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VII.6. Award Sale of Bonds – G.O. Tax Increment Revenue Refunding Bonds, Series 2015C; Harkess (CR2015-138)November 2, 2015 Council Report 2015-138 AWARD SALE OF BONDS – G.O. TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2015C Proposed Action Staff recommends approval of the following motion: Approve resolution No. 2015-089 AWARDING THE SALE OF GENERAL OBLIGATION TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2015C, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $4,490,000; FIXING THEIR FORM AND SPECIFICATIONS; AND DIRECTING THEIR EXECUTION AND DELIVERY. Adoption of this motion will approve the sale of the bonds which will be awarded based on the recommendation of Ehlers and Associates, Inc., financial advisor for this project. Overview The City of Hopkins has the opportunity to refund the 2008 HRA TIF Revenue Bonds and realize an estimated present value savings of $1,230,000. The 2008 HRA TIF Revenue Bonds were sold to finance one of the three buildings in the Cargill development. The savings from refunding the 2008 HRA bonds will reduce total debt service by an estimated $1.4 million over the next 15 years and as a result additional funds will be available to the city for development. Debt service will be paid from tax increment revenues generated from TIF 2-11. The bond will have a 15 year life, maturing in 2030 and are being issued pursuant to Minnesota Statutes, Chapter 469 and 475 with payments to come from tax increment revenues. On October 26, 2015 staff participated in a bond rating call with Standard & Poor’s. The results of that bond rating call were not yet available when this report was prepared. It will be distributed once it is received. At the October 6, 2015 Council Meeting, the Council authorized the sale of $4,490,000 G.O. Tax Increment Revenue Refunding Bonds for purposes of refunding the 2008 GO TIF Revenue Bonds. The bids will be accepted until 11 am on November 2, 2015 at which time they will be reviewed and the recommendation incorporated into Resolution 2015- 089. Primary Issues to Consider At this time, there do not appear to be any primary issues relating to the award of the bond sales. Any significant issues affecting the sale will not be known until after the closing of the bids on November 2, 2015. Staff Recommendation Staff recommends approval of the resolution. Supporting Information Resolution No. 2015-089 Financial Impact: $ 4,490,000 Budgeted: Y/N X N Source: Bond Proceeds ______________________________________ Related Documents (CIP, ERP, etc.): __None________ Christine M. Harkess, CPA, CGFM Notes: __________________ _ Finance Director EXTRACT OF MINUTES OF A MEETING OF THE CITY COUNCIL OF THE CITY OF HOPKINS, MINNESOTA HELD: November 2, 2015 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hopkins, Minnesota was called and held at the City Hall in Hopkins, Minnesota on Monday, the 2nd day of November, 2015, at 7:00 p.m., for the purpose, in part, of awarding the sale of the City’s General Obligation Tax Increment Revenue Refunding Bonds, Series 2015C, and directing their execution and delivery. The following members were present: and the following were absent: * * * * * * * * * The Mayor announced that the next order of business was consideration of the proposals which had been received for the purchase of the City’s General Obligation Tax Increment Revenue Refunding Bonds, Series 2015C, to be issued in the original aggregate principal amount of $4,490,000. The City Manager presented a tabulation of the proposals that had been received in the manner specified in the Terms of Proposal for the Bonds. The proposals are attached hereto as EXHIBIT A. After due consideration of the proposals, Member ___________ then introduced the following written resolution, the reading of which was dispensed with by unanimous consent, and moved its adoption: 469924v1 JAE HP110-87 RESOLUTION NO. 2015-089 A RESOLUTION AWARDING THE SALE OF GENERAL OBLIGATION TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2015C, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $4,490,000; FIXING THEIR FORM AND SPECIFICATIONS; AND DIRECTING THEIR EXECUTION AND DELIVERY BE IT RESOLVED By the City Council of the City of Hopkins, Hennepin County, Minnesota (the “City”) as follows: Section 1. Sale of Bonds. 1.01. Background; Authorization. (a) In accordance with Minnesota Statutes, Sections 469.001 through 469.047, as amended (the “HRA Act”), the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota (the “HRA”) established Redevelopment Project No. 2 (the “Project Area”) and approved a Redevelopment Plan (the “Project Plan”) for the Project Area. (b) The HRA and the City have established Tax Increment Financing District No. 2-11 (the “TIF District”) within the Project Area in accordance with Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”). (c) Pursuant to the HRA Act, the TIF Act, Laws of Minnesota 2003, Chapter 127, Article 10, Section 31 (the “Special Law”), and an Indenture of Trust, dated as of April 1, 2008 (the “Prior Indenture”), between the HRA and U.S. Bank National Association, as trustee (the “Prior Trustee”), the HRA issued its Tax Increment Revenue