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HomeMy WebLinkAbout7.a. Scott Carver Dakota CAP Agency, Inc. Project - Approving the Issuance and Sale of a Commercial Development Revenue NoteAGENDA ITEM: Scott Carver Dakota CAP Agency, Inc Project Approving the Issuance and Sale of a Commercial Development Revenue Note AGENDA SECTION: Public Hearing PREPARED BY: Jeff May, Finance Director AGENDA NO. ATTACHMENTS: Resolution, Memo from Spnngsted, Memo from Briggs Morgan APPROVED BY: RECOMMENDED ACTION: Motion to adopt a Resolution Approving the Issuance and Sale of a Commercial Development Revenue Note, Series 2006 and Authorizing the Execution of Documents Relating Thereto (Scott Carver Dakota CAP Agency, Inc Project). 4 ROSEMOUNT CITY COUNCIL City Council Meeting Date: December 5, 2006 EXECUTIVE SUMMARY ISSUE Hear testimony and discuss the proposed project and financing for the Scott Carver Dakota CAP Agency project. BACKGROUND This item is on the agenda for Council to conduct a public heanng for the proposed project and financing for the Scott Carver Dakota CAP Agency. This is the second financing that the City will have undertaken for these types of notes since the Council adopted a Pnvate Activity Tax- Exempt Financing Pohcy on March 6` of this year This pubhc hearing is the Council's last step in the process for the agency to work with the City to secure this financing This step involves the approval of the issuance of bonds by passing of the proposed resolution following the public hearing The pubhc hearing and approval is required by federal and state law. It is important to understand that this approval does not constitute approval or waiver of any other City regulations or requirements for the project, such as land use regulations The approving resolution authorizes and is contingent on the project receiving the approval of the Minnesota Department of Employment and Economic Development. Both our financial advisor, Spnngsted, and our bond counsel, Briggs Morgan, have supplied information included with this packet that addresses the project and the financing The Scott Carver Dakota CAP Agency is in comphance with the City's Private Activity Tax Exempt Financing Policy at this tune. Representatives from the CAP Agency will be present to speak about the specifics of the project. SUMMARY Recommend approval of the motion fisted under the Recommended Action. Packet page 113 of 222 RESOLUTION APPROVING THE ISSUANCE AND SALE OF A COMMERCIAL DEVELOPMENT REVENUE NOTE, SERIES 2006 AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO (SCOTT CARVER DAKOTA CAP AGENCY, INC. PROJECT) WHEREAS, Rudetpage 114 of 222 CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2006 (a) Minnesota Statutes, Chapter 469 152 to 469 1651 (the "Act as found and determined by the legislature is to promote the welfare of the state by the active attraction and encouragement and development of economically sound industry and commerce to prevent so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment, (b) Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of populanon in the metropohtan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land use which will provide an adequate tax base to finance these increased costs and access to employment opportunities for such population; (c) The City Council of the City of Rosemount, Minnesota (the "City has received from Scott Carver Dakota CAP Agency, Inc a Minnesota nonprofit corporation (the "Borrower a proposal that the City assist in financing a Project hereinafter described, through the issuance of a Revenue Note, referred to in this Resolution as the "Note pursuant to the Act, (d) The City desires to facihtate the selective development of the community, promote training and rehabilitation services for persons with developmental disabihnes, and retain and improve the tax base and help to provide the range of services and employment opportunities required by the population; and the Project will assist the City m achieving those objectives and will enhance the image and reputation of the community; (e) The Borrower is currently engaged in the business of providing services for low income and elderly persons in Scott, Carver and Dakota Counties The project to be financed by the Note is financing the remodeling of an existing building and refinancing of existing debt relating to the building located at 2496 -145 Street West in the City (the "Project The Project is owned and operated by the Borrower, (f) The City has been advised by representatives of the Borrower that convennonal, commercial financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibihty of operating the Project would be significantly reduced, but the Borrower has also advised the City that with the aid of municipal financing, and its resulting low borrowing cost, the Project is economically more feasible; SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. RESOLUTION 2006 (g) No public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project. BE IT RESOLVED by the City Council of the City of Rosemount, Minnesota (the "City as follows: 1.1 Findings. The City hereby finds, determines and declares as follows. (a) The City is a municipal corporation and a political subdivision of the State of Minnesota