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CR 05-133 Sale of refunding bonds September 16, 2005 Council Report 2005-133 AWARD SALE OF BONDS - G.O. REFUNIDNG BONDS, SERIES 2005 A & B Pro Dosed Action Staff recommends approval of the following two motions: Approve resolution No. 2005-092 awarding the sale of $1.640.000 General Obligation Tax Increment Refunding Bonds. Series 2005A. Approve resolution No. 2005-093 awarding the sale of$$1.775.000 Taxable General Obligation Refunding Bonds of 2005B. With this motion, the sale of the bonds will be awarded based on the recommendation of Ehlers and Associates, Inc., financial advisor for this proj ect. Overview Refunding Bonds: The City of Hopkins has the authority to issue refunding bonds to pay for early retirement of old debt for new debt at a better price. Current bond rates have gone down and the city has an opportunity to issue new bonds at a lower rate to payoff old bonds that are at higher rates. All four of the bonds being refunded are callable in February 2006. The combined present value savings is estimated to be approximately $260,000. In the future, less funds will be needed to payoff our new obligation. Outstanding principal on the four bond issues being refunded total $3,630,000. Future assessments, and tax increments will pay for principal and interest on the new bonds according to the prescribed schedule. At the September 13, 2005 Council Work Session, the Council authorized the sale of$I,640,000 (proposed) bonds for refunding of the $500,000 GO Tax Increment Bonds, Series 1996C and the $2,240,000 GO Tax Increment Bonds, Series 1997A and for the side of $1,775,000 (proposed) bonds for the refunding of $1,700,000 Taxable GO Housing hnprovement Bonds, Series 1997B and the $680,000 Taxable GO Tax Increment bonds, Series 1996D. The bids will be accepted until II :00 am on September 20, 2005 at which time they will be reviewed and the recommendation incorporated into Resolutions 2005-092 and 2005-093. Primarv 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 !mown until after the closing of the bids on September 20, 2005. SUDPortinl! Information . Resolutions No. 2005-092 and 2005-093 . Official Statement (previously mailed to each council member) - included as part ofthe permanent minute files ~~ Christine M. Harkess, CPA, CGFM Finance Director Extract of Minutes of Meeting of the City Council of the City of Hopkins, Hennepin County, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hopkins, Minnesota, was duly held in the City Hall in said City on Tuesday, September 20, 2005, commencing at 7:30 o'clock P.M. 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 approximately $1,640,000 General Obligation Tax Increment Refunding Bonds, Series 2005A. The City Manager presented a tabulation of the proposals which had been received in the manner specified in the Terms of Proposal for the Bonds. The proposals were as set forth in Exhibit A attached. 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: In accordance with the official Terms of Proposal the following adjustments were made: Principal Amount: CAW-268159vl HPIlO-70 Maturities: Minimum Purchase Price: RESOLUTION NO. ~ f(JOtJ A RESOLUTION A WARDING THE SALE OF $ GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2005A; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT 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. It is hereby determined that: (a) the City is authorized by Minnesota Statutes, Chapter 475 (the "Act") and Section 475.67, Subdivision 3, of the 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 cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment; (b) Section 475.67, subdivision 4 of the Act permits the sale of refunding obligations during the six month period prior to the date on which the obligations to be refunded may be called for redemption; (c) it is necessary and desirable to reduce debt service costs that the City issue approximately $1,640,000 General Obligation Tax Increment Refunding Bonds, Series 2005A (the "Bonds") to refund certain outstanding general obligations of the City; (d) the outstanding bonds to be refunded consist of the $500,000 General Obligation Tax Increment Bonds, Series 1996C, dated October 1, 1996 (the "Series 1996C Bonds"), of which $500,000 in principal amount is currently outstanding and are callable on February 1, 2006; and the $2,240,000 General Obligation Tax Increment Bonds, Series 1997A, dated January 1, 1997 (the "Series 1997A Bonds"), of which $1,110,000 in principal amount is currently outstanding and is callable on February 1, 2006. The Series 1996C Bonds and the Series 1997 A Bonds are referred to collectively as the "Refunded Bonds". (e) the Series 1996C Bonds are secured primarily by tax increments ("Tax Increments") from Tax Increment Financing District No. 2-9 ("TIF District No. 2-9"); CAW-268159vl HPllO-70 and the Series 1997A Bonds are secured primarily by Tax Increments form Tax Increment Financing District No. 2-1 ("TIF District No. 2-1 "). (f) the Mayor and City Manager are authorized and directed to execute a Tax Increment Pledge Agreement (the "Pledge Agreement") between the City and the Housing and Redevelopment Authority in and for the City of Hopkins (the "Authority") in substantially the form on file in City Hall, pursuant to which the Authority pledges Tax Increments from TIF District No. 2-9 and TIF 2-1, respectively, to pay principal and interest on the respective portions of the Bonds allocated to refunding of the Series 1996C Bonds and the Series 1997 A Bonds. 1.02. The proposal of (the "Purchaser") to purchase $ General Obligation Tax Increment Refunding Bonds, Series 2005A (the "Bonds") of the City described in the Terms of Proposal thereof is determined to be a reasonable offer and is accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 True interest cost: 1.03. The sum of $ being the amount proposed by the Purchaser in excess of $ is credited in part to the Debt Service Fund in accordance with Section 4 hereof and in part to the redemption of the Refunded Bonds in accordance with Section 5 hereof. The City 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 forthwith. The Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the City. 1.04. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes, Chapter 475 (the "Act") in the total principal amount of $ , originally dated November 3, 2005, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward, bearing interest as above set forth, and which mature serially on February 1 in the years and amounts as follows: CAW-268159vl HPllO-70 Year Amount Year Amount 2007 2012 2008 2013 2009 2014 2010 2015 2011 2016 $ of the Bonds (the "TIF 2-9 Refunding Bonds") maturing in the amounts and on the dates set forth below are being issued to refund certain maturities of the Series 1996C Bonds: Year Amount 2012 2013 2014 2015 2016 $ ofthe Bonds (the "TIP 2-1 Refunding Bonds") maturing in the amounts and on the dates set forth below are being issued to refund certain maturities of the 1997 A Bonds: Year Amount 2007 2008 2009 2010 2011 2012 1.05. 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 ifin 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 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. 1.06. Term Bonds. To be completed if Term Bonds are requested by the Purchaser. CAW-268159vl HPllO-70 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 August 1, 2006, to the registered owners of record as of the close of business on the fifteenth day of the immediately preceding month, whether or not that day is a business day. 2.03. Registration. The City will appoint, and will maintain, 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 instnunent 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 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 instnunent of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no CAW-268159vl HPllO.70 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 Destroved 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. 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 CAW-268159vl HPllO-70 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 City Finance Director must transmit to the Registrar monies sufficient for the payment of all principal and interest then due. 2.05. Execution. Authentication and Deliverv. 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 all 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 any Bond, that signature or facsimile will nevertheless be valid and sufficient for all pwposes, 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 pwpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duIy 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 Section 3 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. The Bonds will be printed or typewritten in substantially the following form: No. R-_ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS $ GENERAL OBLIGATION TAX INCREMENT REFUNDING BOND, SERIES 2005A Rate Maturitv Date of Original Issue CUSIP February 1,20_ November 3, 2005 CAW-268159vl HPllO-70 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 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 August 1,2006, 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 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, 20 II, 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 will determine. If less than all Bonds of a maturity are called for redemption, the City will notify Depository Trust Company (DTe) 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. The City Council has designated the issue of Borids 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. This Bond is one of an issue in the aggregate principal amount of $ 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 September 20, 2005 (the "Resolution"), for the purpose of providing money to refund the outstanding principal amount of certain general obligations of the City, 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, Sections 475.67 and the principal hereof and interest hereon are payable from tax increments resulting from increases in taxable value of real property in certain tax increment financing districts in the City, 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 increments pledged, which taxes may be levied without limitation as to rate or amount. The Bonds of this CAW-268159vl HPllO-70 series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. 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 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 instnnnent of transfer satisfactory to the 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 Registrar maydeem 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 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, statutory or charter 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 Registrar by manual signature of one of its authorized representatives. IN WIlNESS 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. Dated: CITY OF HOPKINS, MINNESOTA (Facsimile) City Manager (Facsimile) Mayor CA W-268159vl HPllO-70 CERTIFICATE OF AUTIIENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BANKERS TRUST COMPANY Des Moines, Iowa By Authorized Representative 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 JT TEN -- as j oint tenants with right of survivorship and not as tenants in common Act. . . . . . (State) 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: 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: CAW-268159vl HPllO-70 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, STAMP, 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. Date of Registration Registered Owner Signature of Officer of Registrar Cede & Co. Federal ID #13-2555119 3.02. 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. CAW-268159vl HPllO-70 Section 4. Payment: Security; Pledges and Covenants. 4.01. (a) The Bonds are payable from the Refunding Bonds, Series 2005A Debt Service Fund (the "Debt Service Fund") hereby created. The City will maintain a "TIF 2-9 Refunding Account" (the "TIF 2-9 Account"), and a "TIF 2-1 Refunding Account" (the "TIF 2-1 Account") in the Debt Service Fund. All Tax Increments received from the Authority pursuant to the Pledge Agreement described in Section 1.01 will be deposited in the TIF 2-9 Refunding Account and the TIF 2-1 Refunding Account, respectively. Amounts in the TIF 2-9 Account are irrevocably pledged to the TIF 2-9 Refunding Bonds portion of the Bonds, and amounts in the TIF 2-1 Account are irrevocably pledged to the TIF 2-1 Refunding Bonds portion of the Bonds. (b) There is appropriated to the TIF 2-9 Account of the Debt Service Fund $ of proceeds of the TIF 2-9 Refunding Bonds portion of the Bonds in excess of the amounts needed to redeem the Series 1996C Bonds and pay allocated costs of issuance. There is appropriated to the TIF 2-1 Account of the Debt Service Fund $ of proceeds of the TIF 2-1 Refunding Bonds portion of the Bonds in excess of the amounts needed to redeem the Series 1997 A Bonds and pay allocated costs of issuance. (c) If the balance in either account established in the Debt Service Fund is at any time insufficient to pay all interest and principal then due on the respective portion of the Bonds payable therefrom, the Council covenants and agrees that it will each year levy an amount sufficient to take care of any accumulated or anticipated deficiency, which levy is not subject to any limitation as to rate or amount. 4.02. It is determined that the estimated collection of Tax Increments for payment of principal and interest on the Bonds will produce at least five percent 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. 4.03. The City Clerk is authorized and directed to file a certified copy of this resolution with the Taxpayer Services Division Manager of Hennepin County and to obtain the certificate required by Minnesota Statutes, Section 475.63. 4.04. It is hereby determined that upon the receipt of proceeds of the Bonds (the "Proceeds") for payment of the Refunded Bonds that an irrevocable appropriation to the debt service funds for the Refunded Bonds in the amount of such Proceeds, together with other funds of the Issuer in the amount necessary (when added to the Proceeds) to prepay all the principal of, interest on, and redemption premium (if any) for the Refunded Bonds, will have been made within the meaning of Section 475.61, subdivision 3 of the Act and the City Manager is hereby authorized and directed to certify such fact to and request the Taxpayer Services Division Manager to cancel any and all tax levies made by the resolutions authorizing and approving the Refunded Bonds. Section 5. Refunding: Findings: Redemption of Refunded Bonds. 5.01. The Refunded Bonds are: the General Obligation Tax Increment Bonds, Series 1996C of which $500,000 in principal amount is callable on February 1, 2006; and the CAW-268\S9v\ HPIIO-70 General Obligation Tax Increment Bonds, Series 1997A, of which $1,110,000 in principal amount is callable on February 1,2006. It is hereby found and determined that based upon information presently available from the City's financial advisers, the issuance of the Bonds is consistent with covenants made with the holders thereof and is necessary and desirable for the reduction of debt service cost to the municipality. 5.02. It is hereby found and determined that the Proceeds together with other funds of the Issuer irrevocably appropriated hereunder will be sufficient to prepay all of the principal of, interest on and redemption premiwn (if any) on the Refunded Bonds. 5.03. The Refunded Bonds maturing on February 1, 2007 and February 1, 2012, respectively, and thereafter will be redeemed and prepaid on February 1, 2006. The Refunded Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the forms of Notice of Call for Redemption attached hereto as Exhibits B and C which terms and conditions are hereby approved and incorporated herein by reference. The respective registrar for each of the Refunded Bonds is hereby authorized and directed to forthwith publish the respective Notice of Call for Redemption in a publication qualified under Section 475.54 of Minnesota Statutes (to the extent required by law) and to send written notices of call to the paying agent for the Refunded Bonds. Section 6. Authentication of Transcript. 6.01. 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 instrwnents, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 6.02. The Mayor, City Manager and Finance Director are hereby 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. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses (other than amounts payable to Kennedy & Graven, Chartered as Bond Counsel) to U.S. Trust Company, Minneapolis, Minnesota on the closing date for further distribution as directed by the City's financial adviser, EWers & Associates, Inc. Section 7. Tax Covenant. 7.01. 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 wruch CAW-268159vl HPllO-70 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 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. (a) 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, and the rebate of excess investment eamings to the United States, if the Bonds (together with other obligations reasonably expected to be issued in calendar year 2005) exceed the small-issuer exception amount of $5,000,000. (b) For purposes of qualifying for the small issuer exception to the federal arbitrage rebate requirements, the City finds, determines and declares that the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities of the City) during the calendar year in which the Bonds are issued and outstanding at one time is not reasonably expected to exceed $5,000,000, all within the meaning of Section 148(t)(4)(D) ofthe Code. Furthermore: (i) each of the Refunded Bonds was issued as part of an issue which was treated as meeting the rebate requirements by reason of the exception for governmental units issuing $5,000,000 or less of bonds; (ii) the average maturity of the Bonds does not exceed the remaining average maturity of the Refunded Bonds; and (iii) no maturity of the Bonds has a maturity date which is later than the date which is 30 years after the date the original bonds (refunded by the Refunded Bonds) were issued. 7.03. 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. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; CA W-268159vl HPllO-70 (b) the City hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b )(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds, that are not qualified 501(c)(3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2005 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2005 have been designated for purposes of Section 265(b )(3) of the Code. 7.05. 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 Svstem: Limited Obligation ofCitv. 8.01. 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 1.03 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 ofDTC. 8.02. 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, 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 CAW-268159vl HPllO-7Q 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 govem 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-Entrv Svstem. In the event the City, by resolution of the City Council, detennines 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 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. 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 Continuing Disclosure Certificate will not 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. 9.02. "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. CA W-268159vl HPllO-70 Section 10. Defeasance. 10.01. When all Bonds (or respective portions thereof) 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 (or respective portions thereof) 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. (The remainder of this page is intentionally left blank.) CAW-268159vl HPllO-70 Passed and adopted this 20th day of September, 2005. CITY OF HOPKINS, MINNESOTA Mayor City Manager Attest: City Clerk CAW-268159vl HPllO-70 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. CAW-268159vl HPllO-70 STATEOFMINNESOTA ) ) 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, 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 September 20, 2005 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 $ . General Obligation Tax Increment Refunding Bonds, Series 2005A of the City. WITNESS My hand officially as such City Clerk and the corporate seal of the City this day of ,2005. City Clerk Hopkins, Minnesota (SEAL) CAW-268159vl HPllO-70 STATE OF MINNESOTA TAXPAYER SERVICES DIVISION MANAGER'S CERTIFICATE AS TO REGISTRATION WHERE NO AD VALOREM TAX LEVY COUNTY OF HENNEPIN I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that a resolution adopted by the City Council of the City of Hopkins, Minnesota, on September 20, 2005, relating to General Obligation Tax Increment Refunding Bonds, . Series 2005A, in the amount of $ , dated November 3, 2005, has been filed in my office and said obligations have been registered on the register of obligations in my office. WITNESS My hand and official seal this _ day of ,2005. Taxpayer Services Division Manager Hennepin County, Minnesota (SEAL) CAW-268159vl HPllO-70 EXHIBIT B NOTICE OF CALL FOR REDEMPTION $500,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1996C CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on FEBRUARY 1,2006 all outstanding bonds of the City designated as General Obligation Tax Increment Bonds, Series 1996C, dated October 1, 1996, having stated maturity dates of February 1 in the years 2012 through 12016, both inclusive, totaling $500,000 in principal amount, and with the following CUSIP nwnbers: Year of Maturitv Amount CUSIP 2012 $85,000 2013 95,000 2014 100,000 2015 105,000 2016 115,000 The bonds are being called at a price of par plus accrued interest to February 1, 2006, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the office of Bankers Trust Company, Des Moines, Iowa, on or before February 1,2006. Important Notice: In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2001, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with your social security nwnber or federal employer identification nwnber, properly certified. This requirement is fulfilled by submitting a W-9 Fonn, which may be obtained at a bank or other financial institution. The Registrar will not be responsible for the selection or use of the CUSIP nwnber, nor is any representation made as to the correctness indicated in the Redemption Notice or on any Bond. It is included solely for convenience of the Holders. CAW-268159vl HPllO-70 Dated: September 20,2005. BY ORDER OF THE CITY COUNCIL By: /s/ Terry Obermaier City Clerk City of Hopkins, Minnesota CAW-268159vl HPllO-70 ATTACHMENT C NOTICE OF CALL FOR REDEMPTION $2,240,000 GENERAL OBLIGATION TAX INCREMENT BONDS,SERlESI997A CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on FEBRUARY 1,2006 all outstanding bonds of the City designated as General Obligation Tax Increment Bonds, Series 1997A, dated January I, 1997, having stated maturity dates of February I in the years 2007 through 2012, both inclusive, totaling $1,110,000 in principal amount, and with the following CUSIP numbers: Year of Maturity Amount CUSIP 2007 $160,000 2008 170,000 2009 180,000 2010 190,000 2011 200,000 2012 210,000 The bonds are being called at a price of par plus accrued interest to February I, 2006, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the office of Bankers Trust Company, Des Moines, Iowa, on or before February 1,2006. Important Notice: In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2001, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with your social security number or federal employer identification number, properly certified. This requirement is fulfilled by submitting a W-9 Form, which may be obtained at a bank or other financial institution. The Registrar will not be responsible for the selection or use of the CUSIP number, nor is any representation made as to the correctness indicated in the Redemption Notice or on any Bond. It is included solely for convenience of the Holders. CA W-268159vl HPllO-70 Dated: September 20,2005. BY ORDER OF THE CITY COUNCIL By: Isl Terry Obermaier City Clerk City of Hopkins, Minnesota CAW-268159vl HPllO-70 Extract of Minutes of Meeting of the City Council of the City of Hopkins, Hermepin County, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hopkins, Mirmesota, was dilly held in the City Hall in said City on Tuesday, September 20, 2005, commencing at 7:30 o'clock P.M. 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 approximately $1,775,000 Taxable General Obligation Refunding Bonds, Series 2005B. The City Manager presented a tabulation of the proposals which had been received in the manner specified in the Terms of Proposal for the Bonds. The proposals were as set forth in Exhibit A attached. 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: In accordance with the official Terms of Proposal the following adjustments were made: Principal Amount: CAW-268163vl HPllO-70 Maturities: Minimum Purchase Price: RESOLUTION NO. q31 ')005 A RESOLUTION AWARDING THE SALE OF $ TAXABLE GENERAL OBLIGATION REFUNDING BONDS, SERIES 2005B; FIXING THElR FORM AND SPECIFICATIONS; DIRECTING THElR EXECUTION AND DELIVERY; AND PROVIDING FOR THElR PAYMENT 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. It is hereby determined that: a) the City is authorized by Minnesota Statutes, Chapter 475 (the "Act") and Section 475.67, Subdivision 3, of the 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 cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment; (b) Section 475.67, subdivision 4 of the Act permits the sale of refunding obligations during the six month period prior to the date on which the obligations to be refunded may be called for redemption; (c) it is necessary and desirable to reduce debt service costs that the City issue approximately $1,775,000 Taxable General Obligation Refunding Bonds, Series 2005B (the "Bonds") to refund certain outstanding general obligations of the City; (d) the outstanding bonds to be refunded consist of the $1,700,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B, dated June I, 1997 (the "Series 1997B Bonds"), of which $1,300,000 in principal amount is currently outstanding and are callable on February I, 2006; and the $680,000 General Obligation Taxable Tax Increment Bonds, Series 1996D, dated October I, 1996 (the "Series 1996D Bonds"), of which $430,000 in principal amount is currently outstanding and is callable on February I, 2006. The Series 1997B Bonds and the Series 1996D Bonds are referred to collectively as the "Refunded Bonds." CAW-268163vl HPllO-70 (e) the Series 1997B Bonds are secured primarily by certain housing improvement fees ("Housing Fees") levied on property within Housing hnprovement Area No.2 pursuant to City Council Resolution No. 97-9, adopted February 4, 1997 (the "Fee Resolution"), and the proceeds of the Series 1997B Bonds were used to finance certain housing improvements in Housing hnprovement Area No.2 pursuant to a Development Agreement between the City and Westbrooke Patio Homes Association, Inc. dated as of April 9, 1997 (the "Development Agreement"). (f) the Series 1996D Bonds are secured primarily by tax increments ("Tax Increments") from Tax Increment Financing District No. 2-9 ("TIF District No. 2-9"). (g) the Mayor and City Manager are authorized and directed to execute a Tax Increment Pledge Agreement (the "Pledge Agreement") between the City and the Housing and Redevelopment Authority in and for the City of Hopkins (the "Authority") in substantially the form on file in City Hall, pursuant to which the Authority pledges Tax Increments from TIF District No. 2-9 to pay principal and interest on the portion of the Bonds allocated to refunding of the Series 1996D Bonds. 1.02. The proposal of (the "Purchaser") to purchase $ Taxable General Obligation Refunding Bonds, Series 2005B (the "Bonds") of the City described in the Terms of Proposal thereof is determined to be a reasonable offer and is accepted, the proposal being to purchase the Bonds at a price of $ plus accrued interest to date of delivery, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 True interest cost: 1.03. The swn of $ being the amount proposed by the Purchaser in excess of $ is credited in part to the Debt Service Fund in accordance with Section 4 hereof and in part to redemption of the Refunded Bonds in accordance with Section 5 hereof. The City 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 forthwith. The Mayor and City Manager are directed to execute a contract with the Purchaser on behalf of the City. 1.04. The City will forthwith issue and sell the Bonds pursuant to Minnesota Statutes, Chapter 475 (the "Act") in the total principal amount of$ , originally dated November 3, 2005, in the denomination of $5,000 each or any integral multiple thereof, nwnbered No. R-l, CAW-268163vl HPllO-70 upward, bearing interest as above set forth, and which mature serially on February 1 in the years and amounts as follows: Year Amount Year Amount 2007 2013 2008 2014 2009 2015 2010 2016 2011 2017 2012 2018 $ of the Bonds (the "Housing hnprovement Refunding Bonds") maturing in the amounts and on the dates set forth below are being issued to refund certain maturities of the Series 1997B Bonds: Year Amount 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ of the Bonds (the "TlF Refunding Bonds") maturing in the amounts and on the dates set forth below are being issued to refund certain maturities of the 1996D Bonds: Year Amount 2007 2008 2009 2010 2011 1.05. The City may elect on February I, 2015, and on any day thereafter to prepay Bonds due on or after February 1, 2016. Redemption may be in whole or in part and if in part, at the option of the City and in such marmer as the City will determine. If less than all Bonds of a CAW-268163vl HPIIO-70 maturity are called for redemption, the City will notify 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. 1.06. Term Bonds. To be completed if Term Bonds are requested by the Purchaser. Section 2. Registration and Pavment. 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 Pavment 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 August 1,2006, to the registered owners of record as of the close of business on the fifteenth day of the immediately preceding month, whether or not that day is a business day. 2.03. Registration. The City will appoint, and will maintain, 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 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. CAW.268163vl HPllO-70 (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) hnproper 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 Destroved 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 CAW-268163vl HPllO-70 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. 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 City Finance Director must transmit to the Registrar monies sufficient for the payment of all principal and interest then due. 2.05. Execution. Authentication and Deliverv. 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 all 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 delive!)' of any 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 delive!)'. Notwithstanding such execution, a Bond will not be valid or obligato!)' 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 pnce. 