Bonds (Excelsior Crossings Project), Series 2008 (the “Series 2008 Bonds”), in the original aggregate principal amount of $5,290,000, to finance a portion of the costs of the acquisition of real property, demolition of certain structures, site remediation, and certain site improvements related to the Phase One Improvements and the Phase Two Improvements (as such terms are defined in the Prior Indenture) within the TIF District. (d) Pursuant to the Prior Indenture, the Series 2008 Bonds are payable from the tax increment revenues derived from Lot 1, Excelsior Crossing, according to the plat thereof, Hennepin County, Minnesota, according to the plat thereof, Hennepin County, Minnesota. (e) The Series 2008 Bonds are currently outstanding in the principal amount of $4,730,000 and are callable at the option of the HRA as of February 1, 2014, or any date thereafter, at a price of par plus accrued interest. (f) The City is authorized by Section 475.67, subdivision 3 of the Municipal Debt Act to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City Council to be necessary or desirable for the reduction of debt service costs to the City or for the extension or adjustment of maturities in relation to the resources available for their payment. 2 469924v1 JAE HP110-87 (g) It is necessary and desirable for the reduction of debt service costs to the HRA and the City that the City issue its General Obligation Tax Increment Revenue Refunding Bonds, Series 2015C (the “Bonds”), in the original aggregate principal amount of $4,490,000, pursuant to the TIF Act and the Municipal Debt Act (together, the “Act”), including Section 475.67, subdivision 3, to redeem and prepay the outstanding Series 2008 Bonds. (h) The City is authorized by Section 475.60, subdivision 2(9) of the Municipal Debt Act to negotiate the sale of the Bonds, it being determined that the City has retained an independent financial advisor in connection with such sale. The actions of the City staff and municipal advisor in negotiating the sale of the Bonds are ratified and confirmed in all aspects. 1.02. Award to the Purchaser and Interest Rates. The proposal of __________________ (the “Purchaser”) to purchase the Bonds is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $__________ (par amount of $4,490,000, \[plus original issue premium of $__________,\] \[less original issue discount of $__________,\] less underwriter’s discount of $_________), plus accrued interest to date of delivery, if any, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2016 % 2024 2017 2025 2018 2026 2019 2027 2020 2028 2021 2029 2022 2030 2023 True interest cost: _______% 1.03. Purchase Contract. The sum of $__________, being the amount proposed by the Purchaser in excess of $4,445,100, shall be credited to the Debt Service Fund hereinafter created or deposited in the Redemption Fund hereinafter created, as determined by the Finance Director of the City in consultation with the City’s municipal advisor. The Finance Director is directed to retain the good faith check of the Purchaser, pending completion of the sale of the Bonds, and to return the good faith checks of the unsuccessful proposers. The Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the City. 1.04. Terms and Principal Amounts of the Bonds. The City will forthwith issue and sell the Bonds pursuant to the Act, including Section 475.67, subdivision 3, in the total principal amount of $4,490,000, originally dated November 24, 2015, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: 3 469924v1 JAE HP110-87 Year Amount Year Amount 2016 $ 2024 $ 2017 2025 2018 2026 2019 2027 2020 2028 2021 2029 2022 2030 2023 1.05. Optional Redemption. The City may elect on February 1, 2024, and on any day thereafter to prepay Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 8 hereof) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. \[1.06. Mandatory Redemption; Term Bonds. To be completed if Term Bonds are requested by the Purchaser.\] Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2016, to the registered owners of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated 4 469924v1 JAE HP110-87 transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing. (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes, and payments so made to a registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. (i) Redemption. In the event any of the Bonds are called for redemption, notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 5 469924v1 JAE HP110-87 2.04. Appointment of Initial Registrar. The City appoints Bankers Trust Company, Des Moines, Iowa, as the initial Registrar. The Mayor and the City Manager are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar upon 30 days’ notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and must deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of this Council, the Finance Director must transmit to the Registrar moneys sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the City Manager and executed on behalf of the City by the signatures of the Mayor and the City Manager, provided that those signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of a Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been so prepared, executed and authenticated, the City Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in EXHIBIT B attached hereto with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be exchanged therefor and cancelled. Section 3. Form of Bond. 3.01. Execution of the Bonds. The Bonds will be printed or typewritten in substantially the form set forth in EXHIBIT B. 3.02. Approving Legal Opinion. The City Manager is authorized and directed to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which is to be complete except as to dating thereof and cause the opinion to be printed on or accompany each Bond. Section 4. Payment; Security; Pledges and Covenants. 