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HomeMy WebLinkAbout6.d. 2006B G.O. Improvements Bonds Issue - Authorizing Issuance and Setting Bond SaleAGENDA ITEM: 2006B G.O. Improvement Bonds Issue Authorizing Issuance and Setting Bond Sale AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGEN ATTACHMENTS: Resolution (Recommendations Included with Previous Agenda Item) APPROVED BY: RECOMMENDED ACTION: Motion to adopt a Resolution Providing for the Competitive Negotiated Sale of $4,405,000 General Obligation Improvement Bonds, Series 2006B. 4 ROSE VIOLIN 1' CITY COUNCIL City Council Meeting Date: April 18, 2006 ISSUE The authonzauon to issue bonds for the Old County Road 38 improvements a SUMMARY Recommend the above motion. EXECUTIVE SUMMARY BACKGROUND This item is on the agenda for your consideration in authonzing the issuance and setting the sale of General Obhgation Improvement Bonds for the Old County Road 38 improvements City Project #387. The portion being financed is for the assessment share of the project and the water core share of the project The remaining costs for the project are being funded with reserves and with funds received from Dakota County when the road was turned back to the City. Bids will be open until Tuesday, April 18, 2006, at 12:00 P.M. at the offices of Sprtngsted 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. and CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2006 RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $4,405,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2006B WHEREAS, the City Council of the City of Rosemount, Minnesota, has heretofore determined that it is necessary and expedient to issue its $4,405,000 General Obligation Improvement Bonds, Series 2006B (the "Bonds to finance vanous improvement projects within the City; and WHEREAS, the City has retained Springsted Incorporated, m Saint Paul, Minnesota ("Springsted"), as its independent financial advisor and is therefore authonzed to sell these obligations by a compentive negotiated sale in accordance with Minnesota Statutes, Section 475 60, Subdivision 2(9); 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 Springsted 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 m 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. Terms of Proposal. The terms 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 Springsted 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. ADOPTED this 18th day of April, 2006. A 1 1 James D. Verbrugge, Deputy City Clerk 4 Motion by: Seconded by: Voted in favor: Voted Against: Members Absent: 1892584v1 2 William H. Droste, Mayor RESOLUTION 2006 STATE OF MINNESOTA COUNTY OF DAKOTA ss CITY OF ROSEMOUNT CERTIFICATE I, James D. Verbrugge, duly appointed, acting and qualified Deputy City Clerk of the City of Rosemount do hereby certify that I have exanuned the City of Rosemount records and the Minute Book of said City for the meeting of the.18 of April, 2006 and that the attached copy of the Resolution 2006 RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF $4,405,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2006B 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 April, 2006. 1892584v1 James D Verbrugge, Deputy City Clerk City of Rosemount Dakota County, Minnesota THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: OR 1892584v1 TERMS OF PROPOSAL $4,405,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2006B (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Tuesday, May 16, 2006, 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 7:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Spnngsted will assume no habthty 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 mariner in which the Proposal is submitted. (a) Sealed Biddm,' Proposals may be submitted in a sealed envelope or by fax (651) 223 -3046 to Spnngsted Signed Proposals, without final pnce or coupons, may be submitted to Spnngsted prior to the ume 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 respon rzble for making necesray arrangements to access PAR77Y® for purposes of subm:ttzng its electronic Bid zn a timely manner and in compliance with the requirements of the Terms of Propoial. Neither the City, its agents nor PARITY® shall have any duty or obhgauon 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 habihty for any delays or mterruptions 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 A-1 18925840 PARITY 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support (212) 849 -5000 DETAILS OF THE BONDS The Bonds will be dated June 1, 2006, as the date of original issue, and will bear Interest payable on February 1 and August 1 of each year, commencing February 1, 2007 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. 