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8.a. Accept Bids and Award Sale, G.O. Improvement Bonds, Series 2003A
CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION CITY COUNCIL MEETING DATE: July 1, 2003 AGENDA ITEM: Accept Bids and Award Sale - G.O. Improvement Bonds, Series 2003A AGENDA SECTION: Old Business PREPARED BY: Jeff May, Finance Director AGENDAfRM A ATTACHMENTS: Resolution and Official Statement APPROVED BY: At 10:00 A.M. Tuesday, July 1, 2003, sealed bids for G.O. Improvement Bonds, Series 2003A, will be opened and the results tabulated at the offices of Springsteds. A representative from Springsteds will be at the Council meeting that evening to give their recommendation for the issuance of these bonds and to answer any questions that you may have. Because the bid opening is not until earlier in the day Tuesday, you will receive information regarding the bids at the meeting that evening. RECOMMENDED ACTION: Motion to adopt a RESOLUTION ACCEPTING OFFER ON THE SALE OF $1,945,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2003A AND PROVIDING FOR THEIR ISSUANCE. COUNCIL ACTION: CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2003 - RESOLUTION ACCEPTING OFFER ON THE SALE OF $1,945,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2003A, AND PROVIDING FOR THEIR ISSUANCE WHEREAS, the City Council of the City of Rosemount, Minnesota (the "City "), has heretofore determined and declared that it is necessary and expedient to issue $1,945,000 General Obligation Improvement Bonds, Series 2003A (the "Bonds ") of the City, pursuant to Minnesota Statutes, Chapters 429 and 475, to finance the construction of various improvements in the City (the "Improvements "); and WHEREAS, the construction of the Improvements to be financed by the Bonds has heretofore been ordered; and WHEREAS, offers to purchase the Bonds were solicited on behalf of the City by Springsted Incorporated; and WHEREAS, the City has retained Springsted Incorporated, in St. Paul, Minnesota ( "Springsted "), as its independent financial advisor for the sale of the Bonds and is therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9); and WHEREAS, the following offers were received, opened and recorded at the offices of Springsted Incorporated at 10:00 A.M., this same day: Bidder Interest Rate will be. 4M e d i n 0r ` - kkes Net Interest Cast NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Rosemount, Minnesota, as follows: 1. Acceptance of Offer The offer of (the "Purchaser "), to purchase $1,945,000 General Obligation Improvement Bonds, Series 2003A of the City (the "Bonds ", or individually a "Bond "), in accordance with the terms of proposal, at the rates of interest hereinafter set forth, and to pay therefor the sum of $ 1 , plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable offer received and is hereby accepted, and the Bonds are hereby awarded to 1534016vl RESOLUTION 2003 - said Purchaser. The Finance Director is directed to retain the deposit of said Purchaser and to forthwith return to the others making offers their good faith checks or drafts. 2. Terms of Bonds (a) Title; Original Issue Date; Denominations; Maturities; Term Bond Option The Bonds shall be titled "General Obligation Improvement Bonds, Series 2003A ", shall be dated July 1, 2003, as the date of original issue and shall be issued forthwith on or after such date as fully registered bonds. The Bonds shall be numbered from R -1 upward in the denomination of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized Denomination"). The Bonds shall mature on February 1 in the years and amounts as follows: Year Amount Year Amount 2005 $210,000 2010 $190,000 2006 195,000 2011 190,000 2007 195,000 2012 190,000 2008 195,000 2013 195,000 2009 190,000 2014 195,000 As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provisions of the applicable Bond(s). (b) Book Entry Only System The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or any of its successors or its successors to its functions hereunder (the "Depository ") will act as securities depository for the Bonds, and to this end: (i) The Bonds shall be initially issued and, so long as they remain in book entry form only (the 'Book Entry Only Period"), shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and for purposes of complying with this requirement under paragraphs 5 (with respect to redemption) and 10 (with respect to registration, transfer and exchange) Authorized Denominations for any Bond shall be deemed to be limited during the Book Entry Only Period to the outstanding principal amount of that Bond. (ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond register maintained by U.S. Bank National Association in St. Paul, Minnesota (the "Bond Registrar ") in the name of CEDE & CO., as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee"). (iii) With respect to the Bonds neither the City nor the Bond Registrar shall have any responsibility or obligation to any broker, dealer, bank, or any other financial institution for which the Depository holds Bonds as securities depository (the 'Participant ") or the person for which a Participant holds an interest in the Bonds shown on the books and records of the Participant (the "Beneficial Owner "). Without limiting the immediately preceding sentence, 1534016v1 2 RESOLUTION 2003 - neither the City, nor the Bond Registrar, shall have any such responsibility or obligation with respect to (A) the accuracy of the records of the Depository,, the Nominee or any Participant with respect to any ownership interest in the Bonds, or (B) the delivery to any Participant, any Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any notice of redemption, or (C) the payment to any Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the principal of or premium, if any, or interest on the Bonds, or (D) the consent given or other action taken by the Depository as the Registered Holder of any Bonds (the "Holder "). For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds are credited on the record date identified in a listing attached to the omnibus proxy. (iv) The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to the Holder or the Holders of the Bonds as shown on the bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 10 hereof (with respect to registration, transfer and exchange) references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or City, as the case may be, to the Depository as provided in the Letter of Representations to the Depository required by the Depository as a condition to its acting as book -entry Depository for the Bonds (said Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating to the Depository's role as book -entry Depository for the Bonds, collectively hereinafter referred to as the "Letter of Representations "). (vii) All transfers of beneficial ownership interests in each Bond issued in book -entry form shall be limited in principal amount to Authorized Denominations and shall be effected by procedures by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. (viii) In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any consent or other action to be taken by Holders, the Depository shall consider the date of receipt of notice 1534016vl 3 RESOLUTION 2003 - requesting such consent or other action as the record date for such consent or other action; provided, that the City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than 15 calendar days in advance of such special record date. (ix) Any successor Bond Registrar in its written acceptance of its duties under this Resolution and any paying agency/bond registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations. (x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of surrendering the Bonds for a Bond of a lesser denomination as provided in paragraph 5 hereof (with respect to redemption), make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (c) Termination of Book -Entry Only System Discontinuance of a particular Depository's services and termination of the book -entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bonds if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book -entry transfers through the Depository is not in the best interests of the City or the Beneficial Owners. (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City or the Beneficial Owners of the Bonds that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds shall no longer be registered asbeing registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10 hereof (with respect to registration, transfer and exchange). To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10 hereof (with respect to registration, transfer and exchange), the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of paragraph 10 hereof (with respect to registration, transfer and exchange). (d) Letter of Representations The provisions in the Letter of Representations are incorporated herein by reference and made a part of the resolution, and if and to the extent any such provisions are inconsistent with the other provisions of this resolution, the provisions in the Letter of Representations shall control. 1534016v1 4 RESOLUTION 2003 - 3. Purpose The Bonds shall provide funds to finance the costs of various improvements within the City (the "Improvements "). The total cost of the Improvements, which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is estimated to be at least equal to the amount of the Bonds. Work on the Improvements shall proceed with due diligence to completion. The City covenants that it shall do all things and perform all acts required of it to assure that work on the Improvements proceed with due diligence to completion and that any and all permits and studies required under law for the Improvements are obtained. 4. Interest The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date "), commencing February 1, 2004, calculated on the basis of a 360 -day year of twelve 30 -day months, at the respective rates per annum set forth opposite the maturity years as follows: Maturity Interest Maturity Interest. Year Rate Year Rate % 2005 2010 2006 2011 2007 2012 2008 2013 2009 2014 5. Redemption All Bonds maturing in the years 2012 through 2014, both inclusive, shall be subject to redemption and prepayment at the option of the City on February 1, 2011, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the City shall determine the maturities and principal amounts within each maturity to be prepaid; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of redemption shall be given to the paying agent and to each affected registered holder of the Bonds. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar prior to giving notice of redemption shall assign to each Bond having a common maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the District or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the District and Bond Registrar duly executed by the holder thereof or his, her or its attorney duly authorized in 1534016v1 5 RESOLUTION 2003 - writing) and the District shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denominations, as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered 6. Bond Registrar U.S. Bank National Association in St. Paul, Minnesota, is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12 of this resolution (with respect to interest payment and record date). 7. Form of Bond The Bonds, together with the Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the following form: RESOLUTION 2003 - UNITED STATES OF AMERICA STATE OF MINNESOTA DAKOTA COUNTY CITY OF ROSEMOUNT R- $ GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2003A INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP % July 1, 2003 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS KNOW ALL PERSONS BY THESE PRESENTS that the City of Rosemount, Dakota County, Minnesota (the "Issuer "), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, unless called for earlier redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"), commencing February 1, 2004, at the rate per annum specified above (calculated on the basis of a 360 -day year of twelve 30 -day months) until the principal sum is paid or has been provided for. This Bond will bear interest from the most recent Interest Payment Date to which interest has been paid or, if no interest has been paid, from the date of original issue hereof The principal of and premium, if any, on this Bond are payable upon presentation and surrender hereof at the principal office of U.S. Bank National Association in St. Paul, Minnesota (the 'Bond Registrar "), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder ") on the registration books of the Issuer maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date "). Any interest not so timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record Date, and shall be payable to the person who is the Holder hereof at the close of business on a date (the "Special Record Date ") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. So long as this Bond is registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter described, and as those terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be made as 1534016v1 7 RESOLUTION 2003 - provided in the Letter of Representations, as defined in the Resolution, and surrender of this Bond shall not be required for payment of the redemption price upon a partial redemption of this Bond. Until termination of the book -entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed, in regular and due form, time and manner as required by law, and that this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and the date of its issuance and delivery to the original purchaser, does not exceed any constitutional, or statutory limitation of indebtedness. IN WITNESS WHEREOF, the City of Rosemount, Dakota County, Minnesota, by its City Council has caused this Bond to be executed on its behalf by the facsimile signatures of its Mayor and its Clerk, the corporate seal of the Issuer having been intentionally omitted as permitted by law. 153401'6v 1 8 RESOLUTION 2003 - Date of Registration Registrable by: U.S. Bank National Association 2003 St. Paul, Minnesota Payable at: U.S. Bank National Association St. Paul, Minnesota BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION CITY OF ROSEMOUNT, This Bond is one of the DAKOTA COUNTY, MINNESOTA Bonds described in the Resolution mentioned Within. /s/ Facsimile Mayor U.S. Bank National Association St. Paul, Minnesota Bond Registrar /s/ Facsimile Clerk By Authorized Signature 1534016v1 RESOLUTION 2003 - ON REVERSE OF BOND Redemption All Bonds of this issue (the 'Bonds ") maturing in the years 2012 through 2014, both inclusive, are subject to redemption and prepayment at the option of the Issuer on February 1, 2011, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the City shall determine the maturities and principal amount within each maturity to be prepaid; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of redemption shall be given to the paying agent and to each affected Holder of the Bonds. Selection of Bonds for Redemption; Partial Redemption To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond having a common maturity date a distinctive number for each $5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar` (with, if the Issuer or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or his, her or its attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denominations, as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. Issuance; Purpose; General Obligation This Bond is one of an issue in the total principal amount of $1,945,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination and redemption privilege, which Bond has been issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council of the Issuer on July 1, 2003 (the "Resolution "), for the purpose of providing funds to finance the costs of various improvement projects within the jurisdiction of the Issuer. This Bond is payable out of the General Obligation Improvement Bonds, Series 2003A Fund of the Issuer. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged. Denominations; Exchange; Resolution The Bonds are issuable solely as fully registered bonds in the Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the 1534016v1 10 RESOLUTION 2003 - principal office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar. Transfer This Bond is transferable by the Holder in person or by his, her or its attorney duly authorized in writing at the principal office of the Bond Registrar upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized Denomination or Denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Fees upon Transfer or Loss The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owners The Issuer and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided on the reverse side hereof with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the contrary. Authentication This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. Qualified Tax - Exempt Obligation This Bond has been designated by the Issuer as a "qualified tax - exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. 1534016v1 1 1 RESOLUTION 2003 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UTMA - as custodian for (Cust) (Minor) under the Uniform (State) Transfers to Minors Act Additional abbreviations may also be used though not in the above list. 1534016v1 12 RESOLUTION 2003 - ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and does hereby irrevocably constitute and appoint attorney to transfer the Bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 Ad- 15(a)(2). The Bond Registrar will not effect transfer of this Bond unless the information concerning the transferee requested below is provided. Name and Address: (Include information for all joint owners if the Bond is held by joint account.) RESOLUTION 2003 - [Use only for Bonds when they are Registered in Book Entry Only System] PREPAYMENT SCHEDULE This Bond has been prepaid in part on the date(s) and in the amount(s) as follows: Authorized Signature Date Amount of Holder 1.534016v1 14 RESOLUTION 2003 - 8. Execution; Temporary Bonds The Bonds shall be printed (or, at the request of the Purchaser, typewritten) executed on behalf of the City by the signatures of its Mayor and Clerk and be sealed with the seal of the City; provided, however, that the seal of the City may be a printed (or, at the request of the Purchaser, photocopied) facsimile; and provided further that both of such signatures may be printed (or, at the request of the Purchaser, photocopied) facsimiles and the corporate seal may be omitted on the Bonds as permitted by law. In the event of disability or resignation or other absence of either such officer, the Bonds may be signed by the manual or facsimile signature of that officer who may act on behalf of such absent or disabled officer. In case either such officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. The City may elect to deliver, in lieu of printed definitive bonds, one or more typewritten temporary bonds in substantially the form set forth above, with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Such temporary bonds may be executed with photocopied facsimile signatures of the Mayor and Clerk. Such temporary bonds shall, upon the printing of the definitive bonds and the execution thereof, be exchanged therefor and cancelled. 