and is authorized under the Act to assist the revenue producing project herein referred to, and to issue and sell the Note, as hereinafter defined, for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. (b) The City proposes to issue a revenue note in the principal amount not to exceed $900,000 (the "Note to provide funds to be loaned to Scott Carver Dakota CAP Agency, Inc a nonprofit corporation organized under the laws of the State of Minnesota (the "Borrower to finance the remodeling of an existing building and refinancing of existing debt relating to the building located at 2496 145 Street West in the City (the "Project (c) On the basis of information available to this Council it appears, and the Council hereby finds, that the Project constitutes properties, real and personal, used or useful in connection with one or more revenue producing enterprises engaged in business within the meaning of Section 469.153, Subdivision 2, of the Act; that the Project furthers the purposes stated in Minnesota Statutes, Section 469.152; that the availability of the financing under the Act and willingness of the City to furnish such financing will be a substanual inducement to the Borrower to undertake the Project, and that the effect of the Project, if undertaken, will be to encourage the development of economically sound industry and commerce, to assist in the prevention of the emergence of bhghted and marginal land, to help prevent chronic unemployment, to help the City provide training and rehabilitation services for persons with developmental disabihnes, to help prevent the movement of talented and educated persons out of the State and to areas within the State where their services may not be as effectively used, to promote more intensive development and use of land within the City and otherwise furthering these and other purposes set forth in Minnesota Statutes, Section 469 152. (d) As required by the Act and Section 147(0 of the Internal Revenue Code of 1986, as amended (the "Code the City, on this same date, held a public hearing on the issuance of one or more revenue notes to finance the Project. (e) The Borrower has agreed and it is hereby determined that any and all costs incurred by the City in connection with the financing of the Project whether or not the Project is carried to completion and whether or not approved by the Minnesota Department of Employment and Economic Development will be paid by the Borrower (0 Nothing m this resolution or in the documents prepared pursuant hereto shall authonze the expenditure of any municipal funds on the Project other than the revenues denved from the Project The Note shall not constitute a charge, hen or encumbrance, legal or equitable, upon any property or funds of the City except the revenue and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon The holder of the Note shall never have the right to compel any Etsssisespage 115 of 222 2 PadseBpege 116 of 222 3 RESOLUTION 2006 exercise of the taxing power of the City to pay the outstanding principal on the Note or the interest thereon, or to enforce payment thereof against any property of the City The Note shall recite in substance that the Note, including interest thereon, is payable solely from the revenue and proceeds pledged to the payment thereof The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. (g) In anticipation of the approval by the Minnesota Department of Employment and Economic Development of the issuance of the Note to finance all or a portion of the Project, and m order that completion of the Project will not be unduly delayed when approved, the Borrower is hereby authonzed to make such expenditures and advances toward payment of that portion of the costs of the Project to be financed from the proceeds of the Note as the Borrower considers necessary, including the use of interim, short -term financing, subject to reimbursement from the proceeds of the Note if and when delivered but otherwise without liability on the part of the City. (h) The issuance and sale of the Note by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Note and to sell the Note to Wells Fargo Brokerage Services, LLC or its designee (the "Purchaser'), as provided herein The City will loan the proceeds of the Note (the "Loan to the Borrower in order to finance the Project. (1) Pursuant to a Loan Agreement (the "Loan Agreement to be entered into between the City and the Borrower, the Borrower will agree to repay the Note in specified amounts and at specified times sufficient to pay in full when due the principal of premium, if any, and interest on the Note. In addition, the Loan Agreement will contain provisions relating to the construction, the maintenance and operation of the Project, indemnification, insurance, and other agreements and covenants which are required or permitted by the Act and which the City and the Borrower deem necessary or desirable for the financing of the Project A draft of the Loan Agreement has been subnutted to the City Council. 