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 Section 3 with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and delive!)' of definitive Bonds the temporary Bonds will be exchanged therefor and cancelled. Section 3. Form of Bond. 3.01. The Bonds will be printed or typewritten in substantially the following form: CAW-268163vl HPIIO-70 No.R- UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS $ TAXABLE GENERAL OBLIGATION REFUNDING BOND, SERIES 2005B Rate Maturitv Date of Original Issue CUSIP February 1,20_ November 3, 2005 Registered Owner: Cede & Co. The City of Hopkins, Minnesota, a dilly organized and existing municipal corporation in Hennepin County, Minnesota (the "City"), acknowledges itself to be indebted and for value received 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 August 1, 2006, 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 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 1,2015, and on any day thereafter to prepay Bonds due on or after February 1, 2016. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. Ifless than all Bonds of a maturity are called for redemption, the City will notify 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 $ 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 September 20, 2005 (the "Resolution"), for the pmpose of providing money to refund the outstanding principal amount of certain general obligations of the City, 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 CAW-268163vl HPIIO-70 Statutes, Sections 475.67 and the principal hereof and interest hereon are payable in part from housing improvement fees levied on a property within a housing improvement area in the City and in part from tax increments resulting from increases in taxable valuation in a tax increment financing district in the City, 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 housing improvement fees and tax increments 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. 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 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 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 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 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 issu;mce of this Bond does not cause the indebtedness of the City to exceed any constitutional, statutory or charter 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 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. Dated: CAW-268163vl HPllO-70 CITY OF HOPKINS, MINNESOTA (Facsimile) City Manager (Facsimile) Mayor CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. BANKERS TRUST COMYANY Des Moines, Iowa By Authorized Representative 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 III common UNIF GIFT MIN ACT Custodian (Cust) (Minor) TEN ENT -- as tenants by entireties under Uniform Gifts or Transfers to Minors JT TEN -- as joint tenants with right of survivorship and not as tenants in common Act. . . . . . (State) 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: CAW.268163vl HPIIO.70 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 detennined by the Registrar in addition to, or in substitution for, STAMP, 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. Date of Registration Registered Owner Signature of Officer of Registrar Cede & Co. Federal ill #13-2555119 CAW-268163vl HPll0-70 3.02. 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; Securitv; Pledges and Covenants. 4.01. (a) Generally. The Bonds are payable from the Refunding Bonds, Series 2005A Debt Service Fund (the ''Debt Service Fund") hereby created. The City will maintain a "Housing hnprovement Debt Service Account" (the "Housing hnprovement Account"), and a "TIP Debt Service Account" (the "TIP Account") in the Debt Service Fund. Amounts in the Housing hnprovement Account are irrevocably pledged to the Housing hnprovement Refunding Bonds portion of the Bonds, and amounts in the TIP Account are irrevocably pledged to the TIP Refunding Bonds portion of the Bonds. (b) Housing Improvement Account. The Housing hnprovement Account will be maintained as a separate account within the existing Housing Fund established by the resolution awarding sale of the Series 1997B Bonds. Within the Housing Fund, there will be established and maintained separate accounts as follows: (i) Housing Refunding Account, into which account will be deposited proceeds of the Housing hnprovement Refunding Bonds portion of the Bonds in the amount necessary to redeem the Series 1997B Bonds in accordance with Section 5 hereof. (ii) Housing Improvement Account, into which account will be deposited Housing Fees in the amount necessary to pay when due the principal, interest and redemption premium, if any, on the Housing hnprovement Refunding Bonds portion of the Bonds. There is also appropriated to the Housing hnprovement Account $ of proceeds of the Housing hnprovement Refunding Bonds portion of the Bonds in excess of the amounts needed to redeem the Series 1997B Bonds and pay allocated costs of issuance. In the event of any current or anticipated deficiency in Housing Fees (after taking into account any revenues collected or anticipated to be collected under the Development Agreement), the City Council will levy ad valorem taxes in the amount of the current or anticipated deficiency. (iii) Surplus Account, into which account will be deposited all Housing Fees in excess of the amounts required to be deposited into the Housing hnprovement Account and the Refunding Account under this Section. Amounts in the Surplus Account shall be applied and disbursed in accordance with the Development Agreement. Money in the funds and accounts created by this Section 4.01(b) will be kept separate from other municipal funds and deposited only in a bank or banks which are members of the Federal Deposit Insurance Corporation (FDIC). Deposits which cause the aggregate deposits of the City in anyone bank to be in excess of the amount insured by FDIC must be continuously secured in the CAW-268163vl HPllQ-7Q manner provided by law for the investment of municipal funds. Income derived from investments in the Refunding Account and the Housing hnprovement Account shall be credited to those respective accounts. Income derived from investments in the Surplus Account shall be credited to the Administration Fund established under the Development Agreement. The City further covenants with the holders from time to time of the Bonds as follows: (1) The City has caused the Housing Fees for the housing improvements in Housing hnprovement Area No.2 to be promptly levied against housing units in such area and will take all steps necessary to assure prompt collection; and (2) the City will keep complete and accurate books and records showing: receipts and disbursements in connection with the housing improvements, Housing Fees levied therefor and other funds appropriated for their payment, collections thereof and disbursements therefrom, and monies on hand. (c) TIF Account. Proceeds of the TIP Refunding Bonds portion of the Bonds will be deposited in a "TIP Refunding Account" and applied to redeem the Series 1996D Bonds in accordance with Seciton 5. All Tax Increments received from the Authority pursuant to the Pledge Agreement described in Section 1.01 will be credited for deposit in the TIP Account. There is also appropriated to the TIP Account $ of proceeds of the TIP Refunding Bonds portion of the Bonds in excess of the amounts needed to redeem the Series 1996D Bonds and pay allocated costs of issuance. If the balance in the TIP Account is at any time insufficient to pay all interest and principal then due on the TIP Refunding Bonds portion of the Bonds, the Council covenants and agrees that it will each year levy an amount sufficient to take care of any accumulated or anticipated deficiency, which levy is not subject to any limitation as to rate or amount. 4.02. It is detennined that the estimated collection of Housing Fees for payment of principal and interest on the Housing hnprovement Refunding Bonds portion of the Bonds will produce at least five percent in excess of the amount needed to meet, when due, the principal and interest payments on such portion of the Bonds, and that the estimated collection of Tax Increments for payment of principal and interest on the TIP Refunding Bonds portion of the Bonds will produce at least five percent in excess of the amount needed to meet, when due, the principal and interest payments on such portion of the Bonds, and that no tax levy is needed at this time. 4.03. The City Clerk is authorized and directed to file a certified copy of this resolution with the Taxpayer Services Division Manager of Hennepin County and to obtain the certificate required by Minnesota Statutes, Section 475.63. 4.04. It is hereby determined that upon the receipt of proceeds of the Bonds (the "Proceeds") for payment of the Refunded Bonds that an irrevocable appropriation to the debt service funds for the Refunded Bonds in the amount of such Proceeds, together with other funds of the Issuer in the amount necessary (when added to the Proceeds) to prepay all the principal of, interest on, and redemption premium (if any) for the Refunded Bonds, will have been made within the meaning of Section 475.61, subdivision 3 of the Act and the City Manager is hereby authorized and directed to certify such fact to and request the Taxpayer Services Division Manager to cancel any and all tax levies made by the resolutions authorizing and approving the Refunded Bonds. CAW-268163vl HPllO-70 Section 5. Refunding; Findings: Redemption of Refunded Bonds. 5.01. The Refunded Bonds are: the Taxable General Obligation Housing Improvement Area Bonds, Series 1997B of which $1,300,000 in principal amount is callable on February I, 2006; and the General Obligation Taxable Tax Increment Bonds, Series 1996D, of which $430,000 in principal amount is callable on February I, 2006. It is hereby found and determined that based upon information presently available from the .City's financial advisers, the issuance of the Bonds is consistent with covenants made with the holders thereof and is necessary and desirable for the reduction of debt service cost to the municipality. 5.02. It is hereby found and determined that the Proceeds together with other funds of the Issuer irrevocably appropriated hereunder will be sufficient to prepay all of the principal of, interest on and redemption premium (if any) on the Refunded Bonds. 5.03. The Refunded Bonds maturing on February I, 2007, and thereafter will be redeemed and prepaid on February I, 2006, from amounts in the Housing Refunding Account and TIP Refunding Account, respectively, established under Section 4.01 hereof. The Refunded Bonds will be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the forms of Notice of Call for Redemption attached hereto as Exhibits B and C which terms and conditions are hereby approved and incorporated herein by reference. The respective registrar for each of the Refunded Bonds is hereby authorized and directed to forthwith publish the respective Notice of Call for Redemption in a publication qualified under Section 475.54 of Minnesota Statutes (to the extent required by law) and to send written notices of call to the paying agent for the Refunded Bonds. Section 6. Authentication of Transcript. 6.01. 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. The Mayor, City Manager and Finance Director are hereby 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 ofthe Official Statement. 6.03. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses (other than amounts payable to Kennedy & Graven, Chartered as Bond Counsel) to U.S. Trust Company, Minneapolis, Minnesota on the closing date for further distribution as directed by the City's financial adviser, Ehlers & Associates, Inc. CAW-268163vl HPllO-70 Section 7. Book-Entry SyStem; Limited Obligation ofCitv. 7.01. 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 1.03 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 ofDTC. 7.02. 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, 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 ofDTC; and upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Registrar and Paying Agent. 7.03. Reoresentation 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. CAWM268163vl HPIIO-70 7 04. Transfers Outside Book-Entry Svstem. In the event the City, by resolution of the City Council, detennines 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. 7.05. 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 notices with respect to the Bond will be made and given, respectively in the marmer provided in DTC's Operational Arrangements as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. 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 Continuing Disclosure Certificate will not 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. 8.02. "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. Section 9. Defeasance. When all Bonds (or respective portions thereof) 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 (or respective portions thereof) 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. (The remainder of this page is intentionally left blank.) CAW-268163vl HPllO-70 Passed and adopted this Attest: day of City Clerk CA W-268163vl HPIIO-70 ,2005. CITY OF HOPKINS, MINNESOTA Mayor City Manager 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. CAW-268163vl HPIIO-70 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, 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 September 20, 2005 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 $ Taxable General Obligation Refunding Bonds, Series 2005B of the City. WITNESS My hand officially as such City Clerk and the corporate seal of the City this day of ,2005. City Clerk Hopkins, Minnesota (SEAL) CAW-268163vl HPllO-70 STATE OF MINNESOTA TAXPAYER SERVICES DIVISION MANAGER'S CERTIFICATE AS TO REGISTRATION WHERE NO AD VALOREM TAX LEVY COUNTY OF HENNEPIN I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that a resolution adopted by the City Council of the City of Hopkins, Minnesota, on September 20, 2005, relating to Taxable General Obligation Refunding Bonds, Series 2005B, in the amount of $ , dated November 3, 2005, has been filed in my office and said obligations have been registered on the register of obligations in my office. WITNESS My hand and official seal this _ day of ,2005. Taxpayer Services Division Manager Hennepin County, Minnesota (SEAL) CAW-268163vl HPllO-70 EXHIBIT B NOTICE OF CALL FOR REDEMPTION $1,700,000 TAXABLE GENERAL OBLIGATION HOUSING IMPROVEMENT AREA BONDS, SERIES 1997B CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that, by order of the City Connci1 of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on FEBRUARY 1,2006 all outstanding bonds of the City designated as Taxable General Obligation Housing Improvement Area Bonds, Series 1997B, dated Jnne 1, 1997, having stated maturity dates of February I in the years 2007 through 2018, both inclusive, totaling $1,300,000 in principal amount, and with the following CUSIP numbers: Year ofMaturitv Amount CUSIP 2007 $70,000 2008 75,000 2009 80,000 2010 85,000 2011 95,000 2012 100,000 2013 110,000 2014 115,000 2015 125,000 2016 135,000 2017 150,000 2018 160,000 The bonds are being called at a price of par plus accrued interest to February 1, 2006, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the office of Bankers Trust Company, Des Moines, Iowa, on or before February 1, 2006. Important Notice: In compliance with the Economic Growth and Tax Relief Reconciliation Act of2001, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with CAW-268163vl HPllO-70 your social security number or federal employer identification number, properly certified. This requirement is fulfilled by submitting a W-9 Form, which may be obtained at a bank or other financial institution. The Registrar will not be responsible for the selection or use of the CUSIP number, nor is any representation made as to the correctness indicated in the Redemption Notice or on any Bond. It is included solely for convenience of the Holders. Dated: September 20, 2005. BY ORDER OF THE CITY COUNCIL By: Isl Terry Obermaier City Clerk City of Hopkins, Minnesota CAW-268163vl HPllO-70 ATTACHMENT C NOTICE OF CALL FOR REDEMPTION $680,000 GENERAL OBLIGATION TAXABLE TAX INCREMENT BONDS, SERIES 1996D CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Hopkins, Hennepin County, Minnesota, there have been called for redemption and prepayment on FEBRUARY 1,2006 all outstanding bonds of the City designated as General Obligation Taxable Tax Increment Bonds, Series 1996D, dated October 1, 1996, having stated maturity dates of February 1 in the years 2007 through 2011, both inclusive, totaling $430,000 in principal amount, and with the following CUSIP numbers: Year of Maturitv Amount CUSIP 2007 $75,000 2008 80,000 2009 85,000 2010 90,000 2011 100,000 The bonds are being called at a price of par plus accrued interest to February 1, 2006, on which date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for redemption are requested to present their bonds for payment at the office of Bankers Trust Company, Des Moines, Iowa, on or before February 1, 2006. Important Notice: In compliance with the Economic Growth and Tax Relief Reconciliation Act of2001, federal backup withholding tax will be withheld at the applicable backup withholding rate in effect at the time the payment by the redeeming institutions if they are not provided with your social security number or federal employer identification number, properly certified. This requirement is fulfilled by submitting a W-9 Form, which may be obtained at a bank or other financial institution. The Registrar will not be responsible for the selection or use of the CUSIP number, nor is any representation made as to the correctness indicated in the Redemption Notice or on any Bond. It is included solely for convenience of the Holders. CAW-268163vl HPllO-70 Dated: September 20,2005. BY ORDER OF THE CITY COUNCIL By: Isl Terry Obermaier City Clerk City of Hopkins, Minnesota CA W-268163v1 HPIIO-70 . EHLERS & ASSOCIATES INC Dear Elected Official: At your direction, we have prepared the enclosed preliminary Official Statement describing this [mancial transaction, which must meet the Securities and Exchange Commission disclosure requirements. This Official Statement is also being distributed to potential bidders who will rely on the contents of this document in assessing the security of this issue before submitting their bid. The resolution you will consider when you award the sale of this offering to the successful bidder will ask you to approve the contents of this Official Statement by designating it as the "Final Official Statement". "A Pocket Guide for Elected and Other Public Officials" prepared by the National League of Cities; National Association of Counties; National Association of State Auditors, Comptrollers, and Treasurers; and the Govermnent Finance Officers Association with input from the Securities and Exchange Commission recommends that municipal officials ask the following questions of outside professionals who produce disclosure documents for the sale of municipal obligations. 1. What is the nature or scope of the written opinion or certification, if any, that you are giving in this transaction and relating to the disclosure document? Have we given you access to the information you need? 2. Have you explained to us all aspects of the structure or nature of this transaction so that you are confident we fUlly understand all critical aspects? Does our official statement adequately address any concerns you have about this transaction that a reasonable investor would consider important? 3. Are there any matters regarding your participation in this transaction about which you should make us aware, including potential conflicts of interest? 4. Has your review of the relevantfinancial documents and other materials, including the official statement, raised any concerns regarding this borrowing? Do these concerns need to be disclosed? 5. Are you aware of any circumstances in which we, our staff, or others have not complied with our procedures so that we can make sure that our official statement adequately and accurately describes this transaction? We hope Ehlers has answered these questions prior to or within this document. lfnot, please feel free to contact us. Please review the contents of the Official Statement, and let~know within one week if any changes are necessary to this Official Statement. Yours Truly, EHLERS & ASSOCIATES, INC. cc: Administrator Equal Opportunity Employer LEADERS IN PUBLIC fiNANCE Chart~r Member of the National Association of Independent Public Finance Advisors 3060 Centre Pointe Drive, Roseville, MN 55113-1105 651.697.8500 fax 651.697.8555 www.ehlers-Inc.com In the opinion of Bond Counsel, the interest on the Series 2005A Bonds is exemptfrom taxation by the State of Minnesota and its subdivisions and municipalities and the interest to be paid on the Series 2005A Bonds is not includible in the gross income of the recipientfor United States or State of Minnesota income tax purposes (but is subject to federal alternative minimum taxes on corporations and Minnesota franchise taxes imposed on corporations, including financial institutions, and measured by net income and the alternative minimum tax base) according to present federal and Minnesota laws, regulations, rulings and decisions. (See "Tax Exemption" herein.) City will designate the Series 2005A Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. ing to the ability offinancial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. Interest on the Series 2005B Bonds is includible in gross income of the recipient for United States and State of Minnesota income tax purposes according to present federal and Minnesota laws, regulations, rulings and decisions: The City will not designate the Series 2005B Bonds as "qualified tax-exempt obligations" pursuant to Section 265 of the Internal Revenue Code of 1986, as amended, which permits financial institutions to deduct interest expenses allocable to the Series 2005B Bonds to the extent permitted under prior law. New Issues Rating Application Made: Standard & Poor's PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 8,2005 CITY OF HOPKINS, MINNESOTA $1,640,000' GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2005A $1,775,000" TAXABLE GENERAL OBLIGATION REFUNDING BONDS, SERIES 2005B PROPOSAL OPENING: September 20, 2005, 11:00 A.M., C.T. CONSIDERATION: September 20, 2005, 7:00 P.M., C.T. PURPOSE/AUTHORITY/SECURITY: The $1,640,000 General Obligation Tax Increment Refunding Bonds, Series 2005A (the "Series 2005A Bonds") are being issued pursuant to Minnesola Statutes, Chapters 469 and 475, by the City of Hopkins, Minnesota (the "City"), for the purpose of effecting a currerit refunding of the 20 12 through 2016 maturities ofthe $500,000 General Obligation Tax Increment Bonds, Series 1996C, dated October I, 1996, and the 2007 through 2012 maturities of the $2,240,000 Geueral Obligation Tax Increment Bonds, Series 1997 A, dated January I, 1997. The $1 ,775,000 Taxable General Obligation Refunding Bonds, Series 2005B (the "Series 2005B Bonds") are being issued pursuant to Minnesota Statutes, Chapters 426A, 469 and 475, for the purpose of effecting a Current refunding of the 2007 through 2018 maturities of the $1,700,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B, dated June 1, 1997, and the 2007 through 2011 maturities of the $680,000 General Obligation Taxable Tax Incremenl Bonds, Series 19960, dated October 1, 1996. The Series 2005A Bonds and the Series 2005B Bonds will be general obligations of the City for which its full faith, credit taxing powers are pledged. Delivery is subject to receipt of approving legal opinions of Kennedy & Graven, Chartered, Minneapolis, Minnesota SERIES 2005A BONDS DATE OF SERIES 2005A BONDS: November 3, 2005 MATURITY: February 1 as follows: Year Arnount* 2007 $165,000 2008 180,000 2009 190,000 2010 200,000 2011 205,000 2012 295,000 ADJUSTMENT: . See "Adjustment OpIion" herein. TERM BONDS: See "Term Bond Option" herein. INTEREST: August 1,2006 and semiannually thereafter. REDEMPTION: Series 2005A Bonds maturing February 1,2012 and thereafter are subject to call for prior redemption on February 1,2011 and any date thereafter, at par. MINIMUM PROPOSAL: $1,623,600. GOOD FAITH DEPOSIT: $32,800. PAYING AGENT: Bankers Trust Company, Des Moines, Iowa. BOOK-ENTRY-ONL Y: See "Book-Entry-Only System" herein. Year 2013 2014 2015 2016 Amount* $95,000 100,000 100,000 110,000 SERIES 20058 BONDS DATE OF SERIES 2005B BONDS: November 3, 2005 MATURITY: February 1 as follows: Year . Amount** Year 2007 $150,000 2013 2008 175,000 2014 2009 185,000 2015 2010 185,000 2016 2011 200,000 2017 2012 105,000 2018 ADJUSTMENT: .. See "Adjustment Option" herein. TERM BONDS: See "Term Bond OpIion" herein. INTEREST: August 1,2006 and semiannually thereafter. REDEMPTION: Series 2005B Bonds maturing February I, 2016 and thereafter are subject to call for prior redemption on February 1,2015 and any date thereafter, at par. MINIMUM PROPOSAL: $1,750,150. GOOD FAITH DEPOSIT: $35,500. PAYING AGENT: Bankers Trust Company, Des Moines, Iowa. BOOK-ENTRY-ONL Y: See "Book-Entry-Only System" herein. AmOWlt** $115,000 115,000 125,000 130,000 140,000 150,000 This Preliminary Official Statement will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amount, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other infonnation required by law, and, as supplemented, shall constitute a "Final Official Statement" of the City with respectlo the Series 2005A Bonds and Series 2005B Bonds, as defined .E.C. Rule 15c2-12. . EHLERS & ASSOCIATES lNC 3060 Centre Pointe Drive, Roseville, MN 55113 651.697.8500 fax 651.697.8555 www.ehlers-inc.com Offices in Rosevi/Je, MN Brookfield, WI and Lisle, fL REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representation other than those contained in this Preliminary Official Statement and, if given or made, such other infonnation or representations must not be relied upon as having been authorized by the City. This Preliminary Official Statement does not constitute an offer to seU or a solicitation of an offer to buy any of the Series 2005A Bonds and the Series 2005B Bonds in any jurisdiction to any person t. whom it is unlawful to make such an offer or solicitation in such jurisdiction. This Preliminary Official Statement is not to be construed as a contract with the Syndicate Manager or Syndicate Members. Statements contained herein which involve estimates or matters of opinion are intended solely as such and are not to be construed as representations of fact. Ehlers & Associates, Inc. prepared this Preliminary Official Statement and any addenda thereto relying on information of the City and other sources for which there is reasonable basis for believing the information is accurate and complete. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of Ehlers & Associates, Inc., payable entirely by the City, is contingent upon the sale of the issue. COMPLIANCE WITH S.E.C. RULE 15c2-12 Certain mlUlicipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure (the "Rule"). Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to potential customers. Its primary purpose is to disclose infonnation regarding the Series 2005A Bonds and the Series 2005B Bonds to prospective underwriters in the interest of receiving competitive proposals in accordance with the sale notice contained herein. Unless an addendum is posted prior to the sale, this document shall be deemed the "Preliminary Official Statemen1". Review Period: This Preliminary Official Statement has been distributed to members of the legislative body and other public officials of the City as well as to prospective bidders for an objective review of its disclosure. 'Conunents or requests for the correction of omissions or inaccuracies must be submittcrt to Ehlers & Associates at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will!!Q!. be considered a qualification of a proposal received from an underwriter. Ifthere are any changes, corrections or additions to the Preliminary Official Statemen~ interested bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Series 2005A Bonds and the Series 2005B Bonds, the Preliminary Official Statement together with any previous addendum of corrections or additions will be further supplemented by an addendum specifying the offering prices, interest rates, aggregate principal amoun~ principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Official Statement" of the City with respect to the Series 2005A Bonds and the Series 2005B Bonds, as dermed in S.E.C. Rule 15c2-12. Copies of the Final Official Statement will be delivered to the underwriter (Syndicate Manager) within seven business days following the proposal acceptance. Continuing Disclosure: Subject to certain exemptions, issues in an aggregate amount over $1,000,000 may be required to comply with provisions of the Rule which require that underwriters obtain from the issuers of municipal securities (or other obligated party) an agreement for the benefit of the owners of the securities to provide continuing disclosure with respect to those securities. This Preliminary Official Statement describes the conditions under which the Series 200SA Bonds and the Series 200SB Bonds are exempt or required to comply with the Rule. CLOSING CERTIFICATES Upon delivery of the Series 2oo5A Bonds and the Series 2005B Bonds, the purchaser (underwriter) will be furnished with the following items: (1) a certificate of the appropriate officials to the effect that a1 the time of the sale of the Series 2005A Bonds and the Series 2005B Bonds and all times subsequent thereto up to and including the time of the delivery of the Series 2005A Bonds and the Series 2oo5B Bonds, this Preliminary Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) a receip1 signed by the appropriate officer evidencing payment for the Series 2005A Bonds and the Series 2005B Bonds; (3) a certificate evidencing the due execution of the Series 2005A Bonds and the Series 2005B Bonds, including statemenls that (a) no litigation of any nature is pending, or to the knowledge of signers, threatened, restraining or enjoining the issuance and delivery of the Series 2005A Bonds and the Series 2005B Bonds, (b) neither the corporate existence or boundaries of the City nor the title of the signers to their respective offices is being contested, and (c) no authority or proceedings for the issuance of the Series 2005A Bonds and the Series 2oo5B Bonds have been repealed, revoked or rescinded; and (4) a certificate setting forth facts and expectations of the City which indicates that the City does not expect to use the proceeds of the Series 200SA Bonds and the Series 2005B Bonds in a manner that would cause them to be arbitrage bonds within the meaning ofSecIion 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of applicable Treasury Regnlations. 11 TABLE OF CONTENTS IN1RODUCTORY STATEMENT....................... I 1HE SERIES 2005ABONDS ........................... I GENERAL ...................................... I OPTIONAL REDEMPTION _.......................2 AUIHORITY;PURPOSE..........................2 ESTIMATED SOVRCES AND USES ................3 SECURITY .....................................3 TAX EXEMPTION ............................... 4 QUALIFIED TAX-EXEMPT OBLIGATIONS ..........4 TIlESERIES2005BBONDS ........................... 