2008 $440,000 2011 $430,000 2014 $445,000 2016 $455,000 2009 $425000 2012 $435,000 2015 $450,000 2017 $460,000 2010 $425,000 2013 $440,000 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 mandator) 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. a BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the pubhc. The Bonds will be issued m fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing m 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 m the principal amount of $5,000 or any multiple thereof of a smgle maturity through book entrees made on the books and records of DTC and its participants. Principal and mterest are payable by the registrar to DTC or its nominee as registered owner of the Bonds Transfer of pnncipal 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 apphcable SEC regulations. The City will pay for the services of the registrar OPTIONAL REDEMPTION The City may elect on February 1, 2015, and on any day thereafter, to prepay Bonds due on or after February 1, 2016 Redemption may be m whole or m 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 m such maturity to be redeemed and A -2 each participant will then select by lot the beneficial ownership interests m such maturity to be redeemed. All prepayments shall be at a pace of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obhgations 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 special assessments against benefited properties. The proceeds will be used to finance various improvement projects within the City. TYPE OF PROPOSALS Proposals shall be for not less than $4,369,760 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 Surerâ–  I3ond in the amount of $44,050, 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 Sprmgsted 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 underwnter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Sprmgsted Incorporated m 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 tune, 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 tune 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. (use this if there is only one maturity) Rates shall be in integral multiples of 5/100 or 1/8 of 11/4. Rates must be in level or ascending order. Bonds of the same matunty shall bear a single rate from the date of the Bonds to the date of maturity No conditional proposals will be accepted. 1892584v1 AWARD (if awarded by lowest dollar interest cost, copy this part from separate file)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 (0 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 (m) reject any proposal that the City determines to have failed to comply with the terms herein A -3 BOND INSURANCE AT PURCHASER'S OPTION If the Bonds quahfy for issuance of any pohcy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance pohcy 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 pohcy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept dehvery on the Bonds 1892584v1 CUSIP NUMBERS If the Bonds quahfy 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 dehvery of the 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 Dehvery will be subject to receipt by the purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of Saint Paul and Mmneapohs, Minnesota, and of customary closing papers, including a no- htigation 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 1200 Noon, Central Time. Unless comphance with the terms of payment for the Bonds has been made impossible by action of the City, or its agents, the purchaser shall be hable to the City for any loss suffered by the City by reason of the purchaser's non comphance with said terms for payment. CONTINUING DISCLOSURE On the date of actual issuance and dehvery 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 pnor to sale, any prospecuve purchaser is A -4 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 requited 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 underwrtung 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 175 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 distnbunng copies of the Final Official Statement to each Participating Underwnter. Any underwriter dehvering 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 (u) it shall enter into a contractual relanonship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Parucipanng Underwriter of the Final Official Statement. Dated April 18, 2006 BY ORDER OF THE CITY COUNCIL 1892564v1 A -5 /s/ James D. Verbrugge Deputy City Clerk Presented to: Recommendations For City of Rosemount, Minnesota $370,000 General Obligation Equipment Certificates of Indebtedness, Series 2006A