0) Pursuant to a Pledge Agreement to be entered Into between the City and the Purchaser, the City has pledged and granted a security interest in all of its rights, title, and interest in the Loan .Agreement to the Purchaser (except for certain rights of indemmficauon and to reimbursement for certain costs and expenses). A draft of the Pledge Agreement has been submitted to the City Council. (k) Pursuant to a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Financing Statement (the "Mortgage to be executed by the Borrower in favor of the Purchaser, the Borrower has secured payment of amounts due under the Loan Agreement and Note by granting to the Purchaser a mortgage and security interest in the property described therein A draft of the Mortgage has been submitted to the City Council. (1) The Note will be a special, limited obligation of the City. The Note shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any habihty thereon. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, nor to enforce payment thereof against any property of the City The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitanon. (m) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note, for the purpose of financing the costs of the Project 1.2 Authorization and Ratification of Project. The City does hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the terms and conditions imposed by the Purchaser, to provide for the acquisition and construction of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and without advertisement for bids as may be required for the construction and acquisition of other municipal facilities; and the City hereby ratifies, affirms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such authority. 2.1 Authorized Amount and Form of Note. The Note issued pursuant to this Resolution shall be in substantially the form attached as Exhibit A with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof, and the total aggregate principal amount of the Note that may be outstanding hereunder is expressly limited to $900,000, unless a duplicate Note is issued pursuant to Section 2.7. The Note shall bear interest at a variable rate and the final maturity date shall be not later than 30 years from the date hereof. 2.2 The Note. The Note shall be dated as of the date of dehvery to the Purchaser, shall be payable at the times and in the manner as provided therein, shall bear interest at the rate, and shall be subject to such other terms and conditions as are set forth therein 2.3 Execution The Note shall be executed on behalf of the City by the signatures of its Mayor and Administrator and shall be sealed with the seal of the City; provided that the seal may be intentionally omitted as provided by law. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery In the event of the absence or disability of the Mayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City Council execute and deliver the Note 2.4 Delivery of Note. Before delivery of the Note, there shall be filed with the Purchaser (except to the extent waived by the Purchaser) the following items: (a) (b) (c) SECTION 2. THE NOTE RESOLUTION 2006 an executed copy of each of the following documents: (1) the Loan Agreement, (2) the Pledge Agreement; and (3) the Mortgage, an opinion of Counsel for the Borrower as prescribed by the Purchaser and Bond Counsel; the opinion of Bond Counsel as to the vandity and tax exempt status of the Note; BEsisetpuge 117 of 222 4 (d) a 501(c)(3) determination letter from the Internal Revenue Service evidencing that the Borrower is exempt from income taxation under Section 501(c)(3) of the Code; and (e) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required m subsection (c) above or that the Purchaser may reasonably require for the closing. 2.5 Disposition of Note Proceeds Upon delivery of the Note to Purchaser, the Purchaser shall, on behalf of the City, disburse the proceeds of the Note for payment of Project Costs in accordance with the terms of the Loan Agreement 2.6 Registration of Transfer. The City will cause to be kept at the office of the City Finance Director a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Note The Note shall be mitially registered in the name of the Purchaser and shall be transferable upon the Note Register by the Purchaser in person or by its agent duly authorized m writing, upon surrender of the Note together with a written instrument of transfer satisfactory to the Finance Director, duly executed by the Purchaser or its duly authorized agent. The following form of assignment shall be sufficient for said purpose For value received hereby sells, assigns and transfers unto the within Note of the City of Rosemount, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the books of said City with full power of substitution in the prernises The undersigned certifies that the transfer is made in accordance with the provisions of Section 2.9 of the Resolution authorizing the issuance of the Note. Dated: Rumetpuge 118 of 222 5 RESOLUTION 2006 Registered Owner Upon such transfer the Finance Director shall note the date of registration and the name and address of the new Purchaser in the Note Register and in the registration blank appearing on the Note. 2.7 Mutilated Lost or Destroyed Note In case any Note issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered, a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in heu of and in substitution for such Note destroyed or lost, upon the Purchaser's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the fihng with the City of evidence satisfactory to the City with indemnity satisfactory to it If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note pnor to payment. 