4.01. Debt Service Fund. The Bonds will be payable from the General Obligation Tax Increment Revenue Refunding Bonds, Series 2015C Debt Service Fund (the “Debt Service Fund”) hereby created. The Debt Service Fund shall 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. All tax 6 469924v1 JAE HP110-87 increment revenues derived from Lot 1, Excelsior Crossing, according to the plat thereof, Hennepin County, Minnesota, according to the plat thereof, Hennepin County, Minnesota (the “Phase Two Tax Increment Revenues”) received by the HRA from the TIF District are pledged to the Debt Service Fund pursuant to the Pledge Agreement (as defined herein). There is also appropriated to the Debt Service Fund amounts over the minimum purchase price paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.03 hereof. 4.02. Redemption Fund. Proceeds of the Bonds, less the amounts appropriated in Section 4.01 hereof and costs of issuance of the Bonds, shall be deposited with the City in a separate fund (the “Redemption Fund”) and transferred to the Prior Trustee on or before December 10, 2015 (the “Redemption Date”) for deposit to the Bond Fund established under the Prior Indenture for the purpose of redeeming and prepaying the outstanding principal amount of and interest on the Series 2008 Bonds on the Redemption Date. 4.03. Pledge Agreement. A Tax Increment Pledge Agreement between the City and the HRA, to be dated on the date of issuance and delivery of the Bonds (the “Pledge Agreement”), is hereby approved and shall be executed in substantially the form on file with the City, with such additions, deletions, and other changes as are approved by the City Manager. The Pledge Agreement is to be executed and delivered in order to satisfy the requirements of Section 469.178, subdivision 2 of the TIF Act and Sections 475.58, subdivision 1 and 475.61, subdivision 1 of the Municipal Debt Act. The Pledge Agreement creates rights in the City and the HRA but is not intended to create duties or obligations of the City or the HRA to any other persons (including the beneficial or registered owners of the Bonds) with respect to the Phase Two Tax Increment Revenues or other revenues described or referenced in the Pledge Agreement, except to the extent required by applicable law, and is not intended to create rights in or claims by any other persons (including the beneficial or registered owners of the Bonds) with respect to the Phase Two Tax Increment Revenues or other revenues described or referenced in the Pledge Agreement, except to the extent required by applicable law. 4.04. Covenants. The estimated amount of Phase Two Tax Increment Revenues available to pay debt service on the Bonds exceeds twenty percent (20%) of the costs of the projects originally financed with the Series 2008 Bonds, which were costs eligible for reimbursement from tax increments pursuant to the HRA Act and Section 469.176, subdivision 4 of the TIF Act. 4.05. General Obligation Pledge. If a payment of principal of or interest on the Bonds shall become due when there is not sufficient money in the Debt Service Fund to pay the same, the Finance Director is directed to pay such principal or interest from the general fund of the City, and the general fund will be reimbursed for such advances out of the proceeds of the Phase Two Tax Increment Revenues when received. 4.06. No Tax Levy Needed. It is determined that the estimated collection of Phase Two Tax Increment Revenues for the payment of principal of and interest on 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 and that no tax levy is needed at this time. 4.07. Registration of Resolution. The City Manager is authorized and directed to file a certified copy of this resolution with the Taxpayer Services Division Manager and to obtain the certificate required by Section 475.63 of the Municipal Debt Act. 7 469924v1 JAE HP110-87 Section 5. Refunding; Findings; Redemption of Series 2008 Bonds. 5.01. Purpose of Refunding. It is hereby found and determined that based upon information presently available from the City’s municipal advisor, the issuance of the Bonds to refund the Series 2008 Bonds will result in a reduction of debt service or interest cost to the HRA and the City and is consistent with the covenants made with the holders of the Series 2008 Bonds. 