9. Authentication No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this resolution unless a Certificate of Authentication on such Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds heed not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting as the date of registration in the space provided the date on which the Bond is authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue, which date is July 1, 2003. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. 10. Registration; Transfer; Exchange The City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein provided. Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 9 with respect to authentication) of, and deliver, in the name of the designated transferee or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount, having the same stated maturity and interest rate, as requested by the transferor; provided, however, that no Bond may be registered in blank or in the name of "bearer" or similar designation. At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount and stated maturity, upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond 1534016v 1 15 RESOLUTION 2003 - Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which- the Holder making the exchange is entitled to receive. All Bonds surrendered upon any exchange or transfer provided for in this resolution shall be promptly cancelled by the Bond Registrar and thereafter disposed of as directed by the City. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City evidencing the same debt, and entitled to the same benefits under this resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the Holder thereof or his, her or its attorney duly authorized in writing. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subject to reasonable regulations of the City contained in any agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. The Administrator is hereby authorized to negotiate and execute the terms of said agreement. 11. Rights Upon Transfer or Exchange Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond. 12. Interest Payment; Record Date Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered (the "Holder ") on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth (15th) day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date "). Any such interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at the close of business on a date (the "Special Record Date ") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the Holders not less than ten (10) days prior to the Special Record Date. 13. Treatment of Registered Owner The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 12 above with respect to interest payment and record date) on, such Bond and for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. 1534016v1 16 RESOLUTION 2003 - 14. Delivery; Application of Proceeds The Bonds when so prepared and executed shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 15. Fund and Accounts There is hereby created a special fund to be designated the "General Obligation Improvement Bonds, Series 2003A Fund" (the "Fund ") to be administered and maintained by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Fund shall be maintained in the manner herein specified until all of the Bonds and the interest thereon have been fully paid. There shall be maintained in the Fund two (2) separate accounts, to be designated the "Construction Account" and "Debt Service Account ", respectively. (i) Construction Account To the Construction Account there shall be credited the proceeds of the sale of the Bonds, less accrued interest received thereon, less any amount paid for the Bonds in excess of $1,925,550, and less capitalized interest in the amount of $ (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before February 1, 2004), plus any special assessments levied with respect to the Improvements and collected prior to completion of the Improvements and payment of the costs thereof. From the Construction Account there shall be paid all costs and expenses of making the Improvements listed in paragraph 16, including the cost of any construction contracts heretofore let and all other costs incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65; and the moneys in said account shall be used for no other purpose except as otherwise provided by law; provided that the proceeds of the Bonds may also be used to the extent necessary to pay interest on the Bonds due prior to the anticipated date of commencement of the collection of taxes or special assessments herein or hereafter levied or covenanted to be levied; and provided further that if upon completion of the Improvements there shall remain any unexpended balance in the Construction Account, the balance (other than any special assessments) may be transferred by the Council to the fund of any other improvement instituted pursuant to Minnesota Statutes, Chapter 429, and provided further that any special assessments credited to the Construction Account shall only be applied towards payment of the costs of the Improvements upon adoption of a resolution by the City Council determining that the application of the special assessments for such purpose will not cause the City to no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. (ii) Debt Service Account There are hereby irrevocably appropriated and pledged to, and there shall be credited to, the Debt Service Account: (a) all collections of special assessments herein covenanted to be levied with respect to the Improvements and either initially credited to the Construction Account and not already spent as permitted above and required to pay any principal and interest due on the Bonds or collected subsequent to the completion of the Improvements and payment of the costs thereof; (b) all accrued interest received upon delivery of the Bonds; (c) all funds paid for the Bonds in excess of $1,925,550; (d) capitalized interest in the amount of $ (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before February 1, 2004); (e) revenues from the storm core utility in an amount which, together with the special assessments and other revenues and funds herein pledged, is sufficient to pay the 1534016v1 17 RESOLUTION 2003 - principal and interest on the Bonds when due; (f) any collections of taxes hereafter levied for the payment of the Bonds and interest thereon; (g) all funds remaining in the Construction Account after completion of the Improvements and payment of the costs thereof, not so transferred to the account of another improvement; (h) all investment earnings on funds held in the Debt Service Account; and (i) any and all other moneys, which are properly available and are appropriated by the governing body of the City to the Debt Service Account. The Debt Service Account shall be used solely to pay the principal and interest and any premiums for redemption of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the above in an amount not greater than the lesser of five percent (5 %) of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Construction Account or the Debt Service Account (or any other City account which will be used to pay principal or interest to become due on the Bonds payable therefrom), in excess of amounts which under then - applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code "). 16. Assessments It is hereby determined that no less than twenty percent (20 %) of the cost to the City of each Improvement financed hereunder within the meaning of Minnesota Statutes, Section 475.58, Subdivision 1(3), shall be paid by special assessments to be levied against every assessable lot, piece and parcel of land benefitted by any of the Improvements. The City hereby covenants and agrees that it will let all construction contracts not heretofore let within one (1) year after ordering each Improvement financed hereunder unless the resolution ordering the Improvement specifies a different time limit for the letting of construction contracts. The City hereby further covenants and agrees that it will do and perform as soon as they may be done all acts and things necessary for the final and valid levy of such special assessments, and in the event that any such assessment be at any time held invalid with respect to any lot, piece or parcel of land due to any error, defect, or irregularity in any action or proceedings taken onto be taken by the City or the City Council or any of the City officers or employees, either in the making of the assessments or in the performance of any condition precedent thereto, the City and the City Council will forthwith do all further acts and take all further proceedings as may be required by law to make the assessments a valid and binding lien upon such property. The special assessments have heretofore been authorized. Subject to such adjustments as are required by conditions in existence at the time the assessments are levied, it is hereby determined that the assessments shall be payable with general taxes for the years shown below in equal, consecutive, annual installments of principal, and with interest on the declining balance of all such 1534016v1 18 RESOLUTION 2003 - assessments at a rate per annum not greater than the maximum permitted by law and not less than % per annum: Improvement Collection Designation Amount Levy Years Years Connemara Phase II $1,183,788 2003 -2012 2004 -2013 At the time the assessments are in fact levied the City Council shall, based on the then - current estimated collections of the assessments, make any adjustments in any ad valorem taxes required to be levied in order to assure that the City continues to be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. 17. Coverage Test The special assessments, together with other revenues herein pledged for the payment of the Bonds, will produce at least five percent (5 %) in excess of the amount needed to meet when due the principal and interest payments on the Bonds. 18. General Obligation Pledge For the prompt and full payment of the principal and interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency shall be promptly paid out of any other funds of the City which are available for such purpose, and such other funds may be reimbursed with or without interest from the Debt Service Account when a sufficient balance is available therein. 19. Certificate of Registration The Clerk is hereby directed to file a certified copy of this resolution with the County Auditor /Treasurer of Dakota County, Minnesota, together with such other information as he or she shall require, and to obtain the County Auditor's certificate that the Bonds have been entered in the County Auditor /Treasurer's Bond Register. 20. Records and Certificates The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 21. Negative Covenant as to Use of Proceeds and Improvements The City hereby covenants not to use the proceeds of the Bonds or to use the Improvements, or to cause or permit them to be used, or to enter into any deferred payment arrangements for the cost of the Improvements, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. 1534016v1 19 RESOLUTION 2003 - 22. Tax- Exempt Status of the Bonds; Rebate The City shall comply with requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code of the interest on the Bonds, including without limitation (1) requirements relating to temporary periods for investments, (2) limitations on amounts invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment earnings to the United States. The Issuer expects to satisfy the two -year expenditure exemption for gross proceeds of the Bonds as provided in Section 1.148- 7(d)(1) of the Regulations. 23. Designation of Qualified Tax - Exempt Obligations In order to qualify the Bonds as "qualified tax- exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City hereby makes the following factual statements and representations: (a) the Bonds are issued after August 7, 1986; (b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (c) the City hereby designates the Bonds as "qualified tax- exempt obligations" 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 2003 will not exceed $10,000,000; and (e) not more than $10,000,000 of obligations issued by the City during this calendar year 2003 have been designated for purposes of Section 265(b)(3) of the Code. 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. 24. Defeasance When all Bonds have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the registered holders of the Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms, by depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full, provided that notice of redemption thereof has been duly given. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a suitable banking institution qualified by law as an escrow agent for this purpose, cash or securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest 1534016v1 20 RESOLUTION 2003 - payable at such times and at such rates and maturing on such dates as shall be required, subject to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if notice of redemption as herein required has been duly provided for, to such earlier redemption date. 25. Compliance with Reimbursement Bond Regulations The provisions of this paragraph are intended to establish and provide for the City's compliance with United States Treasury Regulations Section 1.150 -2 (the "Reimbursement Regulations ") applicable to the "reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the City to reimburse itself for any expenditure which the City paid or will have paid prior to the Closing Date (a "Reimbursement Expenditure"). The City hereby certifies and/or covenants as follows: (a) Not later than 60 days after the date of payment of a Reimbursement Expenditure, the City (or person designated to do so on behalf of the City) has made or will have made a written declaration of the City's official intent (a "Declaration ") which effectively (i) states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional description of the property, project or program to which the Declaration relates and for which the Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the general functional purpose thereof from which the Reimbursement Expenditure was to be paid (collectively the "Project "); and (iii) states the maximum principal amount of debt expected to be issued by the City for the purpose of financing the Project; provided, however, that no such Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for the Project, defined in the Reimbursement Regulations to include engineering or architectural, surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not exceed 20% of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement Expenditures not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds. (b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of the Bonds or any of the other types of expenditures described in Section 1.150- 2(d)(3) of the Reimbursement Regulations. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Bonds and in all events within the period ending on the date which is the later of 18 months after payment of the Reimbursement Expenditure or three years after the date on which the Project to which the Reimbursement Expenditure relates is first placed in service. (d) Each such reimbursement allocation will be made in a writing that evidences the City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30 days after the Bonds are issued, shall be treated as made on the day the Bonds are issued. Provided, however, that the City may take action contrary to any of the foregoing covenants in this paragraph 25 upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that such action will not impair the tax - exempt status of the Bonds. 1534016v1 21, RESOLUTION 2003 - 26. Continuing Disclosure (a) The City is the sole obligated person with respect to the Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2 -12 (the "Rule "), promulgated by the Securities and Exchange Commission (the "Commission ") pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the "Undertaking ") hereinafter described to: (1) provide or cause to be provided to each nationally recognized municipal securities information repository ( "NRMSIR ") and to the appropriate state information depository ( "SID"), if any, for the State of Minnesota, in each case as designated by the Commission in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. (2) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the Municipal Securities Rulemaking Board ( "MSRB ") and (ii) the SID, notice of the occurrence of certain material events with respect to the Bonds in accordance with the Undertaking. (3) Provide or cause to be provided, in atimely manner, to (i) each NRMSIR or to the MSRB and (ii) the SID, notice of a failure by the Issuer to provide the annual financial information with respect to the Issuer described in the Undertaking. (4) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the holders of the Bonds and shall be enforceable on behalf of such holders; provided that the right to enforce the provisions of these covenants shall be limited to a right to obtain specific enforcement of the City's obligations under the covenants. (b) The Mayor and Clerk of the City, or any other officer of the City authorized to act in their place, (the ".Officers ") are hereby authorized and directed to execute on behalf of the City the Undertaking in substantially the form presented to the City Council, subject to such modifications thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required by the purchaser of the Bonds and (iii) acceptable to the Officers. 27. Severability If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution. 28. Headings Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. 