Honorable William H Droste, Mayor Members, City Council Mr Jamie Verbrugge, City Administrator Mr Jeffrey May, Finance Director City of Rosemount 2875 145th Street West Rosemount, MN 55068 -4941 Study No.: R0704U5V5 SPRINGSTED Incorporated April 7, 2006 $4,405,000 General Obligation Improvement Bonds, Series 2006B Springsted Re: Recommendations for the Issuance of $370,000 General Obligation Equipment Certificates of Indebtedness, Series 2006A (the "Certificates $4,405,000 General Obligation Improvement Bonds, Series 2006B (the "Improvement Bonds') (collectively, the "Obligations" or "Issues RECOMMENDATIONS We respectfully request your consideration of our recommendations for the above -named Issues. Proceeds of the Certificates will be used to finance the acquisition of various capital equipment for City departments Proceeds of the Improvement Bonds will be used finance street and utility improvements related to the Old County Road 38 Improvement project within the City. We recommend the following for the Obligations: 1. Action Requested To establish the date and time of receiving bids and establish the terms and conditions of the offerings. 2. Sale Date and Time 3 Method of Sale Tuesday, May 16, 2006 at 12:00 Noon, with consideration for award by the City Council at 7 30 P.M. that same evening 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 Obligations are being issued pursuant to Minnesota Statutes, Chapter 475 The Certificates are further authorized pursuant to Minnesota Statutes, Section 412.301. The Improvement Bonds are further authorized pursuant to Minnesota Statutes, Chapter 429. 5. Principal Amount of the Issues The Certificates $370,000 The Improvement Bonds $4,405,000 City of Rosemount, Minnesota Apnl 7, 2006 6. Repayment Term 7. Security and Source of Payment (a) Security (b) Source of Payment (c) Payment Cycle 8. Prepayment Provisions The Certificates will mature annually February 1, 2008 through 2012. Interest will be payable semi- annually each February 1 and August 1, commencing February 1, 2007 The Improvement Bonds will mature annually February 1, 2008 through 2017. Interest will be payable semi- annually each February 1 and August 1, commencing February 1, 2007 The Issues will be general obligations of the City, secured by its full faith and credit and taxing power. The Certificates will be repaid from ad valorem property taxes. The Improvement Bonds will be repaid from a combination of ad valorem property taxes and special assessments filed against benefited properties. The City anticipates using net revenues of their water utility to offset and /or reduce the levy requirement on the Improvement Bonds. The City will make its first levy for the Issues in 2006 for collection in 2007. Since the February 1, 2007 interest payment for the Issues will come due pnor to any tax and/or assessment collections, we have included capitalized interest in the par amount of the Issues to make the February 1, 2007 interest payment. Thereafter, each year's first -half collection of taxes and/or assessments will be used to pay the August 1 interest payment in the year of collection Second -half collections of taxes and/or assessments plus surplus first -half collections will be used to pay the February 1 principal and interest payment due in the following year. Due to their short duration, the Certificates will not be subject to prepayment pnor to their stated maturity dates. The City may elect on February 1, 2015, and on any date thereafter, to prepay the Improvement Bonds due on or after February 1, 2016, at a pnce of par plus accrued interest. Page 2 City of Rosemount, Minnesota Apnl 7, 2006 9. Credit Rating Comments 10. Term Bonds 11. Federal Treasury Regulations Concerning Tax Exempt Obligations (a) Bank Qualification (b) Rebate Requirements An application will be made to Moody's Investors Service for ratings on the Bonds The City's general obligation debt is currently rated "A1" In regards to the Improvement Bonds, we have included a provision that permits the underwnters to combine multiple matunty years into a term bond, subject to mandatory redemption on the same matunty 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 tum is a benefit to the City since selling larger blocks of bonds reduces the risk to the underwnter, allowing them to lower their costs and the Interest coupons Since the Improvement Bonds are being offered on a competitive bid basis and awarded on the lowest true interest cost, the City will award the Improvement Bonds to the best bid regardless of whether term bonds are chosen or not Due to their short duration, term bonds will not be permitted for the Certificates. Under Federal Tax Law, financial