5 GENERAL.......... ... ........... .... ..........5 OPTIONAL REDEMPTION ...... ...................5 AUIHORITY;PURPOSE ..........................6 ESTIMATED SOVRCES AND USES ................7 SECURITY ..................................... 8 TAXABILITY OF INTEREST ......................8 NON-QUALIFIED TAX-EXEMPT OBLIGATIONS... . . 8 PROVISIONS COMMON TO BOTII TIlE SERIES 2005A BONDS AND WE SERIES2005BBONDS ...........................9 LEGAL OPINION.... ..... . . . .. ... . ... ...... .... . 9 RATING.. ..... ..... . . .. . . . .. ....... ... .. .... . .. 9 CONTINUING DISCLOSURE ......................9 FINANCIAL ADVISOR ... ....... ....... .........10 RISK FACTORS ....... ........ ........... ......10 VALUATIONS..................................... 12 CURRENT PROPERTY VALUATIONS ...... _...... 13 2004/05 NET TAX CAPACITY BY CLASSIFICATION. 14 TREND OF VALUATIONS ....................... 14 LARGER TAXPAYERS .......................... 15 DEBT.... ...... ..... ...... . . . .. . ... ... ... ... .. . . .. 16 DIRECT DEBT ................................. 16 SCHEDULES OF BONDED INDEBTEDNESS. . . . . . .. 17 DEBTLIMIT ................................... 24 OVERLAPPING DEBT. . . . . . .. . . .. . . . .. . . .. . . . . . . 25 DEBT RATIOS .................................26 DEBT PAYMENT HISTORY ...................... 26 FVTVREFINANCING ...........................26 TAX LEVIES AND COLLECTIONS ....................27 TAX COLLECTIONS ......................... _..27 TAX CAPACITY RATES .:.......................28 LEVY LIMITS .. ...............:.. ..............28 1HE ISSUER........... . . . .. .. ... .. . ......... ... . .. 29 CITYGOVERNMENT ................. _.........29 EMPLOYEES; PENSIONS; UNIONS ............... 29 LmGATION ... ...... .......... ................29 FUNDS ON HAND .............................. 30 ENfERPRISEFUNDS ... _.. ..... ... .... ... ... ...31 SUMMARY GENERAL FUND INFORMATION...... 32 GENERAL INFORMATION ..................._.....33 LOCATION .................................. 33 LARGER EMPLOYERS ........................ 33 U.S. CENSUS DATA.... .. .. .. ................. 34 EMPLOYMENT/VNEMPLOYMENT DATA ....... 34 BUILDING PERMITS. . . . . . . . . . . . . . . . . . . . . . . .. . 35 FINANCIAL INSTI1UJ10NS .. . . _. .. . . . . . .. . . ... 35 EDUCATION.................................36 IN-PATIENT MEDICAL F ACILmES . . . . . . . . . . . . . 36 EXCERPTS FROM FINANCIAL STATEMENTS....... A-I FORM OF LEGAL OPINIONS ................. _.... B-1 BOOK-ENTRY-ONLY SySTEM.................... C-I FORM OF CONTINUING DISCLOSURE CERTIFICATE 0-1 TERMS OF PROPOSAL SERIES2005ABONDS ........,.............. E-I TERMS OF PROPOSAL SERIES 2005B BONDS ....................... E-6 111 CITY COUNCIL Gene Maxwell Rick Brausen Diane Johnson Bruce Rowan Jay Thompson Mayor Council Member Council Member Council Member Council Member ADMINISTRATION Richard Getschow, City Manager Christine Harkess, Finance Director Terry Obermaier, City Clerk PROFESSIONAL SERVICES Miller, Steiner & Curtis, City Attorney, Hopkins, Minnesota Kennedy & Graven, Chartered, Bond Counsel, Minneapolis, Minnesota Ehlers & Associates, Inc., Financial Advisors, Roseville, Minnesota (Other offices located in Brookfield, Wisconsin and Lisle, illinois) tV INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the City of Hopkins, Minnesota (the "City") and the issuance of its $1,640,000 General Obligation Tax Increment Refunding Bonds, Series 200SA (the "Series 2005A Bonds") and $1,77S,OOO Taxable General Obligation Refunding Bonds, Series 2005B (the "Series 200SB Bonds"), collectively referred to herein as the "Bonds." Any descriptions or summaries of the Bonds, statutes, or documents included herein are not intended to be complete and are qualified in their entirety by reference to such statutes and documents and the forms of the Series 200SA Bonds and the Series 2005B Bonds to be included in the resolutions awarding the sale of the Series 2005A Bonds and the Series 200SB Bonds to be adopted by the City Council on September 20, 200S. Inquiries may be directed to Ehlers & Associates, Inc. ("Ehlers" or the "Financial Advisor"), Roseville, Minnesota, (6SI) 697-8S00, the City's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at www.ehlers-inc.combyconnectingtothelinktotheBondSales and following the directions at the top of the site. THE SERIES 2005A BONDS GENERAL The Series 200S A Bonds will be issued in fully registered form as to both principal and interest in denominations of$5,000 each or any integral multiple thereof, and will be dated, as originally issued, as of November 3, 200S. The Series 200SA Bonds will mature on February I in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be payable on February 1 and August I of each year, commencing August 1, 2006, to the registered owners of the Series 200SA Bonds appearing of record in the bond register as of the close of business on the ISth day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Series 2005A Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Series 200SA Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). (See "Book-Entry-Only System" herein.) As long as the Series 200SA Bonds are held under the book-entry system, beneficial ownership interests in the Series 200SA Bonds may be acquired in book-entry form only, and all payments of principal of, premium, if any, and interest on the Series 200SA Bonds shall be made through the facilities of DTC and its Participants. If the book-entry system is terminated, principal of, premium, if any, and interest on the Series 200SA Bonds shall be payable as provided in the resolution awarding the sale of the Series 2005A Bonds. The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. 1 OPTIONAL REDEMPTION At the option of the City, Series 2005A Bonds maturing on or after February 1,2012 shall be subjecttopriorpayment on February 1,2011 or any date thereafter, at a price of par plus accrued interest Redemption may be in whole or in part of the Series 2005A Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2005A Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2005A Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notifY DTC ofthe 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 interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2005A Bonds to be redeemed at the address shown on the registration books. AUTHORITY; PURPOSE The $1 ,640,000 General Obligation Tax mcrement Refunding Bonds, Series 2005A (the "Series 2005A Bonds") are being issued pursuant to Minnesota Statutes, Chapters 469 and 475, by the City of Hopkins, Minnesota (the "City"), for the purpose of effecting a current refunding of the 2012 through 2016 maturities of the $500,000 General Obligation Tax mcrement Bonds, Series 1996C (the "Series 1996C Bonds"), dated October 1, 1996, and the 2007 through 2012 maturities of the $2,240,000 General Obligation Tax mcrement Bonds, Series 1997A (the "Series 1997A Bonds"), dated January 1, 1997. Following are the maturities of the Series 1996C Bonds which are being refunded by this issue: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 1996C Bonds 10101/96 2/01/06 Par 2012 5.70% $ 85,000 2013 5.70% 95,000 2014 5.70% 100,000 2015 5.70% 105,000 2016 5.70% 115.000 Total Series 1996C Bonds Being Refunded $500.000 2 Following are the maturities of the Series 1997 A Bonds which are being refunded by this issue: Date of Maturities Refunded Call Call Being Interest Issne Being Refunded Issue Date Price Refunded Rates Series 1997 A Bonds 1/01/97 2/01/06 Par 2007 5.00% 2008 5.00% 2009 5.15% 2010 5.20% 2011 5.25% 2012 5.25% Total Series 1997 A Bonds Being Refunded Principal to be Refunded $ 160,000 170,000 180,000 190,000 200,000 210.000 $1.11 0.000 Proceeds of the Series 2005A Bonds will be used to call and prepay the maturities described above and to pay all or most of the costs of issuance. The City will pay the principal and interest payment due on February I, 2006 from the Debt Service Fund for the Series 1996C Bonds and the Series 1997 A Bonds. ESTIMATED SOURCES AND USES Sources Par Amount of Series 2005A Bonds Total Sources $1,640,000 $1,640,000 Uses Deposit to Current Refunding Fund Discount Allowance Finance Related Expenses Contingency Total Uses $1,596,872 16,400 24,000 2.728 $1,640,000 SECURITY The Series 2005A Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. It is the intention of the City to pay principal and interest on the Series 2005 A Bonds from tax increment revenues generated by existing development. If tax increment revenues are insufficient to meet principal and interest on the Series 2005A Bonds, the City is required to levy ad valorem taxes without limit as to rate or amount on all taxable property in the City to make up the deficiency. 3 TAX EXEMPTION In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Series 2005A Bonds is not includible in the "gross income" ofthe owners thereof for purposes of federal income taxation and is not includable in taxable net income of individuals, estates or trusts for purposes of State of Minnesota income taxation, but is subject to State of Minnesota franchise taxes measured by income that are imposed upon corporations, including financial institutions. Noncompliance following the issuance of the Series 2005ABonds with certain requirements of the Internal Revenue Code of 1986, as amended, (the "Code") and covenants of the bond resolution may result in the inclusion of interest on the Series 2005A Bonds in gross income (for federal tax purposes) and taxable net income (for State of Minnesota tax purposes) of the owners thereof. No provision has been made for redemption of the Series 2005A Bonds, or for an increase in the interest rate on the Series 2005A Bonds, in the event that interest on the Series 2005A Bonds becomes subject to United States or State of Minnesota income taxation. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the Series 2005A Bonds will not be treated as a preference item in calculating alternative minimum taxable income. The Code provides, however, that a portion of the adjusted current earnings of a corporation not otherwise included in the minimum tax base would be included for purposes of calculating the alternative minimum tax that may be imposed with respectto corporations. Adjusted current earnings include income received that is otherwise exempt from taxation such as interest on the Series 2005A Bonds. The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code, the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced by an amount equal to 15% of the interest on the Series 2005A Bonds that is received or accrued during the taxable year. Interest on the Series 2005ABonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code_ Under certain circumstances, interest on the Series 2005A Bonds may be subject to the tax on "excess net passive income" of Subchapter S corporations imposed by Section 1375 of the Code. The above is not a comprehensive list of all Federal tax consequences which may arise from the receipt of interest on the Series 2005A Bonds. The receipt of interest on the Series 2005A Bonds may otherwise affect the Federal or State income tax liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the Series 2005A Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Series 2005A Bonds. QUALIFIED TAX-EXEMPT OBLIGATIONS Prior to the adoption of the Code, financial institutions were generally permitted to deduct 80% of their interest expenses allocable to tax-exempt obligations. Under the Code, however, financial institutions are generally not entitled to such a deduction for tax-exempt obligations purchased after August 7, 1986. However, the City will designate the Series 2005A Bonds ofthis issue as qualified tax-exempt obligations pursuant to section 265(b)(3) of the Code which would permit financial institutions to deduct interest expenses allocable to the Series 2005A Bonds to the extent permitted under prior law. 4 THE SERIES 20058 BONDS GENERAL The Series 200SB Bonds will be issued in fully registered form as to both principal and interest in denominations of $S,OOO each or any integral multiple thereof, and will be dated, as originally issued, as of November 3, 200S. The Series 200SB Bonds will mature on February 1 in the years and amounts set forth on the cover of this Preliminary Official Statement. Interest will be payable on February I and August 1 of each year, commencing August 1, 2006, to the registered owners of the Series 200SB Bonds appearing of record in the bond register as ofthe close ofbusiness on the lSth day (whetherornot a business day) of the immediately preceding month. Interest will be computed upon the basis ofa 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Series 200SB Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Series 200SB Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). (See "Book-Entry-Only System" herein.) As long as the Series 200SB Bonds are held under the book-entry system, beneficial ownership interests in the Series 200SB Bonds may be acquired in book-entry form only, and all payments of principal of, premium, if any, and interest on the Series 200SB Bonds shall be made through the facilities of DTC and its Participants. If the book-entry system is terminated, principal of, premium, if any, and interest on the Series 200SB Bonds shall be payable as provided in the resolution awarding the sale of the Series 200SB Bonds. The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Series 200SB Bonds maturing on or after February 1,2016 shall be subject to prior payment on February I, 20lS or any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 200SB Bonds subject to prepayment. Ifredemption is in part, the selection ofthe amounts and maturities of the Series 2005B Bonds to be prepaid shall be at the discretion ofthe City. If only part ofthe Series 200SB Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, 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 interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 and not fewer than 30 days prior to the date fixed forredemption to the registered owner of each Series 200SB Bond to be redeemed at the address shown on the registration books. S AUTHORITY; PURPOSE The $1,775,000 Taxable General Obligation Refunding Bonds, Series 2005B (the "Series 2005B Bonds") are being issued pursuant to Minnesota Statutes, Chapters 428A, 469 and 475, for the purpose of effecting a current refunding of the 2007 through 2018 maturities of the $1,700,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B (the "Series 1997B Bonds''), dated June 1, 1997, and the 2007 through2011 maturities of the $680,000 General Obligation Taxable Tax Increment Bonds, Series 1996D (the "Series 19960 Bonds"), dated October 1, 1996. Following are the maturities of the Series 1997B Bonds which are being refunded by this issue: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 1997B Bonds 6/01/97 2/01/06 Par 2007 7.10% $ 70,000 2008 7.20% 75,000 2009 7.30% 80,000 2010 7.40% 85,000 2011 7.40% 95,000 2012 7.50% 100,000 2013 7.50% 11 0,000 2014 7.65% 115,000 2015 7.75% 125,000 2016 7.85% 135,000 2017 7.85% 150,000 2018 7.85% 160.000 Total Series 1997B Bonds Being Refunded $1.300.000 Following are the maturities of the Series 1996D Bonds which are being refunded by this issue: Date of Maturities Principal Refunded Call Call Being Interest to be Issue Being Refunded Issue Date Price Refunded Rates Refunded Series 1996D Bonds 1 % 1/96 2/01/06 Par 2007 7.45% $ 75,000 2008 7.70% 80,000 2009 7.70% 85,000 2010 7.70% 90,000 2011 7.70% 100.000 Total Series 19960 Bonds Being Refunded $430.000 6 Proceeds of the Series 2005B Bonds will be used to call and prepay the maturities described above and to pay all or most ofthe costs of issuance. The City will pay the principal and interest payment due on February 1, 2006 from the Debt Service Fund for the Series 1997B Bonds and the Series 1996D Bonds. ESTIMATED SOURCES AND USES Housing Tax Improvement Increment Refunding Refunding Total Sources Portion Portion Bond Issue Par Amount of Bonds $1,335,000 $440,000 $1,775,000 Total Sources $1,335,000 $440,000 $1,775,000 Uses Deposit to Current Refunding Fund $1,289,307 $426,463 $1,715,770 Discount Allowance 18,690 6,160 24,850 Finance Related Expenses 22,563 7,437 30,000 Contingency 4.440 (60) 4.380 Total Uses $1,335,000 $440,000 $1,775,000 Breakdown of Principal and Interest Payments: Housing Tax Improvement Increment Payment Refunding Refunding Total Date Portion Portion Bond Issue 2/01/2007 $ 70,000 $ 80,000 $ 150,000 2/01/2008 90,000 85,000 175,000 2/01/2009 95,000 90,000 185,000 2/01/2010 95,000 90,000 185,000 2/01/2011 105,000 95,000 200,000 2/01/2012 105,000 105,000 2/01/2013 115,000 115,000 2/01/2014 115,000 115,000 2/01/2015 125,000 125,000 2/01/2016 130,000 130,000 2/01/2017 140,000 140,000 2/01/2018 150.000 150.000 Total $1,335,000 $440,000 $1,775,000 7 SECURITY The Series 2005B Bonds are general obligations of the City for which its full faith, credit and taxing powers are pledged without limitation as to rate or amount. It is the intention of the City to pay principal and interest on the Series 2005B Bonds from housing fees generated on existing housing units, and tax increment revenues generated by existing development. Ifhousing fees and tax increment revenues are insufficient to meet principal and interest on the Series 2005B Bonds, the City is required to levy ad valorem taxes without limit as to rate or amount on all taxable property in the City to make up the deficiency. TAXABILITY OF INTEREST Under present federal and Minnesota laws, regulations, rulings and decisions, interest on the Series 2005B Bonds of this offering is includible in gross income for federal income tax purposes and in taxable net income of individuals, estates or trusts for Minnesota income tax purposes. NON-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will not designate the Series 2005B 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. 8 PROVISIONS COMMON TO BOTH THE SERIES 2005A BONDS AND THE SERIES 2005B BONDS The following information pertains to both the Series 2005A Bonds and the Series 2005B Bonds which are collectively referred to hereinafter as the "Bonds." LEGAL OPINION An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Bonds. The legal opinion will state that the Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. RATING General obligation debt of the City is currently rated "AA-" by Standard & Poor's. The City has requested a rating on the Bonds from Standard & Poor's, and bidders will be notified as to the assigned rating prior to the sale. Such a rating, if and when received, will reflect only the view of the rating agency and any explanation ofthe significance of such rating may only be obtained from Standard & Poor's. There is no assurance eu;at such rating, if and when received, will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. CONTINUING DISCLOSURE ill order to comply with the provisions of Rule 15c2-l2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act ofI934 (the "Rule") the City has entered into an undertaking (the "Undertaking") for the benefit of the holders of the Bonds. Though the Undertaking, the City covenants and agrees to provide certain annual financial information and operating data about the City and to' provide notice of the occurrence of certain material events. This information shall be provided according to the time parameters described in the Undertaking and to the information repositories and the Municipal Securities Rulemaking Board as required by the Rule. The specific provisions of the Undertaking are set forth in the Continuing Disclosure Certificate in substantially the form attached hereto as Appendix D. The Continuing Disclosure Certificate will be executed and delivered by the City at the time the Bonds are delivered. The City is the only "obligated person" with respect to the Bonds within the meaning of the Rule. The City has complied in all material respects with any previous undertaking under the Rule. 9 FINANCIAL ADVISOR EWers has served as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor will not participate in the underwriting of the Bonds. The financial information included in this Preliminary Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. Ehlers is not a firm of certified public accountants. RISK FACTORS Following is a description of possible risks to holders of these Bonds without weighting as to probability. This description of risks is not intended to be all-inclusive, and there may be other risks not now perceived or listed here. Taxes: The Bonds of this offering are general obligations of the City, the ultimate payment of which rests in the City's ability to levy and collect sufficient taxes to pay debt service should other revenue (tax increment revenues and housing fees) be insufficient. State Actions: Many elements oflocal government [mance, including the issuance of debt and the levy of property taxes, are controlled by state government. Past and future actions of the State may affect the overall [mancial condition of the City, the taxable value of property within the City, and the ability of the City to levy property taxes. Determination of Net Tax Capacity: The State of Minnesota calculates net tax capacity as a ratio of market value for various property classifications which are subject to change. Any reduction in these ratios may generate lower net tax capacities resulting in lower tax increment revenues. Tax Increment Revenues: Decreased valuations or increases which are smaller than projected could result in tax increment collections insufficient to meet debt service requirements. The City would have to use other City funds and/or levy ad valorem taxes to meet any deficiency. Ratings; Interest Rates: In the future, the City's credit rating may be reduced or withdrawn, or interest rates for this type of obligation may rise generally, both possibilities resulting in a reduction in the value of the Bonds for resale prior to maturity. Tax Exemption: If the federal govermnent or the State of Minnesota taxes the interest on municipal obligations directly or indirectly, the value of the Bonds may fall for purposes of resale. Noncompliance following the issuance of the Bonds with certain requirements of the Code and covenants of the bond resolution may result in the inclusion of interest on the Bonds in gross income of the recipient for United States or in taxable net income of individuals, estates or trusts for State of Minnesota income tax purposes. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to United States or State of Minnesota income taxation, retroactive to the date of issuance. The 1995 Minnesota Legislature enacted a statement of intent that interest on obligations of Minnesota govermnental units and Indian tribes be included in net income of individuals, estates and trusts for Minnesota income tax purposes if a court determines that Minnesota's exemption of such interest unlawfully discriminates against interstate commerce because interest on obligations of govermnental issuers located in other states is so included. This provision applies to taxable years that begin during or after the calendar year in which any such court decision becomes final, irrespective of the date on which the obligations were issued. The City is not aware of any judicial decision holding that a state's exemption of interest on its own bonds or those of its political subdivisions or Indian tribes, but not of interest on the bonds of other states or their political subdivisions or Indian tribes, unlawfully 10 discriminates against interstate commerce or otherwise contravenes the United States Constitution. Nevertheless, the City cannot predict the likelihood that interest on the Bonds would become taxable under this Minnesota statutory provision. Continuing Disclosnre: A failure by the City to comply with the Undertaking for continuing disclosure (as described herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with the Rule and must be considered by any broker, dealer, or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. State Economy; State Aids: State cash fIowproblems could affect local governments and possibly increase property taxes. Book-Entry-Only System: The timely credit of payments for principal and interest on the Bonds to the accounts of the Beneficial Owners of the Bonds may be delayed due to the customary practices, standing instructions or for other unknown reasons by DTC participants or indirect participants. Since the notice of redemption or other notices to holders of these obligations will be delivered by the City to DTC only, there may be a delay or failure by DTC, DTC participants or indirect participants to notify the Beneficial Owners of the Bonds. Economy: A combination of economic, climatic, political or civil disruptions or terrorist actions could affect the local economy and result in reduced tax collections and/or increased demands upon local government. 11 VALUATIONS OVERVIEW All non-exempt property is subject to taxation by local taxing districts. Exempt real property includes Indian lands, public property, and educational, religious and charitable institutions. Most personal property is exempt from taxation (except investor-owned utility mains, generating plants, etc.). The valuation of property in Minnesota consists of two elements. (I) The estimated market value is set by city or county assessors. Not less than 20% of all real properties are to be appraised by local assessors each year. (2) The tax caoaciIY (taxable) value of property is detennined by class rates set by the State Legislature. The tax capacity rate varies according to the classification of the property. Tax. capacity represents a percent of estimated market value. The property tax rate for a local taxing jurisdiction is detennined by dividing the total tax capacity or market value of property within the jurisdiction into the dollars to be raised from the levy. State law determines whether a levy is spread on tax capacity or market value. Major classifications and the percentages by which tax capacity is determined are: Type of Property 2002103 2003/04 2004/05 Residential homesteadl First $500,000 - 1.00% First $500,000 - 1.00% First $500,000 - 1.00% Over $500,000 - 1.25% Over $500,000 - 1.25% Over $500,000 - \.25% AgriculIural homeslead' First $500,000 HGA - 1.00% First $500,000 HGA - 1.00% First $500,000 HGA - 1.00% Over $500,000 HGA - 1.25% Over $500,000 HGA - 1.25% Over $500,000 HGA - 1.25% First $600,000 _ 0.55%' First $600,000 _ 0.55%' First $600,000 _ 0.55%' Over $600,000 _ 1.00%' Over $600,000 _ 1.00%' Over $600,000 - 1.00%' Agricultural non-homestead Land _ 1.00%' Land _ 1.00%' Land-1.00%' Seasonal recreational residential) First $500,000 - 1.00% . First $500,000 - 1.00% . First $500,000 - 1.00% . Over $500,000 - 1.25% . Over $500,000 - 1.25% . Over $500,000 - 1.25% . Residential non-homestead: 1 unit - 1st $500,000 - 1.00% 1 unit - 1st $500,000 - 1.00% 1 unit - 1st $500,000 - 1.00% Over $500,000 - 1.25% Over $500,000 - 1.25% Over $500,000 - \.25% 2~3 units - 1.25% 2-3 units - 1.25% 2-3 units - \.25% 4 or more- 1.25% 4 or more - 1.25% 4 or more- 1.25% Small City' - 1.25% Small City' - \.25% Small City' - 1.25% InduStriallCommerciallUti1iIy' First $150,000 - 1.50% First $150,000 -1.50% First $150,000 - 1.50% Over $150,000 - 2.00% Over $150,000 - 2.00% Over $150,000 - 2.00% A residential property qualifies as "homestead" if it is occupied by the owner or a relative of the owner on the assessment date. 2 Applies to land and buildings. Exempt from referendum market value tax. 3 For seasonal recreational residential property, the class rate percentages for the new statewide general tax beginning with taxes payable in 2002 are: First $76,000 - 0.4%, next $424,000 - 1.0%, and over $500,000 - 1.25%. 4 Exempt from referendum market value tax. 5 Cities of 5,000 population or less and located entirely outside the seven-county metropolitan area and the adjacent nine-county area and whose boundaries are 15 miles or more from the boundaries of a Minnesota city with a population of over 5,000. 6 The estimated marke1 value of utiliIy property is determined by the Minnesota Department of Revenue. 12 CURRENT PROPERTY VALUATIONS Estimated Full Value of Taxable Property, 2004/05 $1.704.892.211 I 2004/05 Assessor's Taxable Market Value 2004/05 Net Tax Capacity $16,811,416 173,916 $16,985,332 (804,314) (1,526,509) $ 14,654,509 1,673,106 $16,327,615 Real Estate Personal Property Total Valuation Less: Captured Tax Increment Tax Capacity' Fiscal Disparities Contribution' Taxable Net Tax Capacity Plus: Fiscal Disparities Distribution' Adjusted Taxable Net Tax Capacity $1,331,487,100 8,730,300 $1,340,217,400 According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "ATMV") for the City of Hopkins is about 78.5% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the A TMV. Dividing the A TMV of real estate by 0.785 and adding personal property and mobile home A TMV, if any, results in an "Estimated Full Value of Taxable Property" for the City of $1,704,892,211. 2 The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Hopkins. 3 Each community in the seven-county metropolitan area contributes 40% of the growth in its commercial- industrial property tax base since 1972 to an area pool which is then distributed among the municipalities on the basis of population, special needs, etc. Each governmental unit makes a contribution and receives a distribution- sometimes gaining and sometimes contributing net tax capacity fOr tax purposes. 13 2004/05 NET TAX CAPACITY BY CLASSIFICATION Residential homestead Commercial/industrial Railroad operating property Non-homestead residential Commercial & residential seasonal/rec. 2004105 Percent of Total Net Tax Capacity Net Tax Capacity $ 8,021,174 47.22% 5,647,873 33.25% 30,844 0.18% 3,105,942 18.29% 2,208 0.01% 3,375 0.02% 173,916 1.02% $16,985,332 100.00% Other Personal property Total TREND OF VALUATIONS Adjusted Assessor's Taxable Levy Taxable Net Tax Net Tax Percent +/- in Assessor's Year Market Value Capacity' Capacity' Taxable Market Value 2000101 $ 884,899,400 $17,820,610 $16,025,438 + 11.28% 3 3 2001/02 971,202,200 13,559,734 12,077,438 + 9.75% 2002/03 1,066,035,400 14,192,644 12,649,730 + 9.76% 2003/04 1,175,309,600 15,008,463 13,589,070 + 10.25% 2004/05 1,340,217,400 16,985,332 16,327,615 + 14.03% Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. 2 Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. 3 The Minnesota Legislatures reduced some of the "class rates" used to calculate Net Tax Capacity values in levy year 2001. The lower rates reduce the amount of Taxable Market Value that converts to value for the calculation of property taxes and tax rates. 14 LARGER TAXPAYERS' 2004/05 2004/05 Assessor's Taxable Net Tax Taxpayer Type of Property Market Value Capacity' Super Valu Stores, Inc. Industrial $51,829,000 $ 1,035,080 Duke Realty Corporation CommerciallIndustrial 14,700,000 292,500 Greenfield Apartments General Partnership Apartments 21,836,000 272,95 I Southwest Real Estate, Inc. Apartments 19,500,000 243,750 Ramsgate Apartments LLC Housing - low income 18,833,000 235,413 Auburn Limited Partnership Apartments 12,053,000 150,663 Westside Village Apartments 10,472,200 131,178 Rosewood West Apartments 9,931,000 124,138 Creekwood Estates Apts LLC Apartments 9,647,000 120,588 Knollwood Towers West Apartments 9,003,000 112,538 Source: Current Property Valuations, Net Tax Capacity by Classification, Trend of Valuations and Larger Taxpaying Parcels have been furnished by Hennepin County. Hennepin County has provided only the ten largest taxpayingparcels which appear on the taxrolls ofthe County, and therefore the information stated above may not be reflective of the entire valuation of all parcels and may not include all classifications of property. 