1534016v1 22 t ADOPTED this 1 st day of July, 2003 ATTEST: Linda Jentink, City Clerk RESOLUTION 2003 - William H. Droste, Mayor Motion by: Seconded by: Voted in favor: Voted Against: 1534016vl 23 i RESOLUTION 2003 - STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF ROSEMOUNT I, the undersigned, being the duly qualified and acting Clerk of the City of Rosemount, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of said City, duly called and held on the date therein indicated, insofar as such minutes relate to considering offers for, and awarding the sale of, $1,945,000 General Obligation Improvement Bonds, Series 2003A of said City. WITNESS my hand this day of , 2003. Clerk 1534616v1 24 OFFICIAL STATEMENT DATED JUNE 17, 2003 Ratings: Requested from Moody's NEW ISSUES Investors Service In the opinion of Briggs and Morgan, Professional Association, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, at the time of their issuance and delivery to the original purchaser, interest on the Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross income and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations or the Minnesota alternative minimum tax applicable to individuals, estates or trusts; provided, however, that for the purpose of computing the federal alternative minimum tax imposed on corporations, interest on the Bonds is taken into account in determining adjusted current earnings. No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. See "Tax Exemption" herein. City of Rosemount, Minnesota $1,945,000 General Obligation Improvement Bonds, Series 2003A (the "Improvement Bonds ") $1,170,000 General Obligation Water Revenue Bonds, Series 2003B (the "Revenue Bonds ") (collectively referred to as the "Bonds," the "Obligations" or the "Issues ") (Book Entry Only) Dated Date: July 1, 2003 Interest Due: Each February 1 and August 1, The Improvement Bonds will mature February 1 as follows: commencing February 1, 2004 2005 $210,000 2007 $195,000 2009 $190,000 2011 $190,000 2013 $195,000 2006 $195,000 2008 $195,000 2010 $190,000 2012 $190,000 2014 $195,000 The Revenue Bonds will mature February 1 as follows: 2005 $105,000 2007 $110,000 2009 $115,000 2011 $120,000 2013 $130,000 2006 $105,000 2008 $110,000 2010 $115,000 2012 $125,000 2014 $135,000 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. The City may elect on February 1, 2011, and on any day thereafter, to prepay the Bonds due on or after February 1, 2012. All prepayments shall be at a price of par plus accrued interest. Common to Both Issues The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. Additional sources of security for the Bonds are discussed herein. A separate proposal must be submitted for each Issue, along with a certified or cashier's check or a Financial Surety Bond, for not less than the amounts shown below. Proposals shall specify rates in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Award will be made on the basis of True Interest Cost (TIC). Minimum Bid Good Faith Deposit The Improvement Bonds $1,925,550 $19,450 ` The Revenue Bonds 1,158,300- 11,700 The Bonds will be bank- qualified tax- exempt obligations pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, and will not be subject to the alternative minimum tax for individuals. The Bonds will be issued as fully registered Bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository of the Bonds. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased. (See "Book Entry System" herein.) U.S. Bank National Association, Saint Paul, Minnesota will serve as Registrar for the Bonds. Bonds will be available for delivery at DTC on or about July 22, 2003. PROPOSALS RECEIVED: July 1, 2003 (Tuesday) until 10:00 A.M., Central Time AWARD: July 1, 2003 (Tuesday) at 7:30 P.M., Central Time Further information may be obtained from SPRINGSTED S P R I N G S T E D Incorporated, Financial Advisor to the Issuer, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55901 -2887 (651) 223 Advisors to the Public Sector 3000 Oa_O v a_;0 00 0 C C Er C -C 1 CD W CD =3 0- .a CD h) to C CD CO O CD -o a 3D o3 CD -0 0 � O ((D 0 w �- o m 0Q0 CD � -0 �• 3 Cr CD - O •0 CD O O � O C O `< O fn v 0acy 0• O(DCD� °C 0 W 0 m O cn v =�- -11 3 O = co •O Dm v3NCD0• m 3 CD 0-0cn CD (n o 3 < M CD ,v o < < CD n < CD 0 - N v � at C Q 0 , (n, O CD 2 j CD D v 0 . 3 : (C N O 3 (D CD D (D n N - CD a0 m , 0 CD =Y Z) (D O a CD 0 DN cn(n = cn n ,-� O m -0mCD (n70 u) CD C D 0 a� 0 :� CD Q. O CD 0 C 0 - 0c 3 �0 0 0 (y 3 m CD -* 1< ( I CCU g(n0� QQLn.3v =CD (D CD (a CD (D (a @1_ O CD p Cn N (�D ° = - m -s � O (a . 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CO IM M r 0 - j 0 0 (n CD n CD CD - ,OO CI CD Z DmmO N 3 0 v� >v --I - C O 0 O 0 MEm =m@ -3 0 -10 Kmzo - M ;U -A' (D� 0 j � N M n -1 -1 D Cn .� <. a) C- O�Z =.< ,00 gym � mzXom -w a' °cQ 0 m - ( 1 Dr m -m n - � < - ==z--nO� Ow ( con mD- <mz��• =- C Cn D <rD 1 �mXm00-n 0`n.v a°-� (Q. rn.1 n - nz< CD 0•(D N 2D -InDa3 � 0 (Di�mmr-oo � m� n' < CITY OF ROSEMOUNT C CA COMBINING STATEMENT OF REVENUES. EXPENSES AND CHANGES IN RETAINED EARNINGS ALL ENTERPRISE FUNDS For the Year Ended December 31, 2000 (With Comparative Totals for the Year Ended December 31, 11999) Water Slone (#601, 605, 610) Sewer Water (615, 617, 621) (0602, 606, 625) (#603,607,611.613) Arena ToWhs (622, 624 & 627) (411 & 414) (614, 616.620 8 626) (#650) 2000 1999 OPERATING REVENUES $ 757,112 S 988,494 $ 559,047 S $ 2,304,653 S 1,938,567 Charges for services 17,175 17,175 18,300 Water mete rmaintenance 87,038 - 87,038 85,984 Water Water meters 2,708 87 7,188 264,412 274,395 .290,514 Misc e lla neous 864.033 988,581 566,235 264,412 .2 ,683,261 2,331,365 Total Opera ting Revenues OPERATING EXPENSES 176,313 172,556 137,484 108,413 59b,766 605,196 Personnel services 151,084 10,848 3,597 10,084 175,613 182,446 Supplies 63,695 8,740 8,932 100,107 181,474 183,006 Professional services and charges 87,739 38,900 56,345 12,418 195,402 85,359 Other services and charges 410,160 410,160 396,145 Metro sewer charges 478,831 841,204 206,356 231,022 1,557,415 1,454,152 Total Operating Expenses Operating Income Before Depreciation 385.202 347,377 359,877 33,390 1,125,846 877,213 ( 330,672 (604,518) (218,971) (47,815) (1,201,976) {1,136,457) Depredation 54,530 (257,141) 140,906 (14,425) (76,130) (251244) Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) 649100 412,530 695,576 - 1,757,206 1,379,386 Connection fees 136,300 136,300 114,900 Property taxes 62,126 32,927 161,541 256,594 189,673 341,138 Special assessments Investment earnings 160,045 197,399 34,427 165,584 20,756 121 523,149 74277 (121,164) Net increase (decrease) In the (air value of investment 19,094 Gain (loss) from disposal of fixed assets 158,872 7,370 4,205 170,447 110,220 Surcharges and penalties _ _ (2,635) Other expense (71,262) (6,043) (156,722) (234,547) (197,803) Interest expense and fiscal agent fees 977,455 678,610 690,940 136,427 2,683,428 1,813,715 Total Nonopersting Revenues (Expenses) 1,031,985 421,469 1,031,846 121,996 2,607,296 1,554,471 Income Before Operating Transfers 50,223 70,352 31,779 - 152,354 967,174 operating Transfers in (350,841) (186,192) (225,296) (3,500) (765,829) (1,096,039) Operating transfers out (188,000) (188,000 } (1 79,928) Operating transfers out- component unit (300,618) (115,840) (193.517) (191,500) (801,475) (308,793) Total operating transfers 731,367 305,629 838,329 (69,504) 1,605,821 1,245,678 NET INCOME (LOSS) ADD DEPRECIATION ON CONTRIBUTED ASSETS 228,186 562.170 176,793 47,200 1,014,349 973,726 INCREASE (DECREASE) IN RETAINED EARNINGS 959,553 867,799 1,015,122 (22,304) 2,820,170 ' 2,219,404 BEGINNING RETAINED EARNINGS _ _ _ _ - 4,082,002 7 06 4,216,062 (9,105) 2,198,177 50,793 98,664 - 10,574,905 42,394 8,164,451 191,050 Prior period adjustments 4,062.708 4,206,957 2,248,970 98,664 10,617,299 8,355,501 RETAINED EARNINGS - January 1 7,438 7,438 Equity transfers $ 5.029,699 S 5,074,756 $ 3,264,092 y 76,360 S 13,444,907 S 10,574,905 RETAINED EARNINGS - December 31 TABLE OF CONTENTS 0 N a � E M V d W V) o 6Z V! Z N = w = W O = a y > E'= ova Z ? W c w w r rn g W 2 W c Q Z J o d � S 4 t lY U Z O Ii W Z Q F-°- m 0 > 0 a 0 V t ti Z 0 E w I " 0 Ce LL 0 U M M r°mrd 'a N o vo W m o Woarnn • nn W W v rn o rn m o �° rn W n p Y1 n M W, W W W n 0 W V n M O O D7 ' n V V N m " N O n N ? n O N O M O Pa e S t0 '- O M N n W 7 V V m Of .- N M" N V Z N M m O V w M r Oi M N V D7 O O ^� V M V N M O n N N � W W M V G V M - lV N W V O g N r n V O 0 co n w s�m01 " N O n "M"Nn nM W O u'J W W O. O N nV V a N - "" " W W - . W W N N N Terms of Proposal N r r `... N VI V ,- N C O F N f9 t C o�' I M a M e; s io N o' M N V s ' o N $1 945,000 General Obligation Improvement Bonds, Series 2003A .................................... i -iv n " f? O O n "O 1° W c0 O N t0 N M W a)" O O GO V O t0 M NN N W '� N N N W o o N n w N W of n a, N `•' N N Co V o r w n o ,� V < ° $1 000 General Obligation Water and Storm Water Revenue Bonds, Series 2003B ... v -viii co N N. W W n nn O) u7 O n n 1° V V I r° O. N W M m M N N V aD M n co N M O V O N" N V a0 n n O 1� M W 0 " 10 0 V V r a N N N N V I N tV r V) W "' O - Introductory Statement .. ................ .................. ......... ....... 1 1' n O M O O ' ... O` O O .... N N W M 'n N N Oni " N W t0 M N Cl °i " ' t° �} N Cl M M N _ f- ^ A n Continuing Disclosure ................. 1 M �I I 2 The Bonds ..................... ............................... . ... ... ... d n r i r n N M O N '.n O 1� A m' O m W' O 6 .- V O 0p OD W V W w N' N O. S ...................... ...... .................. ...... .... ............................. T he Improvement Bon .... 4 M M O O) O W CWJ W N O t V N O C O' ,WO-. N O t O O r M O V a W N "M N N O °1 W M ^ M W e < N The Revenue Bonds. ............................... 5 m a m n m N e N �n rn n � W �. m .T N v °' W W m M ... r .... r r N N N Ili 3 " N N " N M N Future Financing ........................................................_..................... ............................... 5 Litigation ............ 5 Legality .................................. ............................... ....................... ............................... 5 a - W N N "" <• O CO M OO et q ao o o w W N W m V O Tax Exemption .................................................................................. ............................... 6 u1N N W V W N NOnNOf V M O W O O 0 " N " r0 W M' M 0 0 0 O N O M M O V: Iq W W n V W C7 Ci W n M fA n n N W N 010n O N v M O .i 0>O�A N W V 0) O .t' _ __ _ °, ° A N 0 ° I Other Federal Tax Considerations . .............................................. ............................... 6 O O !2M V V f M m N M N n V `•' N N N W N O O m 3 Bank- Qualified Tax - Exempt Obligations 7 Ratings ........................................................................................... ....._......................... 7 Financial ............................................................................. ............................... 8 V. -WMNM m m '- m o n rn �°v m m rn n N O N n 0) n.M N V M V O m fM W M N M V " N m O M Certification ........................................................................................ ............................... 8 Nn v> V O.'^NY1 C a n M M Iq OMt°n. co n v RC0 C m m ow � m ° o nN W C) OW10 O 0i V N W WV N. -Nl`1W Oi NOW V OIL N 01 Oi N. W) co W _ - W ° ° ° n n " Q " °, N N N City Property Values ...................... ........... ............................... 9 M N t0 O O n ................... ................... 10 n City Indebtedness ............................................ ............................... ......._..................... 10 City Tax Rates, Levies and Collections .......................................... ............................... 15 Funds Hand ............................................................................. ............................... 16 Z City Investments 16 8 General Information Concerning the City d a g Y ....... ............................... ............................... 17 E w _ m n. " - Governmental Organization and Services.. ............. 20 C N M fl. 2 N d O_ w o F- O I CL a W N X N — M ° - E Proposed Forms of Legal Opinion Appendix 1 ` W ' N O� 7 rn o_ Z JZ W Z m O w = ° o < �_ _ Continuing Disclosure Undertaking M U Z _ H R> Z a " ........ ............................... ................ Appendix I CD y C d to m `m N ro Z d i° w w XU n ,, W. O d W ={ ,> W m V3 W u,j H o y> y n o o 0 o Z `Z < W M z Summary of Tax Levies, Payment Provisions, and W °= c Ww C rn0) c _ o a=icvv am m `o `m m d rn WO WO W. ?H Z 2 A m ❑ o -� w E .E v E n ` .. c m z F- f.. w H o - w > z - Z Minnesota Real Property Valuation .. E H x .z H _ ? d d d o m ° m- W W w N °w Appendix fll Zydd� z 0.23 X �q�� o ��o �- w Ann Financial St .... ..... ... .................. . - d a �, _ _ E � o B „ _ „ X ° E a a w o z Annual Fina al St Appendix IV m E E 1 u a w v O O O o L � m .:w =° d ° w m W U CL O W H Z° O c F t0 A C a W � N E U :.. W M W C. l0 W W N }- a. t — - a� aa p� ~ ar'nn`.02 00a.W Z0U) � ~ 000 ~ UG o °o L) w w v � 0 o Z _ << Z w M w Proposal Forms ......................... ......... ............................ ...... ............................... Inserted IV -12 co CD to U tU CITY OF ROSEMOUNT COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS ALL ENTERPRISE FUNDS For the Year Ended December 31. 2002 (With Comparative Totals for the Year Ended December 31, 2001) Totals Water Sewer Storm Water Arena 2002 2001 OPERATING REVENUES Charges for services S 809.015 S 981.837 S 538.621 S 303,138 3 2.632.611 S 2.582.105 Water meter maintenance 5,709 Water meters 113.471 113,471 126,559 Miscellaneous 2.673 6.323 145,879 154,875 Total Operating Revenues 925.159 988.160 684,500 303.138 2,900,957 2.714.373 OPERATING EXPENSES Personnel services 194.404 205,118 151.513 134,537 685,572 615,090 Supplies 239.813 10.767 11.568 13,687 275,835 350.030 Professional services and charges 103,626 22,093 61,015 12,994 199.728 230,748 Other services and charges 105.596 30,512 172,514 120,719 429,341 215.597 Metro sewer charges 460,881 . - 460.881 427,042 Total Operating Expenses 643.439 729.371 396,610 281,937 2.051,357 1.838,507 Operating Income Before Depreciation 281,720 258,789 287,890 21,201 849,600 875.866 Depreciation (393,397) (622.680 ) (258.409 (53.529 ) (1,328,015 ) (1.261.888 Operating Income (Loss) (111,677) (363,891 ) 29.481 (32.328 (478.415 ) ( 386.02J2 NONOPERATING REVENUES (EXPENSES) Connection fees 1.209.435 581,644 869.324 2.660,403 2.013,209 Special assessments 32.347 94,178 101,059 227,584 247.654 Investment earnings 128,610 187.623 126.535 728 443,496 594,281 Net increase in the fair value of investment 34,884 19.314 17.644 71,842 25.317 Loss from disposal of fixed assets (2.851) Surcharges and penalties 181.739 7,883 1,197 190,819 178,966 Interest expense and fiscal agent fees (93,967 ) (5,637 ) (218.814 ) (318,418 ) (279,517 Total Nonoperating Revenues (Expenses) 1.493.048 885.005 896,945 728 3,275,726 2,777.059 Income (Loss) Before Contributions, Transfers and Depreciation on contributed assets 1.381.371 _521,114 926,426 J31.60 2.797.311 2.391.037 Capital contributions 1,821.961 1,883.753 3,122,743 6.828,457 3,777,581 Operating transfers in 1,792,556 755,014 1,432,001 3,979.571 844.829 Operating transfers out (1,645,205) (1,240.532) (3,049.441) (14.458) (5.949,636) (858.476) Operating transfers in - component unit 7.500 48.000 55.500 Operating transfers out - component unit (84,000) (41,000) (125,000) (500.000) Depreciation on contributed assets 241,684 568.981 193.077 1.003.742 1,050.943 Total contributions, transfers and depreciation on contributed assets 2.134.496 1,926.216 1,746.380 �1 �4.45 8 5,792,634 3.263.934 INCREASE (DECREASE) IN RETAINED EARNINGS 3.515,867 2,447.330 2.672,806 (46,058) 8.589.945 6,705.914 RETAINED EARNINGS - January 1 7,725,007 6,831,885 5.532.790 61,139 20,150.821 13,444.907 Equity transfers 159,587 159.587 RETAINED EARNINGS - December 31 S 11,400.461 S 9.279.215 S 8.205.596 S 15.081 S 28.900.353 S 20.150.821 THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: z M 0 2 W Cn d' LL 0 W U g OD 0 Z 0 z S2 zS W m LLJ Z >. W _ ~ W O O � � N < < m tri al u N U' O V) E �UW a 0 4f"D o a X Q Q c W a> W Wiz } It ) LL LL Q z o0� 0 Uj W z W 0 0 0 W 2 co M 0 NN OD NM to ODr 8thNN to q N N W f�0 N T t O 0 to m m .0 LL C N tL 49 0 m o't� N t g gO tN ) aC) O O t0 n h tq N N K mv C tp C V GO a m Q O'' ' O O O '1CD CD y O O O C) O 0 n O M m 0 0 — 1q N O to ' n O e'7b N to o) ' 0 WO m m co t.otnornmm m _ lA V t0 Wr O O O t7) t7 O t • N h M tom- h v d CM N 06 0 C W 2 M ON... aD 0)N M U] C N t0 > W LL C ts� O 7t- ' N t0 0) t0 0 WO C t0 C) O WO 0 co 0 0 0 O lL N M t7 O t0 W e r W. t0 _ 6 m t CD CM M C) R1tiN AtgN Q N N C Q N r t0 000 00 ' 0 O M C' ^ O O M W 5 m m co OOONd' O " tq v C O CD $? C-4 cc aN m ' • 0 ' C) O e Cl) C 8 m C N 00 co O ' O ' O O 1 O N m N O N O O O N 0 .. 0 W+ 0 W 00 N O 0 Ct . 0 WD O � GO t t CO N U? U) .- `' N to _O WO O t0 C '7 M N N Q t0 70tq •- 'r V N MN O N 1' co (D .- tq t0O 07 0 r r.- 10 O_DDODO N O O n cO co O N h U) N 0 N N td t0 .- t- M .`- (O CO r to th Ui 0i tq 9) 0 N M to M to N m C.)n m �M 0 S S N O R t7 iT ip °o$ N � � r N N N to 0 N N O t0 O N v n IlY O) WA 0 N P 1 0 0 trt =) n C n O t? v) N u7 O N tt) E O O � O t� m C t" �to L C o n m t!1 v O c c W 5 40 4 > p W b C m m m c N W ° c > en m ` > m LD .m. y me dd _ C O .Nm. E �3 C a O C C C �' 2 m T C u a 0 mom? € =E EE 2Z 4D E 0 C ° c Z�� c a m m 'c c . m C v C 0 0 q ) W O m - E 2 a W 0 X m m V 1 LL 7 -1 L 0` m C H E •Q y m o> Em U)0 eom m °) fA e0 m m C W„ m m C C Q' 0"C 1 O c W m 3 N N :a Q Z C L 0 o h �t,rt a j�u m i t0 m m EO`a LM y o�canQ F- w "�•� W Yn Z CD 'C m m m m 0 N r C y F ucna> mo._ z t m 7 t6 W aO 12 U x W m m F 0 q o b 2—: t2 USZOM X U W � 0 � ¢ W LL U. •, IV -10 TERMS OF PROPOSAL $1,945,000 CITY OF ROSEMOUNT, MINNESOTA ° GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2003A m (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Tuesday, July 1, 2003, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, 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 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. rwa (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 sole) as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITY 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 40 West 23` Street, 5 Floor, New York City, New York 10010, Customer Support, (212) 404 -8102. O t? v) N u7 O N tt) O O � O t� m t" c 4 > W m c a m o u p m O C � LL U. •, W M to O a m CO) W u g o Uj N o z w m m m z c CS� LL 2 LL W 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. rwa (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 sole) as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITY 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 40 West 23` Street, 5 Floor, New York City, New York 10010, Customer Support, (212) 404 -8102. DETAILS OF THE BONDS The Bonds will be dated July 1, 2003, as the date of original issue, and will bear interest payable on February Land August 1 of each year, commencing February 1, 2004. 