institutions cannot deduct from income for federal income tax purposes, expense that is allocable to carrying and acquinng tax exempt obligations There is an exemption to this for "bank qualified" obligations, which can be so designated if the issuer does not issue more than $10 million of tax exempt obligations 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 does not expect to issue more than $10 million of tax exempt obligations in 2006, the Issues will be designated as bank qualified. All tax- exempt issues are subject to the federal arbitrage and rebate requirements, which require all excess eamings created by the financing to be rebated to the U.S. Treasury The requirements generally cover two categonew bond /certificate proceeds and debt service funds. There are exemptions from rebate in both of these categones. Page 3 City of Rosemount, Minnesota April 7, 2006 (c) Bona Fide Debt Service Fund Bond /Certificate proceeds, defined generally as both the original principal of the issue and the investment earnings on the pnncipal, 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 City expects to meet the 6 month spend down exemption for the Issues, in which case no rebate of construction fund interest eamings will be required. The City should be aware that this test is an "actual" test, not one of "reasonable expectations" and 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 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. 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 the pnor year. With issues having special assessments pledged as a source of repayment, such as the Improvement Bonds, additional diligence should be exercised in monitoring the debt service fund due to the potential accumulation of assessment prepayments which could cause the debt service fund to become non -bona fide (d) Economic Life The average life of the Bonds cannot exceed 120% of the economic life of the projects to be financed. The economic life of the equipment being financed by the Certificates varies, but is generally at least 4 years or more The average life of the Certificates is 3.734 years. Therefore, the Certificates are within the economic life requirements. Page 4 City of Rosemount, Minnesota Apnl 7, 2006 (e) Federal Reimbursement Regulations 12. Continuing Disclosure 13. Attachments The economic life of the projects to be financed with the Improvement Bonds is 20 years The average life of the Improvement Bonds is 6 231 years. Therefore, the Improvement 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 pnor to the receipt of proceeds of the Obligations. It is our understanding the City has taken whatever actions are necessary to comply with the federal reimbursement regulations in regards to the Obligations. The Obligations are subject to continuing disclosure requirements set forth by the Secunties and Exchange Commission. The SEC rules require the City to undertake an annual update of certain Official Statement information and report any matenal events to the national repositories. Spnngsted 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 Certificates Sources and Uses of Funds Net Debt Service Schedule The Improvement Bonds Sources and Uses of Funds Assessment Schedule Net Debt Service Schedule Terms of Proposals Page 5 City of Rosemount, Minnesota Apnl 7, 2006 The Certificates DISCUSSION Proceeds of the Certificates will be used to finance the acquisition of venous capital equipment for City departments. The sources and uses for the Certificates are shown on page 8. Minnesota Statutes, Section 412 301, specifies that the City may issue certificates of indebtedness without being subject to a petition requirement calking for a referendum if the total amount of the issue does not exceed of 1% of the estimated market value of the taxable property in the City. Based on the City's 2005/2006 estimated market value of $1,919,935,700 this represents a maximum issue size of $4,799,839 The amount of the Certificates is $370,000; therefore the Issue size is within the statutory requirements and is not subject to taxpayer petition for a referendum. We have amortized the Certificates over a term of five years and have structured them with even annual debt service payments, as shown in the debt schedule on page 9 The City will make its first levy for the Certificates in 2006 for collection in 2007 Since the February 1, 2007 interest payment will come due prior to any tax collections, we have included capitalized interest in the par amount of the Certificates to make the February 1, 2007 interest payment. Each year's first -half collection of taxes will be used to pay the August 1 interest payment in the year of