revenue Bonds, the City will covenant to maintain water rates in an amount sufficient to generate revenues to support the operation of the water utility and to pay debt service. The City is required to annually review the budget of the utility to determine whether current rates and charges are sufficient and to adjust them as necessary The City currently has three outstanding bond issues for which the net revenues of the Water Fund are also pledged: (1) the 2000 General Obligation Water Revenue Bonds, Series 2000A which will have a final maturity in 2016, (u) the 2002 General Obligation Water and Storm Water Revenue Bonds, Series 2002B, which will have a final maturty in 2018, and (ii) the 2003 General Obligation Water Revenue Bonds, Series 2003B, with a final maturity in 2014. The table on the following page shows the net revenues available for debt service of the City's Water Fund for fiscal year ending December 31, 2004 The maximum annual debt service payment, including this Issue is projected to be $678,333 in 2013 Page 5 City of Rosemount, Minnesota August 29, 2005 The Refunding Bonds 2004 Net Revenues of the Water Fund Operating Revenues Less Operating Expenses Add Back Depreciation Investment Income Connection Fees Special Assessments Net Revenues Available for Debt Service Less Projected Maximum Annual Debt Service Remaining Capacity for Annual Debt Service 1,189,140 (1,662,962) 487,874 138,665 1.957,729 75,140 2,185,586 (678,333) S 1,507 253 The proceeds of the Refunding Bonds will be used on February 1, 2006 to redeem the February 1, 2007 through 2016 maturities of the City's General Obligation Fire Station Bonds, Series 1996A (the "Refunded Bonds dated July 1, 1996 and currently outstanding in the aggregate principal amount of $1.165,000 The Refunded Bonds were originally issued to finance the acquisition and construction of a fire station for the City The refunding is being undertaken to allow the City to take advantage of lower interest rates The issuance of the Refunding Bonds is being conducted as a 'current' refunding, in which the proceeds of the Refunding Bonds (new issue) are used within ninety days of bond settlement to redeem principal of the Refunded Bonds (old issue) On February 1, 2006, the City will use (i) funds on hand from 2005 collections of tax levies to pay the scheduled principal and interest due on the Refunded Bonds and the proceeds of the Refunding Bonds to redeem the remaining $1,085.000 of outstanding principal on the Refunded Bonds The City will need to invest the proceeds of the Refunding Bonds for the period between the closing date and the call date (February 1, 2006) in order to achieve the savings level estimated for this transaction. Based on current interest rate estimates, the refunding is projected to produce cash flow savings averaging approximately $9,180 annually beginning with the 2005 levy for taxes collected in 2006 This results in future value savings of approximately $105 000, with a net present value benefit to the City of approximately $84,000 These estimates are net of all costs associated with the refunding The City will begin to realize cash flow savings beginning with the City's 2005 levy and the August 1, 2006 interest payment We have attached a set of schedules that summarize the refunding statistics and the projected savings resulting from the sale of the Refunding Bonds These schedules include the following information Preliminary Feasibility Summary indicates the sizing of the Refunding Bonds, savings data and bond data page 10 Page 6 City of Rosemount, Minnesota August 29, 2005 Prior Original Debt Service shows the existing debt service requirements on the Refunded Bonds without a refunding page 11 Debt Service to Call and to Maturity shows the Refunded Bonds' remaining debt service to maturity and to the call date page 12 Debt Service Schedule: shows the new projected debt service on the Refunding Bonds based on current estimated interest rates page 13 Debt Service Comparison shows the debt service comparison and the projected annual cash flow savings of the Refunding Bonds to the Refunded Bonds page 14 Springsted's current estimates show this transaction will generate approximately 7 035% present value savings. The success of any refunding transaction is in a large part dependent upon market conditions at the time the refunding bonds are sold Springsted will continue to monitor the market prior to the sale date and will keep you apprised of any change in conditions which might impact the success of this refunding Springsted