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: 2005 $210,000 2009 $190,000 2012 $190,000 2006 $195,000 2010 $190,000 2013 $195,000 2007 $195,000 2011 $190,000 2014 $195,000 2008 $195,000 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 that 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, 2011, and on any day thereafter, to prepay Bonds due on or after February 1, 2012. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition the City will pledge special assessments from benefited properties. The proceeds will be used to finance various improvements within the City. F Z 0 w 0 W U. O W U Z g M ° Z U- j -�n WWW } Q Z UW ° O W N m U w� U W a zQa II il z 1 0 X< C W S>. W Q Z ¢ } N > Q Q UJ CO LL LL a z OF- W Q W ° W W m W Q F- U ° W z C m G O U ' N ' MvOVO)(O co N -14" to N V -O ( C O M N 0) Q N M f N 0 0 N c 7 LL G 2 :3 l = 69 O N ON ' ' c2 V'O CO)(0 OD CN cc) O W 0)O O) V�0 O z ._.. Lf) M Oi 01 � N M M 7 Q O M C N `- Q a) 0 C> C) ' o r OOr c , N O t- P- m C N N N(0 Ow NNr ' N N a NN VV' �cM � P' ct M U N.-c0 ,- a M N N N C O �- N .- V O N O N 0 7 M N r > LL C a M C) to .V U) N N r (O (0 r 0) 0)N(D ON (D ION N 7 C c M t n r M r LL {a CO to O tp O V N r r to = N N 0) N n � r N, V O (h r t0 0 a N N O O ' 0 0 ' N O N O to O O OO N O N N N r 0 O O N d V r r r W r r N m of to N .. C tU N O cc W c w m C 7 C d d E N 4' U E t5 r H N 06 N N U C D a C N (17 d C a) y N 2 . O C R UJ O N �. N E V - Z y C N "V da yH M ' ' I O N d C) ' N tn U) (O N N N O CC N O O O N N M N M N v IN (` M ' C o C aac co = I N M M M r e M O N M CD N 0 m o o c U) E o o E a y ° ) m N O � (� N N N w LL E M r co(OI� U) ' ' �M r - C N r N r rNV'7IM r OrO O O jCV m N (+') N (0 N M N (n o M V N O M cfC C N (00 'r- C M CO C) (O •- Cl) ri O t` st M r. (0r to M 'N Cl) m. �- r �- t6 M V O M ' C ( W �- M O. M O U) O O t0 to r (� ('1. O Lr) C v_r aDr r .- -- to R:1m m O N (0 cc X ( f 0 O )) 0 O Cl ! O N 6 N N N iT N O N C N 'V 7 C C) O C C •V ` C d CS Z = �v N N O C v a N d .0 d d 0 O N d (D O O X N w 0) U C E _ U W O C O Ti . a C O �U C U n r 0 O Ili r 0) N O r C6 mI co 69 co V) M Z A W W Z w g y M O .T LL W O W O a) O LL w 0 y w li z z co Q 0 z LL N d 0 C d CX X w = O" C C N d U = y W E � O U M m o o c U) E o o E a y ° ) m U C T N m Q' w N N N w LL E m =S.0 X w w z8 BE S B t_ <. [a W 3 N C C . O F 2 N O C Z a Z O H C. L a) N f0 N Z W S N LLJ tU d ~ CL CL M aU Oaaa W =a`O O O X o R:1m m O N (0 cc X ( f 0 O )) 0 O Cl ! O N 6 N N N iT N O N C N 'V 7 C C) O C C •V ` C d CS Z = �v N N O C v a N d .0 d d 0 O N d (D O O X N w 0) U C E _ U W O C O Ti . a C O �U C U n r 0 O Ili r 0) N O r C6 mI co 69 co V) M Z A W W Z w g y M O .T LL W O W O a) O LL w 0 y w li z z co Q 0 z LL TYPE OF PROPOSALS Z 0 w 0 W U_ 0 W 0 z a CD Q z Z O co —�nU- cn ¢ U- W M W z W Z W U W W C) O 0 � N Q m U M (n W a`) f J =v E HvW E z o CL X Q 0 c W S>- W J - _J Q } � Z n< W2ZL Z W U)0LL a Q ow_ z� W W W m W Q W Z m 0 U � a O C Q N T N (6 a' C �p C V Q 0) 7 U_ N C M Proposals shall be for not less than $1,925,550 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 $19,450, payable to the order of the City. If a check is used, it must accompany the proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must • identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3 :30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. 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 • • ` • N O O) (O to to (n ` ` ' O CO t37 ` (� M N N O (O O O In R M M N .O E (n 1 0 Q) V CO N M O) n (O (O (O (h O) (n (O (0 S U a C N rg C O O n �. M r N N O V h > > �Mw _ fn C (q W _ C L C C £ -- d ai LL m 6 C) O p u O. N ] V7 N 7. 7 O > > V Q r=.. 10 a C V7 ()J C ? 0 w 61 o rn Oc oc (n " c 1° c a C� to U Q c a� d �:�E2E�o ai �� c O ' ' ' N. O (O 0 U) m O r 0) • 0) O coo ' n M 0) M 00 M' > (' O NU')M 00((7 1� Q Z Q :5 _y Q. N O 2 N. y N N C N N N C OI O C W U O v W __ Q Z c'.c'. V-� O O U (0 OO W N m 0 O V 07 ((� `(T O) N N a 0) O O) in O O Cl) N N O Oi CO M O) N N 0) 01 Ol G d '-' W�a?uca.c >y0 `� O _(0 N M r N (n u7 O .- O T O (n Cl) N N U < O r N O) O) M v N V CO (O O ... 0 0 0 0 o ' O ` O` 0 0 , , O O O O O O I O. 0 0 0 N O O I OI N W O (O O to N TO W N ? O O c M10 CO 'n C W M W O MMmV N N C "T COO(-N v-v((7 NNMlh N r r1 •- M V (n. M t� N ro m W ro N 7 c U WO)O ON M M(-(M(__ co M -T C 0 @ _O Nt- `- '0 N.-• -Ma M N �' CO T(n Nl� O (A N. 0 ( > 0 N M 7 LL � (�MMMM(0 W MW O tiN�O M 0((70 MOI- )'A V V O N O (O CO .- (l ((7 (O M. O M Nr C ("L O N M N C). 0 0 0 U) M CO N )� ( (O O O N (O , Z6 (O (D t-0 NN a h. CO O7 to 00 O Cl) � V M (A to (O O CO 0 CD r- M (O O N CO O OO W O � N (S O N_ U7 (0 (_ I- r N M (n. 00 00 n O) M K Q '7 (_: r ((J •- M (O co N00 ' 00 •• C, 0 0000 O O O ' O 00 0 0 O O 0 0 IA M (n O `1 O M 0000 O (O CO M O) (fl O N. O C) M N O^ 7 M M M N Cd ti M aO (7) C\1 W .N- (A to C V' N et (O O) O CO (O a) 'cf t0 r .- N (O M � M Proposals shall be for not less than $1,925,550 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 $19,450, payable to the order of the City. If a check is used, it must accompany the proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must • identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3 :30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. 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 C C; V) d N .O E S U a C CL C h N _ fn C (q W _ C L C C £ d ai C m 6 C) O p u O. N ] V7 N 7 7 O > > V Q r=.. 10 a C V7 ()J C ? 0 w _ c om °) o rn Oc oc (n " c 1° c a C� to U Q c a� d �:�E2E�o ai �� c c a` c y m ° c S c W U J Q Z N a H a) V 'O N C C C. N > Z' N'J N N _zd U C C C LL N N > (' Q Z Q :5 _y Q. N O 2 N. y N N C N N N C OI O C W U O v W __ Q Z c'.c'. V-� O O U m z W W > N 10 E O 'Fu uJ lD O C O N LL f0 (O l9 y H V C) Q �• 01 Ol G d '-' W�a?uca.c >y0 `� C .0 .O w �C� CLCLQ. X W Hama~ u p LL Cr w WF- S�ucnU�ZO� X U W u 0: W t _000 O M Proposals shall be for not less than $1,925,550 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 $19,450, payable to the order of the City. If a check is used, it must accompany the proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must • identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3 :30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. 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 Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. p �{ rIt70OM M V p M p N . .. p f p f t0MP AMCD p 10w tr N 00WO W to N CO it r WO O NIp I t ID W <AN N p( r' N V) C4 Q co N N c. O N Ne IA O< SETTLEMENT ��;'�; _,o �; T °N °�« o OD {O�} M N OJh W C�OJ t� M MT N ^ O V'N MID O m: fO lti r`-'O V N V clo NN t:N t` N OO W t? N co r In N M r /L ID ?I: M Ml N O Within 40 days following the date of their award, the Bonds will be delivered without cost to the g p p ° f' E A O OJ � � f• PJ M eo N m O � N t I f- ° N .D N O purchaser through DTC in New York, New York. Delivery will be subject to receipt by the V .Sm ° tD n r OJ M h G R o a R m ' (3i g Iq 3; m � n Omf f0 .-A O NOVA N O O O a `� tA. t7 purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of $ is 0 ID cq ° o ° N cq t% ° M � N e c4 .- ID O V M N n N M 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 m M r- ° ..... ° M M Ip N tD OJ m O N /D n O O O S 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has ° N !r.: ° M C ° Co ° Co ° t= � N M A O M N N N> O to +� 10 M N O f0 to ICJ _ •= N Y eN- N. � N tD � t M ' been made impossible by action of the City, or its agents, the purchaser shall be liable to the �'= o N v t � 7 ' V � V M a City for any loss suffered by the City by reason of the purchaser's non - compliance with said a a terms for payment. CONTINUING DISCLOSURE "c > c o ll. 5im O Co N O 10 M a O M m Of. IDW ehMOt:O N� t OJ MM V _OJ W N O C y Oi u1 N 1N fV w t+i eh O h g 6.- O t0 t N tD 1n t7 to Oi h t� = W t - .1O W t� O t CO N pp N OJ to I� LL9 M ? OI tT V M O O t0 E Iqi v N MW fAs M O 101D f M O On the date of actual issuance and delivery of the Bonds, the City will execute and deliver a 0 d E v �- 1�- N Oi .� .� ,Cj e- MM f0 t•e ID Oi N 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 g ' ' ' ' N o rn w vi a t: rn v M �i M the City and notices of certain occurrences to information repositories as specified in and N o ow a N co M required by SEC Rule 15c2- 12(b)(5). 3 N N M M N N N OFFICIAL STATEMENT to ' ' ' ' M ' m g ' " ' ' " M Z Q m o P m n o I n c� so m v w co o I� "� " v °° ° W e�i ° m o u` co m v G '- The City has authorized the preparation of an Official Statement containing pertinent ; ° N co information relative to the Bonds, and said Official Statement will serve as a nearly final Official = ° z " "' V Q .- O r n N u) t` m a N O N O t0 n n OJ Statement within the meanin of Rule 15c2 -12 of the Securities and Exchan mmission. y m pp a � � � �/ g O� �1�fO th t fA v n O !O M tD R O n For copies Y p ies of the Official Statement or for an additional information p rior to to sale , an Z a ~ d � c o � r, n s � � � � N � N � � m M � m a Y a z 2 ` n> �,< N� � Go prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated, W o g m > N N, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (651) 223 -3000. W N N Q p p p F- F-LLZ 'O m' �iom'mm�e•J c`bai °N uMi ° 9Ot[7 m v` m I Z 0J'O t+s N MMO to CD co O� Z ate M v n i�w o m In " rn� w c t O The Official Statement, when further supplemented by an addendum or addenda specifying the o a Z o E W mt N N °° ° °° m M 2 xWU maturity dates, principal amounts and interest rates of the Bonds, together with any other w W o ; " y information required by law, shall constitute a "Final Official Statement" of the City with respect o W WX W z 9 to the Bonds, as that term is defined in Rule 15c2 -12. By awarding the Bonds to any L Z o Ui C underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no o W J Q � y C more than seven business days after the date of such award, it shall provide without cost to the a J m m senior managing underwriter of the syndicate to which the Bonds are awarded 80 copies of the ° W Official Statement an t he addendum or addenda described above. The City designates the W z m LL e o d d ca E 1Z senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for a o m W H d Ow purposes of distributing copies of the Final Official Statement to each Participating Underwriter. � o = ` 'n Z Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its o m = O c LL 3 y W E a ° proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a ? _ �`° a > m W contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring U € E d V ffi o ` > 11 J W w Z QQ m � c oO.q the receipt by each such Participating Underwriter of the Final Official Statement. m E E yy Z - y t LL Q Z y m s w N G m y m r C y= N > m Y �. >. ` C = V E oJ EEW A °gym —wEW`� �Zn� W — m ` Z� �� m Dated June 3, 2003 BY ORDER OF THE CITY COUNCIL W y m m ° � y H m ° Ip s ,�� ° �, _ ° z y u O � m m E o— m c c a Z fA = y M C m 0 G a , m > m N ,.A- N C 4i N~ d' E E E p y, V L- 5 Q W X x rN C � H 1-• W 7O as JO and �LL W GG M m A d LL W �F �F = �I U. (A USZ� x aV Uo Qa000 Kcc OL W /s /Linda Jentink City Clerk -iv- , IV -7 Z p N W 0 � 0 sZ CD W o Z , o W O F o v > > W N W M O a Z O E w W w z , 8 co uiZ W pm °: »Z�� O jt .7 W � V O y W L W F- Q U L — m W J h LL F F mo d N O Z W L d ? o L o c0 N t0 ° � N w ° ° ° ° a w ° m m THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE "W `° " " ° k g " ' " ' " ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: h w r- omNtocA N0; to n Oh 01 c0? Oc0o OD Co N co OD co OD N M N a0 co O n fV O O 1D c�.0 O f` O O n O c0 ONO O O M ^ OD M M ^ a7 O M ^ O cD un"t O W V ON tD P n N' O Mtt �N m r O kq N N v C N 3 N N r N N �- - NY N N r o C •- v N h N N M O c0 OD Ow Q atc0 O vi O � M N co N 0+0 N DD ^ V m N M r M N co cD 1� T 1� ~ n c0 c00N 0 OOO' M OOM n a W O N7 O M10 cn TERMS OF PROPOSAL c0 co O OD h0 t0 E cl! cn W W OM aD n Q ticD CO NOD Oslo q r •-O c, C1 w o o10 N < Ct E 4 O 10 V O o N M N O m N O— O O o w O v O O V. n M V t` n o co cV n. cD "mO M Rt- M N wco ^001 w r co O M 00� n M O OD MOD co M O N rNr OO� N N �rNA N. r� O at c0 _ O ec O M V O o •- .- r M N h V N O 10 V N •. v v o o O' N N `�' M M M $1,170,000 v w v w. e.. rn 1 1 co o W N ao to M M v, 0 0 CITY OF ROSEMOUNT, MINNESOTA w co N N N O n O I O co M O ci , c1 OD o w° M o o M N N Lq GENERAL OBLIGATION WATER REVENUE BONDS SERIES 2003B y 01 0 ^ to ui. w A O O— o O O A r P- N 1[i co 01 OD to N %! O co w to n.0 p L N N M OD N Q m M O �_ 00 ci Q N 7 E 4.. = N of v tV ti 7 a -o U (BOOK ENTRY ONLY) Mco ' tf,w : ! , w g O MNCO w O-oM O c0 s2w 1 M T M mn O N wcD In O1 N V NOn MOMA et lA CO Oc w M N mo c0 l c0 V MO N 1� C ODO QMCO W O ON N Q 7 W c0c0NO oc0 0 11 N MOO ch O OD I%1% O c0 " ° � E ° ° At ° ' a ° ° "" ° ° ° m eN N Proposals for the Bonds will be received on Tuesday, July 1, 2003, until 10:00 A.M., Central O E O c0 N N cO O N 0 c% h n M co O R O O c0 co tp O N O� W N F E ; V ci .- N.- v N N vN N N N Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the . . • • , , , ° , M ° • " . . . . M s s Bonds will be by the City Council at 7:30 P.M., Central Time, of the same day. c0 c0 c d' N W. to N O OD Q1 O M O C M 7 � .y.• M OD N O Imo. 7 M_ cD O M q � Q7 A M ° N to OD M o V' 47 O O N fD M r N O R O O O OOD. O 0 O M c0 W O N N O N N SUBMISSION OF PROPOSALS v to ' ' ' ' M ' m, M ' ° I v q Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the MO O Nr cD OD •l N Y O f` O O cc a A O O W r O O M co co O z N ° - N ° M t time of sale specified above. All bidders are advised that each Proposal shall be deemed to Iq LL �' " "� " n e N !? constitute a contract between the bidder and the City to purchase the Bonds regardless of the ° N ° ° , , , m ° , °, °, manner in which the Proposal is submitted. y O W 1n t- uz CD M < v, M v O h lA O1 o N n O m E' % = n OD N N V O O r c0 co O o). co O O ti O1 n A N W d d N H C 7 O. N to N N m M w M N tN7 co O) O1 M o o m y (a) Sealed Bidding. Proposals may be submitted in a sealed envelope or by fax co (651) 223 -3046 to Springsted. Signed Proposals, without final price or coupons, may be O • • O a, �, • ° submitted to Springsted prior to the time of sale. The bidder shall. be responsible for submitting 01 01 O N ra c> to OU,. DD GOOD N- c0 o O O 1� t0 r N N O -e v1 M V> 1. M .- rn n v oD m n e v1 1. O M o M co ° °° N -v o v m � lo ; N N to Springsted the final Proposal price and coupons by telephone (651) 223 -3000 or fax m eo a m n �.n o v co M a) a m r N CD - - - "' "' "' (651) 223 -3046 for inclusion in the submitted Proposal. OR E (b) Electronic B Notice is hereby given that electronic proposals will be received via PARIT . 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 42 z ; s a o purposes of submitting its electronic Bid in a timely manner and in compliance with the W� A � s =m Z c IX o � � � � m % 5 „ � �, requirements of the Terms of Proposal. Neither the City, its agents. nor PARITY shall have H n U c any duty or obligation to undertake registration to bid for any prospective bidder or to provide or d�.q�q. c d ` Oc�octo o'3 >* Z H ;u o k a ° m Z ° W g ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor „' m y ; �Y = a E W w 20, ; 5 q o PARITY shall be responsible for a bidder's failure to register to bid or for any failure in the gaci.E .. — w`�-c c> K °iAOCm W c `� rn w 2om;9m a _?L o OC —C,, Z . „ s _ � o * _ Z m - proper operation of or have any liability for any delays or interruptions of or an damages W Aa .o a, o io� F ,,.,�oo m uoi y m °•2 T o v LL ° w �a c� O1m 2 '°C fl 2. q .� y m — E c`S c z c c a c i° r �_ ° a ° °w a Q caused by the services of PARITY The City is using the services of PARITY sole! as a Z d. C .- W C p, d N N Y1 C d 0) __ d N N m W , x D . = , �UC 2.L. 7.d NF , 0 O.O.JO C. o C aa.lL M WOE t- N.Cm m LL W �- �- J LL tq.V =.� M = a w o. o ° o u. E. S_ communic mechanism to conduct the electronic bidding for the Bonds, and PARIT is not X W i; , w ° 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 40 West 23` Street, 5 Floor, New York City, New York 10010, Customer Support, (212) 404 -8102. IV -6 -v- I 3 ( � zT (n Cr D a n n �, -{ '-) CD O -0 3 -0 3 O z CO -I - =3 O Cr -� Cr a -� < (D S C (D (D v , , ; 3 _ �' O : O to (D =' N -n M CD (D o -� ., = O ::r {D N =- O C CD 3 '� - 0 (D `< fD (D - (D = :3 -Q - S * -- =3 (D !D (D C- = O (D `< (D n) 0 3 a- 0 c - - °) n U) n• 5 0 - a -< rn (i ( CO C (n 3 0 0 0 0 Co O 2: Cv (D (D = v C D p C_ cD << �, v v �< COO (D O C W O O o o O 0 o CD cn �3 C7 -,5'c3 0 =3 C " =��'"�� o = 3 oo�lrncn Q con CD 0 a CL U) �� �= pC � no (n Z�(0 m 0 300 � o �60) c�) g 0--n n CD C (D (D --i � -. 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(D O �-I+ Q = '� • U) Cr zr 0 Er CITY OF ROSEMOUNT COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNIT For the Year Ended December 31, 2002 (With Comparative Totals - Reporting Entity for the Year Ended December 31, 2001) Totals Primary Component Totals Governmental Fund Types Government Unit Reporting Entity Special Debt Capital (Memoran• Port (Memorandum Only) General Revenue Service Projects dum Only) Authority 2002 2001 REVENUES Taxes S 4,556 $ 1,002.100 S 312,176 S 5 5,870,567 $ 990,396 $ 6,860,963 $5,264,277 Municipal state aid (MSA) 86,148 86,148 86,148 90,066 Tax increments 155,682 155,682 196,018 Intergovernmental revenues 666.057 666,057 144;800 810,857 1,224,455 Licenses and permits 797,688 797,688 797,688 790,396 Fines and forfeitures 85,835 - 85,835 85,835 88,524 Special assessments 82,103 19,422 891,857 993,382 993,382 1,635,841 Charges for services 702,775 184,341 - 887,116 887,116 1,043,914 Investment income 110,576 40,079 384,612 59,560 594,827 349,500 944,327 1,975,988 Net increase in the fair value of investments 18,548 406 17,289 36,243 - 36,243 8,054 Miscellaneous 288.437 451,120 7,622, 8,362,116 641,874 9.003,990 3,238.301 Total Revenues 7,308,310 1,697.468 1.692,082 7.682,119 18 2,282,252 20.662,231 15,555,834 EXPENDITURES Current General government 1,557,734 29,075 1,586,809 353,381 1,940,190 1,718,760 Public safety 1,884,975 1,884,975 - 1,884,975 1,711,407 Public works 1,834,122 1,834,122 1,834,122 1,676,886 Parks and recreation 785,226 785,226 785,226 751,673 Lease payments 13.529 13,529 13,529 14,028 Other - 297 257,907 258.204 258,204 118,233 Capital Outlay 319,634 - 10.566,847 10,886,481 2.274,514 13,160,995 10,162,680 Debt Service Principal retirement 151,009 3,285,000 3,436,009 330,000 3,766,009 2,843.286. Interest 79,952 1,009,700 1,089,652 531,885 1,621,537 1,547,053 Fiscal agent fees 4,512 4 1.835 6.347 16.542 Total Expenditures 6.062,057 593,199 4,299,509 10,824,754 21,779,519 3,491,615 25,271,134 20,560.548 Excess (deficiency) of revenues over expenditures 1,246,253 1,104,269 (2,607,427) (3.142,635) _ 3,399,540 (1,209.363) (4,608,903) (5.004,714) OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt 95.844 3,306,563 3,402,407 1,789,837 5,192,244 4,937,134 Sale of general fixed assets 11,755 11,755 109,146 120,901 3,058 Operating transfers in 3,500 10,958 70,000 1,989,182 2,073,640 233,443 2,307,083 2,684,958 Operating transfers out - (103,575) (103,575) (233,443) (337,018) (2,671,311) Operating transfers in - primary government - - - - 125,000 125,000 1,137,063 Operating transfers out - primary government (166,800) (166,800) Operating transfers in - component unit 111,300 111,300 111,300 Operating transfers out • component unit (637,063) Total Other Financing Sources (Uses) 114,800 80,862 165,844 5.295,745 5,495.527 1,857,183 7,352.710 5,451839 Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses 1,361,053 1,023,407 (2,441,583) 2,153,110 2.095.987 647.820 2,743,807 449,125 BEGINNING FUND BALANCES 3,765,603 1,294,699 18.537,163 1.990,344 25,587,809 5,212,585 30,800,394 30,432,976 Prior period adjustment (81,707) FUND BALANCES - January 1 3,765,603 1,294,699 18,537,163 1,990,344 25,587,809 5,212,585 30,800,394 30,351,269 Equity transfers 27,918 54,476 (1,067,946) (985,552) 825,965 (159,587 FUND BALANCES • December 31 5 5.126.656 S 2.346.024 S 16.150,056 S 3 .075.508 S 26.698.244 S _ 6.686.37 0 S 33.384.614 $ 30,800,394 E W h a O W N t•1 N m f " opp ♦ t m O N t O 'IANO " IN O �rOKN 00�� pfN { N OY m OfO MQm �O Obr1t0 G g G OP •� N N R !