2.8 Ownership of Note The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account RESOLUTION 2006 of the Principal Balance, redemption price or Interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.9 Limitation on Note Transfers. The Note has been issued without registration under state or other securities laws, pursuant to an exemption for such issuance, and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any parucipanon agreement, except (i) in amounts not less than $100,000, (u) not more than 35 persons each of whom have knowledge and experience in financial business matters and that are capable of evaluating the merits and rules of the investment in the Note and are not purchasing for more than one account or with a view to distributing the Note or their interest therein Any such sale, assignment or participation shall also be (i) in full good faith comphance with all securities registration, broker, anti-fraud and other provisions of the apphcable state and federal laws, (ii) with full and accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s), and (m) under effective federal and state registration statements (which neither the City nor the Borrower shall in any way be obhgated to provide) or under exemptions from such registrations. 2.10 Issuance of New Notes Subject to the provisions of Section 2 9, the City shall, at the request and expense of the Purchaser, issue new notes, in aggregate outstanding principal amount equal to that of the Note surrendered, and of hke tenor except as to number, pnncipal amount, and the amount of the monthly installments payable thereunder, and registered m the name of the Purchaser or such transferee as may be designated by the Purchaser. 2.11 Designation of Ouahfied Tax Exempt Obhgations Issuance Limit. In order to qualify as a "quahfied tax exempt obhganon" within the meaning of Section 265(b)(3) of the Code, the City hereby makes the following factual statements and representations. (a) (b) the Note is issued after August 7, 1986, the Note is not a "pnvate activity bond" as defined in Section 141 of the Code; (c) the City hereby designates the Note as a quahfied tax- exempt obligation" for purposes of Section 265(b)(3) of the Code, (d) the reasonably anticipated amount of tax exempt obligations (other than private activity bonds, treating qualified 501(c) (3) bonds as not being private activity bonds) which will be issued by the City (and all entities treated as one issuer with the City, and all subordinate entities whose obligations are treated as issued by the City) during this calendar year 2006 will not exceed $10,000,000; (e) not more than $10,000,000 of obligations issued by the City during this calendar year 2006 have been designated for purposes of Section 265(6)(3) of the Code, and (0 the aggregate face amount of the Note does not exceed $10,000,000 The City shall use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designation made by this paragraph. Ri&1e6tpage 119 of 222 6 SECTION 3. MISCELLANEOUS. RESOLUTION 2006 3.1 Severabihty If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendenng the provision in question inoperative or unenforceable m any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. 3.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or ceruficates as to all other matters which are reasonably necessary to evidence the validity of the Note All such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein 3.3 Authonzauon to Execute Agreements. The forms of the proposed Loan Agreement, the Pledge Agreement and the Mortgage are hereby approved in substantially the form heretofore presented to the City Council, together with such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by Bond Counsel and the City Attorney prior to the execution of the documents, and the Mayor and Administrator of the City are authorized to execute the Loan Agreement and the Pledge Agreement in the name of and on behalf of the City and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Note In the event of the absence or disability of the Mayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may act m their behalf, shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Pastetpage 120 of 222 7 ADOPTED this 5th day of December, 2006. A 1'1 EST: Amy Domeier, City Clerk William H Droste, Mayor RESOLUTION 2006 Motion by: Seconded by: Voted m favor: Voted Against: PEd a page 121 of 222 8 STATE OF MINNESOTA COUNTY OF DAKOTA ss CITY OF ROSEMOUNT CERTIFICATE RESOLUTION 2006 I, Amy Domeier, 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 5th of December, 2006 and that the attached copy of the RESOLUTION APPROVING THE ISSUANCE AND SALE OF A COMMERCIAL DEVELOPMENT REVENUE NOTE, SERIES 2006 AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO (SCOTT CARVER DAKOTA CAP AGENCY, INC. PROJECT) 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 December, 2006 F%deetpage 122 of 222 9 Amy Domeier, City Clerk City of Rosemount Dakota County, Minnesota EXHIBIT A UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF ROSEMOUNT COMMERCIAL DEVELOPMENT REVENUE NOTE, SERIES 