collection. Second -half collections of taxes plus surplus first -half collections will be used to pay the February 1 pnncipal and interest payment due in the following year. The Improvement Bonds Proceeds of the Improvement Bonds will be used finance street and utility improvements related to the Old County Road 38 Improvement project within the City. The Improvement Bonds will be repaid with a combination of special assessments filed against benefited properties and ad valorem property taxes The sources and uses of funds for the Bonds are shown on page 10. Special Assessments in the principal amount of $2,265,557 will be filed on or about November 1, 2006 The interest rate charged on the unpaid balance of assessments will be charged an assessment interest rate of 1 50% over the rate of the Improvement Bonds. For the purposes of these recommendations, we have used an estimated interest rate of 5 60% Assessments will be spread over a term of 10 years with equal annual principal payments. The projected assessment income schedule is shown on page 11. The City will make its first levy for the Bonds in 2006 for collection in 2007. Since the February 1, 2007 interest payment will come due pnor to any tax or assessment collections, we have included capitalized interest in the par amount of the Improvement Bonds to make the February 1, 2007 interest payment. Each year's first -half collection of taxes and assessments will be used to pay the August 1 interest payment in the year of collection. Second -half collections of taxes and assessments plus surplus first -half collections will be used to pay the February 1 principal and interest payment due in the following year Page 6 City of Rosemount, Minnesota ApnI 7, 2006 Our recommended principal structure for the Improvement Bonds is shown on page 12. Principal repayment over a term of 10 years has been structured around the projected annual assessment income to result in even annual levy requirements. Page 12 shows the following information Columns 1 through 5 show the pnnapal maturity dates, the annual principal payments, estimated interest rates and projected total pnnapal and interest payments, given the current market environment Column 6 shows the capitalized interest included in the par amount of the Improvement Bonds to make the interest payment due February 1, 2007. Column 7 shows the net new debt service on the Improvement Bonds. Column 8 shows the 5% overlevy which is required by State statutes and serves as a protection to bondholders and the City in the event of delinquencies in the collection of tax and /or assessments Column 9 shows the projected assessment income developed on page 11 Column 10 shows the difference between columns 8 and 9, and represents the City's annual levy requirement for the Improvement Bonds. Based on projected assessment income, it is expected that the City will be required to levy ad valorem property taxes to pay a portion of the debt service on the Improvement Bonds. The City's annual tax levy requirement related to the Improvement Bonds will be approximately $267,000 The City anticipates using net revenues of the City's Water Fund to reduce the City's levy requirement on the Improvement Bonds Springsted is pleased to again be of service to the City of Rosemount. Respectfully submitted, ss SPRINGSTED Incorporated Provided to Staff: Rebate and Continuing Disclosure Contract Amendments Page 7 $370,000 City of Rosemount, Minnesota General Obligation Equipment Certificates of Indebtedness, Series 2006A Dated 06/01/2006 Delivered 06/01/2006 Sources Of Funds Par Amount of Bonds Total Sources Uses Of Funds Deposit to Project Construction Fund. Costs of Issuance Deposit to Capitalized Interest (CIF) Fund Total Underwriter's Discount (1 600 Rounding Amount Springsted Sources Uses Total Uses $370,000.00 Ale f ROSPAfO'-/ 5£ Sena 2006A GO amp CV SINGLE PURPOSE 3/Z8/2006 424 YM $370,000 00 $370,000.00 337,973 00 14,350 00 9,088 33 5,920 00 2,668 67 Page 8 SIGNIFICANT DATES Yield Statistics Bond Year Dollars Average Life Average Coupon. IRS Form 8038 Net Interest Cost Weighted Average Maturity $370,000 City of Rosemount, Minnesota General Obligation Equipment Certificates of Indebtedness, Series 2006A NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P +I CIF Net New D/S 105% Overlevy 02/01/2007 9,088 33 9,088 33 (9,088 33) 02/01/2008 70,000 00 3 550% 13,632 50 83,632 50 83,632 50 87,814 13 02/01/2009 70,00000 3 600% 11,14750 81,14750 81,14750 85,20488 02/01/2010 75,000 00 3 700% 8,627 50 83,627 50 83,627 50 87,808 88 02/01/2011 75,000 00 3 750% 5,852 50 80,852 50 80,852 50 84,895 13 02/01/2012 80,000 00 3 800% 3,040 00 83,040 00 83,040 00 87,192 00 Total $370,000 00 $51,388 33 $421,388 33 (9,088 33) $412,300 00 $432,915 00 Dated Date. Delivery Date First Coupon Date Net Interest Cost (NIC) True Interest Cost (TIC) Bond Yield for Arbitrage Purposes All Inclusive Cost (AIC) We ROSF.MO -1.S£ Senn 20V6A COEqu,P Ger l SINGLE PURPOSE 3/26/ZCOG 929 MW 6/01/2006 6/01/2006 2/01/2007 $1,381.67 3 734 Years 3 7193001% 4 1477682% 4 1868774% 3 7152335% 5 3735736% 3 7193001% 3 734 Years Springsted Page9 Springsted Dated 06/01/2006 1 Delivered 06/01/2006 $4,405,000 City of Rosemount, Minnesota General Obligation Improvement Bonds, Series 2006B Sources Uses Sources Of Funds Par Arnount of Bonds $4,405,000 00 Other contributions 5,477,647 00 Total Sources $9,1382,647.00 Uses Of Funds Deposit to Project Construction Fund 9,698,804 00 Deposit to Capitalized Interest (CIF) Fund 113,791 67 Total Undetwnter's Discount (0 800%) 35,240 00 Costs of Issuance 32,950.00 Rounding Amount 1,861 33 Total Uses $9,882,647.00 Irk ROSEMO-LSF Styes 20065 GO Improveme *cal Ave-wnents 3 516 PM Page 10 $2,265,557 City of Rosemount, Minnesota General Obligation Improvement Bonds, Series 2006B Special Assessments ASSESSMENT INCOME Date Principal Coupon Interest Total P 12/31/2006 12/31 /2007 226,555 70 5 600% 148,016 39 374,572 09 12/31/2008 226,555 70 5 600% 114,184 08 340,739 78 12/31/2009 226,55570 5600% 101,49696 328,05266 12/31/2010 226,555 70 5 600% 88,809 84 315,36554 12/31/2011 226,555 70 5 600% 76,122 72 302,678 42 12/31/2012 226,55570 5600% 63,43560 289,99130 12/31/2013 226,555 70 5 600% 50,748 48 277,304 18 12/31/2014 226,555 70 5 600% 38,061 36 264,617 06 12/31/2015 226,555.70 5 600% 25,374 24 251,929 94 12/31/2016 226,555 70 5 600% 12,687 12 239,242 82 Total $2,265,557 00 $718,936 79 $2,984,493 79 SIGNIFICANT DATES Filing Date First Payment Date ffk 1 ROSENO -I.SE 1 Sena 200611 GO Imp Bonds SINGLE PURPOSE 3/30/2006 1 322 PM Springsted 11/01/2006 12/31/2007 Page 11 (1) (2) (3) (4) (5) (6) (7) (8) Date Principal Coupon Interest Total P +1 CIF Net New D/$ 105% of Total Assessment Levy Required 02/01/2007 113,79167 113,79167 (113,791 67) 02/01/2008 440,000 00 3 550% 170,687 50 610,687 50 610,687 50 641,221 88 374,572 09 266,649 79 02/01/2009 425,000 00 3 600% 155,067 50 580,067 50 580,067 50 609,070 88 340,739 78 268,331 10 02/01/2010 425,000 00 3 700% 139,767 50 564,767 50 564,767 50 593,005 88 328,052 66 264,953 22 02/01/2011 430,000 OD 3 750% 124,04250 554,04250 554,04250 581,74463 315,36554 266,37909 02/01/2012 435,000 00 3 800% 107,917 50 542,917 50 542,917 50 570,063 38 302,678 42 267,384 96 02/01/2013 440,000 00 3 900% 91,387 50 531,387 50 531,387 50 557,956 88 289,991 30 267,965 58 02/01/2014 445,000 00 4 000% 74,227 50 519,227 50 519,227 50 545,188 88 277,304 18 267,884 70 02/01(2015 450,000 00 4 050% 56,427 50 506,427 50 506,427 50 531,748 88 264,617 06 267,131 82 02/01/2016 455,000 DO 4 150% 38,202 50 493,202 50 493,202 50 517,862 63 251,929 94 265,932 69 02/01/2017 460,000 00 4 200% 19,320 00 479,320 00 479,320 00 503,286 00 239,242 82 264,043 18 Total 54405,00000 $1,090,83917 $5,495,83917 (113,791 67) 55,382,04750 $5,651,149 88 $2,984,49379 $2,666,65609 Dated 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 Matunty 9k AMMO -19' /Sofa 200CHGO b'nxae 1 6pru/Xttumenb 3/30/2006 A16 FM Springsted $4,405,000 City of Rosemount, Minnesota General Obligation Improvement Bonds, Series 2006B NET DEBT SERVICE SCHEDULE Page 12 6/01/2006 6/01/2006 2/01/2007 $27,446 67 6 231 Years 3 9743958% 4 1027903% 4 1137195% 3 9636522% 4 2555549% 3 9743958% 6 231 Years THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $370,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION EQUIPMENT CERTIFICATES OF INDEBTEDNESS, SERIES 2006A (BOOK ENTRY ONLY) Proposals for the Certificates will be received on Tuesday, May 16, 2006, 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 Certificates will be by the City Council at 7:30 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 Certificates 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 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 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 Certificates, 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 13 DETAILS OF THE CERTIFICATES The Certificates will be dated June 1, 2006, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2007, Interest will be computed on the basis of a 360 -day year of twelve 30 -day months. The Certificates will mature February 1 in the years and amounts as follows: 2008 $70,000 2009 $70,000 2011 $75,000 2010 $75,000 2012 $80,000 BOOK ENTRY SYSTEM The Certificates will be issued by means of a book entry system with no physical distribution of Certificates made to the public. The Certificates will be issued in fully registered form and one Certificate, representing the aggregate principal amount of the Certificates 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 Certificates Individual purchases of the Certificates 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 Certificates. 