5.02. Notice of Redemption. On November 2, 2015, the Board of Commissioners of the HRA adopted a resolution calling the outstanding Series 2008 Bonds for redemption on the Redemption Date and providing the notice of call for redemption of the Series 2008 Bonds. Such call for redemption is contingent upon the deposit of funds with the Prior Trustee necessary to redeem and prepay the principal of and interest on the Series 2008 Bonds on the Redemption Date. Section 6. Authentication of Transcript. 6.01. City Proceedings and Records. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies of proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds, and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 6.02. Certification as to Official Statement. The Mayor, the City Manager, and the Finance Director are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. 6.03. Other Certificates. The Mayor, the City Manager, and the Finance Director are hereby authorized and directed to furnish to the Purchaser at the closing such certificates as are required as a condition of sale. Unless litigation shall have been commenced and be pending questioning the Bonds or the organization of the City or incumbency of its officers, at the closing the Mayor, the City Manager, and the Finance Director shall also execute and deliver to the Purchaser a suitable certificate as to absence of material litigation, and the Finance Director shall also execute and deliver a certificate as to payment for and delivery of the Bonds. 6.04. Payment of Costs of Issuance. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to KleinBank, Chaska, Minnesota, on the closing date for further distribution as directed by the City’s municipal advisor, Ehlers & Associates, Inc. Section 7. Tax Covenant. 7.01. Tax-Exempt Bonds. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become 8 469924v1 JAE HP110-87 subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 7.02. Rebate. The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds. 7.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. 7.04. Qualified Tax-Exempt Obligations. The Bonds are hereby deemed to be “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, because the City determines that: (a) the Bonds are not “private activity bonds” as defined in Section 141 of the Code; (b) the Series 2008 Bonds were qualified tax-exempt obligations; (c) the Bonds are not taken into account in determining the status of the City as a “qualified small issuer” within the meaning of Section 265(b)(3) of the Code, because the amount of the Bonds does not exceed the outstanding amount of the Series 2008 Bonds; (d) the average maturity date of the Bonds is not later than the average maturity date of the Series 2008 Bonds; and (e) the Bonds have a maturity date which is not later than the date which is 30 years after the date the Series 2008 Bonds were issued. 7.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 8. Book-Entry System; Limited Obligation of City. 8.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.04 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (“DTC”). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 8.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the “Participants”) or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar), of any notice with respect to the Bonds, 9 469924v1 JAE HP110-87 including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Manager of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.” will refer to such new nominee of DTC; and upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Registrar and Paying Agent. 8.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Representation Letter”) which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 8.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 8.05. Payments to Cede & Co. Notwithstanding any other provision of this resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and all notices with respect to the Bond will be made and given, respectively in the manner provided in DTC’s Operational Arrangements, as set forth in the Representation Letter. Section 9. Continuing Disclosure. 9.01. Execution of Continuing Disclosure Certificate. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Mayor and City Manager and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. 9.02. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this resolution, failure of the City to comply with the 10 469924v1 JAE HP110-87 Continuing Disclosure Certificate is not to be considered an event of default with respect to the Bonds; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. Section 10. Defeasance. When all Bonds and all interest thereon have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. 