2006 (CAP AGENCY PROJECT) RESOLUTION 2006 $836,000 FOR VALUE RECEIVED THE CITY OF ROSEMOUNT, Dakota County, Minnesota the "City hereby promises to pay [WELLS FARGO BROKERAGE SERVICES, LLC, in Minneapolis, Minnesota], its successors or registered assigns (the "Purchaser from the source and in the manner hereinafter provided, the principal sum of Eight Ilundred Thirty -Six Thousand Dollars ($836,000), or so much thereof as has been advanced and remains unpaid from time to time (the "Principal Balance with interest thereon from the date of the advance until paid or otherwise discharged at the annual interest rate equal to the prime rate announced by the Purchaser (the "Prime Rate as such Prime Rate may change from time to time, in any coin or currency which at the time or tunes of payment is legal tender for the payment of pubhc or pnvate debts m the United States of Amenca, in accordance with the terms hereinafter set forth. 1. (a) Interest shall accrue on the Principal Balance from and after the date hereof. Interest is payable monthly beginning 1 2007, and on the same date of each consecutive month therewith, through and including 20 (b) The Principal Balance and accrued interest hereon shall be amortized and paid in monthly installments set forth on Appendix 1 attached hereto, commencing on 2007, and thereafter through and including 20 (the "Final Matunty Date at which time any remaining Principal Balance and accrued interest thereon shall be paid in full. Payments shall be apphed first to interest due on the Pnnctpal Balance and thereafter to reduction of the Principal Balance. 2. In any event, the payments hereunder shall be sufficient to pay all pnncipal and interest due, as such principal and interest becomes due, or service charge, at maturity, upon redemption, or otherwise Interest shall be computed on the basis of a 360 -day year of twelve 30 -day months 3. Principal and interest or service charge, if any, due hereunder shall be payable at the principal office of the Purchaser, or at such other place as the Purchaser may designate in writing. 4 This Note is issued by the City to provide funds for a project, as defined in Minnesota Statutes, Section 469 152, consisting of the construction and equipping of a facihty to be owned and operated by Scott Carver Dakota CAP Agency, Inc a Minnesota nonprofit corporation (the "Borrower pursuant to a Loan Agreement dated as of December 2006 by and between the R>8ssetpege 123 of 222 A -1 Ritmte6pBge 124 of 222 A -2 RESOLUTION 2006 City and the Borrower (the "Loan Agreement and this Note is further issued pursuant to and in full comphance with the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Sections 469 152 to 469.1651 and pursuant to a resoluuon of the City Council duly adopted on December 5, 2006 (the "Resolution 5. This Note is secured by a Pledge Agreement of even date herewith between the City and the Purchaser (the "Pledge Agreement and is further secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Financing Statement, of even date herewith executed by the Borrower, as mortgagor, in favor of the Purchaser, as mortgagee. 6. The City, for itself, its successors and assigns, hereby waives demand, presentment, protest and notice of dishonor, and to the extent permuted by law, the Purchaser may extend interest and /or principal of or any service charge or premium, if any, due on this Note, including the Final Maturity Date, all without notice to or consent of any party hable hereon or thereon and without releasing any such party from such hability and whether or not as a result thereof the interest on the Note is no longer exempt from the federal or state Income tax. In no event, however, may the Final Maturity Date of the Note be extended beyond thirty (30) years from the date hereof 7. This Note may be prepaid in whole, or in part, at the option of the Borrower, on any monthly payment date, at a pnce of par plus accrued interest without premium. 8. Upon the occurrence of certain Events of Default, as defined in the Loan Agreement and Mortgage, the Purchaser may declare the Principal Balance and accrued interest on the Note to be immediately due and payable. 9. In the event of prepayment of this Note, the Purchaser shall apply any such prepayment against the accrued interest on the Pnncipal Balance and then against the final principal amounts due under the Note. The monthly payments due under paragraph 1 hereof, shall continue to be due and payable m full until the entire Principal Balance, accrued Interest and any premium due on this Note have been paid 10. As provided in the Resolution and subject to certain hmitauons set forth therein, this Note is only transferable upon the books of the City at the office of the City Finance Director, by the Purchaser in person or by its agent duly authorized in writing, at the Purchaser's expense, upon surrender hereof together with a written instrument of transfer satisfactory to the City Finance Director, duly executed by the Purchaser or its duly authorized agent. Upon such transfer the Finance Director will note the date of registration and the name and address of the new registered owner in the registration blank appearing below. The City may deem and treat the person in whose name the Note is last registered upon the books of the City with such registration noted on the Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving payment of or on the account of the Principal Balance, redemption price or interest and for all other purposes, and all such payments so made to the Purchaser or upon its order shall be valid and effective to satisfy and discharge the hability upon the Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. 