•l Q r N " WAN O�P oMi m b C •ON O C O N lV Q A v Q' N. GI N .•> N •� m n O m • m m • n • • (y m • • O, ♦ • m < pp b • N • • . • ,., (� • O �`I N In 47 O Q E N ♦ t7N10 • Q m ^ Q i'<DON ♦ N' ^�N4N V t O n SN� OQfO O. m n 0 O m N O Q m O M O fn t p D , y p e�,m. -mQO o oo �n g p ,n .o i0 C O W mnOt Oi W t'l lh m p n p 10 .�OiY Oi �4K �i �Ot; ♦ V pCppCp l•1.m A O'^ N1 N Oi E N ON m A O Q r 10 m V MnM O�OlO O W•m ip Q mbQ Q N QQ Ol QN � Y) O N aG M r IA a w w K I w • q lD C A r A 1 © m N w w w � m w w O • Q CZ I C � � • • �^ • m0 • N Of • b mmOm • • N.• tONW •.. u,�. N • Nb ♦ Ol b a LL a Nq o $ouN , m" � Q ,(O, m Q o Q �i m o n WM m rO (� �OCO N 10 O m. r W O V V U) Q N b1: N: N • • • • • • .O • • • .ppp�� • n • 8 • • • • po • • • • ♦ • Q�{ yy N. W O • O M ' N Q • • M Of V d N N N tV w w w w q {O O N N ' N ' b C. g °m N N N m m N ZZ E. N m b N O •.p• An m DM V Z LU Q Z N O .O w w w O F U & Pc N 0 n N e m N v m o OOc°� m w LLI m n o V1 �� � �t iia w h w w L Q a rr io O � g W Wn O z� m a o ' So 12 t 1 a a m Y y W Z C - O 1 � F Wa c 7 to ° rn = q W m 9 � Q o u _ o 35 N W 35 B L. o m� - � ° a� In u is vm° 1 O r 9 ,p> �m 4 ID $$,�.4 Si m•�W Vm�ma wm� E ��.$� F W �O_l p y`{ "� CI E W O r� O yi • O C ..I t 1 01 V O O .s� �$ �O Q O 01 6t W O m N 2n ; a q q E� ♦° g�. m W . p C Fan2 Dy. JI 0� "a 3 Uw2 F �U 4 82��LSQ� = V= Ca'IL TYPE OF PROPOSALS Proposals shall be for not less than $1,158,300 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ( "Deposit ") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $11,700, 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 Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement, The Deposit received from the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser, will be deposited by the City. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the City. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1 %. Rates must be in level or ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. s �l 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 IV -4 - vii - (J� p 5 0-0 v(n U 3 o5• 3 CD 0 CD �`� -1 :O� Q o m O' n 0 N C N O -1 a) ( 3 O (D v Q (D �< CD 2 �. (D O v (`"D O co sue -h . 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(D n O -n -1 O O - (D << Q C a) Q (D cn O O� (D (D N CITY OF ROSEMOUNT COMBINED BALANCE SHEET -ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT UNIT December 31, 2001 nth Comparative Totals - Reporting Entity for the Year Ended December 31, 2000) Total Proprietary Fiduciary Account Groups. Primary Component Governmental Fund Types Fund Typ Fund Types General General Govemme Unit Total Reporting Entity Special Debt Capital Internal Trust and Fixed Long-Term (Memorandum Port _ Memorandum Only) General Revenue Service Projects Enterprise Service Agency Assets Obligations Only Authority 2001 2000 ASSETS AND OTHER DEBITS ASSETS Cash and investments $ 3,680,773 $ 1,559,502 S 17,766.544 $ 3.008.187 $ 12.723,402 $ 570,439 $ 79 $ - $ - $ 39,308,926 $ 3,367,567. $ 42,676,487 $ 39,610,903 Investment with fiscal agent - - 709,494 - - - - - 709.494 2,334,283 3,043,777 2,334,729 Receivables Property taxes 356,743 - - - - - - - 356,743 - 356,743 1 340,845 Customer accounts 7,538 10,232 15.740 - 568,052 16,171 - - - 817,733 - 617,733 617,720 Special assessments - 39,082 1,637,182 - 227,537 - - - - 1,903,801 337,610 2,241,411 3,611,610 Notes - - - - - - - - 1,158,767 1,156,767 1,252,068 Due from other governmental units 38,873 - - - 55,648 - 94,521 - 94,521 63,996 inventories and prepaid items 26,298 - 54.955 53,741 - - - 134,994 399 135,393 75,217 Due from other Ponds - - - - - - - - - 101,366 Advances to other funds - - - 383.319 - - - 383.319 - 383,319 $14,342 Fixed assets, net of accumulated depreciation, if applicable - - - 55,056.401 - - 18,960.160 - 74.016,561 368,593 74,385,154 64,573.572 OTHER DEBITS Amount available in debt service fund - - - - - - - 18,537,163 18.537,163 4,328,835 22,865,998 21,734,867 Amount to be provided for retirement of general obligation debt _ _ 6,668.233 6,666,233 5,986,185 12,654,398 11,611,69 TOTAL ASSETS AND OTHER DEBITS S 4,110.225 S^ 1,608,816 S 20,128,960 S 3,008,187 $ 69,069.314 $ 640,351 S 79 $ 18,960,160 S 25,205,396 S 142.731,488 17,882 $ 160,613,701 S 146,442,927 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES Accounts payable S 191,688 $ 4,629 S 652 S 112,370 $ 102.850 $ 14,268 $ 79 $ s - 5 426,536 $ 467,557 $ 894,093 S 445.120 Compensated absences payable - - - - 52,670 - - - 395,657 448,327 - 448.327 399,629 Accrued liabilities 80,608 - - 15.239 - - - 95,847 - 95,847 74,093 Contracts payable - - - 905,473 279,232 - 1,184,705 15,934 1,200,639 424,685 Due to other funds - - - - - - - - - - - 101,366 Advances from other funds - 270.578 - 112,741 - - - - 383,319 383,319 514,342 Deposits payable 35.590 35.540 8,167 41,757 39,436 Deferred revenues 36,736 38,910 1,591,145 - 222.292 - - - 1,889.083 1,496,377. 3,385,460 4,534,878 Accrued interest - 118.301 - 118,301 - 118.301 101,629 Bonds payable net of unamodized discount - - - 6.527.997 - - 23,475.000 30.002.997 10,315,000 40,317,997 .37,440,495 - - - - - 1,334,739 1.334J39 - t r 334,739 5330 Lease obligation Total Liabilities .- 344,622 314.117 1.591,797 .- 1,017.843 7 14 79 - 25.205,396 35,919.444 12.301,035 48,220,479 44.60Q,699 EQUITY AND OTHER CREDITS 41,487.171 41,487,171 41.487,171 42,454,032 Contributed capital - - • - - 18.960.160 - 18.960,160 368.593 19.326.753 14,925,519 Investment in general fixed assets - - - - 6,261,059 6.261,059 6,261,059 5,534,342 Retained Earnings - reserved Retained Earnings - unreserved - - - - 13,889,762 626,083 - - 14.51.5,845. 14 .8.487,359 Fund Balances Reserved for - - - 26,298 - 26,298 Prepaid items 26,298 - - - - 1,990,344 - - - 1,990.344 1,990,344 2,476.047 Capital projects 197,603 - - - - - - 197,603 - 197.603 100,000 Special projects - 131.020 399 131,419 111.804 Encumbrances 131,020 - - - - - 18,537,163 4,328,835 22,865,998 21,734,867 Oebtservice - 18.537,183 Unreserved - - - 3.608,285 - 3,808,285 3,605,002 Designated 3,608,285 - - - - 1.097,096 883.351 1,98 0,487 Undesignated 1.,4 3,765,603 1,294.699 - L 18,537,163 __� 1,990,344 _ _ - 61 626.083 ��_ _ 18.960.160 106 5,581,178 112,393 222 1 2,405,266 101,834,228 Total Equity and Other Credits TOTAL LIABILITIES. 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Z z n r CA D m m Z cn m z v r 2001 PROPERTY TAX AMENDMENTS The Omnibus Tax Bill adopted by the Minnesota Legislature during the First Special Session in 2001 (the "Tax Bill ") made numerous changes to the property tax system. Among its provisions, the Tax Bill provided for the assumption by the State of Minnesota of the general education property tax levy and certain transit costs; increased the appropriation for Local Government Aids by $140,000,000; re- imposed levy limits for two years on counties and cities over 2,500 in population; repealed the Homestead and Agricultural Credit Aid for cities, school districts and townships; provided for the gradual elimination of Limited Market Valuation; and compressed the class rates applicable to various classes of property. 2001 Class Rate Changes Local Tax Local Tax Local Tax Payable Payable Payable Property Type 2001 2002 2003 Residential Homestead Up to $76,000 1.000% 1.000% 1.000 % $76,000 - $500,000 1.650% 1.000% 1.000% Over $500,000 1.650% 1.250% 1.250% Residential Non - homestead Single Unit Up to $76,000 1.200% 1.000% 1.000% $76,000 - $500,000 1.650% 1.000% 1.000% Over $500,000 1.650% 1.250% 1.250% 2 -3 unit and undeveloped land 1.650% 1.500% 1.250 % Market Rate Apartments Regular 2.400% 1.800 % 1.500 % Small City 2.150% 1.800p 1.500 % Low - Income 1.000 % 0.900 % 1.000 % Commercial /industrial /Public Utility Up to $150,000 2.400% 1.500% 1.500% Over $150,000 3.400% 2.000% 2.000% Electric Generation Machinery 3.400 % 2.000% 2.000% Seasonal Recreational Commercial Homestead Resorts (1c) Up to $500,000 1.000% 1.000% 1.000% Over $500,000 1.000% 1.250% 1.250 % Seasonal Resorts (4c) Up to $500,000 1.650% 1.000% 1.000% Over $500,000 1.650 % 1.250% 1.250 % Seasonal Recreational Residential Up to $76,000 1.200% 1.000 % 1.000 % $76,000 - $500,000 1.650% 1.000 % 1.000 % Over $500,000 1.650% 1.250 % 1.250 % Disabled Homestead 0.450% 0.450% 0.450% Agricultural Land & Buildings Homestead Up to $115,000 0.350% 0.550 % 0.550 % $115,000 - $600,000 0.800% 0.550% 0.550 % Over $600,000 1.200 % 1.000 % 1.000 % Non- homestead 1.200% 1.000 %4 1.000 % Rate reduced to 1.25% in pay 2003 and thereafter. 2 Rate reduced to 1.5% in pay 2003 and 1.25% in pay 2004 and thereafter. 3 Rate increased to 1% in pay 2003, classification abolished thereafter. a Exempt from referendum market value tax. M recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Obligations, except in the event that use of the book -entry system for the Obligations is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Obligations may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Obligations, such as redemptions, defaults, and proposed amendments to the security documents. Beneficial Owners of the Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Obligations within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Obligations. Under its usual procedures, DTC mails an Omnibus Proxy to the Registrar as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Obligations will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records, unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Registrar, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Registrar, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. -3- A Beneficial Owner shall give notice to elect to have its Obligations purchased or redeemed, through its Direct Participant, to the nominee holding the Obligations, and shall effect delivery of such Obligations by causing the Direct Participant to transfer the Direct Participant's interest in the Obligations, on DTC's records, to the nominee holding the Obligations. The requirement for physical delivery of the Obligations in connection with a purchase or redemption will be deemed satisfied when the ownership rights in the Obligations are transferred by the Direct Participants on DTC's records and followed by a book -entry credit of purchased or redeemed Obligations to the nominee holding the Obligations. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. THE IMPROVEMENT BONDS The Improvement Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. The proceeds will be used to finance various improvements within the City, including street and utility construction for the Connemara Phase 11 project. The composition of the Improvement Bonds is as follows: Project Costs $ 3,349,193 Less: Contribution from Other Sources (1,159,888) Available City Funds (319,072 Net Project Costs $ 1,870,233 Capitalized Interest 33,142 Allowance for Discount Bidding 19,450 Costs of Issuance 22.175 Total Improvement Bonds $ 1,945,000 Security and Financing The Improvement Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City pledges special assessments against benefited properties and net revenues of the storm utility. Special assessments in the principal amount of $1,183,788 are expected to be filed in October 2003 over a term of ten years, with even annual installments of principal, and interest charged on the unpaid balance at a rate of 2% over the interest rate on the Improvement Bonds. Since the first interest payment comes due prior to first collection of the assessments, capitalized interest in the approximate amount of $33,142 has been included in the principal amount of the Improvement Bonds to make that payment. Thereafter, each year's special assessments and storm utility revenues, if collected in full, will be sufficient to pay 105% of the interest coming due August 1 in the year of collection and the principal and interest coming due the following February 1. The City does not expect a tax levy to be necessary for payment of the Improvement Bonds. STATUTORY FORMULAE CONVERSION OF ESTIMATED MARKET VALUE (EMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS General Classifications Residential Homestead Residential Non - Homestead 4 or more units Agricultural Homestead Agricultural Non- Homestead Commercial- Industrial Seasonal /Recreational Residential Vacant Land Net Tax Capacity Lew Year 1999 First $76,000 of EMV at 1.00% EMV in excess of $76,000 at 1.65% 2.40 %; except certain cities of 5,000 population or less at 2.15% First $76,000 EMV of house, garage and 1 acre at 1.00% EMV in excess of $76,000 of house, garage and 1 acre at 1.65% Remaining Property: First $115,000 of EMV at 0.35% EMV in excess of $115,000 and less than $600,000 at 0.80% EMV in excess of $600,000 at 1.20% First $76,000 of EMV of house, garage and 1 acre at 1.20 % EMV in excess of $76,000 of house, garage and 1 acre at 1.65% EMV of land and other buildings at 1.20% First $150,000 of EMV at 2.40% EMV in excess of $150,000 at 3.40% Non - Commercial First $76,000 of EMV at 1.20% EMV in excess of $76,000 at 1.65% Commercial —1.60% Homestead Resorts — 1.00% N/A (All vacant land is reclassified to highest and best use pursuant to local zoning ordinance) Net Tax Capacity Lew Year 2000 First $76,000 of EMV at 1.00% EMV in excess of $76,000 at 1.65% 2.40 %; except certain cities of 5,000 population or less at 2.15% First $76,000 EMV of house, garage and 1 acre at 1.00% Net Tax Levy Year 2001, 2002, 2003 See next page. See next page. See next page. See next page. See next page. See next page. EMV in excess of $76,000 of house, garage and 1 acre at 1.65 % Remaining Property: First $115,000 of EMV at 0.35% EMV in excess of $115,000 and less than $600,000 at 0.80% EMV in excess of $600,000 at 1.20 % First $76,000 of EMV of house, garage and 1 acre at 1.20% EMV in excess of $76,000 of house, garage and 1 acre at 1.65% EMV of land and other buildings at 1.20% First $150,000 of EMV at 2.40% EMV in excess of $150,000 at 3.40% Non- Commercial First $76,000 of EMV at 1.20% EMV in excess of $76,000 at 1.65 % Commercial - 1.60% Homestead Resorts — 1.00% N/A (All vacant land is reclassified to highest and best use pursuant to local zoning ordinance) See next page -4- 111 -5 Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) "Fiscal Disparities Law" The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as "Fiscal Disparities," was first implemented for taxes payable in 1975. Forty percent of the increase in commercial- industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis /St. Paul seven- county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area -wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area - wide tax base shall be distributed back to each assessment district. THE REVENUE BONDS Authority and Purpose The Revenue Bonds are being issued pursuant to Minnesota Statutes, Chapters 444 and 475. The proceeds will be used to finance improvements to the water utility system, specifically for the Eastside Water Main Phase II project. The composition of the Revenue Bonds is as follows: Project Costs $1,138,250 Costs of Issuance 20,050 Allowance for Discount Bidding 11,700 Total Revenue Bonds $1,170,000 Security and Financing The Revenue Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City pledges net revenues of the City's water utility. The City covenants that it will charge rates sufficient for the operation and maintenance of the City's water utility, and to make debt service payments on the Revenue Bonds and on other outstanding general obligation bonds to which the net revenues of the water utility are also pledged, a listing of which is found on page 12 of this Official Statement. Net revenues of the City's water utility are expected to be sufficient to make the August 1 interest payment due in the year of collection and the February 1 principal and interest payment due in the following year. The City does not expect a general ad valorem tax levy to be required for repayment of the Revenue Bonds. FUTURE FINANCING (The Balance of This Page Has Been Intentionally Left Blank) The City anticipates issuing approximately $2 million of general obligation water revenue bonds during the second half of 2003 for construction of a water tower. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the ability to meet its financial obligations. s LEGALITY The Bonds are subject to approval as to certain matters by Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Official Statement and will express no opinion with respect thereto. Legal opinions in substantially the form set out in Appendix I herein will be delivered at closing. III -4 -5- TAX EXEMPTION At closing Briggs and Morgan, Professional Association, Bond Counsel, will render an opinion that, at the time of their issuance and delivery to the original purchaser, under present federal and State of Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), the interest on each Bond is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross income and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions), and that interest on the Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations or the Minnesota alternative minimum tax applicable to individuals, estates or trusts; provided that interest on the Bonds is subject to federal income taxation to the extent it is included as part of adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. Preservation of the exclusion of interest on the Bonds from federal gross income and state gross and taxable net income, however, depends upon compliance by the City with all requirements of the Internal Revenue Code of 1986, as amended, (the "Code ") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from federal gross income and state gross and taxable net income. The City will covenant to comply with requirements necessary under the Code to establish and maintain the Bonds as tax- exempt under Section 103 thereof, including without limitation, requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Bonds. OTHER FEDERAL TAX CONSIDERATIONS Property and Casualty Insurance Companies Property and casualty insurance companies are required to reduce the amount of tax - exempt interest received or accrued during the taxable year on certain obligations acquired after August 7, 1986, including interest on the Bonds. Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including "net investment income. " Net investment income includes tax - exempt interest such as interest on the Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax equal to 30% of the "dividend equivalent amount" for the taxable year. The "dividend equivalent amount" is the foreign corporation's "'effectively connected earnings and profits" adjusted for increase or decrease in "U.S. net equity." A branch's earnings and profits may include tax - exempt municipal bond interest, such as interest on the Bonds. -6- Levy Limitations for Counties and Cities (M.S. 275.70 to 275.74) Levy limitations are in effect for taxes levied in 2002 and 2003 for all counties and cities with populations exceeding 2,500. Levy increases for cities are limited to its adjusted levy limit base from 1999 plus any increase due to growth in population. Counties are limited in their levy increases to the difference between their adjusted levy limit from 1999 plus any increase due to growth in population and one -half of the county's share of the net cost to the state for assumption of district court costs. Certain property tax levies are authorized outside of the new overall levy limitation ( "special levies "). Special levies do not include levies for bonded indebtedness on installment payments on conditional sales contracts, state -aid road bonds, contracts for deed, tax increment revenue bonds, and lease payments under certificates of participation. In order to receive approval for any special levy claims outside of the overall levy limitation, requests for such special levies must be submitted to the Property Tax Division of the Department of Revenue on or before September 15th in the year in which the levy is to be made for collection in the following year. The Department of Revenue has the authority to approve, reduce or deny a special levy request. Final adjustments to all levies must be made by the Department of Revenue on or before December 10th. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory "net debt" limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements that are payable wholly or partially from the proceeds of special assessments levied upon benefited property. 2. Warrants or orders having no definite or fixed maturity. 3. _ Obligations payable wholly from the income from revenue producing conveniences. 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition and betterment of public waterworks systems, and public lighting, heating or power systems, and any combination thereof, or for any other public convenience from which revenue is or may be derived. 6. Certain debt service loans and capital loans made to school districts. 7. Certain obligations to repay loans. 8. Obligations specifically excluded under the provisions of law authorizing their • issuance. 9. Certain obligations to pay pension fund liabilities. 10. Debt service funds for the payment of principal and interest on obligations other than those described above. III -3 Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279 -282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One -half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty that, depending on the type of property, increases from 2% to 4% on the day after the due date. In the case of the first installment of real property taxes due May 15, the penalty increases to 4% or 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, the penalty increases to 6% or 8% on November 1 and increases again to 8% or 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax- exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the clerk of court files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks, but in no event is the rate less than 10% or more than 14 %. Property owners subject to a tax lien judgment generally have five years (5) in the case of all property located outside of cities or in the case of residential homestead, agricultural homestead and seasonal residential recreational property located within cities or three (3) years with respect to other types of property to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction_ The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40% town or city 20 %; and school district - 40 %. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the circuit breaker credit, which relates property taxes to income and provides relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The circuit breaker credit and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, homestead and agricultural credit aid (HACA) and disparity reduction aid. HACA has been repealed for cities, school districts, and townships. Passive Investment Income of S Corporations Passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than 25 % of the gross receipts of such S corporation is passive investment income. Financial Institutions For federal income tax purposes, financial institutions are unable to deduct any portion of the interest expense allocable to the ownership of certain tax - exempt obligations acquired after August 7, 1986, including the Bonds but for the designation as Qualified Tax - Exempt Obligations below. See "Bank- Qualified Tax - Exempt Obligations" below. General The preceding is not a comprehensive list of all federal tax consequences which may arise from the receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may otherwise affect the federal income tax (or Minnesota income tax or franchise tax) Liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. BANK- QUALIFIED TAX - EXEMPT OBLIGATIONS The City will designate the Bonds as "qualified tax - exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax - exempt obligations. "Qualified tax - exempt obligations" are treated as acquired by a financial institution before August 8, 1986. Interest allocable to such obligations remains subject to the 20% disallowance under prior law. RATINGS Applications for ratings of the Bonds have been made to Moody's Investors Service ( "Moody's "), 99 Church Street, New York, New York. If ratings are assigned, they will reflect only the opinion of Moody's. Any explanation of the significance of the ratings may be obtained only from Moody's. There is no assurance that ratings, if assigned, will continue for any given period of time, or that such ratings will not be revised or withdrawn, if in the judgment of Moody's, circumstances so warrant. A revision or withdrawal of the ratings may have an adverse effect on the market price of the Bonds. 111 -2 -7- FINANCIAL ADVISOR The City has retained Springsted Incorporated, Advisors to the Public Sector, of St. Paul, Minnesota, as financial advisor (the "Financial Advisor ") in connection with the issuance of the Bonds. In preparing the Official Statement, the Financial Advisor has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for the Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the City to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds. CERTIFICATION The City has authorized the distribution of this Official Statement for use in connection with the initial sale of the Bonds. As of the date of the settlement of the Bonds, the Purchaser(s) will be furnished with a certificate signed by the appropriate officers of the City. The certificate will state that as of the date of the Official Statement, the Official Statement did not and does not as of the date of the certificate contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been Intentionally Left Blank) SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION (effective through payable 2003) Following is a summary of certain statutory provisions effective through payable 2003 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Chapter 21, Laws of Minnesota Special Session 2003 -1 was passed by the 2003 Minnesota Legislature and signed by the Governor on June 8, 2003. The enactment of this legislation could change the financial condition of certain issuers. A final determination of the effect of these changes cannot be made until a complete version of the legislation is available from the State Revisors Office. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value Each parcel of real property subject to taxation must, by statute, be appraised at least once every four years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the "Estimated Market Value." Limitation of Market Value Increases Effective through assessment year 2003, the amount of increase in market value for all property classified as agricultural homestead or non- homestead, residential homestead or non - homestead, or non - commercial seasonal recreational residential, which is entered by the assessor in the current assessment year, may not exceed the greater of (i) 10.0% of the value in the preceding assessment or (ii) 15 % of the difference between the current assessment and the preceding assessment. Indicated Market Value Because the Estimated Market Value as determined by an assessor may not represent the price of real property in the marketplace, the "Indicated Market Value" is generally regarded as more representative of full value. The Indicated Market Value is determined by dividing the Estimated Market Value of a given year by the same year's sales ratio determined by the State Department of Revenue. The sales ratio represents the overall relationship between the Estimated Market Value of property within the taxing unit and actual selling price. Net Tax Capacity The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Estimated Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Estimated Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are determined by multiplying the Net Tax Capacity by the tax capacity rate, expressed as a percentage. -8- III -1 CITY PROPERTY VALUES (This page was left blank intentionally.) 2002 Indicated Market Value of Taxable Property: $1,325,923,333` Calculated by dividing the county assessor's estimated market value of $1,153,553,300 by the 2001 sales ratio of 87.0% for the City as determined by the State Department of Revenue. (2002 sales ratios are not yet available.) 2002 Taxable Net Tax Capacity: $13,132,139 2002 Net Tax Capacity $13,525,367 Less: Captured Tax Increment Tax Capacity (420,351) Contribution to Fiscal Disparities (1,269,351) Plus: Distribution from Fiscal Disparities 1,296,474 2002 Taxable Net Tax Capacity $13,132,139 2002 Taxable Net Tax Capacity by Class of Property Commercial /Industrial, Public Utility and Personal Property $ 3,483,286 * 26.5 % Residential Homestead 9,106,459 69.4 Apartments 266,620 2.0 Agricultural 256,852 2.0 Railroad 18,922 0.1 Total $13,132,139 100.0 % Reflects adjustments for fiscal disparities and captured tax increment tax capacity. Trend of Values Indicated Estimated Taxable Tax Market Value Market Value Capacity 2002 $1,325,923,333 $1,153,553,300 $13,132,139 2001 1,122,690,460 976,740,700 11,262,405 2000 959,718,481 846,471,700 14,047,202 1999 804,301,213 729,501,200 11,918,341 1998 712,653,413 657,779,100 10,638, 961 (a) Calculated by dividing the county assessor's estimated market value by the sales ratio determined for the City each year by the State Department of Revenue. (b) See Appendix 111 for an explanation of tax capacity and legislative changes in 2001 to the Minnesota property tax laws. The decrease in taxable tax capacity in 2001 was attributable primarily to reductions in property tax class rates. -9- Ten of the Largest Taxpayers in the City EXHIBIT A * This list is current as of the date of issuance of the Bonds. -10- II -5 2002 Net List of Nationally Recognized Municipal Taxpayer Type of Business Tax Capacity Securities Information Repositories Flint Hills Resources /Koch Refining Oil Refinery $1,617,905 Xcel Energy Utility 269,315 Bloomberg Municipal Repository Clarel Corporation Retail 174,790 100 Business Park Drive Bigos- Rosemount LLC Skillman, NJ 08558 (Cannon Equipment) Manufacturing 86,794 Phone: 609- 279 -3225 Limerick Way LLC Townhouses 82,505 Fax: 609- 279 -5962 Webb Properties Manufacturing 77,968 CF Industries, Inc. ( Cenex) Fertilizer 69,182 Email: Munis(a�Bloombex�.com CUE Properties LLC Trucking/Warehouse 66,896 http : / /www.bloomberg.com/markets /municipal - contactinfo.html Gruett - Labriola Partnership Manufacturing 66,784 Continental Nitrogen & DPC Data Inc. Resources Corp. Fertilizer Blending & Plant Food 66,498 One Executive Drive Fort Lee, NJ 07024 Total $2,578,637' Phone: 201- 346 -0701 Fax: 201 - 947 - 0107 Represents 19.6% of the City's 2002 taxable net tax capacity. Email: nrmsir(a)dpcdata.com http://www.dpcdata.com CITY INDEBTEDNESS FT Interactive Data Attn: NRMSIR 100 William Street Legal Debt Limit New York, NY 10038 Phone: 212 -771 -6999 Debt Limit (2% of Estimated Market Value) $23,071,066 Fax: 212 -771 -7390 (Secondary Market Information) Less: Outstanding Net Debt Subject to Limit (1,911,434 Fax: 212- 771 -7391 (Primary Market Information) Email: NRMSIR c- i,FTID.com Legal Net Debt Margin at May 2, 2003 $21,159,632 http: / /www.interactivedata.com General Obligation Debt Supported by Taxes" Standard & Poor's J.J. Kenny Repository 55 Water Street Principal 45th Floor Date Original Final Outstanding New York, NY 10041 of Issue Amount Purpose Maturity As of 5 -2 -03 Phone: 212 - 438 -4595 Fax: 212 - 438 -3975 7 -1 -96 $1,780,000 Fire Station 2 -1 -2016 $1,315,000 Email: NRMSIR repository(a)sandp.com 12 -1 -01 725,000 Community Center Refunding 2 -1 -2013 725,000 www iikt enn .c�om/jjkenny/pser descrip data rep.html , Total $2,040,000 These issues are subject to the statutory debt limit. * This list is current as of the date of issuance of the Bonds. -10- II -5 including any other information in any Annual Report or notice of an Occurrence, in addition to that which is required by this Disclosure Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of an Occurrence in addition to that which is specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking to update such information or include it in any future Annual Report or notice of an Occurrence. SECTION 10. Default In the event of a failure of the Issuer to provide information required by this Disclosure Undertaking, any Owner may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations to provide information under this Disclosure Undertaking. A default under this Disclosure Undertaking shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer to comply with this Disclosure Undertaking shall be an action to compel performance. SECTION 11. Beneficiaries This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Participating Underwriters and Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 12. Reserved Rights The Issuer reserves the right to discontinue providing any information required under the Rule if a final determination should be made by a court of competent jurisdiction that the Rule is invalid or otherwise unlawful or, subject to the provisions of Section 8 hereof, to modify the undertaking under this Disclosure Undertaking if the Issuer determines that such modification is required by the Rule or by a court of competent jurisdiction. Dater , 2003 CITY OF ROSEMOUNT, MINNESOTA By_ Its By Its General Obligation Debt Supported Primarily by Special Assessments General Obligation Port Authority Debt Principal Date Original Final Outstanding Principal Date Original $2,405,000(x) Final Outstanding of Issue Amount Purpose Maturity As of 5 -2 -03 4 -1 -98 $2,010,000 Local Improvements 2 -1 -2009 $ 1,150,000 7 -1 -99 3,715,000 Local Improvements 2 -1 -2011 2,475,000 10 -1 -99 4,395,000 Local Improvements 2 -1 -2011 3,220,000 8 -15 -01 1,325,000 Local Improvements 2 -1 -2012 1,220,000 7 -1 -02 3,395,000 Local Improvements 2 -1 -2013 3,395,000 7 -1 -03 1,945,000 Local Improvements (the Improvement Bonds) 2 -1 -2014 1,945,000 Total $13,405,000 General Obligation Port Authority Debt 11-4 - 11 - Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 5 -2 -03 4 -1 -98 $2,405,000 Municipal Building Refunding 2 -1 -2018 $2,405,000(x) 9 -1 -00 1,750,000 Business Park Infrastructure Improvements 2 -1 -2011 1,490,000(b) 8 -15 -01 2,045,000 City Nall 2 -1 -2022 2,020,000(0 7 -1 -02 1,795,000 Highway 3 Enhancement 2 -1 -2013 1,795,000 Total $7,710,000 (a) Debt service payments on this issue are made from a combination of user fees from the municipal multi- purpose arena, and certain special tax and general fund levies. (b) This issue is being repaid from a combination of tax increment revenues and ad valorem tax levies. (c) This issue is being repaid from ad valorem taxes levied by the City. (d) This issue is being repaid from a combination of tax levies, special assessments, and storm water utility revenues. 