2 Beginning with taxes payable in 1998, the State of Minnesota reduced the "class rates" used to calculate net tax capacity for most types of property. This has resulted in a reduction in the net tax capacity of some parcels. 15 DEBT DIRECT DEBT' Long-Term General Obligation Debt (see schednles following) Total g.o. debt being paid from tax increment revenues (includes the Series 2005A Bonds of this offering) Total g.o. debt being paid from revenues Total g.o. debt being paid from special assessments and taxes Total g.o. debt being paid from tax increment revenues and housing improvement area fees (the Series 2005B Bonds ofthis offering) Total g.o. debt being paid from special assessments, revenues, and taxes Total g.o. debt being paid from housing improvement area fees Total Long-Term General Obligation Debt Less: Funds on hand for debt redemption as of August 30, 20052 Less: G.O. debt being paid entirely from revenues Net Long-Term General Obligation Debt $ 4,191,284 3,775,000 1,275,000 1,775,000 2,285,000 4,090,000 $17,391,284 (1,706,499) (3,775,000) $11 ,909,785 Non-General Obligation Lease Payable from Annual Appropriations' (see schedule following) Total non-general obligation lease being paid solely from armual appropriations Outstanding debt is as of the dated date of the Bonds. 2 $13,290,000 Funds on hand for debt redemption (available for payment of principal and interest) have been deducted from total g.o. debt to determine net g,o. debt. , Non-general obligation debt has not been included in the debt ratios. 16 CITY OF HOPKI_NNESOTA S"hedule of Bonded IndebtednBH General Obligation Debt BeIng Paid From Tax Increment RClv9nues (a50'11/03105) Taxable ThlslS$ue1} Tax. Redev, Ref, 1) Tax Increment Taxlncremenl Tax Increment Taxtncrement S.r1ee2Q1)5A -- 2101'" I 10101198 10101198 1101197 121121112 "..... _OM $2.888.~.43 $500,000 $680,000 $2.240,000 $2,.450,000 $1,640,000 Maturity 2101 2101 210' 2101 2101 2101 flnalMatu 81111 Flsca/Year Estlmatlld T"'" T"" T"'" Prlnclfllll FlltalYur Endlnlif Prln(llPll' ...~'" Prlnclplll ,......, Prlnclpal lntllrutl principal Interul Prlnclpal ,......, Principal Int.re~' principal ","erest P&I Outstanding "..~ EIlOlng 200S 31.... 63.7181 , 14.2~O 70,000 19.018i 1515,000 32." 90,000 98,.418 , 42.726! 348.284 268,509 814,794 3,845,000 8.28% "lO' '''17 "."" ".'" 165,000 55.'350: "'.<lOO 14$,'0154. 403,'AlS4 3,l1'aO,OO<l 14.35%. - "'. ! 95.000 90,538 180,000 ".040 27S,OOO 140,578 415,!578' 3,315,000 20.91% "" "" 100,000 87,1," 18MOO 44,153: 285,000 131.338 416.338 3,030,000 27.71% '''' 2010 100.000 ".... 200,000 .'37,.&!i0 300J)OO 121,273 421.273 2,7$0,000 34.88% :010 2011 1M,000 79.641 205,000 30,581 $10,000 110,.403 420.403 2,420,000 42.28% :011 2012 , I 110,000 75,673 295,000 21,46:5 405,000 97,138 502,138 2,015,000 51.92% :012 2013 , 115.000 71,17.'3 95,ooCl 14,203 :;!1Cl,ooO 85,375 295,375 1.605,000 56.93% 2013 2014 , 120,000 6&,473 100,000 '''''1 220,000 76,945 296,945 1,585,000 62.16% 2014 2015 I 120,000 61,583 1M,GOO 6,474 m.OO<l 68,058 293,056 1,300,000 67.55% :015 2016 I 130,000 56,296 110,000 2>00 240,000 58,498 298,498 1,120,000 73.28% :016 "" 13.5,000 ",53, 135,000 """ 185.533 985,000 ".... 2017 2011 J 140,000 44.413 140,000 44,41.'3 184,413 845,000 79.84% 2018 20tt I 150,000 37,813 1S0,OOO 37,813 187,813 695,000 83.42% 2011 2020 j 'M,oeo 3Ma1 ",J 155,000 30,881 185,881 5'5.<lOO 87.12% "" "'31 , 170,000 22,750 170,000 22,750 192,750 370,000 91.17% 2021 '02' , 180,000 14,000 180,000 14,000 194,000 190,000 95.47% "" , " 202'$ , 14.2501 I 190,0lYl 4,750 19a,IJOO 4,750 164,750 , 100.00% "" 31.284 S3,716i 0 70,000 19,018 155,000 32,3811~ 2,295,000 1,067,343 1,840,000 4,191,284 1,s12,OO4 5,703,288 - ...., 1) ThI8ll;sue refunded the 1993 thlOugl'l2006 m;1tur~l~ of the City'lII $2,875,000 TllXllble General Obligation Rede-.eJopment Bondlll,Selles 1990,daled March 1,1990. Z) Thl8ls8\Je ~ refundng lhe Z012lhlOugh 2016 maturitles of the Cly's $500,000 General Obllgatbtl Tax Increment 6OfId$, Series 1996C, 4ated OctOber 1,1996: and lheZ007 tluougllZ01:z. maturtlesoflhe ClI)'s$2,2:40,OOOGeneral Obllgll'6:)n1"axlocremem Bonds,$er1es1997A,datedJanuary1,1997. Prepared by Ehlers and Assoelates, Inc. ...."'" T1F Fiscal Year Ending Revenues 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 % Paid 6.75% 13.91% 21.32% 29.01% 37.09% 45.56% 54.30% 63.58% 73.38% 83.71% 85.43% 87.28% 89.14% 91.13% 93.25% 95.36% 97.62% 100.00% Principal Outstanding 3,520,000 3,250,000 2,970,000 2,680,000 2,375,000 2,055,000 1,725,000 1,375,000 1,005,000 615,000 550,000 480,000 410,000 335,000 255,000 175,000 90,000 o Total P&I 420,423 424,229 422,325 419,715 421,270 421,705 416,131 419,683 422,118 423,344 87,534 90,153 87,598 89,878 91,893 88,733 90,411 91,845 4,928,984 Total Interest 165,423 154,229 142,325 129,715 116,270 101,705 88,131 69,683 52,118 33,344 22,534 20,153 17,598 14,878 11,893 8,733 5,411 1,845 ,153,984 Total Principal 255,000 270,000 280,000 290,000 305,000 320,000 330,000 350,000 370,000 390,000 55.000 70,000 70,000 75,000 80,000 80,000 85,000 90,000 3,775,000 CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Revenues (as of 11/03/05) Storm Sewer Water Storm Sewer Dated 8/01/99 4101/00 6/01/03 Amount $1,545,000 $2,060,000 $1,265,000 Maturity 2/01 2/01 2/01 - - . Fiscal Year Ending Principal Interest Principal Interestll Principal Interest 2006 90,000 51,335 120,000 75,733 45,000 38,355 2007 95,000 47,125 125,000 69,699 50,000 37,405 ,2008 100,000 42,590 130,000 63,355 50,000 36,380 2009 100,000 37,890 140,000 56,570 50,000 35.255 2010 105,000 33,020 145,000 49.338 55,000 33,913 2011 110,000 27,750 155,000 41.610 55,000 32,345 2012 115,000 22,125 160.000 33.380 55,000 30,626 2013 120,000 16.250 170.000 24,675 60,000 28,758 2014 130,000 10,000 180,000 15,310 60,000 26,808 2015 135,000 3,375 190,000 5,225 65,000 24,744 2018 65,000 22.534 - 2017 70,000 20,153 00 2018 70,000 17,598 2019 75,000 14,878 2020 80,000 11,893 2021 80,000 8,733 2022 85,000 5.411 2023 291,4601 90,000 1,845 1,100,000 ,515,000 434,894 ,160,000 427,630 Prepared by Ehlers and Associates, Inc. 9/912005 CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Special Assessments and Taxes (as of 11/03/05) Permanent Improvement Revolvlng Fund Permanent Improvement Revolving Fund 12/12/02 $960,000 8/01/99 $850,000 Dated Amount Total Interest Total Principal 2/01 2/01 Maturity Fiscal Year Ending Fiscal Year Ending 2006 2007 2008 2009 2010 2011 2012 2013 % Paid 13.33% 27.45% 42.35% 58.04% 74.51% 83.14% 92.16% 100.00% Principal Outstanding ,105,000 925,000 735,000 535,000 325,000 215,000 100,000 o Total P&I 215,764 219,535 222,546 224,865 226,534 120,195 121.031 101,93B 45,764 39,535 32,546 24,865 16,534 10,195 6,031 1,93B 170.000 180,000 190,000 200,000 210,000 110,000 115,000 100,000 Interest 25,457 23,210 20,524 17,450 14,014 10,195 6,031 1,938 PrincIpal 85,000 90,000 95,000 100,000 105,000 110,000 115,000 100,000 Interest 20,308 16,325 12,022 7,415 2,520 Principal 85,000 90,000 95,000 100,000 105,000 2006 2007 200B 2009 2010 2011 2012 2013 - \0 Spec. Assess & Taxes ,452,408 177,408 ,275,000 9/9/2005 118,818 BOO,OOO 58,590 Prepared by Ehlers and Associates, Inc. 475,000 CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Housing Improvement Area Fees and Tax Increment Revenues (as of 11/03/05) This Issue 1) Series 2005B 11/03/05 $1,775,000 Dated Amount Principal Outstanding Total P& Total Interest Total Principal Estimated Interest 2/01 Maturity Fiscal Year Ending Fiscal Year Ending 2006 2007 2006 2009 2010 2011 2012 2013 2014 2015 2016 2017 2016 % Paid 0.00% 8.45% 16.31% 28.73% 39.15% 50.42% 56.34% 62.82% 69.30% 76.34% 83.66% 91.55% 100.00% 1,775,000 1,625,000 1,450,000 1,265,000 1,060,000 880,000 775,000 660,000 545,000 420,000 290,000 150,000 o 60,929 229,610 248,260 250,921 243,059 249,536 147,594 152,393 146,786 150,753 149,153 151,995 154,125 60,929 79,610 73,260 65,921 5B,059 49,535 42,594 37,393 31,7B6 25.753 19,153 11,995 4,125 o 150,000 175,000 185,000 185,000 200,000 105,000 115,000 115,000 125,000 130,000 140,000 150,000 60,929 79,610 73,260 65,921 58,059 49,535 42,594 37,393 31,786 25,753 19,153 11,995 4,125 Principal o 150,000 175,000 185,000 185,000 200,000 105,000 115,000 115,000 125,000 130,000 140,000 150,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2016 '" <:> 2,335,111 560,111 1,775,000 560,111 ,775,000 Housing Improv. & TIF This Issue is refunding the 2007 through 2018 maturities 01 the City's $1,700,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B, dated June 1, 1997, and the 2007 through 2011 maturities 01 the CIty's $680,000 General Obligation Taxable Tax Increment Bonds, Series 1996D, dated Oelober 1,1996. 9/9/2005 Prepared by Ehlers and Associates, Inc. 1) CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Special Assessments, Revenues and Taxes (as of 11/03105) . ~ Refunding 1) 12/01/01 $3,735,000 Dated Amount Fiscal Year Ending Principal Outstanding Total P& Total Interest Tota: Principal 2/01 Maturity 2006 2007 2008 2009 2010 2011 % Paid 21.23% 42.45% 63.89% 79.43% 95.19% 100.00% 1,800,000 1,315,000 825,000 470,000 110,000 o 556.030 540,510 528,810 378,634 370,585 112.008 71,030 55,510 38,810 23,634 10,585 2,008 485,000 485,000 490,000 355,000 360,000 110,000 Interest 71,030 55,510 38,810 23,634 10,585 2,008 Principal 485,000 485,000 490,000 355,000 360,000 110,000 Fiscal Year Ending 2006 2007 2008 2009 2010 2011 '" ,... Spec. Assess, Rev. & Taxes 2.486,576 This Issue refunded the 2003 through 2008 maturl11es of the $2.000,000 General Obligation Permanent Improvement Revolving Fund Bonds of 1992, dated August 1, 1992 (payable from special assessments); the 2003 through 2010 maturl1ies of the $2,445,000 General Obligation Storm Sewer Refunding Bonds, Series 1993B, dated October 15, 1993 (payable from storm sewer revenues); and the 2003 through 2011 maturities of the $2,065.000 General Obligation Park and Recreation Facility Refunding Bonds, Series 1993D ,dated October 15,1993 (payable from taxes). Prepared by Ehlers and Associates, Inc. 9/9/2005 201,576 2,285,000 201,576 2.285,000 Fiscal Year Ending 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Housing lmprov. 'Yo Paid 4.89% 9.90% 15.16% 20.76% 27.02% 33.50% 40.46% 45.48% 50.66% 56.60% 62.71% 69.19% 76.04% 83.50% 91.44% 100.00% Principal Outstanding 3,890,000 3,665,000 3,470,000 3,240,000 2,985,000 2,720,000 2,435,000 2,230,000 2,010,000 1,775,000 1,525,000 1,260,000 980,000 675,000 350,000 o Total P&I 531,344 473,641 469,533 469,421 477,618 469,280 469,684 372,418 372,709 371,706 369,419 365,981 361,37.9 365,193 362,295 362,734 6,664.354 Total Interest 331,$44 268,641 254,533 239,421 222,618 204,280 184,684 167,418 152,709 136,706 119,419 100,981 81,379 60,193 37,295 12,734 2,574,354 Total Principal 200,000 205,000 215,000 230,000 255,000 265,000 285,000 205,000 220,000 235,000 250,000 265,000 280,000 305,000 325,000 350,000 4,090,000 CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness General Obligation Debt Being Paid From Housing Improvement Area Fees (as of 11/03105) Taxable Housing 1} Taxable Housing Taxable Housing Taxable Housing Dated 9/01/95 5115197 5101/99 I 8101/99 Amount $815,000 $1,700,000 $1,465,000 $2,565,000 Maturity 2/01 2/01 2101 2/01 - - - Fiscal Year Ending Principal Intel'8$t Principal Interest: Principal Interest PrincIpal Interest 2006 0 35,745 65,000 51,642 50,000 85,768 65,000 158,190 2007 60,000 33,465 55,000 82,565 90,000 152,611 2008 65,000 28,683 55,000 79,183 95,000 146,668 2009 70,000 23,450 60,000 75,618 100,000 140,354 2010 80,000 17,560 65,000 71,694 110,000 133,364 2011 85,000 11,000 65,000 67,566 115,000 125,714 2012 95,000 3,800 70,000 63,280 120,000 117,604 2013 75,000 58,564 130,000 108,854 2014 80,000 53,410 140,000 99,299 2015 85,000 47,775 150,000 88,931 .., 2016 90,000 41,650 160,000 77,769 .., 2017 95,000 35,m~ 170,000 65,806 2018 100,000 28,350 180,000 53,029 2019 110,000 20,945 195,000 39,248 2020 115,000 12,958 210,000 24,338 2021 125,000 4,438 225,000 6,297 455,000 153,703 65,000 51,542 ,295,000 828,936 2,275,000 ,540,073 1) The 2006 maturity was called as of February 1, 2005. Prepared by Ehlers and AssocIates, Inc, 9/9/2005 HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF HOPKINS, MINNESOTA Schedule of Bonded Indebtedness Non-G.O, Lease Payable from Annual Appropriations as of 11/03/05) HRA Fiscal Year % Paid Ending 3.91% 2006 7.94% 2007 12.04% 2008 16.29% 2009 20.65% 2010 25.21% 2011 29.91% 2012 34.60% 2013 39.92% 2014 45.26% 2015 50.87% 2016 56.73% 2017 62.90% 2018 69.34% 2019 76.11% 2020 83.18% 2021 90.63% 2022 98.42% 2023 100.00% 2024 Principal Outstanding 12,no,000 12,235,000 11,690,000 11,125,000 10,545,000 9,940,000 9,315,000 8,665,000 7,985,000 7,275,000 6,530,000 5,750,000 4,930,000 4,075,000 3,175,000 2,235,000 1,245,000 210,000 o Total P&I 1,086,619 1,086,969 1,081,318 1,083,829 1,079,285 1,083,148 1,OBO,331 1,078,311 1 ,on ,429 1,074,945 1,075,743 1,074,703 1,076,651 1,071,575 1,074,405 1,070,093 1,Q73,455 1,069,310 214,568 19,612,684 Total Interest 566,619 551,969 536,318 51B,829 499,285 478,148 455,331 428,311 397,429 364,945 330,743 294,703 256,651 216,575 174,405 130,093 83,455 34,310 4,568 6,322,684 Total Principal 520,000 535,000 545,000 565,000 580,000 605,000 625,000 650,000 680,000 710,000 745,000 780,000 820,000 855,000 900,000 940,000 990,000 ,035,000 210.000 9/9/2005 13,290,000 Lease Revenue Public Facility Dated 12/01/02 6/01/03 Amount $10,760,000 $3,050,000 Maturity 2/01 2/01 - - Fiscal Year Ending Principal Interest Principal Interest 2006 405,000 465,463 115,000 101,156 2007 415,000 453,163 120,000 98,806 2008 425,000 440,031 120,000 96,286 2009 440,000 425,425 125,000 93,404 N 2010 455,000 409,194 125,000 90,091 w 2011 475,000 391,756 130,000 86,391 2012 490,000 373,050 135.000 82,2Bl 2013 510,000 350,500 140,000 77,811 2014 535,000 324,375 145,000 73,054 2015 565,000 296,875 145,000 68,070 2016 590,000 268,000 155,000 62,743 2017 620,000 237,750 160,000 56,953 2018 655,000 205,875 165,000 50,776 2019 6B5,OOO 172,375 170,000 44,200 2020 720,000 137,250 1 BO,OOO 37,155 2021 755,000 100,375 185,000 29,716 2022 795,000 61,625 195,000 21,830 2023 835,000 20,B75 200,000 13,435 2024 210,000 4,568 0,370,000 5,133,956 2,920,000 1,188,728 Prepared by Ehlers and Associates, Inc. DEBT LIMIT The statutory limit on debt of Minnesota municipalities other than school districts or cities of the first class (Minnesota Statutes, Section 475.53, subd. 1) is 2% of the Assessor's Taxable Market Value of all taxable property within its boundaries. "Net debt" (Minnesota Statutes, Section 475.51, subd. 4) is the amount remaining after deducting from gross debt: (1) obligations payable wholly or partly from special assessments levied against benefitted property; (2) warrants or orders having no defmite or fixed maturity; (3) obligations issued to fmance any public revenue producing convenience; (4) obligations issued to create or maintain a perinanent improvement revolving fund; (5) funds held as sinking funds for payment of principal and interest on debt other than those deductible under 1-4 above; (6) other obligations which are not to be included in computing the net debt of a municipality under the provisions of the law authorizing their issuance (e.g. the Series 2005A Bonds and the Series 2005B Bonds of this offering). Assessor's Taxable Market Value Multiply by 2% Statutory Debt Limit Less: Long-Term Debt Outstanding Being Paid Solely from Taxes' Less: Long-Term Debt Outstanding Being Paid Solely from Annual Appropriations (applies to issues in excess of $1,000,000 originally issued after 6/1/97) Unused Debt Limit $1,340,217,400 0.02 $ 26,804,348 (830,000) (13,290,000) $ 12,684,348 This represents the portion of the $3,735,000 General Obligation Refunding Bonds of2001 that refunded the $2,065,000 General Obligation Recreational Facilities Refunding Bonds, Series 1993D that are payable solely from taxes. 24 OVERLAPPING DEBT' Taxing District Hennepin County I.S.D. No. 270 (Hopkins) I.S.D. No. 270 (St. Louis Park) Metropolitan Council Suburban Hennepin Reg. Park Dist. City's Share of Total Overlapping Debt 2004/05 Adjusted Taxable Net Tax Capacity $1,193,918,722 84,687,209 43,718,646 2,680,905,320 898,456,710 City's %In Total Proportionate City G.O. Debt Share 2 1.3676% $359,510,000 $ 4,916,533 19.0468% 85,395,000 16,264,999 0.4516% 54,875,000 247,807 3 0.6090% 201,365,000 1,226,381 1.8173% 41,525,000 754,632 $ 23,41 0,353 Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non-general obligation debt, self-supporting g.o. revenue debt, short-term general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. 2 Hennepin County also has $78,810,000 General Obligation Solid Waste Revenue Bonds outstanding which are payable entirely from the County's solid waste enterprise fimd; $11,140,000 General Obligation Bonds, Series 1997 A (Century Plaza Debt) which are expected to be paid from building rental fees from County departments and non-County tenants; and $1,990,000 General Obligation Ice Arena Revenue Bonds which are expected to be paid from building rental payments from Augsburg College. These issues have not been included in the overlapping debt or debt ratios. 3 The above debt includes all outstanding general obligation debt supported by taxes ofthe Metropolitan Council. The Council also has general obligation sewer revenue, wastewater revenue, and radio revenue bonds and lease obligations outstanding all of which are supported entirely by revenues and have not been included in the Overlapping Debt or Debt Ratios sections. 25 DEBT RATIOS DebtlEstimated Full Value of Debt/17,643 4:-" Taxable Property Estimated G.O. Debt ($1,704,892,211) Population Direct G.O. Debt Being Paid From: Tax Increment Revenues $ 4,191,284 Revenues 3,775,000 Special Assessments and Taxes 1,275,000 Housing Improvement Area Fees and Tax Increment Revenues 1,775,000 Special Assessments, Revenues, and Taxes 2,285,000 Housing Improvement Area Fees 4,090,000 Total General Obligation Debt $ 17,391,284 Less: Funds on HandI (1,706,499) Less: G.O. Debt Paid Entirely from Revenues (3,775,000) Net General Obligation Debt $ 11,909,785 0.70% $675.04 City's Share of Total Overlapping Debt $ 23,410,353 1.37% $1,326.89 Note: Debt service on the City's general obligation revenue debt is being paid entirely from revenues and therefore is considered self-supporting debt. DEBT PAYMENT HISTORY The City has never defaulted in the payment of principal and interest on its debt. FUTURE FINANCING The City reports no plans for additional fmancing in the next three months. Funds on hand for debt redemption (available for payment of principal and interest) have been deducted from total general obligation debt to determine net general obligation debt. 26 TAX COLLECTIONS Tax Year 2000/01 2001/02 2002/03 2003/04 2004/05 TAX LEVIES AND COLLECTIONS Certified Levy' $5,012,361 6,591,140 7,168,252 7,704,136 8,120,078 Total Collected Collected Following Year to Date2 % Collected $4,985,846 $5,011,125 99.98% 6,547,935 6,589,210 99.97% 7,117,634 7,164,573 99.95% 7,661,158 7,685,960 99.76% r----------------------------------------------------, I In process of collection I L____________________________________________________~ Property taxes are collected in two installments in Minnesota--the first by May 15 and the second by October 15. Mobile home taxes are collectible in full by August 31. Minnesota Statutes require that levies (taxes and special assessments) for debt service be at least 105% of the actual debt service requirements to allow for delinquencies. This reflects the Final Levy Certification of the City after all adjustments have been made. 2 Collections are through May 31, 2005. 27 TAX CAPACITY RATES' 2000/01 2001/02' 2002103 2003/04 2004105 Hennepin County 37.624% 50.409% 50.607% 47.324% 44.172% City of Hopkins 31.136% 54.796% 56.925% 56.664% 48.944% 3 I.S.D. No. 270 (Hopkins) 44.220% 15.034% 20.588% 22.203% 19.176% 3 I.S.D. No. 283 (St. Louis Park) 51.126% 26.557% 26.238% 24.683% 22.762% Metro Mosquito 0.324% 0.506% 0.567% 0.566% 0.564% Metropolitan Council 0.814% 1.490% 1.471% 1.212% 1.132% Metro Transit 4.691% 1.541% 1.787% 1.724% 1.608% Hennepin Parks 1.434% 2.618% 2.695% 2.599% 2.667% Park Museum 0.476% 0.734% 0.762% 0.774% 0.775% HCRRA 0.387% 0.179% 0.475% 0.317% 0.636% Referendum Market Value Rates: I.S.D. No. 270 (Hopkins) 0.18074% 0.19380% 0.17666% 0.15754% 0.14342% I.S.D. No. 283 (St. Louis Park) 0.23312% 0.22045% 0.19446% 0.17376% 0.16925% Source: Tax Collections and Tax Capacity Rates have been furnished by Hennepin County. lEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 2001, the Legislature imposed levy limits for all counties and all cities over 2,500 population. These limitations have not applied to taxes levied to pay debt service. While these limitations have expired for taxes payable in 2005, the potential exists for future legislation to limit the ability of local govermnents to levy property taxes. For more detailed information about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. Afterreduction for state aids. Does not include the statewide general property tax against commercial/industrial, non-homestead resorts and seasonal recreational residential property which is effective with taxes payable in 2002 and 2003. , Tax rates for many cities, townships and counties increased significantly for taxes payable in 2002, due primarily to reductions in state aids and in class rates used to calculate net tax capacity values. 3 The State of Minnesota enacted significant property tax reform measures in 2001. Among these measures were several provisions which substantially reduced school district property tax levies, replacing the tax levy funds with state aid. As a result, tax levies and tax rates for most school districts for taxes payable in 2002 are substantially less than the comparable figures from prior years. 28 THE ISSUER CITY GOVERNMENT The City of Hopkins was organized as a municipality in 1893 and comprises four square miles. The City operates under a home rule charter form of government consisting of a five-member City Council, of which the Mayor is a voting member. The City Manager, Finance Director, and City Clerk are responsible for administrative duties and financial records. ' EMPLOYEES; PENSIONS; UNIONS The City currently has 104 full-time, 23 part-time, and 27 seasonal employees. All full-time and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employee 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 retirement plans. PERA members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security. See the Notes to Financial Statements in Appendix A for a detailed description of the Plans. Recognized and Certified Bargaining Units Bargaining Unit Hopkins Municipal Employees Association International Union of Operating Engineers (Local 49 IUOE) Hopkins Police Officer Association Hopkins Police Dispatcher & Public Service Officer Assoc. LELS #143 Hopkins Police Sergeants Union LELS. Local 171 Expiration Date of Cnrrent Contract December 31, 2005 December 31, 2005 December 3 1,2005 December 31, 2005 December 3 I, 2005 LITIGATION There is no litigation threatened or pending questioning the organization or boundaries of the City or the right of any of its officers to their respective offices or in any manner questioning their rights and power to execute and deliver these Bonds or otherwise questioning the validity of these Bonds. 29 FUNDS ON HAND <As of August 30, 2005) Fund General Special Revenue Tax Increment Debt Service Internal Service Capital Enterprise Funds Operating Debt Service Total Funds on Hand Total Cash and Investments $ 2,741,245 2,383,974 3,405,827 1,456,499 1,549,766 4,159,592 1,745,143 250,000 $17,692,046 30 ENTERPRISE FUNDS Cash flows for the City's enterprise funds have been as follows as of December 31 each year: Water Utility Total Operating Revenues Less: Operating Expenses Operating Income Plus: Depreciation Revenues Available for Debt Service Sewer Utility Total Operating Revenues Less: Operating Expenses Operating Income Plus: Depreciation Revenues Available for Debt Service Storm Sewer Utility Total Operating Revenues Less: Operating Expenses Operating Income Plus: Depreciation Revenues Available for Debt Service 2002 2003 2004 $ 855,683 $ 942,795 $ 826,129 (713,181) (991,320) (1,010,688) $ 142,502 $ (48,525) $ (184,559) 274,744 227,004 234,863 $ 417,246 $ 178,479 $ 50,304 $1,334,592 $1,324,254 $1,253,772 (1,275,766) (1,459,743) (1,410,200) $ 58,826 $ (135,489) $ (156,428) 146,070 93,628 96,057 $ 204,896 $ (41,861) $ (60,371) $ 708,852 $ 666,524 $ 717,691 (105,523) (262,389) (288,121) $ 603,329 $ 404,135 $ 429,570 171,751 165,422 178,026 $ 775,080 $ 569,557 $ 607,596 31 SUMMARY GENERAL FUND INFORMATION Following are summaries of the revenues and expenditures and fund balances for the City's General Fund for the past five fiscal years. These summaries are not pmported to be the complete audited fmancial statements of the City. Copies of the complete audited financial statements are available upon request. See Appendix A for exceIpts from the City's 2004 audited fmancial statement. Beginning in 2003 the City prepared their financial statements in accordance with Governmental Accounting Standards Board Statement No. 34. FISCAL YEAR ENDING DECEMBER 31 COMBINED STATEMENT 2000 2001 2002 2003 2004 Revenues Property taxes $ 4,327,792 $4,740,931 $ 5,799,310 $ 5,932,258 $ 6,372,727 Intergovenunental 2,134,678 2,175,051 1,521,976 1,094,005 743,812 Fees, licenses and pennits 428,435 377,048 468,312 639,566 531,206 Fines and forfeitures 111,221 113,353 115,354 133,973 156,449 Charges for services 218,832 193,337 296,523 333,085 277,206 Investment earnings 165,005 160,343 116,211 0 0 Interest 0 0 0 101,647 48,919 Other miscellaneous revenues 49.981 95.428 14.499 9.783 298,714 Total Revenues 7.435.944 7.855.491 8.332.185 8.244.317 8,429,033 Expenditures Current: General govenunent 828,027 827,483 874,288 1,155,609 $ 1,015,190 Public safety 3,158,178 3,359,401 3,625,449 4,309,848 4,588,464 Health and welfare 0 0 0 60,535 57,814 Highways and streets 0 0 0 1,63 I ,249 1,627,347 Community development 670,252 759,178 693,193 0 0 Public works 1,500,689 1,573,614 1,547,079 0 0 Recreation 460,528 480,186 479,277 0 0 Culture and recreation 0 0 0 489,697 461,239 Other 1,318 34,290 93,508 0 0 Capital outlay 550.894 617.882 786.315 24.271 82.186 Total Expenditures 7,169.886 7,652.034 8.099.109 7.671.209 7,832.240 Excess of revenues over (under) expenditures $ 266,058 $ 203,457 $ 233,076 $ 573,108 $ 596,793 Other Financing Sources (Uses) Operating transfers in 0 0 0 0 0 Operating transfers out (16.943) (31.379) (55,378) (721.004) (313.408) Total Other Financing Sources (Uses) $ (16,943) $ (31,379) $ (55,378) $ (721,004) $ (313,408) Excess of revenues and other financing sonrces $ 249,115 $ 172,078 $ 177,698 $ (147,896) $ 283,385 General Fund Balance January I 2,877 ,512 3,126,627 3,198,705 3,376,403 3,787,911 Prior Period Adjustment 0 0 0 559,404 0 Residual Equity Transfer in (out) 0 (100.000) 0 0 0 General Fund Balance December 3 I $ 3,126,627 $ 3,198,705 $ 3,376,403 $ 3,787,911 $4,071,296 DETAILS OF DECEMBER 31 FUND BALANCE Reserved $ 652,560 $ 617,388 $ 580,462 $ 557,628 $ 97,740 Umeserved: 161,799 3,973,556 Designated 2,446,396 2,561,426 2,753,990 3,068,484 0 Undesignated 27.671 19,891 41,951 0 0 Total $ 3,126,627 $3,198,705 $ 3,376,403 $ 3,787,911 $4,071,296 32 GENERAL INFORMATION LOCATION The City of Hopkins, with a current State Demographer's estimated population of 17,643 and comprising an area of four square miles, is located approximately eight miles southwest of the City of Minneapolis. LARGER EMPLOYERS Larger employers in the City include the following: No. of Firm Type of BusinessIProduct Employees' Super Valu Inc. Food distributor/retailer 1,558 2 I.S.D. No. 270 (Hopkins) Elementary and secondary education 501 Thermotech Precision injection moldings 281 Oak Ridge Country Club Country club 230 Augustana Chapel View Care Center Nursing home 180 Rudy Luther's Hopkins Honda Auto dealership 155 City of Hopkins Municipal govermnent and services 154 EDCO & Arrowhead Products, Inc. Outdoor building products 120 Hopkins Care Center Nursing home 120 SunGard Financial Systems Data processing 112 U.S. Bank Banking 105 Walser Chrysler Jeep Auto dealership 100 Source: Written and telephone survey (August, 2005), 2005 Minnesota State Business Directory and the 2005 Minnesota Manufacturers Register. Includes full-time, part-time and seasonal. 2 Reflects the number of employees in the City of Hopkins. 33 U.S. CENSUS DATA Population Trend: City of Hopkins, Minnesota 1990 U.S. Census 2000 U.S. Census Current State Demographer's Estimate Percent of Change 1990 - 2000 Income and Age Statistics 1999 per capita income 1999 median household income 1999 median family income 2000 median gross rent 2000 median value owner occupied housing 2000 median age Housing Statistics All Housing Units 1990 8,572 16,534 17,145 17,643 + 3.70% City of Hopkins $26,759 $39,203 $50,359 $710 $132,400 34.1 yrs. Hennepin County $28,789 $51,711 $65,985 $654 $143,400 34.9 yrs. State of Minnesota $23,198 $47,111 $56,874 $566 $122,400 35.4 yrs. City of Hopkins 2000 8,404 Percent of Change -1.96% Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Year 2001 2002 2003 2004 2005, June' Averal!e Emplovment Hennepin County 649,991 658,532 663,214 650,875 660,839 Source: U_S. Bureau of Labor Statistics. Preliminary data. Averal!e Unemplovment Hennepin County State of Minnesota 3.6% 3.9% 4.4% 4.6% 4.6% 4.9% 4.5% 4.7% 3.9% 3.9% 34 BUILDING PERMITS 2001 2002 2003 2004 200S' New Single Familv Homes No.ofbuildingp~ts 14 38 30 5 0 Valuation $2,533,000 $7,016,600 $25,008,200 $1,743,414 $0 New MultiDle Familv Buildings No. of building permits 37 0 52 1 I Valuation $3,508,033 $0 $13,437,630 $687,000 $400,000 New Commercia1lIndustrial No. of building p~ts 0 5 10 2 2 Valuation $0 $10,901,200 $29,967,572 $1,370,000 $504,800 No. of All Building Permits {including additions and remodelings} 531 487 498 542 232 Valuation of All Building P~ts (including additions and remodelings) $8,528,000 $34,562,884 $40,363,863 $34,316,423 $16,600,397 FINANCIAL INSTITUTIONS Financial institutions located in the City include the following: Citizens Independent Bank (Branch of St. Louis Park) Hopkins Schools Credit Union Peoples Community Credit Union U.S. Bank National Association (Branch of Cincinnati, OR) Wells Fargo Bank Minnesota, National Association (Branch of Sioux Falls, SD) Source: American Financial Directory. . As of August 30, 2005. 