is pleased to again be of service to the City of Rosemount Respectfully submitted, SPRI GSTED In'orporated ss Provided to Staff Rebate and Continuing Disclosure Contract Amendments Page 7 Sources Of Funds Par Amount of Bonds Total Sources Uses Of Funds Deposit to Project Construction Fund Costs of Issuance Total Underwriter's Expense (0 800%) Rounding Amount Senn 2005 GO Water Reve 1 SINGLE PURPOSE 8/3/2X5 i 10 03 AAA 7,,L2; Springsted $2,990,000 City of Rosemount, Minnesota General Obligation Water Revenue Bonds, Series 2005C Dated 11/0112005 1 Delivered 11/01/2005 Sources Uses $2,990,000 00 $2,990,000.0D 2,938,000 00 26 850 00 23 920 00 1 230 00 Total Uses $2,990,000.00 Page 8 SIGNIFICANT DATES Dated Date Delivery Date First Coupon Date Yield Statistics Bond Year Dollars Average Life Average Coupon Net Interest Cost (NIC) True Interest Cost (TIC) Bond Yield for Arbitrage Purposes All Inclusive Cost (AIC) IRS Form 8038 Net Interest Cost Weighted Average Maturity Senes 2005 GO Weer heir 1 S/VCLE IMPOSE 8/3/2005 10 03 AM Springsted $2,990,000 City of Rosemount, Minnesota General Obligation Water Revenue Bonds, Series 2005C DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I 02/01/2006 02/01/2007 235,000 00 2 900% 127,646 88 362,646 88 02/01/2008 270,000 00 2 950% 95,302 50 365 302 50 02/01/2009 275 000 00 3 050% 87 337 50 362 337 50 02/01/2010 285,000 00 3 200% 78 950 00 363,950 00 02/01/2011 295,000 00 3 350% 69,830 00 364,830 00 02/01/2012 305,000 00 3 450% 59,947 50 364,947 50 02/01/2013 315,000 00 3 550% 49,425 00 364 425 00 02/01/2014 325 000 00 3 650% 38 242 50 363 242 50 02101/2015 335 000 00 3 800% 26,380 00 361,380 00 02/01/2016 350,000 00 3 900% 13,650 00 363 650 00 Total $2,990,00000 $646,711 88 $3,636,71188 11/01/2005 11/01/2005 8/01/2006 $18,112 50 6 058 Years 3 5705280% 3 7025915% 3 7081536% 3 5567118% 3 8801660% 3 5705280% 6 058 Years Page 9 Dated 11/01/20051 Delivered 11/0312005 Sources Of Funds Par Amount of Bonds $1,120 000 00 Accrued Interest from 11/01/2005 to 11103/2005 212 32 Total Sources. $1,120,212 32 Uses Of Funds Deposit to Current Refunding Fund Costs of Issuance Total Underwriter's Discount (0 675%) Rounding Amount Deposit to Debt Service Fund Total Uses ISSUES REFUNDED AND CALL INFORMATION Prior Issue Call Price Prior Issue Call Date SAVINGS INFORMATION Net Future Value Benefit Net Present Value Benefit Net PV Benefit 1 $1,200 994 05 PV Refunded Debt Service BOND STATISTICS Averace Life Average Coupon Net Interest Cost (NIC) True Interest Cost (TIC) 1 The estimated savings results of the refunding are subject to market conditions krlcs 200' Art 964 SLA'GLEFCAPoW ;:27/20051 IDSiM^ Springsted $1,120,000 City of Rosemount, Minnesota General Obligation Fire Station Refunding Bonds, Series 2005D Current Refunding of Series 1996A Preliminary Feasibility Summary 1,085,000 00 23,950 00 7 560 00 3 490 00 212 32 $1,120,212 32 100 000% 2/01/2006 1 $104 678 68 584,484 05 7 035% 6 031 Years 3 5684586% 3 6803757% 3 6827255% Page 10 $1,780,000 City of Rosemount, Minnesota General Obligation Fire Station Bonds Series 1996A Prior Original Debt Service Date Principal Coupon Interest Total P +I 08/01/1996 02/01/1997 90,000 00 4 100% 55,257 71 145257 71 08/01/1997 45,518 75 45,518 75 02/01/1998 55,000 00 4 250% 45,518 75 100,518 75 08/01/1998 44,350 00 44,350 00 02101/1999 60,000 00 4 400% 44 350 00 104,350 00 08/01/1999 43 030 00 43,030 00 02/01/2000 60,000 00 4 600% 43 030 00 103,030 00 08/01/2000 41 650 DO 41,650 00 02/01/2001 65,000 00 4 700% 41 650 00 106,650 00 08/01/2001 40,122 50 40 122 50 02/01/2002 65,000 00 4 800% 40,122 50 105 122 50 08/01/2002 38,562 50 38 562 50 02/01/2003 70,000 00 4 900% 38,562 50 108 562 50 08/01/2003 36,847 50 36,847 50 02/01 /2004 75,000 00 5 000% 36,847 50 111,847 50 08/01/2004 34,972 50 34,972 50 02/01/2005 75,000 00 5 100% 34,972 50 109,972 50 08/01/2005 33,060 00 33,060 00 02/01/2006 80,000 00 5 200% 33 060 00 113 060 00 08/01/2006 30,980 00 30,980 00 02/01/2007 85,000 00 5 300% 30,980 00 115,980 00 08/01/2007 28 727 50 28,727 50 02/01/2008 90 000 00 5 400% 28,727 50 118,727 50 08/01/2008 26 297 50 26,297 50 02/01/2009 95,000 00 5 500% 26 297 50 121,297 50 08/01/2009 23 685 00 23,685 00 02/01/2010 100,000 00 5 600% 23 685 00 123,685 00 08/01/2010 20 885 00 20 885 00 02/01/2011 105 000 00 5 700% 20 885 00 125 885 00 08/01/2011 17 892 50 17 892 50 02/01/2012 110,000 00 5 750% 17 892 50 127 892 50 08/01/2012 14,730 00 14 730 00 02/01/2013 115,000 00 5 800% 14,730 00 129 730 00 08/01/2013 11,395 00 11 395 00 02/01/2014 120,000 00 5 850% 11 395 