11. All of the agreements, conditions, covenants, provisions and stipulations contained in the Resolution, the Loan Agreement, the Pledge Agreement and the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. RHoketpage 125 of 222 A -3 RESOLUTION 2006 12. This Note and Interest thereon and any service charge or premium, if any, due hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement and the Mortgage do not constitute a debt of the City within the meaning of any constitutional or statutory limitation, are not payable from or a charge upon any funds other than the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary liability of the City or any of its officers, agents or employees, and no holder of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note or the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, hen or encumbrance, legal or equitable, upon any property of the City, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement, sufficient to pay all costs of such performance or the enforcement thereof. 13. If an Event of Default (as that term is defined in the Loan Agreement and the Mortgage) shall occur, then the Purchaser shall have the right and option to declare, upon thirty (30) days written nonce, the Principal balance and accrued interest thereon, immediately due and payable, whereupon the same, plus any Premiums or service charges, shall be due and payable, but solely from sums made available under the Loan Agreement Failure to exercise such option at any time shall not constitute a waiver of the right to exercise the same at any subsequent time. 14. The remedies of the Purchaser, as provided herein and in the Loan Agreement, the Pledge Agreement and the Mortgage, are not exclusive and shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Purchaser, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 15. The Purchaser shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Purchaser and, then only to the extent specifically set forth in the writing A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event 16. This Note has been issued without registration under state or federal or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participauon agreement, except in accordance with an apphcable exemption from such registration requirements The City acknowledges that the Purchaser intends to enter into a participation agreement with one or more sophisticated investors. 17. This Note is a "qualified tax exempt obligation" under Section 265(b) of the Internal Revenue Code of 1986, as amended. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to exist to happen and to be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. RESOLUTION 2006 IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its name by the manual signatures of the Mayor and Administrator, the corporate seal having been intentionally omitted as permitted by law, and has caused this Note to be dated as of December 2006 CITY OF ROSEMOUNT, MINNESOTA Attest. Administrator Rissiastpage 126 of 222 A -4 Mayor RESOLUTION 2006 Date of Name and Address Signature of Finance Registration Registered Owner D= PROVISIONS AS TO REGISTRATION The ownership of the unpaid Principal Balance of this Note and the interest accruing thereon is registered on the books of the City of Rosemount in the name of the holder last noted below. December 2006 [Wells Fargo Brokerage Services, LLC 608 Second Avenue South MAC N9303 -100 Minneapolis, MN 55479] F dsetpage 127 of 222 A -5 November 28, 2006 Mr. Jamie Verbrugge, Administrator Mr. Jeff May, Finance Director City of Rosemount 2875 145th Street West Rosemount, MN 55068-4997 Gentlemen: RE: Scott Carver Dakota CAP Agency, Inc. Request for Tax Exempt Financing Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel 651- 223 -3000 Fax 651- 223 -3002 www springsted com The City of Rosemount has been asked to issue bonds on behalf of the borrower, Scott Carver Dakota CAP Agency, for the purpose of refinancing existing debt of $753,882.87 at a lower interest rate and for the construction of a new roof and flooring repairs at their current location at 2496 145th Street West in Rosemount. Scott Carver Dakota CAP Agency is a private non profit community action agency servicing the needs of low income and elderly people of Scott, Carver and Dakota Counties. They deliver programs such as Senior Dining, Meal on Wheels, Head Start, Emergency Services, Food Shelves, Weatherization, Crisis Nursery, WIC, Transitional Housing and Homeless Services, Case Management and Budget Counseling. There is 40 staff at this location and they have been in Rosemount since 2003. Bond proceeds of up to $836,000 will be used to refund an outstanding Contract for Deed and for building improvements. The cost components are estimated as follows: Refinancing $755,000 Roof and Flooring 81,000 