35 EDUCATION Independent School District No. 270 (Hopkins) provides education for 8,069 students in grades K through 12. The District, with 1,671 employees, owns and operates ten schools, three of which are located in the City of Hopkins. Teachers' contracts in the District are currently settled. A small portion of the City is also located in Independent School District No. 283 (St. Louis Park). IN-PATIENT MEDICAL FACILITIES IN THE CITY Name of Facility Augustana Chapel View Care Center Hopkins Care Center Type of Facility Nursing Home Nursing Home No. of Beds 126 130 Source: Minnesota Department of HeaIth. N:\Minnsota\HOPKINS\ANALYST\os.mtr.2005A&B RK:SIIdll 36 APPEN[)IX A EXCERPTS FROM FINANCIAL STATEMENTS Reproduced on the following pages are excerpts from the City's audited Financial Statements for the fiscal years ending December 31, 2002, 2003, and 2004. The Financial Statements have been prepared by the City and audited by a certified public accountant. Notes (included here for fiscal year ending 2004) are an integral part of the audits and any judgment of the Financial Statements should be based on the Financial Statements as a whole. Effectivewith the fiscal year ending December 31,2003, the City implemented new accounting standards consistent with GASB Statement No. 34 "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments". Copies of the complete audited [mancial statements and the current budget are available upon request from Ehlers. A-I Both of the government-wide financial statements disdnguish functions of the City of Hopkins tha1 are principaUy supported by taxes and intergovenunental revenues (govemmental activities) from other functions that are intended to reCOver all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Hopkins i~clude general, public safety, highways, streets, culture, recreation, urban redevelopment, housing, health and welfare. The business-type activities oftheCit)' of Hopkino;; include water, sewer, ref\Jse, stOml sewer utilitieS, an ice arena, a skate park and a housing and redevelopment authority. Cit)'ofHopkins This section of the City's comprehensive annual fmancial report presents a discussion and analysis of the City's financial activities during the fiscal year ended December 31, 2004, This discussion and analysis should be read in conjWlction with the letter oflransmittal in the introductory section of this report. The government-wide financial statements include the City of' Hopkins itself, but also a legally separate Hopkins Housing and Redevelopment Authority. Although the Hopkins Housing and Redevelopment Authority is legally separate, it functions for an practical purposes as a depar\:Iflent of the City 'Of Hopkins, and therefore has been inc(udec1 as an integral part of the primary government. The govenu11ent-wjde financial statements can be found on pages 28-29 ofthis report, Fund financial stAtements, A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specifiC activities or objectives, The City of Hopkins, like other state and local govenunents, uses fund accounting to ensure and demonstrate compliance with fina~related legal req,uirements. AU of the funds of the City of' Hopkins can be divided in two categories: governmental funds and proprietary funds, Governmental funds. Governmental funds are used to account for essentially the same function: reported as governmental activities in the government-wide financial statements. However, unlike the govel'Mlent-wide fmancial statements, gO'lemmental fund f'\nancial statements focus on near. term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fLscat year, Such infonnation may be useful in evalutlting a City's m~ar-term fmancing requirements, Floandal Highltghts The assets of the City of Hopkins exceeded liabilities by approxin\tltely $58 m!1lion, Of thi: amount, (unrestricted net assets), approXimately $22 million may be used to meet the City's ongoing obligations to citizens and creditors. The City's total net assets increased by approximately $3 million. As of the c\ose of the curient fiscal year, the Cit)' afHapkinsgovernmental funds reported combined ending fund balances of approximately $2 I mUllon, a decrease: of approximately $4 million in comparison with the prior year. Approximately $11 million of fund balance is aVlloUable for spending at the City's discretion (unreserved fund balance), As of December 31, 2004, unreserved fund balance for the General Fund was approximately $4 million, or 52% of total general fund expendituJ'es. The City of Hopkins total debt decreased by approximately $2 million (6 percent) during the current fisc?\ year. The key factor for this decrease was the payment of principal on existing debt. . . . Overview of the Financial Statements t Because the: focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compll1'e the information presented for governmental funds with si,milar information presented far govel.'tUl\ental activities in the government-Wide financial statements, By doing so, readers may better understand the long-tenn impact of the City's near.term (manclng decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. This discussion and analysis are intended to serve as an introduction to the eil)' of Hapkins basic financial statements. The City of'Hopkins basic fimmcial statements comprise three components: 1) government-wide finanoial statements, 2) fund financial statements, and 3) notes to the finnncial statements, This report also contains other supplementary information in addition to the basic financial statements themselves, Government-wide nnaDcla! statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Hopkins financeS, in a manner similar to a private-sector business, The City or Hopkins maintains forty-two indi'lidual govemrnental funds. Information is presented separately in the govenunental fund balance sheet and in the governmental fund statement of reveflUes, expenditures, and changes in fund balances for the general fund, Tax Increment 1-2 Entertainment District, capital improvements fund. pennanent improvement revolving fund, 1997 G,O, housing bond fund, 1999A taxable housing improvement bonds and 1999B taxable housing improvement bonds, all of which are considered to be major funds. Data from the other thirty-five funds are combined into a single, aggregated presentatlon. Individual fund data for each of these non.major governmental funds is provided in the form of combining statements elsewhere in this report. The statement of net assets presents infonnation on aU of the City of Hopkins assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases hi net assets may serve as a useful indicatot af wheth<< the financtal position of the City of Hopkins is improving or deteriorating, The statement of activities presents infonnation showing how the City net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the Wlderlying event giving rise to the change occurs, regardless of the timing of related eash flows, 'rhus, revenues anc expenses are reported in this statement for some items that wlH only result in cash flows in future fiscal periods (e.g., uncollected. taXes and earned but Wlused vacation leave). -,--~..(..,.~",,_..-~-,..._., ""'-(~.....--""-~~_.........,. __w,..- ~d"'---""'-'- -'- ~.."".-~..-.~-- -~"" ._,-,.""'-,_..._""'~"'._-~ ,e,""'''' ne~d '0 re?a)' m' debt ",U,' be ?,ovlded flo'" o\het '0""'''' 1.0C3 ,e,'''''''' 4,;Jf>6,0?1 7,""'" ,,810,7\7 ..,\e','" 4','''~'' ..,.",781 ".,;",,7 ",""'''' ,",,,,,790 "....,.'" ..,""'" ~~-=.z...~~~~ 4~"'''' ",,7\,'" ,....,,,. ..,,7" ,,79,,06' ""...... ,.<1;'.2!i ,..~ "".Oll!l.~'~'''~ ~~~~ _",\4"::C"~""\~ ,,,50"" "A'"'' \4...0.'" ",42~"0 ,,.,,,0,79' ",.M.,M ..00""'" ."~,,. z;o,OOO .,7..~>7 ",.'''' ZO,""'" ",4\~'" 1.77','" ,,'06,"', 21,06"M< 2"e\2A>O. ~~_".'40.,i13-$I.'.;z:m ~~' - -- -- -- - - -- "~...~- ...-.~"""'_...._..."-,. --.....- ...~~.--..._..".~.~- ..-- ~""...-.......,,".""'._~_.... yeat. 1'otA\ ,.-.~,,"'-;''''' ---.... ",...- --- ...-,"", ~..-..-.,...-"'" ($21,967,6\\) ",aybe us.~ to ",ee,the SOvetOlf\en," 01\l\onrgobhW""'" ,oe,Il<,"",tvI ed,'ots. __.,....w -..-......." "" .,.-""''' -"'--~-,~_.,~""'......,...._. ,he CitY ofHo?ldns, ....<tI e\etnents ofthi' \!Illle... or< as tol\""" '~1I04 ~ttS BUS\1\.'wT'fV'l MtMttrlr. iOO4 iOO3 City QUiopkins riel D6l;.OrnbGr31 GGVIjIITl!"l'o\ln1.a\'~\VIUG. 2.'004 ~ 1'otall\GlflS$&ts AAS&\l> C\.llT'!ntatl4Q\to.erass6\S ce.{l\\.lllj,SSo\$ 1o\a\&ssets tlfltM!;9t5 IlWeslecll\C3PWI.I ass.els,(\atC.ff11IIl\e.d dO" Restde\ed \JnrQ$\lI(Md 1,..Ia'U,\\l;\&S OtMT\\iO\1\\10S \-CI1\\}.t'3I\Tl\\tiO\\\\10!l. Q\l\S.Ulnd!ng iola\l1ab1litleS ~O"O,~......". -' ~_.......- '" "" .........' levenue ""'~, e.eep' fOf 'M eonunun\tY,oeve\o?"",nl b\cek !;l"" "'~ 1>leek 64 Deve\opmenl funOs. 1he ~udlle'$tY eotn?""on "",etnents have been ~tov\de~ iot Ih. llener>\ ftln~ ,tvI1'" lnet"",en' \.2 lln,,,,,a\nllten' D\smel ,tvI seMauleS ". ~lov\ded iOI o'he! fund' '0 ~e",o...ale cotn?\illl\ce wlth the budF,et, The baS,e gove_en,.\ ftlnd financi.\ sta,e",ents e'" be toun~ on ~'ll~' ~Q':l9 of thl' ,C]'ort, ffoprl''''ry iuo~" Th' CItY of Ro?ldo, ",,"ntain' ,",0 ly?eS of p'e?riel$tY "",Os. "",e!\ln,e, ""'~, "e .se~ '0 tepa" the ,"". fun<Uoo, pre.en\e~ as bu,iness-ly?e ""lvl'ieS in the llev,nunen'- ..i~' fine!\Jliol ,,,\e,,,en", 1M CItY oi Ro?\OIts uses en,e!\lrise fund' '0 ",,,,unt fol I" ...'ef. .... _. -~....~ ~.- ,. - ~....", ~ ~ -." -- _._-~--~....._~ oIloe.\< eosts in,emellY ,,",onll the CitY of Ro?\On' "",e.' !unO,io... ']lte Ciry eill<>1'l<ins use' -----.-.---.. ","'I'"""ted ,bsenee'. 1>ea.u,e .II of the" 'e~eeS ?ledo",Io",'IY Mnef,' sove~~nl'l .Utl'" ,tan b.,\ne".ly?e "",e,len" th"i have been U\el.~ed ..,th,n llove_en"\ ",\tV\\\es m 'M go"'emn'1ent~wide tin~cia\ statetnents. > ---~-_.-...~--" ,,,,._" on"!Y in ",o,e ~e\a\l. The ?toPriel>lY fund finonei'\ "..e",ents p'ovioe seIl""te inf_an;n fo' ,he wa'e!, sewel, on~ "onn ....e! oper,,\ons, an of ..\\i"h are eousid"ed 10 be ",ajo' ftln~' o! the CitY of llo?ldns. D,,.l'rom the othe!,iOUlentet1>ri.. fun~' aie ",rnbined \nlO a ~ sinll\e. aW'lla'ed ?le,entation. l1l~\v\duol"",~ data tol eaeh of 'he,e non-malot ?IOl'ri'l>lY fund' ,_.~_.-----'~- ~....-..., ~ are eo",b\ned in'o a ,\ngle, 'llll'ega'ed p....ntation in the ?roptie'$tY futt~ fi!\onei,L,ta\<ntents. lndiVid.a\ futt~ data fOI the '\n'ell\oI ,erviee futtd' i' also ptovi~e~ \n the fo<tl\ cf eo",binlnll st$tements elsewhere in this ttPOtt.. The bas\e PlcPrie,.,.,,"",d fmoncia\ ,ta'e",en" ean be toun<! on pages 40.4J of this lC]'ort. !l.,.. '0 'M n.aoolal ,ta\erneots. The, no'es ?lcvi~e ,d~\ti.na\ info<tl\a'lon tha' i' e"en'ial '0 a .,_.w---~-"""'-'-' ~ _..._--~....-....""...- "...- ---..--....'-...- - -..-.- _......~" -.~- --_..~...~-- -.....-"'" "a'etnents on~ seh,,",I" ,'" be fcun~ on ?alleS 65.\07 oithi' ,eport. G(J"o'ero.~nt..wld~ Vlna'M\at A,na\)'sis ~...~,~ ~ -----......-..-..- - .~_.~""._._--""'''''''.~- of the most tecent t\scal ye:as. Property taxes increased in 2004 as a result of debt service levies and increased operating costs. Expenses and Program Revenues. Governmental Activities $5,000,000 $4,000,000 $3,000,000 S2,000.000 $1,(XlO,OOO $0 Gene/al PubUtS.fely Highway. and U",,, Cultul'lland HI811hand Inlereslcnlc Government Slreet. Rtlfevelopmenl recreation wellare IIIrmdabt and Hou.\ng Rtvenu.. by Source. Govemmental Acllvlll.. lnvellmenlflrnlng. ". GranlJlndcontrlbutlOns Ch'lge1fQl'lielYlces nOlrestrid.,d .. 4' T."lncremenlJ ". InNclAsset Busfnltllll.T~eAotlvlttOi R04 200: City ofHopkllls Change: Docember31 GOVttrnmontlltActlvlUoll 2004 2003 2003 Total 2004 Revenues: Programrevonues: ChargasfotselVloes 7,022,276 4,859,859 4,158,141 4,017,420 2,864,135 842,449 1,699, 2,343,130 304,150 232,689 1,394,761 2,110,44 OparaUnggrants and conlrfbuUons Capll;algrantsand cOnltlbuUons Generalrevanues: 863,01 1.467,946 98,673 975 764,138 .466,971 6,877.33 2,214,833 7,289,973 2,177,518 6,877,331 2,214,833 7,289,973 2,177,518 Property taxes Taxlncremen1.9 Granlsandconlrlbutlons notreslrlcled Investmenteamlngs Transfers 691,438 416,726 566,514 418,263 88,767 78,380 (126,240) 691,438 327,959 566,514 339,883 126,240 19;7fi4,t2-6 1,411,159 4,477,224 2,229,67 19,123,213 50,064 4,477,224 2,114,601 4-;-650,13 4,203,224 15,134,595 1,411,159 4,477,224 2,229,671 f4;9;19~ae9 50,064 4,750,296 2,114,60 TOlalrevenues Exponsu: General Govemmenl Public Safety Highways and Streets Urban Redevelopment and 1,5SS,395 1,220,030 185,8:3 1,650,989 1,075,399 1,459,743 409,282 654,721 339,511 18,199 939,846 ,193,801 180,314 1,804,523 ,053,600 ,410,200 686,883 429,768 367,367 44,056 ,075,399 1,459,743 409,282 654,721 339,511 18,199 ,053,600 ,410,200 686,883 429,166 367,387 44;056 1.598,395 1.220,030 165,893 1,650,989 939,846 ,193,801 180,314 ,604,523 HousIng Culture and recreation HeallhandweUare Interest on long-term debt Wetel Sawel Storm Sewer R!lfuse :>> , ... PevlHonJlceArllna Ska.tePark Housing and Redevelopment Authority TOlalexp 448,869 17,176,685 425,024 16,~ 448,669 4,405,524 425,024 4,416,898 12,171,36 1,933,445 enses 2,607,641 $54,784,812 52,178,97 2,772,870 54,784.8 S57,557,682 244,607 16,377,880 $16,/)22;487 (213,674 16,622,487 $41,148,869"$38,162,325 $16,408,813 2,363,234 35,799,0 2,986,544 38,162,325 Irlcre8se (deCr9ase) In net assets 31 January Decembe Netassels Nete$8els "FiuaueialA'D1l1YSi~ oftbe City's Funds As noted e"uer, me City of BOP \tins uses !\lnd at"uu(rng to ensure and demonstrate ,ompuan" with tit13flce.related legal req,uirement.S. Gove",,,,eotal fuod,. Tne fo'US of fue CitY of Boplcins gov._ental !\lnd' i; to provid< information on ne".term inl\ows, outaOvlS, and b.lances of >p.ndable "",urees, su,n inform"ion is us.M in assessiog fue City of Hop\tios financing requir.ments, 10 portieul", unreserved fund talance m.Y ser'" "a useful "...sur. of' City', net resourees av.ilatlo for >pending at the .nd of the fiseal year, . ;.s offue end of fue ,,,,,ent fiscol year, the City ofHoplcins governmental !\lnd, repo~.d ,omtined ending fund b.lan,eS of $7.0,609,282, a decrease of 14.236,~7 in eo!t1l>arison witn the prior y'''' APproximatelY on' hall of !\lnd bal>ll" ($10,869,\9'1) eoOS"rutes """,erved !\lnd balan,e, whi,h Is av,;lable for spending at the City'S discretion, The remainder of!\lnd b.lan,e is reserved \0 indiea" th.t it is not av,;\.ble lor noW spending b"'use it hes .\r<ady ","n ,o_ined l) to p'Y debl ,ervi,e, 2) to p'y lor me f.cillty eoOS.,,,tion, 3) to pay for lax in,rement proi"'ts and debt, 4) to provide for futU'e renabilltatiOn loWS. and $) to provide ror long"erm receivables that are not available or spend3.ble resoUl'ces. The general fond is the ,roof operating fund of fue City of Hop\cins. At the end of the ,,,,,ent 6s,," year, unre"",ed!\lnd ba\lln" 01 the general fund wes $3,973,556. This ,epresen" 98% of the lotal f\l.nd. balance, As am"'''''' 01 the ge_1!\lnd" li~uidity, it m'y be useful to co!t1l>ate both uures""ed DIDd balan" end total fund balence to total!\lnd ",pendl""'" 1Jureserved lImd bal,," repre"nts approximatelY 5 I p"_ of total general fund ",pendi""" while totol !\lnd balen" "p""nts 'l'I',oximate1Y 52 patcent of that sante ""aunt, <he fund bal"" of Ine City of HoPi<lns general Ilmd incre",ed by $283.;85 dudng tM current fiscal ye", The )<ey fa"'" in the in,reaSe is increased inter~;ove_ental revenues ($60,027) and ehatg" 10' services in the eommunity deVelopment department ($51,827) oIong with d"rease' i. expendi""" for general gove_ent in the deP",,",en" of mayo' and council ($1 8,09g), .d",inistr,'ive "rvices ($73,409); and in publi' works in the department of streets and' .lleys ($\28.665). The tal( iucrement 1-2 entelUillroant d;",;,t fund haS , total fund bal"",e of $28,312 .11 01 which is uureserved. <he!\lnd bala." d"re",ed bY $24,057. The oapital improvement Jimd nas a total fund balance of $1,526.732. all of whieh is reserved [or the facility p,oject ,onsttUctlO1l' The faCility p,oi"'t con'trUCtion i' · eombin.tion of , neW !\re station, a new publi' Vier'" SlOt>ge facility and ,emodeling of the police Slalion. The not decreaS' in!\lnd b.l""" dudng tM ,,,,,ent y",in theCapitol improve..ent fund wes $4,973,2B4, 'rhe permanent imp,ove",ent revolving fIm<\ haS a total fund b3lan" of $1.534.376. all of wro,n is designated fo' future ",eel improvement ptojec'" The net increaSe in !\lnd tolen" during tho "",ent y'" in th. perm"".nt improvem""t revolving fund wes $371.\ 1&. Bu,lness-ty]le activities. Business.type "tiviti" "perieneed no sIgnificant ebang" in nel."e", - - e:.cp(H'\$e~ a.nd program Rc~jl[\ue&' &Jll~non.t}'Po ,l>.C;tMtto, $1,~'OOC $1.250,001> $1,OOl),1jCI) emrQ"'I!(\\IU, .ex.pen~e~ $7SC.COO ,$00.000 1 $250.000 . $' Walel ....." ~1\lSe '",,'" p;wi~e~FaI'" ~siflg sewer A.reTl'a Au1l\Ot'llY - ~ V1 - - Rel/'enues by SourG4 . Bush,ess.type Acttvitl&$ Il\IieSlrt'1&11tearnings ,% OpefaUn9g!t.f\t& ltulCl'll\Vlbvllol'110 (w. C~tges1\)tteNlce' ,,.. eS\lm'''' .". tX]l<'.dit.feS wete 'eS' than budS.t'l)' -~,.._.....- ."...- --"'~- esti""teS, e\i1l\in,ti.S \\\e need '0 dr'w upo' "", g budget to a.c\W.\ var\3.t\ces.. fuea\ year inc\l,1.ded the {O\WoNi.r.~ I III 1"0\;'\\ ..,~"It'" .u."'....t;~ ~ GO""'''''''~ ~ l~ 2'''- >co. ~~~~$~~ '"' ._' ..,.~. :,r.;.' ,'.:~ ;.;.' ,,.." . - "^'" ". ~ ,'..:,.. ,;";,,. "..,. ,..... ~ .:.- ,,,,,,;:'~ "... ;,.". ",,,. .~ ~ ~"' ,,,,. ~:. ~.: \';:;:0: ,,,,"" - ,,.,,, ",": .";,,, .,,,,, ~-""'" co"UU"\O'\0'109r...~~~~ 5 '-'""'" ,-,,""" '-"'~'" !-"...'" !-....." "...' " . 'tal ,sse\> c'" b' lound i. note 500 o"es 54.55 Mdilio.,1 i.lo,,",tio. 00 the Ci"l o[rlOP\utl' caP' oft'ni.Sfe9<'rL ,ii,c.i ~'"' tb' CitY orrlop\<io' b,d 10\>' bOne.d e,"t \.ons.t.rtn d.bt. AI the end onh~ c""eo $1; a I 0'000 comp"'" ""."ns ",d redevelOP",ent o""t","i.g 01$;;.352..,6. Olth" """.nt, .....,;. i.ef""e.t fCeeveIO?",.nt de"" ",d ___.."."'.~'"t'....-_... ...- ,...... ~ $2.965.000 comp\\'" Set"",1 o"M,uon ~otbet $5.630.000" ,peci" Ie" Mot 10f whicb the !nil [,itb and..~\t 01 tb' so,,"""~~.! .It ". the yfo~eltY own.{$ ,u"iec' to the lee" The savemmen' "I.."le It' ,he eve.' o. .. " I\.dW\.n\s1.rallOl1 \$,ion ",d . y."liC wOf"" "o",se l"ilitY. "T\lC C)Jt\Stt'Uct\01\ cont\1\ued on s. new, iif ~., Cons,",Ctio.in,fosr.""onhee\o,.O[ilIe ,...,de\\ng OCgan 10' the n"" ?O lee ,0\ '1. ,,,e>l ;>e>th.d reSched $15.a~1 .301., "and ,."",,, lor "i,\lnSS"ee" wefC conwleled in A v,neW 01 ",eel cO..".CtIOn pfO)ec ' 'h.e.".n' lIseSl yeS' al.co,t 01$~56,254~ ""n" wcr' co",pl,,.d in th' ",,,,nl r"eal y'" ".\\OU' buildi.S, in~..t"lC,"fC .,," l",pfO . at aCQs\ ofS9\(),'l\ \. . . !\lnd h'" ,0\$1 fund ".I",ee oUIIl2.12" al\ olwhieh i, ,e,,,l"Ied (of The 1991 G.O. "o."ng "o.d"Th !\l d b"",ee ine",,,ed .pptO,im'lel~ a" ?"eent ($9,0\3). the pe.ycnent of debt ser-'\Ce. e n , d1;1 db'"'0\$1 !\lW",I",ee 01$110.906. ,II o{ The 1999A "T",OIe "ousinS 1lnpfOv,ment o~ ~" [un. balance inc"..,d al'l'f,,,i",,,,11 [N' wbich i, """,ed [or tM I"ytnent o[ deb' ,el"l\Ce. ,,,,ent (51,100). , b d [und \lSS ' total rund b.,ance 01 $,0>.15g. all or "The 1999B "Trot.OIe "o.,i.g 1lnprovement o~ Th [une balanC' i.e"..ed ap?,o,i"""IY !lv, ,mich is ""rved lor ,M p.ytn.n' o{ de"t ,,1"1\0" ' yetcent($",7.03). . rund . d the ,,,.e l)'lle o{in,ormatlon ?tcOtl.tarY I..d'. The ciw or;!O?"''' ?to!'"eta\)' i '~~a'; lound in the go""""..,-wide lInaneial ,ta"m,nta, bUt 0 100" \ ' 'II e ,oe end or the yesf ,",o..'od to $612.,.a, 1h. lJ",,,meted ne' .."" o{ the .te~~. at ,og \0'''' ",d p'~ [Of inll",",,,.,e i",yt<lve",.n'" .",eSmc,.d net "",IS >t' us.d to 0 oPel' \ 1he decli.e i. ne' ."e" ,,,,o..ted to ($2S..1~3). the eod o[ 1\lC 1"r ,",o..,ed " $663.>25, The W"'rl,,,ed net .."" 01 ,\lC S,w~e.{uod at, tosses ",d ?,y {o' in~"'''''''.'' impt<lV",,,n'" .n".m",d ..I .."" >t' .sed to ~ .(~ ~~~~~~ R,ven.es .lsO lIUC'"'" ."".al\1 <lel>.odinS on Thadecline \n netass'" """.n" to ' . w"et .sag.. ll'O.n'" '\'~ I>lM ,0(lS1"'" e h ><101 the y.>t ,",ow'ed 10 $6~5.,,9. 1\1e lJ",e,uic"d "" ....t, olt\le SIOrn\ S,w,,!\ln ,t' e" 'm ",,,men" "The Il'ovrth ,n net .."" ~ .",,,mc'ed ne' """ are ..ed \0 p'Y 10f \nft~,:,tIl" :n~need m.io; 1n!r.._tIlfC im,fOvo",eo' 0' ".ounted \0 52a1.063. 1M St""" S.~ef i::' C'~ :~".. "v",\ feven.e "cnd' to p'1 [0' 'I" co," ovet t\le \$S' ,evetal ;>e"" ca."ng " 'w"di; t\lO y,ytnent o{tM debt in \IIi' [un.. imp",,,,,,e"'" ^ pottion or \lie "vonues goes 0 -~-"~-,,,,-"'''''-''''''-'' G..e,.1 V.od Budget.ry Wgh\\Shts . . "bnd et ",d \he fln,1 "",nded bndSel f".lted in , "The diltef<:1lCe be\VIeen ilIe s,n..,,1 !\lnd ons\n I: The "asOn rot \\10 ,,,,.n<!me"" w.. a Wdg.'ed i..fC..e 01 $1~,269 \n endi"g ":':: ~i c>!t'l 10{VI,," un,,~'n.,d 'l'I'r<>pn~lon' d,ci,\on "1 ilIe City co.neil to 'i~ ~O~\o:is ;:'co~pl"od ptoi"'''' The ,,"o.nt ..m,d !to'" !tom 200> into ,200' ""d ~o'" . . 0 I $.1 >96 ",d the ".o.n' carrl.d ~om 200' to 2005 200> in\O 200' ,",o.n'~ $~S ':6~n'~~:'g.' chang" can'" ,=an"d" 10noW' ,,"o\lXlt,d \0 . .ecte"e 0 ' . . . \'let i.'"'''' 01 521,6'1 In e,pendi""eS 10' gen,~,1 sovemmen' ,cI\Viti'" . \'let i.cre"e 01 $\,,196 in "pend''''''' lot yu"hC ,.letY: . \'let I.".... 0; $21,256 i. e-<peneltll,,, [Of ",eelS "'. bis\lw'f' . \'le' i."",e oUI \,500 \n tX?nditlltaS {ot c.\\IlIe ",d ,_\\Of\. . \'let deef.... 0{$\\4,05a in .,p,ndi\llIeS (Of u..\loc.ted. . \'let in"....0!$1~,160 i. <>l"nd\""eS lot """I", ou'. asset events d\\dnS tbe. cun:en\ C\~ofttC?\dnsC$.?\\,a.\ ~\S ,net of dt;?teeia\1.0n) U&ce"ll'\~T$' . . . veSt",ent In cal'ital .."" lor it' sovet""''''''' "'. b~'\~'" __ ~O".,_. ",""",",..--' ...........',-,.,~.:"*---.._. ~~i~:~~:.::d~t\~~~~':.: ~~d%" and di,trib.tlon ,yat,,,,,, ;...sset ~nd Debt Cll-yita M:a.}otCi!;pi.ta.\ . . Thi, financial toport i' d.,ign.d '0 p<ovid. a g.net.IOV'l'Ii'w of tM City of Hopkins finan..s for a\\ t.... with an int.",t in ,he gov._.nt" fin>llcc,. Question' co",,,,"ng SIX'J cf ,h. information provid.d in a,i, report or r.....'ts for addition.l financi.1 information ,...Id be .ddres'" to ,he Finsnc, Direc,or, City ofHopldns, tOlorirst Stteet So.t~, Hopkins, MN 55~43. p.ring do" c.rront llseal y."" .","'l'Ied fund b.lanc. in ,~. g.M",l fund incr.ased '0 $4,07' ,296. Th' O[flce of the Stat. A.udi,or r"om""nd' u",,,.rved fund bslanc" not "'cc.. 50% of g.netsl fund ..pendit"'''. Tbc City i' V/i\hin that reco_.ndation for \h. genetal fund. Th' \Ulf".rved fund b.I"''' i' used '0 p'y for do" City" g.nera1 fund obligations .n,il it receives its property t'-" levy fe\/enues in June. A. numbet of [actors wete ,aken into conside",tion when preparing the City of Hopkin' 2005 bud.gol. U\i\ity charg" were revi.wed. and '" . r"ult w.tor and refu" rat" wet. in"''''d.. 1'-" ra,e deof""d d.e '0 ,he d.".rtift,.,ion of ,_ tall incr.men' di,'ricts, V/~ic~ in"e"ed \he geM'" ,'-" .basc o[th' city .\\owing ,,,,,, to iMreas. with minimal impact on propert'! own.'" Opeta'ing coSt, ,vit~in the goo".1 fund for the nOW p.blic work' and fire ,\o'tion [",iliti" were <<p",ted to in,,'''' sligh'ly " ,~ese [aci\i'i" bec,"",e ope"tion'\. Con,,",c'ion projec" wit~in the ci'y tot.ling ,ppro"imately $11,COO,OOO wet. to b' compl.'ed in 2005. Th. City" popula,;on would ,em.in con,t",t. The City ",'icip.ted inftation."I in"'''cs ofab?' 2% ovet ,he modilied 2004 bud.g." Economlc y><tots .nd !'loxt "ioar's Budt'lS ..d Rat" 1\el\UeSts f()l' InronT\.atioll and an "A.l" rat\I\.J!, from can be fo\l.t'l.d in note 8 on pages 57 1h. City is subj." '0 . ,tatulOrY li",it of bonded indebtednes' .qu.ling 2.0 p."..t of "tim.ted propertY ",arke' val'" wi,bin the City during 2C04. A.t p",.mber ~t, 2C04, the d.b' limit for th. Cit)' i, $25,601,~gO. Of \h. 'otal debt, $11,005,67a of genetsl ob\ig.'ion and "venue bond' i' applicabl' '0 the limit. The I.t.l debt margin is $14,595,702. !lousing >nd Redevelop",en' /l.u\hcrity bondS ar' backed by the [u\\ f.ith, cl.dit and ,,,,ing power of ,h. \lRA, and "paym.nt monieS are ~onerated bY "",ual I"" 'PPlopria'ion' [rom ,~. CitY. ""d Revenu, !londs are back.d by ,he full [.i\h, "edit and ,,,,ing powet o[t~. Cit)', .nd are "l'Iiced by t~' Wate' and Stotlll S.wet Uti\ity Fund' conon' revonues. Gone,,1 Obllt.tion!lond, ,to back.d by ,he full f.ith, ".ditand t,-"ing po",er of thO City, and'" ,erviced by Gen.,,1 and Tall In"emen' levies >nd .\so by fees .".".. again" b.ner.ted plopetties. .".m....'''' A.""'" ..""".",. ",\I,"" ,~" -"" "". -",. ,,,,- ".. ~'''' ,_"."..",. ".""'" ,-. ..,...----: ,.-",,,.:;;;... ".a";;;;; s.''''''' ..m.." ",,,.'" s."'.'" ..""'." 5.SO'.000 5."..... 5.'00,,", ,,,.... 1."..000 ,,,.'00 \.,...000 ,........ '.>f','" ,....000 a.""'"' S;110,OOO 5,1\0,000 5;110,CIQO 5,7\a~ - -- ------ .l.. "..,.'" ~ .....,..,,],. Sf1O.... ..t $710,00II ...L ,,'''A1!....!. ".s"'~ C\ty Special """,men' !lond' ar. backed by the [u\1 fai'h, ".di, and t,-"ing pow" of ,he City. ,opaymenl monieS ar' g.net.'ed by tlte co\\ection of ,peci.1 """m.,,\$ .nd g.net.1 levies. Th. Cit)' ofHop!dn, to\>I d.bt d",,,sed by $?,220,6'lll, (6petcenl) during Ih' Cllttont r,,"\ y.ar. -me decrease waS ptindpal payments on debt. $5,270.000. rep,,"nlS bends ,.,ured ,ol.ly by sp",r"d. Th' Cit)' of\lopldn' ",.intains an "A.A.-" ",ing [ro'" Standard 8< POOl" Moody'S. Mdition.! in[otlllation on the Ci'y of Hopkins long-totlll debl 59oft'nisrepO!t. CitY ofROplcins Outstanding. Dllbt oenera\ O'o\igatiOl\ and RevCO\,le Bonds Oee;IIrnb9r:51 remainder of the City of:1:!o1?\dns d~bt, revenue sources (i,e." revenue. bO(lds). 'tIM\U$ct$'l~'J,'tlonllll G.o.1l1X\i'oCWf\ell"l~' G,O,}\O'Jsll\9 It. 1>>1141 G<O,Redevll~6.fIlbOmlS G,o.S~c~jl\ 3SSusmlllllbQl\4S \1#II.Iwt.'\W(IdS ?;- -'l City of Hopkins Statement of Net Assets December 31,2004 . A-8 City of Hopkins Statement of ActivIties For the Year Ended December 31, 2004 Net(Expense) Revenue and Changes In Net Assets Business-type ActiVities Governmental Activities Capital Grants and Contributions ram Revenues Operating Grants and Contributions Pr, Charges for Services Total (60D,381) (3,24:i,839) (72,141) (1,059.845) (376,535) (556,320) (1,604,523) (7.513,584) $ $ (600,381 (3,243,839) (72,141) (1,059,845) (376,535) (556,320) (1,604,523) (7,513,584) $ 97,863 350,000 980,322 38,786 $ 423,028 ,090,765 " 93,990 23,201 324,525 154,932 $ 28,792 65,692 14,183 51,233 200,000 482,549 $ Expenses ,150,064 4,750,296 180,314 2,114,601 939,546 1,193,801 1,604,523 1.933j445 $ Functions/Programs Governmental Activities: General Gal/emman Public Sa~ly Health and Welfare Highways and Streels Urban Redevefopment and Housing Culture and Recreation Interest on long-term debt - (227,471) , (156,428) 287,923 (72,132) (6,070) (44,056) 52.420 (165,814) (165,814) (165,814) (227,471) (156,428) 287,923 (72,132) (8,070) (44,056) 52,420 1,466,971 2,110,441 842,449 Total Governmental activities Buslness.type Activities: Water Sewer 826,129 1,253,772 717,691 1,053,600 1,410,200 429,76B 686,883 975 975 22,891 ~ 232,689 t 2,343,130 590,86S 361,297 ~ 4,017,420 367,367 44.066 425.024 4,416,89B Storm Sewer Refuse Pavilion/Ice Arena Skate Park Housing and Redevelopment Authority Total Buslness.type actIvities ;J> , \0 F.679,39B) (7,613,5841 $ 1,467,946 4.859.869 $ $ 16.350.343 Total government 7,289,973 2,177,518 566,514 418,263 7,269,973 2,177,518 566,514 General revenues: Property taxes Tax Increments Grants & contributIons not restrIcted earnings 10,452,266 2,772,870 54,784,812 7B,360 126,240) (47,860) (213,674) 16,622,467 339,883 126,240 0,500,'i2s 2,986.544 38,162,325 Unrestricted Investmen Transfers Total general revenues Change In net assets Net assets ~ beginnIng 57,557,662' $ 6,406,813 $ 41,148,869 $ ending Net assets City 01 Hopkins Balance Sheet Total Governmental Funds Other. Govemmenta1 t=unds 1999-6 'T:axable Housing Improvement 1999-A Taxable Housing Improvement 1997 GO Housing Bond Fund Governmental Funds Oecember31.2004 Pennanen' Improvement Revolving Fund Capital Improvemen\ Fund Tax Ineremen' 1-2 Entertainment District 16,455,636 133,777 11,268,171 751,784 563,201 103;893 2,066,893 97,740 2,206,524 .2,434,748 633,008 $ 11,205,742 86,060 694.211 504,905 510,453 68,844 1,560,590 .- 49.032 300,000 633,008 $ 299,669 1,831 3,847,127 $ 68,973 2,153,827 ,032 $ 179,094 2,281,363 1,094 $ ,452,054 2,311,643 109,24S 7,002 $ $ 62,657 382 $ $ General Fund 137,634 52,746 23,906 505.203 97,740 $ 3,D87,427 47,717 2,157,492 $ 4.363.511 $ 1.766.847 $ 2157.492 $ 3.879.944 $.2.461.551 $ 2.323.632 $ 4.146.847 $ 15.612.745 '$ 36:734.375 ,723.606 411,140 Assets Cash and Investments Taxes receivable Special assessments receivable Accounts receIvable Intergovernmental receivable Interest receivable Due from other funds Inventories Restricted cash and investments long.term recE!\vab\e Advance \0 other funds Total assets 1,205,199 13,114 .9,330 2,382,501 562 7",140 11,B03,Q17 6,126,093 $ 319,125 13,114 1,118 B24,782 662 711,140 ',162,126 2,B22,067 $ 20B 3,844,681 3.644,869 . $ 119 2,152.807 2,152,926 $ 126 2,278,701 2,278;827 $ 39.059 2,306,509 2,345,558 $ 622,548 8,212 $ 16 ,757,619 $ 223,99B - 68,223 292,2,21 $ LlablUt\es and fund balancQ$ Liabilities: Ac<:ounts payable Sa1arles payable AeCl1Jed Inlerest payable Due to other funds Due to other governments Advance from other funds Unearned revenue Totelllabllltles ;I>- , ..... o 97,740 1,575,732 385,395 3,258,865 633,008 3,789,322 49,000 3B5,398 3,258,B85 633,008 3,131,934 630,760 1,526,732 1,757,635 97,740 3,993,720 3,973.556 2,901,921 20.509,282 $ 36.'734.315 . 2,459.344 3,973,556 . 28.812 - 4,071,296 28.812 1.526.732 ~ 182,724 ~ 303,758. $ 4.363.511 $ 1766.647 $ 2.157.492 $. 3.879.944 $ 2.M\1.551 u$ 2.323.832 $ 4.148.647 $ 15.612.745 . 2,873,109 '\2,790.678 - 303,758 70,906 182,724 1,534,376 Fund balances: Reserved for: Inventory Facility prolecl Rehab loanS reeetvabte Tax Increment dtstrlets Advances to other funds Oebt seMee Unreserved, reported in: Capital proJects funds General fund Special revenue funds Total fund balances Total Uabllltles and !un<! balances . $ 20,609,282 45,609,592 (11,944,551) 11,536,697 4,039,082 (28.746,914) 45,6S1 Ci\)f 01 HopkIns, Mlnnesola ""eoooc1\\.IIOO of 1M B.I.o"" Sn.el of Govem",eo",I Funds To tM S\atement of Nel 'Assets December 31. 2004 Fund balances at 90vemmenlal fUnds Amounts reported lor governmental.diVlties In Ine slalement of net assets are different because: capl\al Assets used In govemmenlal aclivltles are 001 financial resOurces and; tn-refore, not reported \n the gOl/eromen\3.\ fundS. capital assets L'ss accumulate<! depreclaUon ciMr long-Ie"" aSSets not available 10 pay oUITent panod e>pend\l\lreS and, l\1erefore, .re daferred in 1\1. govemmen\2.1 fUnds. Inlemal service fundS are used by l\1e CI\)f 10 cnarge l\1e costs of cartaln aclivlUes. sucn as replacement of C\"J venlc\eS and equlpm.nt, TM assets and Ilab"IUeS of I\1s Inlema\ service funds are \ncluded In \l1<l govemm.n\a\ aellv\\les In 1M sl,;lemeolOf net assats, Long-term \\ablllUes, Including bonds payable and accrued InlereSI payable, ere 001 due and payable In 1M culTOnl perted and, Iherefore, are nol reported In l\1e govem",enta\ fUnds. Long.le"" lIabllmes Less deferred enarge for bond. IssUance costs ~ .... .... Net assets of ~o"am{J'lenta\ acli'J\t\es tn Fund Balances City of Hopkins, Minnesota Statement of Revenues, expenditures, and Changes Governmental Funds For the Year Ended December 31 Total Govemmental Funds Non--malor Governmental Funds 1999-8 Taxable Housing I,mprov. 1999-A Taxabte Housing Improv. 2004 1997 G,O. Housing Sonds Permanent Impro"emen~ Revolving .Fund Capital Improvement Fund Tax Increment 1.2 Entertainment District 7,283,712 2,177,518 1,441,885 1,758,513 686,933 792,280 197,337 339,883 700,012 15,378,133 $ 910,985 2.127,122 97,863 ,014,761 155.727 515,074 4D,885 $ 253.952 $ 142,281 $ 171,595 $ 775,554 $. $ 50.396 $ General Fund $ 8,372,727 743.812 531,206 Revenues Property taxes Tax Increments Special assessments Intergovernmental Fees. licenses ancl permits Charges for services Fines 243,611 51.298 4,391 2,472 2,414 29,339 8,005 350.000 3'58,O'Qa 729 277,206 156,449 48,919 295.714 6,4i9.0a'3 tnteresl Other miscellaneous revenues 1,094,528 4,695,803 160,314 1.681.464 937,549 1,074,567 5,157,329 77,998 107.339 122.500 54,137 937,687 613,345 258,373 510 144,733 341 174,309 457 505.223 . 