00 131 395 00 08/01/2014 7 885 00 7 885 00 02/01/2015 130,000 00 5 900% 7 885 00 137 885 00 08/01/2015 4 050 00 4 050 00 02/01/2016 135 000 00 6 000% 4,050 00 139 050 00 Total $1,780 000 00 $1,144 540 21 $2,924 540 21 Yield Statistics Average Life Weighted Average Maturity (Par Basis) Average Coupon Refunding Bond Information Refunding Dated Date Refunding Delivery Date 1 The est]mated u urge results of the refunding rue sublec/ to market conditions ,Sena 1996A 1 JINGLL/VAPOSL 1 9/27/2005 1 10 57,441 Springsted 5 761 Years 5 755 Years 5 8049544% 11/01/2005 11/03/2005 Page 11 Date Refunded Bonds D/S To Call Principal Coupon Interest Refunded D/S 11/03/2005 02/01/2006 08/D1/2006 02/01/2007 08/01/2007 02/01/2008 08/01/2008 02/01/2009 08/01/2009 02/01/2010 08/01/2010 02/01/2011 08/01/2011 02/01/2012 08/01/2012 02/01/2013 08/01/2013 02/01/2014 08/01/2014 02/01/2015 08/01/2015 02/01/2016 1,085,000 00 1,085,000 00 5 200% 30 980 00 85,000 00 5 300% 30 980 00 28 727 50 90,000 00 5 400% 28 727 50 26 297 50 95,000 00 5 500% 26 297 50 23 685 00 100,000 00 5 600% 23 685 00 20 885 00 105,000 00 5 700% 20,885 00 17 892 50 110,000 00 5 750% 17 892 50 14,730 00 115,000 00 5 800% 14,730 00 11,395 00 120,000 00 5 850% 11,395 00 7,885 00 130,000 00 5 900% 7,885 00 4,050 00 135,000 00 6 000% 4,050 00 30,980 00 115,980 00 28,727 50 118,727 50 26,297 50 121,297 50 23,685 00 123,685 00 20,885 00 125 885 00 17 892 50 127 892 50 14 730 00 129,730 OD 11 395 00 131 395 00 7 885 DO 137 885 DO 4 050 DD 139 050 DD Total 51,085,000 00 $1,085 000 00 51 085,000 00 5373,055 00 $1,458 055 DD Yield Statistics Average Life Weighted Average Maturity (Par Basis) Average Coupon Refunding Bond Information Refunding Dated Date Refunding Delivery Date 1 The estimated sanngs results of the refunding are subject to market conditions Sene• 2996A j 9NGLEJUUNOA 727/2005 1057,54 Springsted $1,780,000 City of Rosemount, Minnesota General Obligation Fire Station Bonds Series 1996A Debt Service To Call And To Maturity 6 167 Years 6 161 Years 5 5752662% 11/01/2005 11/03/2005 Page 12 Yield Statistics Net Interest Cost (NIC) True Interest Cost (TIC) Bond Yield for Arb trace Purposes All Inclusive Cost (AIC) IRS Form 8038 Net Interest Cost Weighted Average Maturity Springsted $1,120,000 City of Rosemount, Minnesota General Obligation Fire Station Refunding Bonds, Series 2005D Current Refunding of Series 1996A Debt Service Schedule Date Principal Coupon Interest Total P +I 02/01/2006 02/01/2007 90,000 00 2 900% 47,771 88 137,771 88 02/01/2008 100,000 00 2 950% 35 607 50 135,607 50 02/01/2009 105,000 00 3 050% 32 657 50 137,657 50 02/01/2010 110,000 00 3 200% 29,455 00 139,455 00 02/01/2011 110,000 00 3 350% 25,935 00 135,935 00 02/01/2012 115,000 00 3 450% 22,250 00 137,250 00 02/01/2013 115,000 00 3 550% 18,282 50 133,282 50 02/01/2014 120,000 00 3 650% 14 200 00 134,200 00 02/01/2015 125,000 00 3 800% 9 820 00 134,820 00 02/01/2016 130,000 00 3 900% 5 070 00 135,070 00 Total $1,120,00000 $241 049 38 $1,361,04938 Accrued Interest from 11/01/2005 to 11/03/2005 Bond Year Dollars Average Life Average Coupon 1 The estimated savings 1; cults 01 the refunding an salved to market conditions Srnes 2005 Ref96A c1VGLL PURPOSE 1 7/27/2005 1 10 57 44 212 32 $6,755 00 6 031 Years 3 5684586% 3 6803757% 3 6827255% 3 5546673% 4 0974468% 3 6806229% 6 026 Years Page 13 Date Total P41 Escrow Existing D/S Net New D/S Old Net D/S Savings 02/01 /2006 (3 970 74) 113,060 00 109 089 26 113,060 00 3,970 74 02/01/2007 137,771 88 137,771 88 146,960 00 9,18812 02/01/2008 135,607 50 135,607 50 147,455 00 11,847 50 02/01/2009 137 657 50 137,657 50 147,595 00 9 937 50 02/01/2010 139 455 00 139,455 00 147,370 00 7,915 00 02/01/2011 135 935 00 135,935 00 146,770 00 10,835 00 02/01/2012 137 250 00 137,250 00 145,785 00 8,535 00 02/01/2013 133,282 50 133,282 50 144 460 00 11,177 50 02/01/2014 134,200 00 134,200 00 142 790 00 8,590 00 02/01/2015 134,820 00 134 820 00 145,770 00 10,950 00 02/01/2016 135,070 00 135 070 00 143,100 00 8,030 00 Total $1,361,049 38 (3 970 74) $113 060 00 $1,470,138 64 $1,571,115 00 $100,976 36 PV Analysis Summary (Net to Net) Net FV Cashflow Savings Gross PV Debt Service Savings $1,120,000 City of Rosemount, Minnesota General Obligation Fire Station Refunding Bonds, Series 2005D Current Refunding of Series 1996A Net PV Cashflow Savings 3 555 %(Bond Yield) Accrued Interest Credit to Debt Service Fund Contingency or Rounding Amount Net Future Value Benefit Net Present Value Benefit Net PV Benefit $323 279 25 PV Refunded Interest Net PV Benefit $1,200,994 05 PV Refunded Debt Service Net PV Benefit $1,085,000 Refunded Principal Net PV Benefit $1,120,000 Refunding Principal Refunding Bond Information Refunding Dated Date Refunding Delivery Date 1 The estimated raving' 1 e ruBc of the refunding are subject to mardct conditions Sena 2005 Ref 96A 1 MVJ n'AEOSE 7/27/2005 I 1057AM springsted Debt Service Comparison 100,976 36 80,781 73 80,781 73 21232 3,490 00 $104,678 68 $84,484 05 26 133% 7 035% 7 787% 7 543% 11/01/2005 11/03/2005 Page 14 DETAILS OF THE BONDS The Bonds will be dated November 1, 2005, as the date of original issue, and will bear interest payable on August 1 and February 1 of each year, commencing August 1, 2006. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months The Bonds will mature February 1 in the years and amounts as follows. 2007 $235,000 2011 $295,000 2014 $325,000 2008 $270,000 2012 $305,000 2015 $335,000 2009 $275,000 2013 $315,000 2016 $350,000 2010 $285,000 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 and must conform to the maturity schedule set forth above at a price of par plus accrued interest to the date of redemption 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 Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the 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 Bonds Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC, transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the 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, 2013, and on any day thereafter, to prepay Bonds due on or after February 1, 2014 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 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. SECURITY AND PURPOSE The 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 acquisition and construction of a water tower within the City Page 16 TYPE OF PROPOSALS Proposals shall be for not less than $2,966,080 and accrued interest on the total principal amount of the Bonds Proposals shall be accompanied by a Good Faith Deposit "Deposit in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $29,900, payable to the order of the City If a check is used, it must accompany the proposal If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3 30 P.M., Central Time, on the next business day following the award If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City 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 Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made Rates shall be in integral multiples of 5/100 or 1/8 of 1 Rates must be in level or ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity No conditional proposals will be accepted AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to. (i) waive non substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Page 17 Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser SETTLEMENT Within 40 days following the date of their award, the 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 Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate Orf the date of settlement, payment for the 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 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 On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking (the "Undertaking whereunder the City will covenant for the benefit of the owners of the Bonds to provide certain financial and other information about the City and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2- 12(b)(5) OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said 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 Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000 The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2 -12 By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 120 copies of the Official Statement and the addendum or addenda described above The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participatino Underwriter of the Final Official Statement. Dated September 6, 2005 BY ORDER OF THE CITY COUNCIL /s/ Linda Jentink City Clerk Page 18 THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: Proposals for the Bonds will be received on Tuesday, October 4, 2005, until 12:00 Noon, Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at 7 30 P M., Central Time, of the same day OR TERMS OF PROPOSAL $1,120,000" CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION FIRE STATION REFUNDING BONDS, SERIES 2005D (BOOK ENTRY ONLY) 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 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. (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 Bids submitted to PARITY Each bidder shall be solely responsible for making necessary arrangements to access PARITY for purposes of submitting its electronic Bid 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 bidders 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 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, 2 Floor. New York, New York 10018 Customer Support (212) 849 -5000 Page 19 2007 90,000 2008 $100,000 2009 $105,000 2010 $110,000 DETAILS OF THE BONDS The Bonds will be dated November 1, 2005, as the date of original issue, and will bear interest payable on August 1 and February 1 of each year, commencing August 1, 2006. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months The Bonds will mature February 1 in the years and amounts as follows: 2011 $110,000 2012 $115,000 2013 $115,000 The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds offered for sale Any such increase or reduction will be made in multiples of $5,000 in any of the maturities. In the event the prncipal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced 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 and must conform to the maturity schedule set forth above at a price of par plus accrued interest to the date of redemption 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 Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the 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 Bonds. Individual purchases of the Bonds may be made in the principal amount of S5 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 Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC, transfer of principal and i nterest 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 Bonds, will be required to deposit the Bonds with DTC. REGISTRAR 2014 $120,000 2015 $125,000 2016 $130,000 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 Bonds will not be subject to payment in advance of their respective stated maturity dates SECURITY AND PURPOSE The 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 will be used to refund the February 1, 2007 through February 1, 2016 maturities of the City's General Obligation Fire Station Bonds, Series 1996A, dated July 1, 1996 Page 20 TYPE OF PROPOSALS Proposals shall be for not less than $1,112,440 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit "Deposit in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $11,200, payable to the order of the City If a check is used, it must accompany the proposal If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3 :30 P M Central Time, on the next business day following the award If such Deposit is not received by that time. the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City 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 Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1% Rates must be in level or ascending order Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling The City will reserve the right to (i) waive non substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and On) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that t the City has requested and received a rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. CUSIP NUMBERS If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Page 21 f Bonds The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser SETTLEMENT Within 40 days following the date of their award, the 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 Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. Orr the date of settlement, payment for the 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 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 On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking (the "Undertaking whereunder the City will covenant for the benefit of the owners of the Bonds to provide certain financial and other information about the City and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2- 12(b)(5). OFFICIAL STATEMENT The City has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said 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 Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, 330 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223 -3000 The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2 -12 By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 50 copies of the Official Statement and the addendum or addenda described above The City designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement Dated September 6, 2005 BY ORDER OF THE CITY COUNCIL /s/ Linda Jentink City Clerk Page 22