11-4 - 11 - General Obligation Debt Supported by Revenues Total $2,040,000(b) $2,800,772.50 $13,405,000(c) $15,592,912.10 (a) Includes the Improvement Bonds at an assumed average annual interest rate of 3.25 %. (b) 81.1% of this debt will be retired within ten years. M 98.5% of this debt will be retired within ten years. SECTION 5. Reporting of Significant Events A. This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Bonds, if material: (1) ( (3) difficulties; ( ( (6) security; ( ( ( (10) and principal and interest payment delinquency; non - payment related defaults; unscheduled draws on debt service reserves reflecting financial unscheduled draws on credit enhancements reflecting financial difficulties; substitution of creditor liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax - exempt status of the modifications to rights of security holders; Bond calls; defeasances; release, substitution or sale of property securing repayment of the Bonds; (11) rating changes. B. Whenever an event listed in Section 5.A. above has occurred, the Issuer shall as soon as possible determine if such event would constitute material information for Owners of Bonds. If knowledge of the Occurrence would be material, the Issuer shall promptly file a notice of such Occurrence with each National Repository or the MSRB and with the State Depository, if any. C. The Issuer agrees to provide or cause to be provided, in a timely manner, to each National Repository or the MSRB and to the State Depository, if any, notice of a failure by the Issuer to provide the Annual Reports described in Section 4. SECTION 6. Termination of Reporting Obligation The Issuer's obligations under this Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. SECTION 7. Dissemination Agent The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. SECTION 8. Amendment; Waiver Notwithstanding any other provision of this Disclosure Undertaking, the Issuer may amend this Disclosure Undertaking, and any provision of this Disclosure Undertaking may be waived, if (a) a change in law or change in the ordinary business or operation of the Issuer has occurred, (b) such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule, and (c) such amendment or waiver is supported by an opinion of counsel expert in federal securities laws to the effect that such amendment or waiver would not materially impair the interests of Owners. SECTION 9. Additional Information Nothing in this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or -12- II -3 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 5 -2 -03 8 -1 -93 $ 945,000 Water Revenue Refunding 2 -1 -2005 $ 270,000 7 -1 -96 1,035,000 Storm Water Revenue 2 -1 -2012 705,000 7 -1 -96 500,000 Water Revenue 2 -1 -2005 140,000 10 -1 -99 855,000 Storm Water Revenue 2 -1 -2015 735,000 9 -1 -00 1,160,000 Water Revenue 2 -1 -2016 1,075,000 8 -15 -01 1,140,000 Storm Water Revenue 2 -1 -2017 1,100,000 12 -1 -01 805,000 Storm Water Revenue Refunding 2 -1 -2008 685,000 7 -1 -02 1,195,000 Water and Storm Water Revenue 2 -1 -2018 1,195,000 7 -1 -03 1,170,000 Water Revenue (the Revenue Bonds) 2 -1 -2014 1,170,000 Total $7,075,000 Annual Calendar Year Debt Service Including These Issues G.O. Debt Supported G.O. Debt Supported Primarily by by Taxes Special Assessments Principal Principal Year Principal & Interest Principal & Interest 2003 (at 5 -2) (Paid) $ 36,847.50 (Paid) $ 230,525.00 2004 $ 135,000 235,817.50 $ 2,065,000 2,550,003.35 2005 140,000 235,170.00 2,315,000 2,715,617.50 2006 150,000 239,162.50 2,105,000 2,424,005.00 2007 150,000 232,275.00 1,620,000 1,869,361.25 2008 160,000 235,220.00 1,615,000 1,802,670.00 2009 170,000 237,307.50 1,065,000 1,198,257.50 2010 175,000 233,820.00 890,000 981,090.00 2011 185,000 234,765.00 900,000 951,752.50 2012 190,000 230,130.00 390,000 414,102.50 2013 200,000 229,992.50 245,000 256,871.25 2014 120,000 139,280.00 195,000 198,656.25 2015 130,000 141,935.00 2016 135,000 139,050.00 Total $2,040,000(b) $2,800,772.50 $13,405,000(c) $15,592,912.10 (a) Includes the Improvement Bonds at an assumed average annual interest rate of 3.25 %. (b) 81.1% of this debt will be retired within ten years. M 98.5% of this debt will be retired within ten years. SECTION 5. Reporting of Significant Events A. This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Bonds, if material: (1) ( (3) difficulties; ( ( (6) security; ( ( ( (10) and principal and interest payment delinquency; non - payment related defaults; unscheduled draws on debt service reserves reflecting financial unscheduled draws on credit enhancements reflecting financial difficulties; substitution of creditor liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax - exempt status of the modifications to rights of security holders; Bond calls; defeasances; release, substitution or sale of property securing repayment of the Bonds; (11) rating changes. B. Whenever an event listed in Section 5.A. above has occurred, the Issuer shall as soon as possible determine if such event would constitute material information for Owners of Bonds. If knowledge of the Occurrence would be material, the Issuer shall promptly file a notice of such Occurrence with each National Repository or the MSRB and with the State Depository, if any. C. The Issuer agrees to provide or cause to be provided, in a timely manner, to each National Repository or the MSRB and to the State Depository, if any, notice of a failure by the Issuer to provide the Annual Reports described in Section 4. SECTION 6. Termination of Reporting Obligation The Issuer's obligations under this Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. SECTION 7. Dissemination Agent The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. SECTION 8. Amendment; Waiver Notwithstanding any other provision of this Disclosure Undertaking, the Issuer may amend this Disclosure Undertaking, and any provision of this Disclosure Undertaking may be waived, if (a) a change in law or change in the ordinary business or operation of the Issuer has occurred, (b) such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule, and (c) such amendment or waiver is supported by an opinion of counsel expert in federal securities laws to the effect that such amendment or waiver would not materially impair the interests of Owners. SECTION 9. Additional Information Nothing in this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or -12- II -3 "Repository" shall mean each National Repository and each State Depository. Annual Calendar Year Debt Service Including These Issues(continued) "Resolution" shall mean the resolution or resolutions adopted by the Governing Body of G.O. Debt Supported the Issuer providing for, and authorizing the issuance of, the Bonds. G.O. Port Authority Debt by Revenues Principal Principal "Rule" shall mean Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Year Principal & Interest Principal & Interest Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time or interpreted by the Securities and Exchange Commission. 2003 5 -2 at ( ) (Paid) $ 168,888.76 (Paid) $ 134,099.38 2004 $ 560,000. 887,840.02 $ 600,.000 893,357.32 "State" shall mean the State of Minnesota. 2005 580,000 886,901.27 735,000 998,087.51 2006 585,000 869,420.02 565,000 803,048.76 "State Depository" shall mean any public or private repository or entity designated by the 2007 615,000 2008 635,000 875,443.77 869,603.77 585,000 605,000 801,316.26 797,756.26 State as a state depository for the purpose of the Rule. As of the date of this Disclosure 2009 580,000 788,643.77 470,000 640,645.01 Undertaking, there is no State Depository in Minnesota. 2010 605,000 787,561.27 495,000 644,967.51 SECTION 3. Provision of Annual Reports 2011 635,000 2012 435,000 789,447.52 565,053.14 520,000 540,000 647,545.01 643,571.26 2013 455,000 565,125.01 470,000 550,853.76 A. Beginning in connection with the Fiscal Year ending on December 31, 2014 260,000 353,698.13 490,000 549,391.26 2003, the Issuer shall, or shall cause the Dissemination Agent to, as soon as available, but in any 2015 270,000 350,867.50 375,000 414,060.01 event not later than December 31, 2004, and by December 31 of each year thereafter, provide to 2016 285,000 352,230.00 310,000 332,248.76 each Repository an Annual Report which is consistent with the requirements of Section 4 of this 2017 305,000 357,587.50 205,000 214,869.38 Disclosure Undertaking. 2018 315,000 352,113.75 110,000 112,530.00 2019 135,000 160,990.00 B. If the Issuer is unable to provide to the Repositories an Annual Report by 2020 145,000 164,125.00 the date required in subsection A, the Issuer shall send a notice of such delay and estimated date 2021 150,000 161,750.00 of delivery to each Repository or to the MSRB and to the State Depository, if any. 2022 160,000 164,000.00 SECTION 4. Content and Format of Annual Reports The Issuer's Annual Report shall Total $7,710,000(b) $10,471,290.20 $7,075,000(x) $9,178,347.45 contain or incorporate by reference the financial information and operating data pertaining to the (a) Includes the Revenue Bonds at an assumed average annual interest rate of 3.30%. Issuer listed below as of the end of the preceding Fiscal Year. The Annual Report may be (b) submitted to each Repository as a single document or as separate documents comprising a 73.7% of this debt will be retired within ten years. package, and may cross- reference other information as provided in this Disclosure Undertaking. (c) 78.9% of this debt will be retired within ten years. The following financial information and operating data shall be supplied: Lease- Purchase Agreements A. an update of the type of information contained in the Official Statement under the caption CITY PROPERTY VALUES; CITY INDEBTEDNESS; and CITY The City has entered into a lease- purchase agreement dated March 28, 1995 for the acquisition TAX RATES, LEVIES AND COLLECTIONS; of various equipment and vehicles. The principal amount of the lease is $362,000, with semiannual payments of $25,359. The final payment is due August 1, 2005. B. Audited Financial Statements of the Issuer. The Audited Financial The City entered into a lease- purchase agreement dated May 15, 1996 for a fire truck. The Statements of the Issuer may be submitted to each Repository separately from the balance principal amount of the lease is $476,445 with annual payments of $64,896. Final payment will of the Annual Report. In the event Audited Financial Statements of the Issuer are not be due June 1, 2006. available on or before the date for filing the Annual Report with the appropriate Repositories as set forth in Section 3.A. above, unaudited financial statements shall be The City entered into a lease- purchase agreement dated May 31, 2001 for the acquisition of provided as part of the Annual Report. The accounting principles pursuant to which the various equipment and vehicles. The principal amount of the lease is $885,000, with financial statements will be prepared will be pursuant to generally accepted accounting semiannual payments of $57,660. The final payment will be due August 1, 2011. principles promulgated by the Financial Accounting Standards Board, as such principles are modified by the governmental accounting standards promulgated by the Government Accounting Standards Board, as in effect from time to time. If Audited Financial Statements are not provided because they are not available on or before the date for filing the Annual Report, the Issuer shall promptly provide them to the Repositories when available. 11 -2 -13- APPENDIX II Summary of Direct Debt Including These Issues CONTINUING DISCLOSURE UNDERTAKING Gross Less: Debt Net Debt Service Funds Direct Debt This Continuing Disclosure Undertaking (the "Disclosure Undertaking ") is executed and G.O. Debt Supported by Taxes $ 2,040,000 $ (128,566) $1,911,434 delivered by the City of Rosemount, Minnesota (the "Issuer "), in connection with the issuance of G.O. Debt Supported by Special $ General Obligation Bonds, Series 2003 (the "Bonds "). The Assessments 13,405,000 (5,527,927) 7,877,073 Bonds are being issued pursuant to a Resolution adopted July 1, 2003 (the "Resolution "). G.O. Port Authority Debt 7,710,000 (868,465) 6,841,535 Pursuant to the Resolution and this Undertaking, the Issuer covenants and agrees as follows: G.O. Debt Supported by Revenues 7,075,000 (1.,.036,436) 6,038,564 y * SECTION 1. Purpose of the Disclosure Undertaking This Disclosure Undertaking is Debt service funds are as of April 30 2003 and include money to pay both principal and interest. being executed and delivered by the Issuer for the benefit of the Owners and in order to assist the Participating Underwriters in complying with SEC Rule 15c2- 12(b)(5). Indirect General Obligation Debt SECTION 2. Definitions In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Undertaking unless otherwise defined Debt Applicable to in this Section, the following capitalized terms shall have the following meanings: 2002 Taxable G.O. Debt Tax Capacity in City Taxing Unit Net Tax Capacity As of 5- 2 -03 Percent Amount "Annual Report" shall mean any annual financial information provided by the Issuer Dakota County $ 296,320,618 $ 99,200,000 4.4% $ 4,364,800 pursuant to, and as described in, Sections 3 and 4 of this Disclosure Undertaking. ISD 196 (Rosemount - Apple Valley- Eagan) 101,437,039 126,247,280(c) 11.9 15,023,426 "Audited Financial Statements" shall mean the financial statements of the Issuer audited ISD 199 (Inver annually b an independent certified public accounting firm prepared pursuant to generally Y Y P p g � P p P g Y Grove -Pine Bend) 16,817,876 9,025,000 6.4 577,600 accepted accounting principles promulgated by the Financial Accounting Standards Board, ISD 200 (Hastings) 17,054,644 42,675,000 0.2 85,350 modified by governmental accounting standards promulgated by the Government Accounting Metropolitan Council 1,964,914,748(d) 24,650,000(e) 0.6 147,900 Standards Board. Metropolitan Transit Dist. 1,723,299,577( 159,840,000 0.7 1,118,880 "Dissemination Agent" shall mean such party from time to time designated in writing by Total $21,317,956 the Issuer to act as information dissemination agent and which has filed with the Issuer a written acceptance of such designation. (a) Only those units with debt outstanding are shown here. W Excludes debt supported by revenues and tax and aid anticipation debt. "Fiscal Year" shall be the fiscal year of the Issuer. (c) Includes $19,150,000 of annual appropriation lease revenue debt. "Governing Body" shall, with respect to the Bonds, have the meaning given that term in (d) Represents 2001 taxable net tax capacity. 2002 values are not yet available. Minnesota Statutes, Section 475.5 1, Subdivision 9. (e) Does not include outstanding general obligation debt supported by sewer revenues, 911 user fees or housing rental payments. "MSRB" shall mean the Municipal Securities Rulemaking Board. Debt Ratios Including These Issues G.O. Net G.O. Indirect & Direct Debt Net Direct Debt t "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories as of the date of execution of this Undertaking are listed on Exhibit A. To 2002 Indicated Market Value ($1,325,923,333) 1.25% 2.86% Per Capita (17,293 - 2003 City Estimate) $962 $2,194 * Excludes general obligation debt supported by revenues, state -aid street bonds and lease- purchase agreements. G "Occurrence(s)" shall mean any of the events listed in Section 5.A. of this Disclosure Undertaking. "Official Statement" shall be the Official Statement dated 2003, prepared in connection with the Bonds. "Owners" shall mean the registered holders and, if not the same, the beneficial owners of any Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. -14- II -1 is excluded, to the same extent, from both gross income and taxable net income for State of Minnesota income tax purposes (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations or the Minnesota alternative minimum tax applicable to individuals, estates or trusts; it should be noted, however, that for the purpose of computing the federal alternative minimum tax imposed on corporations, such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes and from both gross income and taxable net income for State of Minnesota income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income and taxable net income retroactive to the date of issuance of the Bonds. We express no opinion regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. Dated at Saint Paul, Minnesota, this day of July, 2003. Professional Association CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates S 1 -4 2002/03 For 1998/99 1999/00 2000/01 2001/02 Total Debt Only Dakota County 28.322% 27.247 % 25.320% 33.102% 32.463% -0- City of Rosemount(a) 41.710 39.335 36.553 59.546 57.123 9.399% ISD 196(b) 56.311 53.231 53.249 28.883 27.638 15.383 Special Districts(c) 6.702 6.455 6.378 5.021 5.225 2.048 Total 133.045% 126.268% 121.500% 126.552% 122.449% 26.830% (a) The City also has a 2002103 tax rate of 0.01382% spread on the market value of property in support of debt service on general obligation fire station bonds. (b) Independent School District 196 (Rosemount -Apple Valley- Eagan) also has a 2002103 tax rate of 0.16120% spread on the market value of property in support of an excess operating levy. (c) Special districts include Metropolitan Council, Regional Transit District, Mosquito Control, Dakota County Technical College, Dakota County Light Rail and Dakota County HRA. NOTE. Taxes are determined by multiplying the net tax capacity by the tax capacity rate, expressed as a percentage (see Appendix III). Tax Collections for the City Net Collected During Collected Amount Collection Year As of 4 -30 -03 Levy /Collect of Levy Amount Percent Amount Percent 2002/03 $6,916,955 (In Process of Collection) 2001/02 5,730,975 $5,675,507 99.0% $5,700,566 99.5% 2000/01 4,716,935 4,658,485 98.8 4,709,380 99.8 1999/00 4,289,662 4,255,292 99.2 4,288,319 99.9 1998/99 4,110,723 4,076,854 99.2 4,105,666 99.9 The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy is the basis for computing tax capacity rates. -15- FUNDS ON HAND As of April 30, 2003 2200 FIRST NATIONAL BANK BUILDING 332 MINNESOTA STREET SAINT PAUL, MINNESOTA 55101 Fund Cash and Investments R �-+ RI GrCS AND M ORGAN TELEPHONE (651) 223 -6600 L FACSIMILE (651) 223 -6450 General $ 4,296,709 Special Revenue Port Authority 2 ,731,716 308,915 PROFESSIONAL ASSOCIATION WWW.BRIGGS.COM Debt Service: Tax Supported 128,566 Assessment Supported 5,527,927 Port Authority Supported 868,465 { General Obligation Revenue Supported 1,036,438 $1,170,000 Construction 6,352,720 GENERAL OBLIGATION WATER REVENUE BONDS, Water, Sewer and Storm Water 11,991,478 SERIES 2003B Arena 67,998 CITY OF ROSEMOUNT Total $33,310,930 DAKOTA COUNTY MINNESOTA CITY INVESTMENTS City funds are invested in accordance with Minnesota Statutes, Section 118A and the City's investment policy which is more restrictive than State statutes. The City investment portfolio is managed in a manner to attain a market rate of return while preserving and protecting the capital of the overall portfolio. The Finance Director or the City Administrator is responsible for investing all funds, including making investment decisions on a daily basis and monitoring the portfolio. Pursuant to the City's investment policy the City is authorized to invest in the following: 1. Governmental Securities: Instruments such as bonds, notes, bills, mortgages and other securities which are direct obligations of the federal government or its agencies, with the principal fully guaranteed by the U.S. government or its agencies. The City will not invest in any mortgage or mortgage- related security unless a return of principal is completely guaranteed by a federal entity. 