51.125 1.01S.190 4.588.464 57.814 1,\;27,347 Total revenues EXPENDITURES Current: General govemment Public safety Health and welf~re Highways and streets Urban redevelopment and housln9 Culture and recreatIon ;J> , - N 182 481.239 1.6'l4.908 1,180,620 6.651.109 19.741.200 .274.747 .605,620 941.745 .5~ 188.680 75,000 91.692 45.000 109.B09 55,000 244.170 37.033 185,298 220.856 22oTa6 5.331.292 5;331.292 75.000 75.182 82.186 7.832.240 Debt service: Interest and fiscal fees Prtnclpal retirement Capital ouijay Total expenditures Excess (defi<:lency) expenditures (4.383.067) 2,594.787 (2,468.547) 128.240 . (577 .772) 2.594.787 (.1,941,920) 652.867 14.203 7.700 9.013 584,337 (213.219) (213.219) (4.973.284) (24.057) 596,793 (313.408) (313,408) ot revenues over Other financIng sources (uses) Transfer In Transfer out Total other financing sources and uses Total GO\lemmental Funds (4,236,627) Non-major Governmental Fund. 1999-B Taxable Housing Improv. 1999-A Taxable Hou$tng Improv. 75,095' 163,206 269,555 12,715.583 24,846,109 ' $ ,170,906 $ 303,7SS $ 12,790.676 $ 20,609.282 ($ 4.236,827) 6,014.829 (976,975) 1.821,005 364.512 $ 2.986,544 - CI\y of Hol Mln""Sotl Sta~ment of Revenues.. e,xpendauI'QS, and Changes In FUl1d Salances Governmental funds Fer the Year ended December 31, 200l\. Tax ll'\Crement permanent 1.2 Capital Improvement 1997 G.O. Entertainment ImpJ'O\lement Revo\vlng HousIng General Fund Dlstrlcl t:uno Fund Bonds 283,3SS (24,057) (4,973,284) 371,116 9.D13 3,767,911 52,009 6,000.016 - 1,163,258 173,711 $ 4.071,296 $ 26.612 '$ 1,526,732 $ 1.534,376 $ 162,724 Reconciliation of the Statement of Revenues, expendltureS, and Changes In Fund Balances of Govemmental funds to the Statement of Act\lIit1es For the year E.nded December 31, 2004 14,203 7,700 Net change 10 fund balan<:es Fund balanceS - beginning Fund balances - endIng of ~ctlvitie5 are dIfferent because: statement Net cnange In fund balances -lota( govemmental funds Governmental fu~ds report capital oullays as expenditures. However. In the statement of activities the cosl of those a..e.. Is allocated over Ihelr .sttinated u.eful live. and reported as depreclallon expense. TI1I.Is!he amount by whlch.capllal outlays exceeded depreclatlon In the current pertod. lhe Amounts reported far governmental actll/itlesln ~ .... t.;> ,esources do not pro'Jide current flnanclat R.evenues in the s.tatement of act\\littes that are not reported as revenues In the fundS -me Issuance of lOng-term debt provIde. current financIal resources to governmental fund.. While the repayment of the principal elleng-term lIebt use. the eu"ent financtal resource. of govermental fundS. Netlher transeollon. however, has any effecl on net assels. PJSO, govermental fundS report the effecl of Issuance costs, premiums, discounts, and similar Items when debl Is flret Issuell. whereas these amounts arellefe"ed anll amortized In lhe statemenl of eollvitles. Tnls amount Is Ihe net effect of these differences In the treatment of long-term debt related items. ofacti'lltleS In the statement External revenues and expenllltureS of the Internal service fundS reported are not reporteq as revenues and expenditures in gcwemmental funds. of governmental actll(ities Change to net assets A-14 City of Hopkins. Mirineoota Statement of Revenues. Expenditures and Changes-in Fund Balance Budget and Actual General Fund For the Year Ended December 31, 2004 Variance with final budget Budget posi~ve Original Final Actual (negative) Expenditures, (continued) General Government, (continued): Administrative services Salaries and employee benefits 322,258 322,258 267,452 54,806 Matenals. supplies and services 52,210 52,210 36,420 15,850 Total 374,528 374,528 303,872 70,656 Less d.penditures charged to other- activities (100,033) (100,033) (102,786) 2,753 Net 274;495 274,495 201,086 73,409 'Finance SaJaries and employee benefits 296,345 296,345 282.995 13,350 Materials, supplies and services 49,261 49,261 55,914 (6,653) Total 345,606 345,606 338,909 6,697 Less ex.penditures charged to ether activities (181,215) (181,215) (185,341) (1.814) Net 158.391 158,391 153,568 4,823 Legal Services .Materials, supplies and services 123,980 123,980 118,280 5,700 Municip<tl Building Sah~ries and employee benefits 67,026 67,026 69,876 (2,850) Materials, supplies and services 171,163 171,763 152,172 19,591 Capital outlay II ,500 15,537 (4,037) Total 238,789 250,289 237,585 12,704 Less eXpenditures charged to other activities (167,760) (167,760) (172,500) 4,740 Net 71,029 8i.529 65,085 17,444 Elections Salaries and employee benefits 12,545 12,545 17,997 (5,452) . Materials. supplies and. services 19,290 19,290 11,342 1,948 Total 31,835 3"1,835 35,339 (3.504) City Clerk and ReCeption Salaries and employee benefits 107,100 107,100 1l8,205 (11,105) ,Materials, supplies and services 11,224 11,224 10,266 958 Capital outlay 8,180 9,672 (1,492) Total 118,324 126,504 138,143 (10,147) Less expenditures charged to other activities (34,000) (34,000) (34,045) 45 Net 84,324 92,504 104,098 (10,\02) ASsessing Salaries and employee benefits 93,519 93,516 106,187 (12,611) Materials, supplies and services 71,516 71,5"16 76,\10 (4,5~4) Total 165,035 165,032 182,297 (17,265) Less expenditures charged to other activi~ies (20,562) (20,562) (20,562) Net 144,473 144,470 182,297 (37,821) A-IS A-17 A-18 CITY OF HOPKINS, MINNESOTA TAX INCREMENT 1.2 - ENTERTAINMENT CENTER SPECIAL REVENUE I'UND STATEMENT OF REVENUES, EXPENDrruREs, AND CHANGES IN FUND BALANCE - BUDGET AND AClUAL Year Em/ed December 31,2004 Variance with fmal budget Budget Amount positive Origfual Final Actual (negative) Revenues: Taxes: Tax increment $ 49,500 $ 49,500 $ 50,396 $ 896 Iilvestment earnings 700 700 729 29 Tola! Revenues 50,200 50,200 51,125 925 Expenditures: Materials. supplies and services 400 400 182 218 Capibi! outlay: Public improvements 29,925 104,525 . 75,000 29,525 Total Expenditures 30,325 104.925 75,182 29,743 Net change in fund balance 19,875 (54,725) (24,057) 30,668 Fund Balance - January I 52,869 52,869 52,869 Fund Balance - December 31 :; 72,744 $ (1,856) $ 28,812 $ 30,668 A-19 A-20 CITY OF HOPKINS, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2004 Business-type Activities-Enterprise Funds Governmental Non-major Activities Water Sewer Storm Sewer Proprietary Internal Utility Utility Utility Funds Totals. Service Funds Operating revenues: Charges for services $ 794,200 $ 1,238,879 $ 674,553 $ 1,177,315 $ >3,884,947 $ 310,730 Other 31,929 14,893 43,138 42,513 132,473 Total Operating Revenues 826,129 1,253,772 717,691 1,219,828 4,017,420 310,730 Operating expenses: Cost of sales and service 603,842 1,1l9,019 31,024 1 ,080,3 1 0 2,834,195 33,376 Administration 171,983 195,124 79,071 159,529 605,707 . Depreciation 234,863 96,057 178,026 283,491 792,437 303,029 Total Operating Expenses 1,0 I 0,688 1,410,200 288,121 1,523,330 4,232,339 336,405 Operating income (loss) (I ~,559) (156,428) 429,570 (303,502) (214,919) (25,675) Nonoperating revenues (expenses): Investment earnings 17,888 > 26,228 24,140 10,124 78,380 44,646 Interest/fiscal agent expense (42,912) (14I,647) (184,559) Intergovernmental grants . 232,689 232,689 326,841 Gain on sale of equipment 975 975 18,700 Total nonoperating revenues (expenses) (25,024) 26,228 (1l7,507) 243,788 127,485 390,187 Income (loss) before transfers (209,583) (130,200) 312,063 (59,714) (87,434) 364,512 Transfers in (out) (45,000) (50,000) (25,000) (6,240) (126,240) Change in net assets (254,583) (180,200) 287,063 (65,954) (21.3,674) 364,512 Total net assets - beginning 4,112,083 4,202,106 3,750,789 4,557,509 . 16,622,487 3,674,570 Total net assets - ending $ 3,857,500 $ 4,021,906 $ 4,037,852 $ 4,491,555 $ 16,408,813 $ 4,039,082 A-21 CITY OF HOPKINS, MINNESOTA STATEMENT OF CASH FLOWS , PROPRIETARY FUNDS the Year Ended December 3 2004 For Governmental Activities Internal Service Funds rise Funds OthCI Proprietary Funds e Activities-Bnte Business- Totals Stonn Sewer Utilit)> Sewer Utilit)> Water Utilit)> (313,026) (290,179) (166,448) (5,409) 232,689 232,689 (45,000) (50,000) (25,000) (6,240) (126,240) (45,000) (50,000) (25,0001 226,449 106,449 53,600 358,242 (37,816) 18,905 392,931 $ 3,971,35 (292,873) 298,000 (1,619,780) (963,359) (.543,761) 849,578 $ ,175,175 298,000 (578,243) (458,664) (109,308) 326,960 '$ 717,69 (223,710) (17,125) (23,197) (78,521) 375,138 $ ,262,345 (17,267) (711,386) (191,319) (189,484) 152,889 $ 816,140 ,896) (5 $ Cash Flows from Operating Activities Receipts from customers and users Receipts from interfund services provided Internal activity-payments to other funds Internal activity-payments from other funds Payments to suppliers Payments to employees Payments for interfund services used Net cash provided by (used in) op~rating activities Cash Flows from Noncapital Financing Activities Intergovernmental grants Transfen in (out) Net cash provide<! by (use<! > , N N in) p.oncapital financing activities (1,151,200) (215,131) (1,091,907) 975 (215,131) (188,779) 975 (262,230) (327,498 (313,400) Cash Flows from Capital and Related Financing Activities: Purchases of capital assets Construction of capital assets Proceeds from, Sales of capital assets Advance to Pavilion for Mezzanine construction: 8,700 (9,785) (45,067) (151,603) (IlOMO) (330.000) (468,467) (327,498) (743,833) (639,595), (2,179,my (1,142,285) (246,445) 9,785 (i 96,670) (440,000) (246,445) 9,785 Loan to Hockey Association Advance from Equipment fund Interest and other payments Bond payments Net cash used in capital and related financing activities 55,061 (694,293) 2,178,612 70;984 (1,152,382) 4,518,066 0,487 (75,699) 774,230 20,51 (373,184) 1,371,463 23,195 (201,414) 1,241,709 6,79 (502,085) 1,130,664 Cash Flows From Investing Activities in cash and investments .. January I Net decrease Cash and Investments $ 698,531 $ 3,365.684 $ 1,484,319 998,279 $ $ ,,040,295 628,579 $ Cash and Investments ~ December 3 CITY OF HOPI<lNS,. MINNESOTA 'STATEMENT OF CASH FLOWS, (CONT.) PROPRIETARY FUNDS For the Year Ended December 31. 2004 (25,675) $ (214,919) $ (303,502) $ 429,570 $ (156,428) $ (184,559) $ Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (toss) to net, cash provided by (us~d in) operating activities: 303,029 101,112 792,437 (6,922) 2,700 283,491 (5,506) 2,700 78,026 96,057 8,573 234,863 (9,989) Depreciation expense (Increase) decrease in: AccountS receivable Due frOm other funds Due from other .governments 14,465 (38,000) (924) 4,597 198,400 ,962 107,820 2,427 (38,000) (2,010) 4.597 87,928 295,300 (8,748) (223,710) ,337 22,217 (17,267) 198,400 (25 . 6,423 (51,896) payable Inventory Prepaid expense Accounts, compensated absences and accrued interes Due to'other funds, Due to other governments Unearned revenue .962 $ 375,138 S 326,960 S 849,578 $ 392,931. 152,889 S S (5,409) Net cash provided by (used in) operating activities ;t> , f.,) W ~rd~a\ ",,,.""""'.., "'..,,,. ."._d rorusin. <he co"'., _ci" ",,,,,,,,, m.""""" r.co' ona th. ""difi,d .""", b"" .r _~,. Th<~ .."".~ "" ""'...... ""on ,,''''l'lib}' 10 """," Q.... .....they be,,"" m"'''''''' ond ..,,;Iab"), "M."""b}'" m'''' <he "".un<.f th. "..."... ,on be' do,._o<I "'" ...,.;}.bl." ""... ,,\l,,'b" wl\h th. "",on' porlod ..within.;.ty "'yo <he,.ulir" b. ."d" p.yli.bili'" ,rth.-'" ~;".d.' . . . ". .li.wility 'o<l"-". h'" b.'" ",.e V.bUt.d utility """" .."i"""" City outop1On$, Mlrinesotil N()'[BS'(Ol'lN""CIJIL s~...-re>fl!NTS' (COm.) De:c~c31.:l()Q4 .,' to!;</'CO\.le::~$GOna.s ~,"'. cttyoUtopkins,M'uultSota N01'E8 '(0 l'lN""CIJIL s~..."Il!MJ!lITS. (CON1'.) Octert\bcr31.2004 'M'}or ,,,on'" \hO' oI' ,,,,,,,Ub" ,. ",ruol 1n,lud. ,~ """,. "",i" ",.ssmon.. In""",mm"'" ""...., ,WS" 10' ,.,.."" ond bW"-' """"... MoJ" ""onu" tho' '" no' ,,,,,,,,'bl, \Q ","", in"ud' &<0 'ona """'''on''''' ",,,,,,,, ""h'- '" ""..... ",y " ""I"d .",.." they '" .or m~))t1.b\e until collected. Th' clIy .r llcpldM, >l1M"'" (th, City) " . ,_, Clty. wbl,h .." ."....<<1 D'"'''''' 1. 1947. Th. City .p'_ p"'-' ,. ."."bI. """"." "w' ond ..",\eO. 'Ih> """""""lly .C<he Cityl.. C,,,,,,,,, 'M....." fo~o!goveJ'lllMr.t. ' 1l<P"~""" '" .""",,y "'....... undor iho m,diD'" -"" b"i. .r .-."" .wh" ,'" "l.',d .";.,, 'lobmty "in,......, """ for prln'~" ond"....,'" ......l"...IOnn d.b' ond ,..."",.IOd .b.""" tl\" ",. ""..."d wbon d.. ond payob", . ,... _"" ...,........r th. City b<V' bee. p~ In ...r...,;tY with .",..ting ~lin.i"" ..",,,ny.<<','''' 10 "" uoi"" s..,,, .r _0'" " ."n'" 10 ",,,,,,,,"..1>1 ""'. by th' Go"-"'" ...",,"'''', Slond.ro. BooId (OASB). 'Ih> "'" ,'gni!i'''' ,,-tins p,lici" or<he City'" d",,,b,d bOlow. A. fu>.e..t\Cia1teSO\1tc:t:': repaymtntOf lh' r. ,\I llCCUm.\)\at~ ro fJl-~ount It\S\lScdto 'TheeitY reportS \he !OUoWU\~roa.ior go~ratrtental tunds: 'Th~ gc~ fund is \he:: ptimUY opennnS fund or ~e City, cxet.pt those req~~ to bt acwuntcd [or tn anomer fUn'J. roll'OlttlNO mnrrY In 000'''''''' ..ith GAS9 p.."'.."n".... "" City'. .""'"" ."'_.~ incl.d. ell run" end d",_"".r th. City ",d I" """"no" ""'.. ..""", Cor whl'" lh. City" "",\dOtOd \0 be ...,,,W'y "",-'" ... b}",ded ,,""'...., unit, "thoo........y "._ en'ty ", in ..'"""CO. pod .rth. Clty', .p",,;,,,, end""" rw...... unit 's combln'" with.." .fth' ptiloUl' .."......c ,... City'. bl..d'" """'".., uni' boo' Moo'" " Y"'""d. bow';" wbO. blended with th,CitY 1\" .hown with. 1)o<.mb" 31 y.,,~nd. ...= Th' 1999B """". b'uojnZ ...,,,"'''''''' ho.d rundo""""" lOr ..,,"'''' ."omut.toa ond ,.""'.... ""d.. for plindp"'" bll'"'' "Inn.."'''!' d,bl ",oed 10 ~.y r., VI.' !lfoOk P.ti, llomo im,,,,,,"".' Th. own'" .r"'''' \0'" """" pey ",...uel roo, .,.,ld<b" """ "Y' [orth. bond U'.', Th~c\ty t'Cporls \he [ol\owblg tna!or pTOPrietarY fUnds: ThO'''''''' ,oW" .....\0"" ,..." [u.ds ...,un' ror <he ...vlli" "I"'" ,. th. ~ity" w"or. ..'I''' ",d "or'" .oW" ,,,,,I.", Th. City opere'" th. '1'"",, a"1ri-' .,..,on>, ..wor \1ft ..."... ",d dl'PO'''' "" ,\0"" Sll\vtrmain~' Th. """, "",,,,,,,,,,,, [u.d .",un. for rund. ,,' "Id. ror "" ","'If'''.'. ",d im,""''''''' o[ City l).clUtyand!nftv.&tt'IlCttlJl>. Th. ,,,,,,,,,.., "",'0~.'1''''' ..~Ivin' fund "".." for "'...... ...."'.'''.d ond ,."""." m.d. fot ..." i_V~". woogb,"' th. C,ty. . Th' '997 GO b"''''' bond runa .,,,.." rot ",,""" ",,,,,,.,.ICd "'" p.ym.." ""d' [ot .M"'" ",a in""" ..I",.,."" ao1>t "...... paY ror W..'B"'o~ P..o Roo" ...,..",..'..' Th. ,...... .f""" \own hotnCS pl\)' ~ann\lll\ ~~ wlUc'n in t\ttl1 pa)'S fbt,tM bon61sS\1c. Th' 1999... """"" hOO.In. ...,",..m"" hond [und _. ror .."u.... .."...",."d ",d p.""".. ""d. !or """Ip" ",d "',,"".. I'."""" d,b' "..ed \0 p,y for V""Y ~odt C.udomIniom imp'OV''''''.' Th' own'" .!th"".nd.mini"'" "y on ","..ll... ..",,,,,,, """ p,yo lOr th. b"d ..... r" 111c'U\:ll. iMtemcnt \--Z cntcf\1.iM\ct\t d.i.striet. ~tl.d a~ d.~bt on me. entet\ftintnenl district W'. incteIM1lt ptoj~l. 'Ih> ,ov"","",.wi~' fln""i" "".",,,,; ~,.. ."'.....tor no' OS". ond th. ,,,,,,,,,,,, or,,,,,,,,, in.O! ....") repon \nl<l"""'''''''' >II ,! "" ..nfid'''~ ".'i.".r thO ,dnOU:! ",v""moffi end i. "m,"".' ",,,. p., th. "",,' p.... <he .rr..,.! "'......d ".v,"'.... b.'" ..m",ed - th... ...t..,,,,'" 0"''''''';'''''' ...~ti.., wblob .._Uy ... ..".",d \>y '''''' ond """,._'" .."..". '" "p.n.d -"'y from b"ino'" typ' ,,'vi.", will" rely \Q . .i""'fieUol OX'''',,, &<0 ond 'h..... ror ,up"'" sop..... 60",.;.1 ...,,"'... ... p",vld.d !J>r "vem""'''' [uudo wl ,,,pdowY \\md., ,vo' ......." i."" '" ..".ded rw", th' g."......,.wli\. fiJ<or>Oi" .",,"''''", Moj" Indlvlauel .."""".".! [und. ",d m.I" i<\divldUO' onl~' funds '" ",...",.. .op"'" ..,.... In <he [und 6o"",.\ ....,,,,,to. C. MllAS1J[\ll,..,.rrrocus. BASts OF ...CCO=lNO. = "",,,,,Cw.. STA"Il!MJ!lIT .lUlSEN"lA~'ON Th' ,,,,,,,,,,,...wi.. iiilon"" .",IOm"'.'" ",,"'" ..In. <he''- ",,,,,,, -""""" C_ ond .. .""'" b". of ..c,,,,,,,,g," '" "" ,,,,,,oWl' fU.d .."."" .~.....".. Rov'''''''' -",d ..bo..,""" "'" """'\'....".."sed who' .li.b\lll> ,,~, "....\00. .rth. tbnin,.f ",."" ",,, 00"', .rop''''' ,.,,,. '" "'......." ."..... 10 <he ~ [0, ..""b <hey '" l.vI"'- """"..d .in<l'" ,tom> '" -...... 00 1 ~l.g..d 1<<<1",.",.,.0< Auth"'ty lo..d ror 'b'ClI\' ,rll.,Id" fJ!!"') Th' llAA w.. ""'''' by th. City " .".y out "",," ...",}.",...", ,,,,;eo" Md 1.'1""""'" ""~, b."""" h>d'vlduolo "th,City c.uncU rep""" th. .."m\ngb.... .[th.llM- "lb' h,..In,.elivilY i. ",ppo"'" in port ",.lb..rol,ub~ai'" "lb'"'' on .."..,,, """ ."'..."', """,."th.llAA ond IlUD """di.,,,,, fo,llity. Th. llAA I. ",.,.d,d in th. City" "'~<9"" [uudo. Sop"''' fi"""i.b <nO 00' ,..,..... OOVl!\UlMIlN"l.WlllE =?UlID mw'CIJlLS~..."Il!MJ!lITS 'Ih> ..,.....,.f "Iiv\'" dom."""" th. d..... " w""h <he dh<eI "p""" .r. gI"" [uno.'" or """,eo' ... o!locl by ~",gram ",,,'''' D\rOO' ...""" '" "".. "'" '" c,.,,\y ,...iilI"'" with. "",I" [u"""" or "....., p",,,,,,, "".." ""I.do 1) """" 10 c.'""'''~ or ",,_" who ,<ncl<U" "'. or dl~etlY """r" ll<>m .~. .oM"" "p.Iv\I'''' ,,,,vId'" 'uY . given "".... or ,,"".'" end 1) ...." wl ...uI'."" <he' '" ",,,,,led \0 """., th. .,.".0,,", or ee,11>1 "......... of. porticol" [uno'" or "S"".' t"''' end oth" ltom> 'OlP',porly In".d'" ""'., "",gram .."",...'" "port'" In....d os "'"'tV .."..". B. ";P- iG -I'- C^~l\t-l'P~ ___....-_...-..._.-'_-,.(Se~ . '" .w ~ "" ,n.",.. 10 ,," ..~"',w. !\>nds .. 1M ."" .f ,",pll<'"' <0'; ';t" :r.'=::...--.-....---"--~,... .-:::....::;.:-:,.....,,...--,.....-,...- -...- "_~i"P'P"",,,..rt~,,,,,,''''''b....'n,'QIt4''''''''prt'. . .. ......---...-..----...- . ...'-"--- ~_..-,_...~..-,. ::.-......,.--. --...----'. \hO'fU\UtCia\s\O.t~nt. 0. n<r1llU'lJllP~C1ll'lJlllUSll'^YJlllL'ES . . . f &\ngIoO""'"'S """,.,"",~ ."""",,,,,S " lhO .n&.f ,"' A"';'''' ""',,. ~ '"" ""~~~:';;;~,;':'"" ".&... 0.'" Il>' ~ ",tIio. .f 1l>I<d<>"& "",,) " f<",1 ,,,, ". ,.,,,,, ~.~..,," '" """"".""". .1i".&.on<!,I.""\' AU .Il>" ...-""S b'\""~ .,&_ 101- .,"" ""._ ~:" . "'" ,,",, >;;:",." NJ,y ,..id,,1 ."""" ""~. .,,...,. "" ;::;:.::~~--_..~---- '"m\Wla\ ~\atr.~" -..--.....,...-.-""- -....-'" ",,,"""''''Pond,__,,~,,,,,,,_w...p,,,,,,,o&. --.----.---....-........ II<'" in"'" S"......,.Wid< ",& ~ -"" ,1A"""n". ~C'fllOo.s~N:lD~ =.;=...~........:;::::'..:';:::::'.:.-.:::::: ,pplio>'" b.nd "".on" "&,,,"1"1."""'..... l\. C;J>trbL ^SSl!tS , .",... _.._ ",SO" (..." to'&!' .dOS'" "",,, ... c;.pilOl"''''' W~ u.,I""'''''' b'U""",' """p",n ,yst_ "'. ,to>U" ilA<nS\.... ropo"" u. ,"' e.ppl\~bI' ~..~""......"'\l<$,~~.,......,_'~..:_..:....wI<l>_ol"."-IA"'&""P..P.."-'Y. ,,,~.,b._a-<rP'~"""".. &"'~-:::" 'm \!>idol ",,,,';'d>><l"""''''''''''''' ~ ..,.ci>l ,,,,,,,,,,,,. 1llO ?,'>: .,fin<' "lit" ....::,.. ::..;';.,. :"'.....', ""'"'" "'.- 0''''''& $1,000 ~d $1'l ~titn'lot~.".'lfo1.~~~~~~_~~k~~'lotih~datCO!~tiQn. ,..pllA\&S"IA""-~ .---.--- . . . _1--'."--" ",& ,_,~ ,"" '0 ",I od' \0 ,"' ."", or th,,,'" " ...,,""'\1 ,,,oo& ..,," 'fh~';O)tQ~1\.o,,"- ..,...... .- "1'-:-" u.'1~sarel\oteapitati2.C~ c\~ o{\top\dnS. lAinntsO~ NO~~ol'l>l""'cv-L Sl^~' (COllT.\ pe~M\"3\. 7.004 ". Ci.tt'oEg~\:iW. 'Minnuo:ta "0~'tO l'JW>>'C1JJ..SlA~S.(COllT') ll_.,,;\.Z()1)4 }>.$ . goo"" ..I' ,"' .!t<<' of In''&.on<! ".';'\1 "" bOOn $t$tett\.e\'l.\$. .....;.,.....- -...,....." -......,.......-... .~ -.--...--...'----- ~ ....,r..:.- ----..........-....-.- t.v,"'''' U\<.-.Is', ...,..1 "....~ ""I.d< ",''''', . !\>nds dJo'"' "" ,_ ...,,,,.~... .1tP<"''' - .....R...... I".... Op'''''' ",...~ on' ?rop~., _II." e:u" ~<!Pm ._..,.._. ,,";'" ",& ."",..,lng ",& ,,,1<""" ~ In ",......n with. ~""~ ,....~" "" ." ,N"- ' . f'" ,...1.... .....o...r\s ...._M. __ol. oM ~" prltl'1p" .ngou.s <IP""i.... Th'.,nnotpol <!pm"'" ,..",.~. ='~' ......,.c' ~- i:l-o-"--'-'~~- ..........---:: -_..-~,..,_...--_..._.~ ... ... ~........--~-~_..........-- e.xptnSU. ---....----.. ....,. "'0"'" f\<$l.,on&""n ..,"""'''',,,,,,,,'''''''....,, "'.....d. "'. ""fu.fin '1"'''-'''' ""ffsoib' ,{un&i><\"''' "",.,._\W' ~,..:;:;::::::.:-;,,;;,_.-'-"'_.- ..v~\\~\e fuWI~la1 t~urces. J>lvm<tOiDlS"''''' ?~?^lD naj;\S G. f. fiaan~\"t ^ddili,~I,. m' Cl\1 ,.p.rtS m' ,.II.w\llS ~ 1'11"" Spoci~ ~;."" f.,di . spoo\" ,,'''''''. (un" "" ",~,IO -"" ,,, 'M .,....<IS .f .po"\\' .,,,,,~!""'" """,y,.,m"" \0 '1<1''''''''' rot spo<tli,& p........ . ",bt s""..'~ '. O,bl ,,";''' {un" "" ..0& \0 ""'''''; lOt ,"' """""i"'" ,f "'.,.".. ,,, ."""'" ,f,"''''' l,nS'-"" .",,0\,0. """,,,,"'& "'.... "".~" -'"'....-_......-~._.-'_.._.. -....-.---...----.-- pto?fiebUY~OfS~ie.\'eYt1\~~ ~ . I .. f>n<\I ~",,!\>nds '" ..0&10 ",..., '" ,p...- \hO' ". _& ",& """,,& "" :::::--''''' - ---.......... -...,....... ...---,.-...-............-- b._'....",,"',~rlnt..u1 _",,,,'l><'l"- . ...... -.- --......~.....;.......-'.......- _.~_....-..~..--- -- !\>nds'''''''' lOt ",,"..,," toP,,-'" \l>S-...~"",,,,,... ,,,,,,IOY" b.,ofllA. --".-...__....,;.._,.,~'_. -....--.......-...--.......,...- .~-_.-_...,- _..~.......- .---.---...-.........- l\mi"d". 'Th' ...''''''','' "" .1""& ",t 10 ,,\\,," ",,,,,,..nl >,,"''''''''' 5"'&"'''' . e\~?~d. {tOm the iove~t.\<llde tevt1\\le ll1\cthe ';l> N V> ,tS:Iricled \s.iMCi~' Cit'} <ltRopklns. Mirlntsota NOTESTO F1NANCIALST"~' (Com.) DecUllbtt3t.2.C()4 1<. roND iQurrY ln th..,.~ _...1 sta\......~. g"""""'''' ~ ..""n ",,"""'''' '.f fun~ bal"'" (0, -"" ....' u. "", .~il"" (0, 'PP"'prlation Ot Ies",y""ti,..d by.,.ld. p>rti.. (0, '" f.,. "",""P'",'''' O"I8"'d... Of (on<! bd"''7 """,,,,,_d" ...""S-., pi... !h.t ",,,bjie' to .hAng" .' r... JNTBIU'Wll "l"l<ANS"cnONS lnl,,_.,.d ..,vi... P"''';''o on<l ."d ... ".,,,,,,ted lOt .. ..v..." and ..peodl_. """,.a...!hA' ......." "..b""""'''' ,.. fund lOt "p.odl- ioiliaUy..... ft.", I' ...,... ,,,,perly .p?,,""I. to ...!h" fund'" ....,0.1.. .",..<Ii_,.!h. ,,_ ,,!Ill..d ""d"a... .1 .xpeodl_ '" !h. fu.d!hat ~ teimb~' R." ptope"" ",,,s.to ...,.bl. by ''''P.yen '" twO "",.1 """'_.. .. M.y IS ",d o~_ 15. p...nal l""""" """", ols. p'l"bl. by "",'Y'" in two .,ual "'st"""..~..n F.b"'''''' 2S and 'un' '0. Th' C_ty ,,,,vld" "" "\11"",,. to ,,"os .....!h" I.oal go","""". _ limOS' >"", .n '" b.r." Ian""" ,5. July 5 lUldNovembct' 30. A\l ofuec ~~~cfun.d trM\StlctiO(lS arC tepc~ as. trat!$fets. M. PROl'BRTV1'AXES ?<<>!>"'" "" I.vi"'" so' by.!h. City Co...il '" D.-"".I caob yea:. ",d u. .odifiod to ..."",<,in C...ty ("" C.""ty) lOt ""..".. '" ",. I.U...",. yoU. In !h. s..te .fMinn"'lc, ....a" ,,'" ..,,""", .g"'~ lOt aU ,,,,,...,.,,,,... 'Tho C.unty "'"...011 t."" ov" ..."."". _rty. sO', """ b......."'" " l"""'" I Iltld at& rec~d as ft(:civab\ts by the City at \hat datc. 1'1, CONDUlTDEBT oauoATIONS From lito. to lito., "" City bas I.",.d eo"""."i.1 D",.I.,'I"'" Rc,,,n~' N.I",,"O> '" ,ceo"""" wi'" !h. MinO",ta Moci"P"'!nduiti., D.v""""" At' 'Th'" .bU"",,, ",I"",,, ,,,,,,dO fin""Ial...j,.....IO. pd""'''~ot ..lid.. fot !h. ",.~I\io' ",d _"".Ii.. .I.indoslrl.l and .._"".1 ...llltios ...",od" b. '" "'. ,ub'" "''''''' Th. .bliS..... '" ...=" by "" P"'P''''' ......d ",d ... p,""l. "t.l, f""" p'''''''- "oalvod on !h. .....rlylng ...".... 1_. tl,,. top_'" .r !h. ,bIlS'.'''' .....nbi, 01 lb. ",,\rod ""tltl" _f'" \lOm "'. .,.d holdor 10 tho pci",~...to,,,'ty "....,d by tho d... I""'''''' N,I<hor "', City, "'. S.". .ot "" ,.IIU,.l subd''''''' !h.""f is ublls'tod in ",y manno' for "'.".,.., .f th. ""..",,,,,, """d"'Sly.th. ...",.to'" "",,'" .. li,bil\Ii..1o !h. ".""p",ylng liD""'.l ,..""",.. ^' .ID"'''''''' 31. ,004. !h'" w'" " oi>"",..d ~.." "....dins. ",th '" ......... ,M,ip.l .",,"'" ,.,.bl. ,f appro,amately $48 tfliutQn. In "'. 80"""""'0.1 rund fi.",.I.1 "'""'..,, ptoP"'l' ""OS '" .-'" ..d .......... " ..,,"'. for ..""d." ..lID!' 60 dOY' oly..'..... "f"''' !h,1 "moto ..,aid" th. C...",.. Doc.n,'''' II '" "..,ulod" d.I"",'" """ "'''"bl.. on<l'" foUy ,Ill" by d.f.... "v"," .oo."'" !h.y ... .., "aU.bi. " fll<aI\" ."""" ."l'..~i_. N. ."."''''" lor _!lieb'" """ haS boon ,,,,"dOd b""" .uoh _..~ ... eo, t;(ptCted.tobenm\erlll. O. tlSllOFES'\'lMATES Th. p","'"oo ,f finoo"ol..,,-~ In .....""'''' wI!h .._""S pM,lpl.. ....ally ",op'" '" lb. tlolted SUI...r "",m... ",.Im ........""""', .. aW<o "lilno'" ond ...."pli.... \h$1 off'" !h. """lIod ""."". 01 """ ",d Il.bi"" on<l ",,,I."" .I..'''''S'''' ....".". U.bi".".t "" d.. ,I"" fu>ol>Oiol..t"""~ ",d "" IOp."od """.." ,I "ven'" ... .",,,,,.. dud.. tho "l'.""'8 period. ",roal _10 ..uld dill" - ,I..... (lStimatts: City QrRop1cins. MiflMSOta NOTES TO F1Ni\NCtAl-ST""\1lMSlll"S' (Com.) ~"et31.2.CI)4 BWl<li.S'. "ulp""'~ ",il """'__ ,r!h. Cil1r.odth.lIllA'" deplOCI"od us'" !h~ """b'."" m."'od ovor1h~e.s~useMlivese.s(QnowJ: . Building' ~C. 40yem Mains ana L\ncs 40~ 50)'~ StJeets 20- 25.1"" l:arprDNe~n.ts \0- 20Y"" Vel\ic~ 3. ~OYW$ ~uipmcnt 3.. ZOyt:afS l. COMPl!NS"'!'EIl NlSl!NCBS Th' CIty ..m'....'" '" ""pl.,....l"" ".....Ii.. ",,,,,,,,,,il "..U.. or n.. I..... ....,I,y..' hiro<l ,dor W ".~ 1, 1999....y 0"" haY' ".~ \oOv'. ~ "" "" .fS 10>'"' (0, ""oo"oWmo.!h ,11I>l~1i.... .oM". uu~d of n~ le:....e. l!mpl.y... ldxod ,,"or'" ,.,....\'1, 199'. lbol have ,.t ",,~ (0, ."'"v" .hall" eolill.d " ..v."'" p'Y. alIo' """,.U.. ,f nv, y_ ,f ..."".",. City ....,1',..,..'. S""",,, p,y ~ Wo.,.te' 'y ....\\i,I""'. 'b. 10101 .""",.. ,I ...""".....l"'" In "'. City _Ioy ..,dIo' ",......,.Iod .~k I.'" by"" .w" -.. eote p...,;linS .1 de" .1 "v."""" " ... doy pOl you .1 "oh ,""",ym"'" to . m..lm.... .f 20 d.)". S.o!> "v""",, moMY ...ll b..,." ",.." 01 ......\io. ..usod by de.th. ,li~"bl. ..,..mon... '" ...odl"'" .,\OS"d "",Wlty ,,,v,,tinS >n ....,'.l". \lOm poti,mtinS Ib' roo;o' ~.o....1 "'. ".,it\.. or ",...,\,. (0, .... d;,sci.plinAlYUlB$Ot\S. . ';i> 10 .ddlli.. " !h, p""lo" bon.litt "".nb.d '" """ 9. !h. Cl\:l provlrlo' p.st.tcIi_ot hul!h .... b""r,~ to N .mpl'''''' ..b. w'" hi"d ,d,n.luly 1, 1993 "'dha".... wl!h Ib' City IOt.1 1..."'" y"" ",d... .I!h" 0"- (I) .g' 6t> Y'''' Ql .'d", ot (:l) ,liS"" lOt full ..llA _..,.",.fi~. . Th"..,mpl."... ""y ",Ute ",d "",v. foU .insl. b"I'" on<l life "'''''''''' "v."", """"8' 65. C."",dy 18 ....,loy... -' "'," .liglblllty "'w""",,.. O"""S lb. y'" ""..d'IO,,' ol.".."",.tely 566.AlJO WOl' I.""" lOt "st."U"....., ...lib cate benefits. ".......",'" ~,,\io.. ." and .""d sov_" p"/ ;, ..",,"od " !" _"" ..d on ".om" liobllity " "" b...fi~ ""'SO to ....,1',... '" lb. gov."""""...!do ood ,,,pcioWl' (on<! finoo'''' ,,,,,,,,,.... " ">biilty rot Ib... .......~ i. .top,"d in tho gov_..l>I ..... oo!y if """fits .." ....Md " . ""," ,f ....plo'" ",ign>Ii'" .., _mo.ts. Th. .....""" "ooll" ""om.l 'oM" (on<! "p,rtS "'. ,.._..101 ""'0>' UabUity for comfrtltlS\l.ted "bscnct8 on. me aeeroal bMU. . I. I.ONO.~B\\MOUUOAno"s '" 1\10 S''''''''''''''''\dO flnan,I.l ...-"" ..d',,,,,,'''''' "",d finan,IoI ..."m.... ,...."lm debt ",d ,th" .....,,,,,, ,'lis.Ii'''' ." "",nod" li..m... '" ",. .,,"....,. gov_toJ ;,Ovi'''. b",""'.typ' ."Ivl'''', Ql ptoprl."'Y fund typ' ",..""ot .1 "., ""~. B..d ,.."du"" ",d dl,,'''''''. " ...tl " I..""''' ,no. ,eo ,.,,..don<l.....- .VOl th.lIf. ,f!h' b...... BooO> ,.""1.... """lIod co' ,I"" ."lI"bl. ",.d ,.."",... Ql di..o..'. B'" ;,.""", ...~ ... ""lIod" "'f,..d.b"'" ",d ...""'wI..Ol <h, ,elm .f"" "1.,,. d.bL In "'. governmon'" fund _Ial ,,,,.,,,on. ""'" p""';- and ",..."".. " w.tl " ",.d i...."" ,,,- ... .'",gn\7l><l d"""S !h. ........' ,.n,d. The.... ....."", of d""I...", " "",nod .. ."'or finoo''''S ...<q>, F"ml..... "..iv,d.. d""I...""" '" "p."'" " ."'or """"'S ..........bi'. dl..."",..' d.bl I""""" '" top.lIod " ,!h" llnonO",g us'" ,....... ...... ....!h" Ot..' wlthb.id ftum "" ,,~.I d.bl p"''''''' "..,...... '" .",.".d" dob"O(VI...,p..dl_. . City o(HopkW, Minnesota NOTES '10 FIl'!ANCJAL STATEMENTS. (Com.) Decttnber 31. 2004 rce AND ACCOl rNTmO,rN A. BUDGBTS AND BUDGETARY ACCOUNIlN9 Annual budgets ~ adopted. on a basis consistent with generally accepted acoountir:1g principles for all governmental funds except.the Hennepin County COBa special revenue fund, the Block 64 DeVelopment special . revenue fund and the capital proJccts fuo.ds, which are not budgeted. A capital improvement plan la roviewed annually by the City Coull.cll (or the capital projects funds and utility funds. Howcm-. appropriations for major projects IlI'e not adopted Ull.ti1 the actual bid award o(the improvement. The appropriations IIJ'e not reflected in the financial smtements. AU ann\w appropriations lapse at fiseaI Year'end. , The City follows these procedum in establishing the budgetary dllta reflected in the financial statements and set (onh inSeGt10n 7.04 of the City Charter. I. The City Manager sball, at tbe first regular council meeting In September, submit to the Council a proposed budget and an explanatory budget musage in a fonn and manner as pmcribed by the City Chatter. 2.' The'Council shall dete~e the plan and time of the public hearings on *e budget to obtain taxpayer comments. 3. The Council shall adopt the ~ levy by resolution no later than a Oecembet date, which Is annually established by law (or the county auditor to levy taxes. The budget shall set forth the total (or each budgeted ~nd with such segregation as to objects a,nd pU[J)oses of expenditures as the Councll deems necessary for purposes o(budget coIltrol. 4, The City Manag~ is authori~d 10 transfer budgeted amounts between departments within any fund; however, any revisions that alter the total eltpenditures o( any fund musl be apPf9ved by the City COUQcll and are limited to the amount revenues exceed the budgets or authorize the trtnsf~ of sums from unexpended balanqcs to other purposes. Budgeted. exp'enditure appropria~ons lapse at year-end. The level of legal control is Il.tthe fund level, S. The Counell made several, supplemental budgelaty appropriations throughout the year. nie general fund budgelaty reductiOIl was S65,665 as funds were moved to 2005 for uncompleted 2004 projects. An significant adjustment was also made in <he economic development fund to account for gTB.l\t rovenues and theirre!atCdcxpe~dltures. B. EXCESS OF EXPENDITURES O~R APPROPRIATIONS For the year ended Deeemb~ 31, 2004, actual cx.pendi~ exceeded the budgeted amouot in t1ie Housing Rehab fund by $6,800, the Depot Coffee House fund by $11,038, the Art Ccoter fund by $9,712 and the Tax Increment Dlslrict 2.10 fund by $306. These over expenditurei' were funded by greatertluu1 anticipated. revell.ues Ill. the case of the Depot Coffee House and,Art Center fund and by available fund balance in the Housing Reliab and Tax Increment funds. Budgets are adopted for some specie.