Financing 43,720 Total $879,720 Wells Fargo Brokerage Services, LLC, will be the underwriter (initial purchaser of the bonds). The bonds will be secured by a pledge of revenues for repayment as well as a mortgage on the property. The term of the bonds is through 2023 with a 16.5 year amortization. This refinancing will result in estimated savings of $113,000 by reducing the interest rate from 7% to an estimated 5 The term will not change other than converting the loan to monthly rather than semi annual payments, which also increases savings. Estimated annual savings will be about $9,000. Wells Fargo will market the bonds to investors. The bonds will not be rated, but Wells Fargo intends to comply with the City's Tax Exempt policy by restricting sales to private placements with investors in Packet page 129 of 222 Pub'c Setter Advisors Rosemount, Minnesota November 28, 2006 Page 2 denominations of $100,000 or more. Wells Fargo expects to place these bonds with no more than 3 or 4 investors. Any subsequent sales will be limited to the same criteria. Policy Compliance Considerations: 1) Does the project provide a positive benefit to the City? Economic Base -The proposal assists a business that employs 40 people and serves hundreds of customers. By lowering costs and improving the budding, the jobs in place will likely remain in Rosemount. Education- Education is a primary function of the CAP Agency including Head Start, Case Management and Budget Counseling. Community Services- the CAP Agency provides community services that complement employment services provided by counties. 2) Is the application complete with all fees paid? The applicant has completed the application, as requested, and followed all steps outlined in the City's policy. The application fee has been paid. They have agreed to pay the administrative fee plus all out of pocket costs. 3) Are the bonds structured to protect the City's assets and resources? The only revenues pledged are those of the Scott Carver Dakota CAP Agency. The Issuer is not subject to any liability related to this transaction nor shall any holder of the bonds have the right to compel the exercise of the taxing power of the Issuer to pay the bonds or the interest thereon. The bonds do not constitute a pecuniary liability, general or moral obligation, charge, lien or encumbrance, legal or equitable upon any property of the Issuer The City and its representatives are held harmless should any legal challenges be made regarding the bonds The City's policy requires a statement of indemnification stating that the applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for the Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 4) How is the likelihood of default minimized? The Bonds are secured by a mortgage on the building used to house their Rosemount CAP operations. The appraised value of the building is approximately $1.7 million. The Bonds of $879,000 account for about half of the cost. A default would be expensive for the CAP Agency as they would risk $871,000 of equity This is a large stake, providing a strong incentive for repayment. The bank would have ownership Packet page 130 of 222 Rosemount, Minnesota November 28, 2006 Page 3 of the facility in the case of default, and could sell the building or use it to generate revenue streams to service the bonds. The impact of non repayment of the bonds on the City of Rosemount's credit rating is negligible. Rating agencies have indicated that conduit debt does not reflect the City's ability to repay, only that of the borrower. 5) Is the transaction administratively manageable? After completing the closing document signatures, the transaction will be administered by the CAP Agency and Wells Fargo Bank. Unless there is a change to the covenants or bond schedule, the City will not need to be involved. The City should report this Issue in their Financial Statements in the Notes section, not on the balance sheet. 6) Impact on the City of Rosemount's ability to issue other bonds. These bonds are bank qualified, meaning the City does not intend to issue more than $10,000,000 in bonds during 2006, including this issue. There is an understanding that the City will stay within $10,000,000. However, if circumstances require the City to issue bonds causing the total to exceed this cap and be sold as non -bank qualified (reducing the tax exempt benefit to banks) the additional estimated cost in interest rates will be paid by the CAP Agency. In conclusion, the applicant has complied with the City's policy for Private Activity Tax Exempt Financing. The resulting transaction saves interest costs for the Scott Carver Dakota CAP agency by using the City's tax exempt bonding authority, but does not obligate or impact the City's finances today or in the future. Please let me know if you have any questions or if I can be of further assistance �R e s pp e c tf u l 1, y Terri Y Heaton, Senior Vice President Client Representative Packet page 131 of 222 BRIGGS mmacnim November 29, 2006 VIA E -MAIL City of Rosemount 2875 145th Street West Rosemount, MN 55430 Attn: Jeff May Scott Carver Dakota CAP Agency, Inc. 2496 145th Street West Rosemount, MN 55068 Attn: Jane Cummiskey Ladies and Gentlemen: We have been asked to serve as Bond Counsel for a proposed