2. Certificate of Deposit. 3. Repurchase Agreement. 4. Reverse Repurchase Agreement. We have acted as bond counsel in connection with the issuance by the City of Rosemount, Dakota County, Minnesota (the "Issuer "), of its $1,170,000 General Obligation Water Revenue Bonds, Series 2003B, bearing a date of original issue of July 1, 2003 (the "Bonds "). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and we express no opinion relating thereto. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present Minnesota and federal laws (which excludes any pending legislation which may have a retroactive effect on or before the date hereof), regulations, rulings and decisions, it is our opinion that: (1) The proceedings show lawful authority for the issuance of the Bonds according to t their terms under the Constitution and laws of the State of Minnesota now in force. 5. Prime Commercial Paper. 6. Any security which is a general obligation of the State of Minnesota or any of its municipalities. 7. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. Collateral ization is required on two types of investments, certificates of deposit and repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateral ization level is 110 percent of the market value of principal and accrued interest. (2) The Bonds are valid and binding general obligations of the Issuer and all of the taxable property within the Issuer's jurisdiction is subject to the levy of an ad valorem tax to pay the same without limitation as to rate or amount; provided that the enforceability (but not the validity) of the Bonds and the pledge of net revenues for the payment of the principal and interest thereon is subject to the exercise of judicial discretion in accordance with general principles of equity, to the constitutional powers of the United States of America and to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted. (3) At the time of the issuance and delivery of the Bonds to the original purchaser, the interest on the Bonds is excluded from gross income for United States income tax purposes and -16- 1 -3 (3) At the time of the issuance and delivery of the Bonds to the original purchaser, the interest on the Bonds is excluded from gross income for United States income tax purposes and is excluded, to the same extent, from both gross income and taxable net income for State of Minnesota income tax purposes (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations or the Minnesota alternative minimum tax applicable to individuals, estates or trusts; it should be noted, however, that for the purpose of computing the federal alternative minimum tax imposed on corporations, such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes and from both gross income and taxable net income for State of Minnesota income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income and taxable net income retroactive to the date of issuance of the Bonds. We express no opinion regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. Dated at Saint Paul, Minnesota, this day of July, 2003. Professional Association 1 -2 The City attempts to diversify its investments according to type and maturity. The portfolio, as much as possible, contains both short -term and long -term investments. The long -term portion of the portfolio, meaning longer than five years, may not exceed 35% of the total funds in the portfolio. This is done to reduce overall market risk of rates changing. As of April 30, 2003 the City had a total of $31,594,427 invested funds as follows: Amount Invested Type of Security Length of Investment as of 4 -30 -03 Certificates of Deposit Less than 12 months $21,879,610 Certificates of Deposit One to ten years 2,215,000 Certificates of Deposit Over ten years 288,000 Government Asset Backed Securities Ten years or less 5,365,275 Government Asset Backed Securities Over ten years 1,734,792 Mortgage Backed Securities Over ten years 111,750 Total $31,594,427 GENERAL INFORMATION CONCERNING THE CITY The City of Rosemount, located in northern Dakota County, is a southern suburb of the Minneapolis /Saint Paul metropolitan area. The City encompasses an area of 22,560 acres and has a 2000 U.S. Census count of 14,619, a 69.6% increase from the City's 1990 Census count of 8,622. The City estimates its current population to be 17,293, an 18% increase over the 2000 U.S. Census. A major contributor to the City's tax base and economy is an industrial complex sited on 6,200 acres in the northeastern portion of the City near the Mississippi River. Firms located there include Flint Hills Resources /Koch Petroleum Group, CF Industries, Continental Nitrogen, Endres Processing and Spectro Alloys. Mid- American Pipeline Company transports gas from southern states and operates a bottling station at Pine Bend. Minnesota Pipeline Company transports Canadian and North Dakota crude oil to the Flint Hills refinery at Pine Bend. Flint Hills is a leading producer of petroleum products in Minnesota converting 290,000 barrels of crude oil into gasoline each day. This Rosemount company employs 763 full -time workers, and it has invested nearly $600 million recently in new equipment, processes, training and operations. In September 1999, Koch agreed to pay $3.5 million in fines to resolve a wastewater cleanup dispute at its Rosemount facility. In July 2000, the company agreed to pay an additional $1 million in fines related to air pollution issues at its facility located in the City and two facilities in Corpus Christi, Texas. In the agreement signed with the Environmental Protection Agency, Koch agreed to spend up to $80 million for pollution- reducing equipment and improvements at the three refineries. The University of Minnesota's Rosemount Research Center is located on an 8,000 acre tract of land situated partially in the City. This facility is utilized by the University, other research agencies, and private firms for agricultural and other research projects. I -17- APPENDIX I Major Employers Employer Product/Service Independent School District 196 Education Dakota County Technical College Education Flint Hills Resources Crude Oil Intermediate School District 917 Education Genz Ryan Plumbing & Heating Plumbing and Heating Cannon Equipment Company Manufacturing of Metal Parts Spectro Alloys Corp. Aluminum Alloys Greif Brothers Corporation Multiwall Bags Endres Processing Ltd. Livestock Feed City of Rosemount Government Dakota County HRA Government Astro Plastics Plastics Manufacturing Rayfo Inc. Industrial Refuse Containers Utilicorp United Inc. (People's Natural Gas) Natural Gas Continental Nitrogen & Resources Corp. Chemicals CF Industries, Inc. (Cenex) Warehousing /Freight Terminal (a) Represents total employment, not just within the City of Rosemount. (b) Excludes over 140 part -time and seasonal employees. Source: Telephone survey of individual employers, June 2003. Labor Force Data April 2003 Dakota County Minneapolis /St. Paul MSA Minnesota Civilian Unemployment Labor Force Rate 227,679 3.7% 1,825,708 4.2 2,918,187 4.6 Approximate Number of Employees 4,000(a) 775 763 360 200 170 125 120 80 68(b) 60 60 50 40 40 37 P. elyJ Civilian Unemployment Labor Force Rate 228,256 4.0% 1,828,104 4.4 2,917,629 4.8 Source: Minnesota Department of Economic Security. 2003 data are preliminary. Building Permits Issued by the City -18- New Sinale Familv Homes Number Total Permits 89 Number Value 2003 (to 4 -30) 244 $21,356,609 2002 1,398 82,398,820 2001 1,009 82,897,167 2000 862 52,125,217 1999 1,021 50,950,727 1998 739 31,939,355 1997 601 24,173,652 1996 655 28,440, 950 1995 641 30,376,849 1994 662 32,969,672 1993 592 39,154,474 -18- New Sinale Familv Homes Number Value 89 $19,773,915 330 61,571,739 304 60,458,504 285 39,074,424 357 40,780,200 190 21,856,164 99 10,942,651 130 13,941,688 190 20,529,873 223 23,329,937 196 20,716,580 a t A PROPOSED FORMS OF LEGAL OPINION SRI CGS AND MORGAN PROFESSIONAL ASSOCIATION $1,945,000 GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2003A CITY OF ROSEMOUNT DAKOTA COUNTY MINNESOTA W W W- BRIGGS.COM We have acted as bond counsel in connection with the issuance by the City of Rosemount, Dakota County, Minnesota (the "Issuer "), of its $1,945,000 General Obligation Improvement Bonds, Series 2003A, bearing a date of original issue of July 1, 2003 (the "Bonds "). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and we express no opinion relating thereto. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present Minnesota and federal laws (which excludes any pending legislation which may have a retroactive effect on or before the date hereof), regulations, rulings and decisions, it is our opinion that: (1) The proceedings show lawful authority for the issuance of the Bonds according to their terms under the Constitution and laws of the State of Minnesota now in force. (2) The Bonds are valid and binding general obligations of the Issuer and all of the taxable property within the Issuer's jurisdiction is subject to the levy of an ad valorem tax to pay the same without limitation as to rate or amount; provided that the enforceability (but not the validity) of the Bonds and the pledge of taxes for the payment of the principal and interest thereon is subject to the exercise of judicial discretion in accordance with general principles of equity, to the constitutional powers of the United States of America and to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted. 1 -1 2200 FIRST NATIONAL BANK BUILDING 332 MINNESOTA STREET SAINT PAUL, MINNESOTA 55101 TELEPHONE (651) 223 -6600 FACSIMILE (651) 223 -6450 Current General Fund Budget General Fund Revenues: General Property Taxes Intergovernmental Licenses and Permits Fines and Forfeits Charges for Services Miscellaneous Revenues Investment Income Transfers In Total General Fund Revenues General Fund Expenditures: General Government Public Safety Public Works Parks and Recreation Transfer Out Total General Fund Expenditures 2002 2002 2003 Adopted Budget Actual Adopted Budget $4,295,288 $4,556,291 $5,005,169 818,612 666,057 834,231 478,500 797,688 516,200 90,000 85,835 90,000 481,400 702,775 539,400 213,300 389,088 218,600 121,000 110,576 131,000 3,500 3,500 3,500 $6,501,600 $7,311,810 $7,338,100 $1,670,600 $1,557,734 $1,870,200 1,942,800 1,884,975 2,198,000 2,025,300 1,834,122 2,334,700 862,900 785,226 935,200 -0- -0- -0- $6,501,600 $6,062,057 $7,338,100 Action taken by the 2003 Minnesota Legislature provided for total reductions in City Aid (formerly titled Local Government Aid and Market Value Homestead Credit) of $142,000,000 in collection year 2003 and $170,000,000 in collection year 2004. The effect of these changes to the City of Rosemount is a reduction in aid of approximately $752,472 in 2003 and 2004. Minnesota law allows the City to levy for 60% of the lost aid during the levy cycle payable in 2004. The level of aid reductions does not pose a significant problem to the City and in the opinion of management will not affect ongoing operations. -22- Recent and Proposed Development In 2002, the City saw one construction project within the business park, a 10,000 square -foot building for Mittelstaedt Brothers Construction. The commercial area saw construction of 12,000 square feet in retail space, including a KFC /A &W Restaurant. From 1997 through 2002, an average of over $35 million in new construction value was added per year. During this same period, the City added over 1,100 single - family homes to its housing stock (an average of 222 homes per year). Additional recent and proposed commercial and industrial development in the City includes the following: • A proposed commercial development would add three restaurants to the community along with 20,000 square feet of retail stores. • The City is currently looking at completing enhancements to its downtown. The first step is a streetscape project that includes street, sidewalk and street light improvements. This project will be completed in the summer of 2003. Some of the larger housing projects currently being developed or recently completed are as follows: Units Units Built Development/Developer Housing Approved as of 5 -1 -03 Geromine Pond /Heritage Development Co. Single Family/Twin Home 104 100 Biscayne Pointe /Heritage Development Co. Single Family 152 109 Wensmann 11 Addition/ Wensmann Development Townhomes 98 94 Bloomfield /Centex Homes Single Family/Townhome 464 227 Evermoor /Contractor Property Developers Company Single Family/Townhome 999 498 Wachter Lake Senior Condos/ Wensmann Development Condominiums 48 0 Rosewood Estates /Progress Land Co. Single Family 55 0 Rosewood Village /Progress Land Co. Single Family 43 0 Carousel Plaza Townhomes/ Heritage Development Co. Townhome 38 13 Financial Institutions Full service banking is provided by the First State Bank of Rosemount and Rosemount National Bank, located in the City. As of March 31, 2003, the two banks reported deposits of 5 $48,493,000 and $46,895,000, respectively. A branch of Vermillion State Bank is also located in the City. Source: Federal Deposit Insurance Corporation website. -19- Education The major portion of the City is part of Independent School District 196, headquartered in Rosemount. The District's enrollment for the 2002/03 school year was approximately 28,139 students in grades kindergarten through twelve. The District is one of the fastest growing school districts in the State, and one of the largest employers in the City with approximately 4,000 full - time and part-time employees District -wide. The physical plant of the District consists of 18 elementary schools, six middle schools, and four senior high schools. Of these schools, two elementary schools, one junior high, and one senior high are located in the City of Rosemount. Small portions of the City are located in Independent School District 199 (Inver Grove -Pine Bend) and Independent School District 200 (Hastings), The Dakota County Technical College is also located in the City. The Technical College, located on a 96 -acre site, opened in 1973. The Technical College has an enrollment of approximately 2,000 post- secondary students. In addition, the Technical College offers an extensive adult education program. GOVERNMENTAL ORGANIZATION AND SERVICES Organization Rosemount was established as a municipal corporation in 1858, and became a statutory City in 1974. The City has a Mayor - Council form of government, with the four Council members being elected to overlapping four -year terms of office. The present City Council is listed below. Expiration of Term William H. Droste Mayor December 31, 2006 Mark DeBettignies Council Member December 31, 2006 Kimberly Shoe - Corrigan Council Member December 31, 2006 Kevin Strayton Council Member December 31, 2004 Mary Riley Council Member December 31, 2004 The City's chief administrative officer is the City Administrator, who is appointed by and serves at the discretion of the City Council Mr. James D. Verbrugge was appointed to the position of City Administrator in March 2003. Prior to that, Mr. Verbrugge served as Assistant to the City Administrator in Eagan, Minnesota since 1998. Mr. Jeffrey A. May, who has served in the City's Finance Department since 1985, was appointed as the City's Finance Director in March of 1991. Growth and development of the City is guided by a Comprehensive Land Use Plan which was commissioned soon after the consolidation in 1971 of the former Village and Town of Rosemount. The Plan outlines long -range zoning and development policy of the City, and is designed to encourage and promote orderly development and growth which will perpetuate a sound tax base. This Plan was last updated in 1999 and covers the next 25 -year period. -20- Services Police protection for the City is provided by 17 full -time officers, and four other police personnel. Fire protection is provided by 44 trained volunteers. The City has a class 5 insurance rating. The City completed an expansion of its public works facility in 1999. The expansion was funded by a 20 -year internally funded lease- purchase agreement, effective January 20, 1999, in the amount of $548,000. Municipal water, sanitary sewer and storm water services are provided to virtually all of the developed areas of the City. The municipal water service is provided by six wells with three water towers having a total storage capacity of 2,000,000 gallons. The maximum pumping capacity is 6,000,000 gallons per day with an average demand of 1,628,620 gallons pumped daily. It is the City's policy to finance all of its lateral sanitary sewer and water improvements by special assessments filed against benefited property; however, there is a provision for deferred assessments, in which case it may be necessary to provide some tax support. Core facilities are intended to be financed from water and sewer connection charges, but these too may require some tax support in the event sufficient connections do not occur in a timely manner. To date, tax support has not been necessary. The City finances the construction and long -term maintenance of its storm water core facilities through the operation of a storm water utility. Each property in the City pays a quarterly "stormwater user fee" and an initial connection charge to support the program. Interceptor sewer lines and wastewater treatment plants in the seven- county metropolitan area, of which the City is a part, are under the jurisdiction of the Metropolitan Council Environmental Services ( "MCES "). MCES finances its operations through user charges based on usage. The City is responsible for the construction and maintenance of sewer laterals. Employee Pensions All full -time and certain part-time employees of the City of Rosemount are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost- sharing multiple- employer public employees retirement plans. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All employees of the City covered by PERA belong to the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by the PEPFF. For the year ended December 31, 2002, the City's contribution to PERA was t $233,914. r -21-