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 Certificates, will be required to deposit the Certificates 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 Certificates will not be subject to payment in advance of their respective stated maturity dates. SECURITY AND PURPOSE The Certificates 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 finance the acquisition of various capital equipment for City purposes. TYPE OF PROPOSALS Proposals shall be for not less than $364,080 and accrued interest on the total principal amount of the Certificates. 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 $3,700, 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 Certificates 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 Page 14 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 Certificates is adjourned, recessed, or continued to another date without award of the Certificates 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. Certificates of the same maturity shall bear a single rate from the date of the Certificates to the date of maturity. No conditional proposals will be accepted. AWARD The Certificates 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 Certificates, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. CUSIP NUMBERS If the Certificates qualify for assignment of CUSIP numbers such numbers will be printed on the Certificates, but neither the failure to print such numbers on any Certificate nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Certificates. 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 Certificates 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 Certificates 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 Certificates 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 Certificates, and said Official Statement will serve as a nearly final Page 15 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 Certificates, together with any other information required by law, shall constitute a "Final Official Statement" of the City with respect to the Certificates, as that term is defined in Rule 15c2 -12. By awarding the Certificates 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 Certificates are awarded 25 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 Certificates 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 Certificates 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 Certificates for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated April 18, 2006 BY ORDER OF THE CITY COUNCIL /s/ Linda Jentink City Clerk Page 16 THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: OR TERMS OF PROPOSAL $4,405,000 CITY OF ROSEMOUNT, MINNESOTA GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2006B (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Tuesday, May 16, 2006, 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 710 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 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 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 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 17 DETAILS OF THE BONDS The Bonds will be dated June 1, 2006, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2007. 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: 2008 $440,000 2011 $430,000 2014 $445,000 2016 $455,000 2009 $425000 2012 $435,000 2015 $450,000 2017 $460,000 2010 $425,000 2013 $440,000 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, 2015, and on any day thereafter, to prepay Bonds due on or after February 1, 2016. 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 matunty 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 special assessments against benefited properties. The proceeds will be used to finance various improvement projects within the City. Page 18 TYPE OF PROPOSALS Proposals shall be for not less than $4,369,760 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 $44,050, 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 matunty. 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 19 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. 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 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 175 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 Underwnter. 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 April 18, 2006 BY ORDER OF THE CITY COUNCIL /s/ Linda Jentink City Clerk Page 20