revenue note (the "Note to be issued by the City of Rosemount, Minnesota (the "Issuer and purchased by Wells Fargo Brokerage Services, LLC, or its designee (the "Purchaser The proceeds of the Note will be loaned by the Issuer to Scott Carver Dakota CAP Agency, Inc., a Minnesota nonprofit corporation (the "Company and used to pay for certain costs incurred by the Company in connection with the renovation of an existing facility. In performing our services as Bond Counsel, our client will be the Issuer. Our principal responsibility as Bond Counsel is to provide the Issuer, the Company and the Purchaser an expert opinion (the "Bond Opinion upon which each of them and the holders of the Note may rely, as to (i) the validity and enforceability of the Note and the Issuer's obligations under the financing documents, and (ii) exemption of interest on the Note from federal and Minnesota income taxes. We will also assume principal responsibility for drafting the financing documents and any security documents agreed to by the parties. We do not assume any responsibility for any disclosures made to the Purchaser regarding the Company, the project, or the security for the Note. We do not expect to give any opinion with respect to the Company's participation in the financing or the status of title or the priority of any mortgage lien or security interest securing the Note. As to these and other matters the parties will be relying upon the opinion to be given by counsel for the Company or upon a policy of title insurance, if required by the Purchaser. 1970551v1 Packet page 133 of 222 2200 IDS Center 80 South 8th Street Minneapols MN 55402 -2157 te16129775400 fax 612 977 8650 Wells Fargo Brokerage Services, LLC 608 Second Avenue South, 10th Floor Minneapolis, MN 55479 Attn. Timothy Joyce Re: City of Rosemount, Minnesota $836,000 Commercial Development Revenue Note, Series 2006A (Scott Carver Dakota CAP Agency, Inc.) Briggs and Morgan, Professional AssoclMlon Minneapolis 1 51 Paul I wwwbirggs.com Member Lex Mundi, a Globa Assooabon of Independent Law Rrms BRIGGS AND MORGAN November 29, 2006 Page 2 The Bond Counsel opinion will be executed and delivered by us in written form on the date the Note is purchased by the Purchaser and will be based on facts and law existing as of that date Upon delivery of the Bond Opinion, our responsibilities as Bond Counsel will be concluded with respect to this financing. In rendering the Bond Opinion, we will rely upon representations of the Issuer, the Company and the Purchaser set forth in the financing documents, the certified proceedings, and other certifications of public officials, officials of the Company and other persons (including certifications as to the use of Note proceeds and various tax matters) without undertaking to verify the same by independent investigation. As Bond Counsel, we do not review the financial condition of the Company or the financial feasibility of the financing, and we will express no opinion relating to the foregoing. We wish to point out to the parties that while the Purchaser and the Company have engaged separate counsel for this transaction, we have represented the Purchaser from time to time in the past on legal matters unrelated to the present financing and may do so in the future. While these related and unrelated representations may be "adverse" under applicable ethics rules, this letter will confirm our understanding that the parties are agreeable to our acting as Bond Counsel in this proposed financing notwithstanding our representation of the Purchaser on unrelated matters. If our understanding is not correct, please contact us. We understand that the Company will be responsible for payment of our fees and disbursements as Bond Counsel. Based upon: (i) our current understanding of the terms, structure, size and schedule of the financing represented by the Note; (ii) the time we anticipate devoting to the financing, we estimate that our fee as Bond Counsel for this transaction will be approximately $12,000 Such fee may vary: (i) if the principal amount of Note actually issued differs significantly from the amount stated above, (ii) if the manner in which the Note is marketed (private placement, public offering, etc.) changes, (ni) if material changes m the structure of the financing occur, or (iv) if unusual or unforeseen circumstances anse which require a significant increase in our time or responsibility. If the Note is in fact issued we will submit our statements for services and disbursements to the Company at or promptly after the closing. If the transaction is cancelled before closing for whatever reason, we would then submit our bill to the Company for the time expended and disbursements made by us to the date of termination at our standard hourly rates. If the foregoing omits or misstates any item, please contact me. Otherwise, we will assume our participation as Bond Counsel and the scope of our engagement as Bond Counsel are 1970551v1 Packet page 134 of 222 B R I G G S AND M O R G A N November 29, 2006 Page 3 acceptable to you. We are pleased to be working on this matter and look forward to bringing it to a successful conclusion. TJH/kq 1970551v1 Packet page 135 of 222 Very truly yours, Trudy J. Hall (612) 977 -8513 thalla @briggs.com