11 469924v1 JAE HP110-87 The motion for the adoption of the foregoing resolution was duly seconded by Member __________ and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 12 469924v1 JAE HP110-87 Passed and adopted this 2nd day of November, 2015. Mayor Attest: City Clerk 13 469924v1 JAE HP110-87 EXHIBIT A PROPOSALS A-1 469924v1 JAE HP110-87 EXHIBIT B FORM OF BOND No. R-_____ UNITED STATES OF AMERICA $_________ STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS GENERAL OBLIGATION TAX INCREMENT REVENUE REFUNDING BOND SERIES 2015C Date of RateMaturity Original Issue CUSIP February 1, 20__ November 24, 2015 Registered Owner: Cede & Co. The City of Hopkins, Minnesota, a duly organized and existing municipal corporation in Hennepin County, Minnesota (the “City”), acknowledges itself to be indebted and for value received hereby promises to pay to the Registered Owner specified above or registered assigns, the principal sum of $__________ on the maturity date specified above, with interest thereon from the date hereof at the annual rate specified above, payable February 1 and August 1 in each year, commencing February 1, 2016, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by Bankers Trust Company, Des Moines, Iowa, as Bond Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. The City may elect on February 1, 2024, and on any day thereafter to prepay Bonds due on or after February 1, 2025. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify The Depository Trust Company (“DTC”) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. This Bond is one of an issue in the aggregate principal amount of $4,490,000 all of like original issue date and tenor, except as to number, maturity date, redemption privilege, and interest rate, all issued pursuant to a resolution adopted by the City Council on November 2, 2015 (the “Resolution”), for the purpose of providing money to refund the outstanding principal amount of revenue bonds issued by the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota (the “HRA”), pursuant to and in full conformity with the home rule charter of the City and the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters 469 and 475, as amended, specifically B-1 469924v1 JAE HP110-87 Section 475.67, subdivision 3. The principal hereof and interest hereon are payable primarily from tax increment revenues resulting from increases in taxable valuation of real property in a tax increment financing district within the City and pledged to the payment of principal of and interest on the Bonds by the HRA pursuant to a pledge agreement dated as of the date of issuance of this Bonds, as set forth in the Resolution to which reference is made for a full statement of rights and powers thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy ad valorem taxes on all taxable property in the City in the event of any deficiency in tax increment revenues pledged, which taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. The City Council has designated the issue of Bonds of which this Bond forms a part as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) relating to disallowance of interest expense for financial institutions and within the $10 million limit allowed by the Code for the calendar year of issue. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the home rule charter of the City and the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, charter, or statutory limitation of indebtedness. This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Bond Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Hopkins, Hennepin County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Manager and has caused this Bond to be dated as of the date set forth below. B-2 469924v1 JAE HP110-87 Dated: November 24, 2015 CITY OF HOPKINS, MINNESOTA (Facsimile) (Facsimile) Mayor City Manager ______________________________________ CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BANKERS TRUST COMPANY By Authorized Representative ______________________________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT _________ Custodian _________ (Cust) (Minor) TEN ENT -- as tenants by entireties under Uniform Gifts or Transfers to Minors Act, State of _______________ JT TEN -- as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. ________________________________________ ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto ________________________________________ the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint _________________________ attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: B-3 469924v1 JAE HP110-87 Notice: The assignor’s signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program (“SEMP”), the New York Stock Exchange, Inc. Medallion Signatures Program (“MSP”) or other such “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STEMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account.) Please insert social security or other identifying number of assignee ________________________________________ PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Signature of Date of Registration Registered Owner Officer of Registrar Cede & Co. Federal ID #13-2555119 B-4 469924v1 JAE HP110-87 STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) SS. ) CITY OF HOPKINS ) I, the undersigned, being the duly qualified and acting City Clerk of the City of Hopkins, Hennepin County, Minnesota (the “City”), do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the City Council of the City held on November 2, 2015 with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of the City’s General Obligation Tax Increment Revenue Refunding Bonds, Series 2015C, in the original aggregate principal amount of $4,490,000. WITNESS My hand officially as such City Clerk and the corporate seal of the City this ____ day of __________, 2015. City Clerk City of Hopkins, Minnesota (SEAL) 469924v1 JAE HP110-87