( revenue fund types but not all. Excluded from the budget adoption process arc funds that are completely reimbursable from the (ederal govermnent. The Community Development Block Otant is a non.budgeted fund. City of Hopkins. Min.nesola NOTES '10 F1NANClAL STATEMENTS. (Com.) December31.2~4 2. ill] ERNIv1ENT .WIDB ANn FUND FIN'ANCIAL STAT , . A. EXPLANATION OF Ce:RTAD-l DlFFBRENCES BBTWBEN TIm GOVERNMENTAL FUND BALANCE SHEBT AND TIm GOVERNMENT.WIDE STATEMENT,OF NET ASSlITS The governmental fulld balllllce lhee( includes arecoll.cililltion betwccll. fund balance _ total governmental funds . and net assets -: govemrneiatal activities as reported in the government.wide ltatemenl of net I1Ssets. One element of that reconciliatloll explains that long-term liabilities, including bonds payable, are not due a.D.d payable in the current period and thcrefore are not reported in the funds. Detaila: of this djff~ence art as follows: Bonds payable 528,082,436 Accrued interest payable 664418 Net adjustment to reduce fund bala.D.ce -total governmental funds to arrive at net assets - governmental ac'livllies ~'R'14/'i<)ld B. BXPI..ANATION OF'CERTAIN DIFFBlU3NCBS BB'T'WEEN nm GOVBRNMENTAL FUND STATEMENT OF REVENUEs, EXPENDITURES AND' CHANGES m FUND BALANCE AND TIlE GOVERNMENT. WIDE STATEMENl,'.OF ACTMTIBS The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation betwe,en net changes in fund balances - total governmental funds and change in net assets of ;;> governmental activities as reported in the government.wide statement o( activities. One element of that reeonciljation explains, "Oovemmental funds report capital outlays as expenditures. However, In the statement.of IV activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation -...1 expense." The details oftbls difference lite as follows; Capilaloutlay $6,856,955 Depreciation expen&c (842.126) Net adjustment to increue net changes in fund balances- lotal govemniental tUnds to arrive at changes in net assets of govemmentalactivlties WWll Another element of that ~conciUation explains that, "the issuance of long.term debl p"rovidC! current financial resources to -govcnunentai funds, white the repayment of the prUlclpal ofloag.tenn debt uses financial resollrCes of the govemmenlal f\Inds. Neither of these transactions bas any effect on the net assets. Also, governmental funds report the etrect o( Issuance costs, premiums, discounts and similar Items when debt is first issued, whereas these amounts Illedeferred and amortized in the statement of net changes." The details of these differences are ~ follows: Principal debt service payments 1,780,620 Deferred issuance costs ( 2,404) Reverseprior~a.rs:intetutex.pense 704,863 Accrue interest expense for current year (654478\ Nel adjustment to increase net changes in fund balanees- tota! governmental fu.D.ds to arrive at changes in net assets of governmental activities llW.QQ.l CityofHopldns, MiMesota NOTBS1'O FrnANC1ALSTA~, (com;: Det~u~\.2.004 (f) Guaranteed investment contracts issued or guaranteed \lyUnitcd States commercial blinks Of domesl;ic \mnchc: of foreign banks or,United States insurance companles or their sUbsidiaries. (g) Repurchase or revetSe repurchase agreements with banks that are members of the Fedel'3l Reserve System with ep.pltalizadon exceeding S10.QOO,OOO, a prl..ma.ry reporting dealer in U.S. Government securities to ,the Federal RcsctVe Bank of New York. or certain Minnesota. securities broker-acaJen. The City'~ investments are oategorized below to g\v.c an indication of the level of custodial credit risk assiuned at' yeu-end. ~lotegQ1'J 1 includes. m\'estmems. that are ins~ orteglstetcd or Cor which the securitieS are held by the City or Itll agent io.1he City's name. Category 2 lnclud6s uninsured and unregistered investments for whicb the securities are held by the COuntetpariy'I, !nIst'depa:tmeal::ll or agent in the City's name. Category 3 includes , uninsured and u1\I'e&\s\ertd invcstments for whi.ch. the securities are bold by the .couutetpat'ty, or by its trUSt department or agent, but not in the City's name. The City has the abIlity and intent ,to hold its in.vestalCD.ts to ma,turity and therefo~ intends to recover the full cartyi.ng value o(its invcstment portfolio upon maturity. Investment balances at December 31, 2004, were AS followS: Cus'todill1 Crodlt Risk Cate~ory SecuritiesTvne I , 3 Fair Value U.S. Government Agency Securities $15.470,089 , , $15,343,618 Commm.iat Pap.e{ 7.700.3,43 7.700,343 1'otalJnvestments $23.170.432 , , $23,043,961 TolAl Deposits (See Note 4A) 468202 Totil mvestmenta lAd Dt;p~si.ts 23.512,163 Less Reslri~led Cash and Investments 2456524 NetCuh, Cash Etiuivalen\S ~d In'ICSune~ts s 11(W1639 In tiseal2.004, the City recorded an unrealized 1f>>S o{$121,471 foranainlnvcsttnents. CityofHopkins,Minntllola NOTES TO FINANCIAL STATEMENTS, (CONT,) ~llcember31,~004 .C. FUND BALANCE DEFICITS At December 31, 2004, the following funds had de.iicit fund ba\ances or 1'10\ llSSe\$, These defidta will be corrected through future tax levies, contributions orcharges for services: Art Center $\.021.682 , Tax Incremrnt 2.6 $ 400.071 Tax Increment 2.7 , 1,042 Block: 64 Development , \,437 4. CASH AND tNVBS'r'MI!NTS 'A, DEPOSITS In accordance with MlllncsotA Statu{:S, the City maintains deposits at financial institutions wiUrin the Slate, designated lIS official depositories by the City Council, alt of which ue membet! of the Fedeml ReselVe S~tcm. Balanccs at December 31. 20,04, were as followS: Canvirlll'Value Ra.nkBalance S 468,202 Sl,I79~478 >- Minneso~ Statutes require that all Cit)' deposits be protected by insurance, surety boed. 'or col1atcral. The mar'otct , value ofcollatcra1 pledged muSt cquall10% oCthe deposits not covered by i.nsutance or bonds (140% in the case N of mortgage nOtes pledged), Authorized collateral inCludes the legal investments described below, lIS well as 00 eertaht fint mortgage, !Iotes, and certain other state or local govemm~1 obligations. Minnesota StaMes require that securities pledged as collateral be held'in aafekeeping"by the City treasurer or in a financial institUtion other ~ \hat furn!'hins the oot\a~. At Oecember 31. 2004 the City had no deposit:l that were uninsured' or uncolJ&tmlized. 'The deposits were itlsured or collateraliud by securities held by the City's agent in tho City's """" Deposits IItll carried. at Cost plus accrued interest. The carrying amount of deposits lIIe included ill cash and investments on the balMce sheet, Jnv~trnents are reported al fair value based on quoted market prices, InvCSlU1ent earnings arc accrued at the balance sheet date. B, INVBSTMENTS The City is aut.l1orize~ by Minnesota Stat\ltes 10 invest in the following: (a) Direct obligations or obligations guaranteed by the Uaited States or its agencies. (b) Slims of investment companies registered under the Federal tnvealment Company Act of 1940 and whose only lnmtments aro insecurities described in (a) above, (c) Qmera1 obligations in the State ofMinn~ta or any of its municipalitieS;' (d) Bankers' acceptances ofU!ll~d Stales b~,eligible for purchase by the Federal Reserve Systemi (0) Coromercia1 paper issued 'cIY United States corpottlt1ons or their CMldir.n lub,iditrics. of tM nigMst quo.ttty, and IlUlturity in 270 da)'s or less; and ,City ofHoptdns..Minnesota N()TES TO FmANCIAl. STATEMENTS, (CONT:: City oCHopkics, Minnesota' "NOTES TO 'FINANCIAL STATBMBNTS, (com.) BeginniCg Ending ~ - ~ ~ S '205.691 , 6:000 , , 211,697 1,21fi,014 .512,773 (750,009: 1,098,778 1,481.711 578.773 (750.009) 1,310,475. 5,735,746 891,974 6,627.720 17,866,948 38,800 17,905,748 3,882,296 307,977 4,190.273 529.808 239,523 (23,190) 746.141 725,811 . 725.811 28.740,609 1,478,274 ~ 30,195,693 (2,505,537) (206,994) (2,712,531) (7,527,701) (394,>149) (7,922,1S0) (350,248) (90,026) (440,274) (308,367) (23,536)' 23,190 (308,713) (394,677) (77,432) (472,109) (11,086,530) (792.437) . 23,190 (11,855,777) 17,654,079 685,837 18,339,916 $'19,135,790 S1,246,610 $(750,009) $19,650,391' 2004 December 31 2004 December 3 'Busmess-typeActivitles: Capital assets, not being depreciat'ed Und Conslruction in Progress , Total not bting depreciated Less ac<:umu]atcd Buildings Infrastructure Oth<< Improvements Vehiclcs Machinery & Equipmenl Tot:alaecumulatcd depreciation Total capHalassets, being depreciated,net Business.-type actlvities capital assets,net 'Depreciation expense WQS charged to City func({ons as depreciation: Capital assets, being depreciated Buildings Infrasaucrure Otherlmpi'Qve!f1ents Vehicles- 'Machinery & Equipment TOlalbeingdepreeialed Ending ~ $5,772,023 14,762,523 20.534,546 ~ , 2004 were as follows: """"'" , 6,275,483 6.275,483 CAPITAl M~SETS Capilal asset activity for the yearcnded December 3.1 $ 5,772,023 8.487,040 14.259,063 BegiDniDg Balance 5. OovcromentaJ activities: CapitallS$ets, nol being depreciated Und Con.structioninProgrcss Total not being depreciated 6.026,566 15,470,857 1,972,061 2,694,553 4,705,446 30,869,483 (2.004.754) (7,625,031) (1,266,582) (1,903,826) (2,708,549) l5,508,742) 15,360,741 , (258,094) (150,903) (77.863) (486,860) 150,903 77,867 228,770 (258,090) $ (258,090) 18,237 426,210 5,861 224,500 1,014,279 1,689,087 (152,526) (549,148) (53,348) (151.431) (238.702) (1:m:t5S) 543,932 $6,819,415 6,008,329 15,302.741 1,966,200 2;620,956 3.769.030 29,667,256 (1,852,228) (7,075,883) (I,213~34) '(1,903,.298) (2~47,714) (14,592,357) 15,074,899 $29.333,962 Capital assets, being depreciated BuUdmgs ' lnftastruCture Other Improvements Vehlc!" Machlnery & eqUipment Total being depreciated Less accumulated depreciation: Buildings In&astructurc bther ~provements Vehicles Machinery & Equipment Total accumulated depreciation Totalcapitalassets;being depreciated,net Oovemmental activities capital assets,net >- N \0 49,846 40,386 633,911 1,997 115,986 , follows: Govemmentil activities: General government P\lbiicsafety HighwaY' and streets Urban redevelopment and housing CultuA. and recreation Capital assets'held by the governm.enl's internaJ. service funds 8fe charged to the various functions based on their usage cifthe Issets Total depreciation expense- governmental activities $35,895,287 " l~~:;~ S 234,863 96,057 17:8,026 32,122 75,502 42,587 ---ill.ZiQ LZ2.lm Business-typeac:tivities: Water Sewer Stonn Sewer Refuse PavilioDlreearcna Skate Park Housing and Redevelopment Authority Total depreciation expen.se- busiriess-type activities Th' Cl\,! .~o \OS ....t.1 ......._ bon&, wbloh'" ...,tA by 1M ~ !>i\h, ,,..lIt ond .,.ina I"'wot of >h. CItY, and "..ymont tno';" ... g..""ttA by >h. ..II"';" of .peciaI ",,,,,,,,,,,~ ",d g.."" \OVi". "th. boodC h<V' . . .~tod "I' 01 inlW" /<Otn I.WA . 4~'A and'" ..yobl. o,ot >h.." to. "1'''''' 'lb' bond< odain"\Y ~..tA .t S'2.,6jG,Q(lO have e.t~nt 'lla\.;ntll ofS\,9S0,OQ(!. tl:C\\"tOu';h\e l;1:$I\l!ers \n"\\\4.C \he to\\QvMS: \) "",..._.10" /<Otn ""f, "w"and >to..f"'''' lot ,_ p'Y"'-" "W ..bU, wot"" [Aclll\'!. 2) M "",,,ai_lot ....1M ",,!,tIIl F\>l><l"." ........It forod to 'UI'Po. op.".... of \hi. "",d. 'lb' _f", in 20" i. $IS,.... . ~) As> ....01 _fot /<Otn >h. .""""" D"'\"""'" F\>l><l to \h. Nt Co.", tuM to p,y >h' odgUtol dob' fa< h\li\d}ngthefaeil\ty. ..~ 'lh>CitY ~.." ";"tIIlobll..tlon bond< to p"'''do funds forth. ....I.IUe" and "'........ 01 m.iot ."",'" fo,lIl.'" o.<t.,,1 ob"ga." ",nd< "''' b:O' >>",tAlo< go,~.tal ,,\iVlII". C...,,' Obllga." $.... ... "",tA bY Ih' full foi<h. ,,tAIt and _. p,,"ot of tho CI\)".... ... ,,,",,..d by 0",.,,1"'" To< In",,,,.t ,,,,.. ond.... by.... ",,,,.d'gM>s< b..,fit., pmP''''''' Tho" b.... .......Y Of' \s",tA as 20-'1'" ,oda! b..... O.."",.,,,ga." ..,;, _,dY ..ta,..o;.. ". as folloW", fo,ndSt1\at~lIa~\hllttn~ ~tAmO~ S \0,1\.&5,<<10 1,&01,436 ~.I d.b' ,,<'Ii" "",\t<""~" to ",,~tY fof ,p"lol ........., b........ as [.lIows' .\ ~"'~Il\A.fl\d $\'2.,4\5,000 "1,1.68,54'1 fiJUo'!'s _",ld.bI "on" "".\t<"'- to ."."",\)'10< g...,,1 obli"..... bon&"''' lo<aforod_fot$a!loWth'Cllito"""t.~"".....to""""<'IiO' oo\iVoI;\O(I o~bt. C\tyorfIOP'\dnl'~ ",Ons TO VlllNlCIAL lIT"TllJ<ll!IlTS, (CO",.) oeccm~{'.n.20tl4 ;,;Ii lliIomtl S 66.65\ S6~21 46)1> )4,3$4 ",.'~S ~ 5' Drili ~ '52,\19 692.14$ 591,32.5 550,>16 50$,925 1.344;116 866,113 $6~~:'lfo ~ 1,O-sJl% 3,O-&.i~ $~~ 313;,000 1\5,000 12.0,flJO 1.fJO.ooO ~. $ \.930,000 ~; 1,451'" 145,000 ,'0,000 315,000 ;,460,000 1.,940,000 ~ ~c .-,." overomct\.\,lIJo.lCt\.vIDe.5 aoveJnlMt'lta\ t.c.ti:ritie~- tefu~\n& 1:.~~1 2005 2006 1.fJ01 ZOOS 2009 20\0-20\$ 'roul '(;,~~~ 2005 2006 1.fJ01 200' 7tffJ 2t\\Q.1014 2{l\5~lf}t9 2.t\tQ:.2(l2.') To'" a ~tojcetot funds had eq,ua1 ~out'.ts pa~b\e \l) Tbo el\)' \0$ "tN. _""otIo. proiodts ".ofD".",b" >t, 2004. '{he pmj"ta ",ol.d""" p""li' wo'" .""g' r"IlI\)',.... ~,. """. "d _odOlll>i 1M poli" d.._on\. "th. CI\)", "...."..... wi'" "'..."o~ ",..., '" "" noW p""II' works .",,,,,.. f,.ui\'!, tlrO .".... "d poll" .-<olini p"'i'" Is $1,401,119. 'lh> is\<aforod ,...".b'" "d "y.b1oo .llow \1" CilY to 'onow >h' "so""" 01 ",. ",.d '" fooili"" 0,,,,1i'" of ""tb" fund. . J!l!l. 6~~,OOi 6~,OOO .9211J' 3,\),4{lg. 2\3,1.\9 45,000 SO,Ooo 2$,000 \,94\.9'l.O' ~240 ~t4,m 1'1on..mf.j01' :~- ~ \,114,3\1 614,'7%2 3\6100 ~*_iS91 Tbo follo""'" Is ..~ of_rot' b''''''' funds" ofo",,,.'''f' I, ,004'. ,~ttt'\1\ ~ ~59,Ooo~ we"" lerrl.~ 'Tho folio"'" fonds ",d _an" "',',obI..... 01M' funds,'" \ho fOSP"';" other tlJnlis- at 'Oee~bet' 'H,1004: Dl,\efttJtnctbJ!;r!\1n& 1~ftf$tlut~ (Jon"" 'P~t 1nipto"emel\t Revo\>M& Wo.tef seW~[ Sto-nn sewer 'Nowcna)Of go"ernnvmu.l }1.~n1~~!:~rroe 1'o~trfoS'I!fe!!O\tt Citj offlop'1Qt\S, ~uo\a "'0"\'llS10ID>lNlCl-'LlIT"~'(C01'lt.) 20" 1.IM,$1l 435,879 ~ l,S~6~ 'Noo4t\ljot O,{t~ntal M,,~fr:omotherfuoda Noa..ma.3ot ,...~nta~ 633"OOS . ~ Ger.e~ t1~~cmbct ') 'Due to olhtt fUnds', ~tnCf~\'.2 1'Ioo-fl\i.3ot ll()ve~ntsl Nsn.~\otb\lsines~ Tote1_ dut\!.O_Q1h~t ~ds_ 1. t <:> 6. CityofHopkins,Miru1csota. NOTES '10 FINANCIAL STATIlMl1NTS, (CONT.) D~cr~I,2004 Annual debt service requirements 10 maturity are as follows: YcarEnding December31 ~ - '005 $ .520,000 $ 580,894 :W06 520,000 566~19 '007 535,000 551,969 2008 '545,000 536,318 2009 565,000 518,829 2010-2014 3,140,000 2,258,504 2015.-2019 .3,910,000 l,463,~!6 2020-2024 4 075 000 :....ilim TOla! 513,810,000 $6,903,479 The City is subject to a statutory limit of.oonded indebtroness 'equa.lirlg 2.0 percent' of market valUe. At Decetnb'er 31,2004, the debt limit for th~ City fa $25,601;380. Of the 'tota! debt, $11,005;678 of general obligation and revenue bonds is applicable to the limit, The legal debt margin is $14,595,702. . Chanl!'es in !onlr_term li1lbi1lti/!~ . Long-term liabUity activilY for the ye&: ended De<:ember 31, 2004, was as follows: Beginning Ending Due Within Balance Additions Deductions ~ OneYeat Governmelltalactlvltles: Bondspa,Yllbl~: General obligation bonds $13,778,056 , $ 1,485,620 S 12,292,436 5 731,t52 Special uscssmcnt bond 2,2.75,000 295,000 1,980.000 ' 3Q5,00O Public facility lcaso bonds 13,810,000 13,810,000 . '520,000 Total bonds payable 29,863,956 1,780,620 28,082,436 1,556,152 Compel'lsatedabscnces 634,140 21.315 - 655.455 655.455 Governmental activity Long-tenn liabilities $30,497,196. , 21,315 $1,780,620 $28,73:,891 ,$2,211,607 Duslness-t)'peactlvltles: Bonds payable: Revenue bonds $ 5,710,000 , , 440,000 $ 5,270,000 , 440,000 Compensated absences 123,809 2.593 126.402 126;402 Business-type activity Long.~ liabilities $ 5,833,809 , 2,593 , 440.000 $ 5.396,402 , 566,402 9. PEN'STONPI AN OBLIGATIONS I. Defined Benefit Pension Plans ~ Statewide A. PlanDescrlption All full.time and certain part-time employees of the ,City of Hopkins arc covered by rJofined bcocfit plans administered by the P,:!blie Employees Retirement Association of MinncaolA (pBRA). PERA ictrninislonl the Public Bmployees.Retirement Fund (PBRF) and the Public Bmployees Police and Fire Fund (PEPFf), which ere cost sharing, multiplc-employcr retirement plans. These 'pInns ere established and administered in accordance with Minn~ota StaMes, Chapten 353 and 356. City bfHopkins, Minnesota NOTES TO FINANCIAL STATEMENTS, (CON.I'.) DCCCJJl,ber 31, 2004 Rcvenuebonds The City also issues bonds where the govemmlln~"plcdgcs mcome derived from the acquired or constructed assets to pay debt s~rvice; Revcnue bonds outstanding at year~d areas follows: - Intcre!ltRates OrilrinalAmount CUlTcntAmount Stornucwet' conswction & replacement 2.0- 5,0% $2,810,000 $2,490,000 Water tower painting, meter system replacement 4.5- 5.5% 2.060,000 1,630,000 Stonn sewcr - rtfiu1ding 2.75-3.65% 1.610,000 1,250,000 Revenue bond ~ebt sernce requiremcnts. to maturity arc as follows: Year Ending December 31 ~ _. '005 , 440,000 $ 2lS,302 2006 450,000 198,902 2007 475,000 181,304 2008 495,000 162,202 2009 505,000 '141,851 2010-2014 1,900,000 430,613 201~-2019 '.670,000 108,505 2020-2023 335.000 .-..11.ill. Total $5,270,000 S 1,4Q6,560 ;J> , Publie Facility I .ea~e Revenue Ronds W - The H01,ISiJ!g and Redevelopment Authority in and for Ute City ofHopltins, II ble"ded component unit of the City, has issued public facility lease revenue bonds fo~ the COnstruction of public works facility, ~ fire sl:ltionr and police station improvelnCots., the aggregate Ilttlount oCbonds issued lolBls $13,810,000. The Housing and Redevelopment Authority has entered into ground leases with the City for Utll1casc of Ute facllttillS to the <:;ity. The leases,will rtmaln in effect Ulltil all principal and interest on the bonds have been paid, So 10Dg as tOe ~ell.Ses are in effect, the City will make scmiantlual1ease payments on each FebrulU)' 1 and AUffilS,t I, in amounts sufficIent to pay all principal and inlcrest on the bODds due on such payment date, The bonds ere special ob~gations of the Ho~ing and Redevelopment Authority. Tho bonds do Qot constitute a gen~ obligation of the Housing and Redevelopment Authority or the City. It is the Intent 'of the City to levy'ad valorem taxes an amount sufficient to make rental paymcllt:il required under the leases. rn the event the oMual appropriation is not made, the bond trustees arc entitled to repossession and the right to re-1cllSe Ute buildings and land. Public facnity lease revenue bonds currently outstanding are as follows: - Intl!rcstR.ate.~ Ori~nal Amoun! Current Amount Public Works and Fire Station 3.0-5.0% $10,760,000 SIO,760,OOO Police S~tion lmprovemel)ls 2.0 - 4.35% 3,050,000 3,050,000 Clty.OfHOpkins, Minnesota NOTES TO FINANCIAL STATB~S, (CONT,) Dececnber:n.2.004 'ation 'Ibe City contrlbute8 to the Hopkins Fire Relief Assocla.tion (Associlltiou); a single ctpployef defuted 'turneut plan. The Association administers the plan and issues separate financtilJ sllltclI1Cnts that can be obtained by contacting Ute Association. . Volunteer fitefighters of the City ll.fC membc:ra of the Association, The plan provides for pemunent and short teml. dis&bility benefits, death bt1lC6t.s and pens.lolU with .a'set value for .the anD.ual withdcawilJ 1Un0unt. Full vef>ting in the plan requites 'a member to have sCtVed for at least 5 yean. to bave reached the age of 50 yean and to have been a !1\Cffiber of the Association for at least 20 years. ~cse bencfit provisions and ,.u other requ\tcrne1:lts ate consule?t with enabling staMes. M!' The governing board of the Association requests changes in benefit levels a.nd contribution requiremcnts that must 'be approved by the City Councl1. The f\1nding polley provides that contributions from tJ;1~ City and from the State ofMinneaota are in BmO\1J\ts ~mcient to accwnuh1e assets to pay bcu!lnu when. due, The City puses Uuougb state aids allocatod to the plan, in accordance with ~te statulo$. The 8J1t1.ual penston information is as follows: 2004Col).tribulions A.ctuaria1valualiondate: Actuarial cost method: Assumed me of return: Actuu\'ll vatuu.ti.on period Amorti%ation method Amortization period lni1ati.onnte Projectedsaiaxyincreases , Post retirement b~cfit increasu NctPclUion Obligation AtYcllfEnded $0 SO SO % of Annual Pension Cos!Conlributcd 100% 100% 100% Annual PClUion Cost (APC) $ noS's $ 30,766 $ 29,870 ~ 12131104 12/31/03 \2131/02 Funded lUdo (afb) 119% 101% 92% Elt.Ccss(Under) Of Assets Over AAL (a..\)) $505,504 $ 15,508 $(217,528) . ActuarlalAccrued Llability(AAL) J?1ttyAge $'2,692,59& $2,180,591 $2,640,695 . Plan Dcscrintlon 2. $)1,535 1104,8;2 method ". Actuarial Valucof Assets (a) $3,i9S,10'2 $2,796,099 $2,423,167 City State tZl31104 Entry age nonnal actu8.ria! co, 5% Op<n Level ~otlar - open Ten years None Notappii<;ablc 'S200 per ycarofscrviee Fundin in' fFun, Attuui'/J. Valuation Date imii04 12/31103 12131102 City ofHopldns, Minncsobl. NOTES TO FINANClAL.S'fA'IBMENTS. (CaNT" December 31, 2004 PBRP members belong to either the Coordinated P~ or the BaSic PIIll1. Coordinated Plan mcfnbers a:t~ ~ove~ by Social Security ~d Basic Plan membera are not. All new IIlcmberi mU$t participaiC in the Coordinated Plan. All police officcrs, fire fighters and peace officers thatl':flW.ify fot rnembetship hy statutt> atecovctcd b.~ PEPFF. PBRA provides retirement bencfits as wcll as disability b6nefits to members, and bcnefits-to survivors upon death of eligible tne~eIll, Benefits m csta6lisbcd by State Statute, and vest after three years of credited service. The defined retirement benefits are bued on a member's bigbest Ilvmge salazy for any five su.ccessivll years of allowable scrvice,llge. And yC8l$ of credit, at te~ilonofse\'Vicc. 1'wo melhods aro used to compute benefits" (or. PERFs Coordinated and Basic Plan .members. The retiring met1'lber teCeivoss the hisher ofll. stcp-rate benefit'accrual fonnula (Method 1) or a level accrual fonnula (Mcthod 2). Under Method I, the annutn' accrual rate (or a Basic Plan member is 2.2 percent of average salaxy for etch of the first 10 yellt8 ofscrvice,and 2,7 pcrc:,ent for each mnaining year. the annuity accruaJrate for a Coordinated Plan tlWmbt.r is 1.1 pen>>n\of e.vetage ,atary for each. ofthc first to years and 1.7 pci'certl for each remaining ycil!'. Under Method 2, the annuity aecNal tate I. 2.7 percent ofavmgc sata.cy for Bl1lIic Plart members and {,7 percent for Coordinated Plan members for caeh year of service. For PEPFF members, the annuity accrual rate Is 3.0 pCNCnt for each ycar'of lieM.tC. For &,1.\ PEPFi' merr.\)t.\,,& find PBRF mcmbm hiM prior to Julyt. 1989 whose annuity is calculated using Method I, a.MI annuity is ",vallable when Ilge plus years of service equal 90.. Normal retirement age is 5S for PEPFF members and 65 for Basic a.nd Coordinated members hlred prior to July I. 1989, Normal tctircmcnt age is the age for unreduced SocW SecuritJ \)cnefi~ (,S~ at 66 {()t Cootdtnatcd membttt hired 011 or'a&r July I, t989, A reduced retirement annuity Is also aVD.ilable to eligible members seeking carty retiremenL >- There are different types of annuitie.s available 10 ~W1bcts upon retiremenL A single.life lUIJluity is a lifetime , annuity that ceases upon tho de;a.th of the rct!rCe-o.o .surviVtlr annuity I' payahle. There are also vanous types of W l'--) joint and survivor annuity options availahle which wiU be payable over joint lives. Members may also leave thlllr 'contributiol1t in the f'wid upon fermlnation of public service in order to qualify fQr D defemd annuity at retirement .... F.et\mds. of contributionS ate available 'at any time to members who leave public service, but before retirement benefits begin, The bel'1Cfit fIOv\s\ons stated ir. the p~vious paragte.phs of this sceti.on are current provisions lllld' apply to active plan partIcipants. Vc.sled, terminated employees who arc entiUed to b~efits but are not recc1ving them yet arc bOWld by the proviilonf in effect at the tim.e they last terminated. their public service. PERA Issues a publicI)' available financial report that iru:ludes financial statements and requited supplementary information for PERF and PEPFF. That report may be oblaincd on the web almnpen,org, by writing to PERA, 60 Empire Drive #200, SI. Paul, Minnesota. S51{)3.208S or by <:a1\ing (65\) 296,:460 cr 1-%00.652.9026, B. Funding P'oUcy' Minnesota Statutu Cbapter 3.53 sets the cates for cmployer and ctTlployee contributions, Thc.se statutes arc established and amended by the state legisla~. The CitY. makes annual conlrlbution~ to the pension plans equal to the al:Dounl rcqulrcd by stato statuteS, PERf Basic Plan members and Coordinated Plan members 8(0 required to contribute 9,1% and 5.1%, respectively. of their annual covered salary. PBPF.F members are required to eGlllrlbutC 6.10% of thelt ann1,la1 covered salary. The City of Hop~ns is required to contribute the following percMtages.of annl,lal covered payroll: t 1.78% for Basic Plan PERP' membets, 5.53% for Coon:linatcd Plan PERF members and 9.3% for PEPFF membe.n. Thc City'. contributions to the Public Employees Retirement'Fund for \he}'earn ending D~ber 31, 20(}4., 2003, and 2002 ""* $1.13.189, $233.325 an4 S219.858. respectively, The City's ~ritribuliozis to the Public Employees Poll~ & Fire Fund fot Ute ye~ ending Oecember 31, 2004, 2003, and 2002 were $161,777. $154,824 tUld $142,797. -respectively. The City's contributions r<'crc equatto the contractually rcquired conlrlbuuons for each:rera as set by state ,tlt\l~, . City ofi1~\drG. 'M\rul.eSota NOTf!S"'01'lllANCw..S'A~'(CO"'" D~embet' ') t, 2{1Q4 'I'M ","""", ",,,,,d ".bUi\1 of ':l,692,S9' " poc<<nb" 31, :lOll' W" "\,,,,,"d """" ,he S~" or M_'" S,h~,"O I ro'" lot \umP _ p,,,;on pi"". _ ,,,,\,, .. po,id" nOl _to .,,",hI' !O, b<"'u 01"01,1'" " 01 0"."'.... ~', ZQ04. "f\I< !loplci" 1'... pop_"" i.' voi""." o......don ""d th,"!'" do" not hi" p.)'to" " di.llelosO. < ' \G. ~"'R1U-rA'tT[)~I.()ANS'F.'(ll.t<:rvA.S1& Th. City ",al<<> ..h,bUi"U,n 10"'" '" ,..id,.dol "'" """",,<.01 .nod" "i\hill tho City. R,,\d,,'i'\ \0'" '" ""d' rot'O >"" potiO" .<3'" in''- .,I. "'0".... ....,.' \b.p""'lIY irop""~ 1st.",""" ""d City ,..a" ,",,,,.lb1. 10 IO\\OW'" ",y d'\[oqU'"-''''''' wn t<?'Y"'nU '" ""d." ""'"'" F,""",i~ S"",,,"" """,'''''' w"'" ,,;loh ,_". r" 01 ,'.9\ "" "'0,"" pot \,... ?tin,i", ""d in""" '" lo,.,udod'" \\" Ci\1 ",onthly wi\\l \,on 00\\0<00. "'" 10'" .."', ""rts. Ro\>nl>",,,,'ion 10'" .cO,i\1 i" !\uI,lio' olIM llo"- P.,~,,,,,'nt p,md, \hO !l.on.pl. ConolY COllO ""d tho !l.""'" lI<""b Funds. Lo"" ''''0'''' do. in fUll upon ",. or ".po<\1. lI<bnbmtalion \."" _I"bl. _untod 10 '30\)9' ., lloc<<nb" ~i, zl)l)'. \t. ~....fMS A.-,.mt,t't'1t1}.'1'l~ "" Cl\1 hod th.",,,,, "'" ""tiinorll"fP" 'l"""'U....'" .I.i"" ""...S" y."."d, whi.h'" ,10 minOf""''' "",,,,,,II)' oil ",.<<<1 bY _" ."".df" <hat polP"'~ "" CItY .""". ,\,000,000 p,bY" om,"\ l.i.,il1\1 lnSU""''' poli.y wlth',,,'\\< "dty ""d _'01"""''''''''''''' '? \Z $1StzMA'Nj\r.'i'l.~ ~ tho CItY" ."",,,d '" ,,.;.0'" ""', ,r ''''' ",."d .. ..""lh'~ or, d""'S' 10, ",d d""",d'" of "".: "".. "'" '" ,,,,,,,I'''': i.J"tio< '0 ''''p\'Y'''' "'" "."'" dioO'''''' tho CitY ,,,,,.ip.'" in' pub'" .."tY ris\; pool" ..">'" ,~",po"" \0 ",,,. rio\:!. wo<~... ",.p....lio. ond plOP"" ",d 1101>11\\1 ,..,,,,s, '" p",,,.d """"sb' po,l.d "l!....-" ,,,,, with "",e< .id". S..'od ""I"" he" not "",..sod \nt,""" 00'''''' i. 'ony ,I tho pO< """ p,..l y''''' .... City P'Y''' ",,,,01 p-'''''' ,."" "F'i" claims hi""" !oll~ """,... oornpn""t\or> ,ot"'''' 'Th. pub'" ...\1 ri,k pool" tosp>"'ibi' fot lh' p'Y"'.! of '" ",ooi.,," d..... 'Th. CItY h'" "0,000 d,,0o01>\o pot ~",,_.with. ",...mom pot y'" ", olpoo\tO\ ,r'40,OOO, [oliO ""pollY ",d ii.bili\)' 00''''''' Th.,,,blic .."\1 "'" pool I. _osibi' 10< 01\ 'ot'" i. "",,,. ,I ,,0,00'> p" --. ",d 01\ In"" 00''''''''> ,~" tho $40.00010-,,10 CItY ""fp'''''' ",0. ' APPENDIX B FORM OF LEGAL OPINION 470 U.S. Bank Plaza 200 South Sixth Street Minnea11<>lis MN 55402 & (612) 337-9300 telephone (612) 337-9310 fax http://www.kennedy-graven.com CHARTERED $ General Obligation Tax Increment Refunding Bonds, Series 2005A City of Hopkins Hennepin County, Minnesota We have acted as bond counsel in connection with the issuance by the City of Hopkins, Hennepin County, Minnesota, of its General Obligation Tax Increment Refunding Bonds, Series 2005A, (the "Bonds"), originally dated as of November 3, 2005, in the original aggregate principal amount of $ . For the purpose of rendering this opinion we have examined certified copies of certain proceedings taken by the City with respect to the authorization, sale and issuance of the Bonds, including the form of the Bonds, certain other proceedings and documents furnished by the City, and applicable laws of the State of Minnesota. From our examination of such proceedings and other documents, assuming the genuineness of the signatures thereon and the accuracy of the facts stated therein, and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion that: 1. The Bonds are in due form, have been duly executed and delivered, and are valid and binding general obligations ofthe City, enforceable in accordance with their terms. The rights ofthe owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor's rights generally and by equitable principles, whether considered at law or in equity. 2. The principal of and interest on the Bonds are payable primarily from tax increments resulting from increases in the taxable value of real property in certain tax increment financing districts in the City, but if necessary for the payment thereof ad valorem taxes are required bYlaw to be levied on all taxable property in the City, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is not includable in gross income of the recipient for federal income tax purposes or in taxable net income for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates, but such interest is includable in the computation of "adjusted current earnings," used in the calculation of federal alternative minimum taxable income of corporations, and is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income and the alternative minimum tax base. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied B-1 subseqUeIit 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 excluded from taxable net income for Minnesota income tax purposes. We express no opinion regarding other federal or state tax consequences arising with respect to the Bonds. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated at Minneapolis, Minnesota, B-2 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis MN 55402 & (612) 337-9300 telephone (612) 337-9310 fax http://www.kennedy-graven.com CHARTERED $ Taxable General Obligation Refunding Bonds, Series 2005B City of Hopkins Hennepin County, Minnesota We have acted as bond counsel in connection with the issuance by the City of Hopkins, Hennepin County, Minnesota, of its Taxable General Obligation Refunding Bonds, Series 2005B, (the "Bonds"), originally dated as of November 3, 2005, in the original aggregate principal amount of $ . For the purpose of rendering this opinion we have examined certified copies of certain proceedings taken by the City with respect to the authorization, sale and issuance of the Bonds, including the form of the Bonds, certain other proceedings and documents furnished by the City, and applicable laws of the State of Minnesota. From our examination of such proceedings and other documents, assuming the genuineness of the signatures thereon and the accuracy of the facts stated therein, and based upon laws, regulations, rulings and decisions in effect on the date hereof, it is our opinion that: I. The Bonds are in due form, have been duly executed and delivered, and are valid and binding general obligations of the City, enforceable in accordance with their terms. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor' srights generally and by equitable principles, whether considered at law orin equity. 2. The principal of and interest on the Bonds are payable from tax increments resulting from increases in the taxable value of real property in a tax increment financing district in the City and from housing improvement fees levied on property within a housing improvement area in the City, but if necessary for the payment thereof ad valorem taxes are required by law to be levied on all taxable property in the City, which taxes are not subject to any limitation as to rate or amount. 3. We express no opinion as to the status of the interest on the Bonds for federal or state income tax purposes. We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. B-3 This opinion is given as ofthe date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to OUT attention or any changes in law that may hereafter occur. Dated at Minneapolis, Minnesota, B-4 APPENDIX C BOOK-ENTRY-ONL Y SYSTEM 1. The Depository Trust Company ("DTC'~, New York, New York, will act as securities depository for the securities (the "Securities'} The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative ofDTC. One fully-registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such maturity, and will be deposited with DTC. 2. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a ''banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants'~ deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC'} DTCC, in turn, is owned by a number of Direct Participants ofDTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries ofDTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants'} DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the ,Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner'~ is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant throngh which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee, Cede &Co., or such other name as may be requested by an authorized representative ofDTC. The deposit of Securities with DTC and theirregistration 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 Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which mayor 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. C-I 5. 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 orregulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtsin and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemptionnotices shall be sent to DTC. Ifless than all of the Securities within an issue are being redeemed, DTC's practice is to detennine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Onmibus Proxy to the City 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities 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 upon DTC's receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC's records. 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 orregistered in "street name," and will be the responsibility of such Participant and not ofDTC (nor its nominee), Agent, or the City, subject to any statutory orregulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative ofDTC) is the responsibility of the City or the Agent, disbursement of such payments to Direct Participants will be the responsibility ofDTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to (TenderIRemarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC'srecords, to the (TenderIRemarketing) Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC' s records and followed by a book -entry credit of tendered Securities to (T enderIRemarketing) Agent's DTC account. 10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the City or the Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 11. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accUracy thereof. C-2 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Hopkins, Minnesota (the "Issuer") in connection with the issuance of$ General Obligation Tax Increment Refimding Bonds, Series 2005A and $ Taxable General Obligation Refimding Bonds, Series 2005B (the "Bonds"). The Bonds are being issued pursuant to award resolutions adopted by the City Council of the Issuer on September 20, 2005 (collectively, the "Resolutions") and delivered to the Purchaser(s) on the date hereof. Pursuantto the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the Issuer hereby covenants and agrees as follows: Section I. Puroose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (defined herein) of the Bonds in order to assist the Participating Underwriters (defined herein) in complying with SEC Rule 15c2-12(b)(5). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defmed in this Section, the following capitalized tenns shall have the following meanings: "Annual Report" means any annual report provided by the Issuer pursuant to, and as descnlled in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means the Issuer's annual financial statements, prepared in accordance with generally accepted accounting principles ("GAAP") for Governmental Units as Prescribed by the Governmental Accounting Standards Board ("GASB"). "Fiscal Year" means the fiscal year of the Issuer. "Final Official Statement" means the deemed final official statement dated , 2005 plus the addendum thereto which together constitute the final official statement delivered in connection with the Bonds, which is available from the MSRB. "Holder" means the person in whose name a security is registered or a beneficial owner of such a security. "Issuer" means the City of Hopkins, Minnesota which is the obligated person with respect to the Bonds. "Material Event" means any of the events listed in Section 5( a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314. "NRMSIR" means any nationally recognized municipal securities information repository as recognized from time to time by the SEC for purposes of the Rule. D-I "Participating Underwriter" means any of the original underwriter( s) of the Bonds (including the Purchaser(s)) required to comply with the Rule in connection with the offering of the Bonds. "Repository" means each NRMSIR and each SID, if any. "Rule" means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. "SEe" means Securities and Exchange Commission. "SID" means any public or private repository or entity designated by the State of Minnesota as a state information depository for the purpose of the Rule. As of the date of this Certificate, there is no SID. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) 1he Issuer shall provide, as soon as available, but not later than 12 months after the end of the Fiscal Year commencing with the year that ends December 31, 2005, each Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be snbmitted as a single document or as separate documents comprising a package, and may cross- reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available. (b) If the Issuer is unable or fails to provide to the Repositories an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repositories and the MSRB. (c) The Issuer shall detennine each year prior to the date for providing the Annual Report the name and address of each Repository. Section 4. Content of Annual Revorts. The Issuer's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: I. Current Property Valuations 2. Direct Debt 3. Tax Levies & Collections 4. Population Trend 5. Employment/Unemployment Any filing under this Disclosure Certificate may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC") as provided at http://www.disclosureusa.org unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004. In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the SEe. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. D-2 Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events if material with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the secmity; 7. Modifications to rights of secmity holders; 8. Bond calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the secmities; and 11. Rating changes. (b) Whenever the Issuer obtains knowledge of the occurrence of a Material Event, the Issuer shall promptly file a notice of such occurrence with either all NRMSIRs or with the MSRB and with any SID. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) .and (9) need not be given under this subsection any earlier than the notice (if any) of the rmderlying event is given to Holders of affected Bonds pursuant to the Resolutions. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer's information. Section 6. Termination of Reoorting Obligation. The Issuer's obligations rmder the Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, or upon the redemption or payment in full of all the Bonds. Section 7. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations rmder the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. . Section 8. Amendment Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions constituting the Undertaking and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to each then existing NRMSIR and the SID, if any, an opinion of nationally recognized bond counsel D-3 to the effect that those portions of the Rule which require the Resolutions and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the deliveI)' by the Issuer to each then existing NRMSIR and the SID, if any, of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions and this Disclosure Certificate and by the Issuer with the Rule. Section 9. AdditiOnal Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds 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 under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respectto the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Beneficiaries. 1bis Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights in any other person or entity. (The remainder of this page is intentionally left blank.) D-4 of IN WITNESS WHEREOF, we have executoo this Certificate in our official capacities effective the ,2005. CITY OF HOPKINS, MINNESOTA Mayor City Manager D-5 day APPENDIX E TERMS OF PROPOSAL $1,640,000* GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2005A CITY OF HOPKINS, MINNESOTA Proposals for the purchase of$1,640,000 General Obligation Tax Increment Refunding Bonds, Series 2005A (the "Series 2005A Bonds") of the City of Hopkins, Minnesota (the "City") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Financial Advisors to the City, until 11 :00 A.M., Central Time, on September 20,2005, at which time they will be opened, read and tabulated. The proposals will be presented to the City Conncil for consideration for award at a meeting to be held at 7 :00 P.M., Central Time, on the same date. The proposal offering to purchase the Series 2005A Bonds upon the terms specified herein and most favorable to the City will be accepted unless all proposals are rejected. PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 469 and 475, for the purpose of effecting a current refunding of the 2012 through 2016 maturities of the $500,000 General Obligation Tax Increment Bonds, Series 1996C, dated October 1, 1996, and the 2007 through 2012 maturities ofthe $2,240,000 General Obligation Tax Increment Bonds, Series 1997 A, dated January I, 1997. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. DATES AND MATURITIES The Series 2005A Bonds will be dated November 3, 2005, will be issued as fully registered bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February 1 as follows: Year Amount* Year Amount* Year Amount* 2007 $165,000 2011 $205,000 2015 $100,000 2008 180,000 2012 295,000 2016 110,000 2009 190,000 2013 95,000 2010 200,000 2014 100,000 ADJUSTMENT OPTION * The City reserves the right to increase or decrease the principal amount of the Series 2005A Bonds on the day of sale, in increments of$5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. TERM BOND OPTION All dates are inclusive. Proposals for the Series 2005A Bonds may contain a maturity schedule providing for any combination of serial bonds and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year conforms to the maturity schedule set forth above. E-1 INTEREST PAYMENT DATES AND RATES Interest will be payable on February I and August I of each year, commencing August I, 2006, to the registered owners of the Series 2005A Bonds appearing of record in the bond register as ofthe close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Series 2005A Bonds of the same maturity must bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Series 2005A Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5/1 00 or 1/8 of 1%_ BOOK-ENTRY -ONLY FORMAT The Series 2005A Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Series 2005A Bonds, and will be responsible for maintaining a book -entry system forrecording the interests ofits participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests of the individual purchasers of the Series 2005A Bonds. So long as Cede & Co. is the registered owner of the Series 2005A Bonds, all payments of principal and interest will be made to the depository which, in turn, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Series 2005A Bonds. PAYING AGENT The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Series 2005A Bonds maturing on or after February 1,2012 shall be subjectto prior payment on February I, 2011 or any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2005A Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities ofthe Series 2005A Bonds to be prepaid shall be at the discretion of the City. If only part of the Series 2005A Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notifY DTC ofthe 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 interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2005A Bonds to be redeemed at the address shown on the registration books. DELIVERY On or about November 3, 2005, the Series 2005A Bonds will be delivered without cost to the original purchaser at DTC. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and certificates verifYing that no litigation in any manner questioning the validity of the E-2 Series 2005A Bonds is then pending or, to the best knowledge of officers of the City, threatened. Payment for the Series 2005A Bonds must be received by the City at its designated depository on the date of closing in immediately available funds. LEGAL OPINION An opinion as to the validity ofthe Series 2005A Bonds and the exemption from taxation ofthe interest thereon will be furnished by Kennedy & Graven, Chartered, Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2005A Bonds. The legal opinion will state that the Series 2005A Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, exceptto the extentto which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. SUBMISSION OF PROPOSALS Proposals must not be for less than $1,623,600 plus accrued interest on the principal sum of $1,640,000 from date of original issue of the Series 2005A Bonds to date of delivery. A signed proposal form must be submitted to Ehlers prior to the time established above for the opening of proposals as follows: 1) In a sealed envelope as described herein; or 2) A facsimile submission to Ehlers, Facsimile Number (651) 697-8555. Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither the City nor Ehlers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit") in the amount of $32,800, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer of funds to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0211-13086 for further credit to Ehlers, Bond Issue Escrow Account No. 850-788-1. The Deposit will be retained by the City as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Series 2005A Bonds. The Deposit, payable to the City, shall be retained in the offices of Ehlers with the same effect as if delivered to the City. Alternatively, bidders may wire the Deposit to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0211-13086 for credit to Ehlers Bond Issue Escrow Account, No. 850-788-1. The City and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: 1) All income earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) Ifthe proposal is accepted, the Deposit shall be returned to the purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the funds to the bidder; 5) Ehlers shall not be an insurer of the Deposit amount and shall have no liability hereunder except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $100,000 per bidder. 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 Ehlers prior to the opening of the proposals. Such bond must identifY each bidder whose Deposit is guaranteed by such [mancial surety bond. If the Series 2005A Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit E-3 its Deposit to Ehlers in the form of a certified or cashier's check or wire transfer as instructed by Ehlers not later than 3:00 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 satisf'y the Deposit requirement. The amount securing the successful proposal will be retained as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. No proposal can be withdrawn aftei the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2005A Bonds is adjourned, recessed, or continued to another date without award of the Series 2005A Bonds having been made. AWARD The Series 2005A Bonds will be awarded to the bidder offering 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. In the event of a tie, the sale of the Series 2005A Bonds will be awarded by lot. The City reserves the right to reject any and all proposals and to waive any informality in any proposal. BOND INSURANCE If the Series 2005A Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense of the purchaser of the Series 2005A Bonds. Any cost for such insurance policy is to be paid by the purchaser, except that, if the City requested and received a rating on the Series 2005A Bonds from a rating agency, the City will pay that rating fee. Any rating agency fees not requested by the City are the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after the Series 2005A Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2005A Bonds. CUSIP NUMBERS The City will assume no obligation for the assignment or printing ofCUSIP numbers on the Series 2005A Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser, if the purchaser waives any delay in delivery occasioned thereby. QUALIFIED TAX-EXEMPT OBLIGATIONS The Citywill designate the Series 2005A Bonds as qualified tax-exempt obligations for purposes of Section 265(b )(3) of the Code. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with the provisions of Rule 15c2-l2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act'of 1934 the City will enter into an undertaking (the "Undertaking") for the benefit of the holders of the Series 2005A Bonds. A description of the details and terms of the Undertaking is set forth in the Official Statement. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. INFORMATION FROM PURCHASER The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial offering prices of the Series 2005 A Bonds necessary to compute the yield on the Series 2005A Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended. E-4 PRELIMINARY OFFICIAL STATEMENT Underwriters may obtain a copy of the Preliminary Official Statement relating to the Series 2005A Bonds prior to the proposal opening by request from Ehlers at www.ehlers-inc.combyconnectingtothelinktotheBondSales. The Syndicate Manager will be provided with 50 copies of the Final Official Statement within seven business daysofthe proposal acceptance. Additional copies of the Final Official Statement will be available at a cost of$1 0.00 per copy. Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 551 13-1105, Telephone (651) 697-8500. By Order of the City Council Terry Obermaier, City Clerk City of Hopkins, Minnesota E-5 TERMS OF PROPOSAL $1,775,000'* TAXABLE GENERAL OBLIGATION REFUNDING BONDS, SERIES 2005B CITY OF HOPKINS, MINNESOTA Proposals for the purchase of$I,775,000 Taxable General Obligation Refunding Bonds, Series 2005B (the "Series 2005B Bonds") ofthe City of Hopkins, Minnesota (1he "City") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Financial Advisors to the City, until 11 :00 A.M., Central Time, on September 20, 2005, at which time they will be opened, read and tabulated. The proposals will be presented to the City Council for consideration for award at a meeting to be held at 7:00 P.M., Central Time, on the same date. The proposal offering to purchase the Series 2005B Bonds upon the terms specified herein and most favorable to the City wiII be accepted unless all proposals are rejected. PURPOSE The Series 2005B Bonds are being issued pursuant to Minnesota Statutes, Chapters 428A, 469 and 475, for the purpose of effecting a current refunding of the 2007 through 2018 maturities of the $1,700,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B, dated June I, 1997, and the 2007 through 2011 maturities ofthe $680,000 General Obligation Taxable Tax Increment Bonds, Series 1996D, dated October 1, 1996. The Series 2005B Bonds wiII be general obligations of the City for which its full faith, credit and taxing powers are pledged. DATES AND MATURITIES The Series 2005B Bonds will be dated November 3, 2005, will be issued as fully registered bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February I as foIIows: Year Amount" Year Amount" Year Amount" 2007 $150,000 2011 $200,000 2015 $125,000 2008 175,000 2012 105,000 2016 130,000 2009 185,000 2013 115,000 2017 140,000 2010 185,000 2014 115,000 2018 150,000 ADJUSTMENT OPTION ** The City reserves the right to increase or decrease the principal amount of the Series 2005B Bonds on the day of sale, in increments of $5 ,000. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. TERM BOND OPTION All dates are inclusive. Proposals for the Series 2005B Bonds may contain a maturity schedule providing for any combination of serial bonds and term bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year conforms to the maturity schedule set forth above. E-6 INTEREST PAYMENT DATES AND RATES Interest will be payable on February I and August 1 of each year, commencing August 1, 2006, to the registered owners ofthe Series 2005B Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Series 2005B Bonds of the same maturity must bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Series 2005B Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5/100 or 1/8 of 1 %. BOOK-ENTRY-ONL Y FORMAT The Series 2005B Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Series 2005B Bonds, and will be responsible for maintaining a book-entry system forrecording the interests of its participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests ofthe individual purchasers of the Series 2005B Bonds. So long as Cede & Co. is the registered owner of the Series 2005B Bonds, all payments of principal and interest will be made to the depository which, in turn, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Series 2005B Bonds. PAYING AGENT The City has selected Bankers Trust Company, Des Moines, Iowa, to act as paying agent (the "Paying Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION At the option of the City, Series 2005B Bonds maturing on or after Februaryj, 2016 shall be subject to prior payment on February 1, 2015 or any date thereafter, at a price of par plus accrued interest. Redemption may be in whole or in part of the Series 2005B Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Series 2005B Bonds to be prepaid shall be at the discretion ofthe City. If only part of the Series 2005B Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notify DTC ofthe 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 interest in such maturity to be redeemed. Notice of such call shall be given by mailing a notice not more than 60 and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Series 2005B Bond to be redeemed at the address shown on the registration books. DELIVERY On or about November 3, 2005, the Series 2005B Bonds will be delivered witholit cost to the original purchaser at DTC. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and certificates verifying that no litigation in any manner questioning the validity of the E-? Series 2005B Bonds is then pending or, to the best knowledge of officers of the City, threatened. Payment for the Series 2005B Bondsmust be received by the City at its designated depository on the date of closing in immediately available fimds. LEGAL OPINION An opinion as to the validity of the Series 2005B Bonds will be furnished by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, bond counsel to the City, and will accompany the Series 2005B Bonds. The legal opinion will state that the Series 2005B Bonds are valid and binding general obligations of the City enforceable in accordance with their tenus, except to the extent to which enforceability may be limited by Minnesota or United States laws relating to bankruptcy, reorganization, moratorium or creditors'rights generally. SUBMISSION OF PROPOSALS Proposals must not be for less than $1,750,150 plus accrued interest on the principal sum of$1,775,000 from date of original issue of the Series 2005B Bonds to date of delivery. A signed proposal form must be submitted at Ehlers prior to the time established above for the opening of proposals as follows: I) In a sealed envelope as described herein; or 2) A facsimile submission to Ehlers, Facsimile Number (651) 697-8555. Proposals must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of proposals. Each proposal must be unconditional except as to legality. Neither the City nor EWers shall be responsible for any failure to receive a facsimile submission. A good faith deposit (the "Deposit") in the amount of $35,500, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer offunds to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0211-13086 for further credit to Ehlers, Bond Issue Escrow Account No. 850-788-1. The Deposit will be retained by the City as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Series 2005B Bonds. The Deposit, payable to the City, shall be retained in the offices of Ehlers with the same effect as if delivered to the City. Alternatively, bidders may wire the Depositto U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0211-13086 for credit to Ehlers Bond Issue Escrow Account, No. 850-788-1. The City and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: I) All income earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) If the proposal is accepted, the Deposit shall be returned to the purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the fimds to the bidder; 5) Ehlers shall not be an insurer ofthe Deposit amount and shall have no liability hereunder except if it willfully fails to perform, orreckIessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to $100,000 per bidder. 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 EWers prior to the opening of the proposals. Such bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Series 2005B Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit its Deposit to Ehlers in the form of a certified or cashier's check or wire tranSfer as instructed by Ehlers not later than E-8 3 :00 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the fmancial surety bond may be drawn by the City to satisfy the Deposit requirement. The amount securing the successful proposal will be retained as liquidated damages if the proposal is accepted and the bidder fails to comply therewith. No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the City scheduled for award of the Series 2005B Bonds is adjourned, recessed, or continued to another date without award of the Series 2005B Bonds having been made. AWARD The Series 2005B Bonds will be awarded to the bidder offering 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. In the event of a tie, the sale of the Series 2005B Bonds will be awarded by lot. The City reserves the right to reject any and all proposals and to waive any informality in any proposal. BOND INSURANCE If the Series 2005B Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense of the purchaser of the Series 2005B Bonds. Any cost for such insurance policy is to be paid by the purchaser, except that, if the City requested and received a rating on the Series 2005B Bonds from a rating agency, the City will pay that rating fee. Any rating agency fees not requested by the City are the responsibility of the purchaser. Failure ofthe municipal bond insurer to issue the policy after the Series 2005B Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2005B Bonds. CUSIP NUMBERS The City will assume no obligation for the assignment or printing of CUSIP numbers on the Series 2005B Bonds or for the correctness ofany numbers printed thereon, but will permit such numbers to be printed at the expense ofthe purchaser, if the purchaser waives any delay in delivery occasioned thereby. NON-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will not designate the Series 2005B Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. CONTINUING DISCLOSURE In order to assistthe Underwriters in complying with the provisions of Rule 15c2-l2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 the City will enter into an undertaking (the "Undertaking") for the benefit of the holders of the Series 2005B Bonds. A description of the details and terms of the Undertaking is set forth in the Official Statement. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. INFORMATION FROM PURCHASER The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial _offering prices ofthe Series 2005B Bonds necessary to compute the yield on the Series 2005B Bonds pursuant to the ~rovisions ofthe Internal Revenue Code of 1986, as amended. E-9 PRELIMINARY OFFICIAL STATEMENT Underwriters may obtain a copy of the Preliminary Official Statement relating to the Series 2005B Bonds prior to the proposal opening by request from EWers at www.ehlers-inc.combyconnectingtothe link to the Bond Sales. The Syndicate Manager will be provided with 50 copies of the Final Official Statement within seven business days ofthe proposal acceptance. Additional copies of the Final Official Statement will be available at acost of$IO.OOper copy. Information for bidders and proposal forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Telephone (651) 697-8500. By Order of the City Council Terry Obermaier, City Clerk City of Hopkins, Minnesota E-10 PROPOSAL FORM The City Council City of Hopkins, Minnesota Septemher 20, 2005 RE: $1,640,000* General Obligation Tax Increment Refunding Bonds, Series 2005A DATED: November 3, 2005 For all ornone of the above Series 2005A Bonds, in accordance with the Tenus of Proposal and tenus of the Global Book-Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $1 ,623,600) plus accrued interest to date of delivery for fully registered bonds bearing interest rates and maturing in the stated years as follows: % due 2007 % due 2008 % due 2009 % due 2010 % due 2011 % due 2012 % due 2013 % due 2014 % due 2015 % due 2016 * The City reserves the right to increase or decrease the principal amount of the Series 2005A Bonds on the day of sale, in increments of $5,000 each. Increases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1 ,000. We enclose our good faith deposit in the amount of $32,800, to be held by you pending delivery and payment. Alternatively, we have provided a fmancial surety bond or have wired our good faith deposit to the U. S. Trust Company, N.A., Greenwich, CT, ABA No. 0211-13086, for further creditto Ehlers & Associates, Inc. Bond Issue Escrow Account No. 850-788-1. If our proposal is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditions and duties of EWers & Associates, Inc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated September 8, 2005. This proposal is for prompt acceptance and is conditional upon deposit of said Series 2005ABonds to The DepositoryTrustCompany, New York, New York, in accordance with the Tenus of Proposal. Delivery is anticipated to be on or about November 3, 2005. This proposal is subject to the City's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rn1e 15c2-l2 promn1gated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as descnbed in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or corrections to the Final Official Statement. As Syndicate Manager, we agree to provide the City with the reoffering price of the Series 2005A Bonds within 24 hours of the proposal acceptance. Account Manager: Bv: Account Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed fromNovember 3, 2005 of the above proposal is $ and the true interest cost (TIC) is %. ------------------------------------------------------------------------------------------------------- The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Hopkins, Minnesota, on September 20, 2005. By: Title: Bv: Title: PROPOSAL FORM The City Council City of Hopkins, Minnesota September 20, 2005 RE: DATED: $1,775,000** Taxable General Obligation Refunding Bonds, Series 2005B November 3, 2005 For all Of none of the above Series 2005B Bonds, in accordance with the Tenus of Proposal and terms of the Global Book-Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $1,750,lSO) plus accrued interest to date of delivery for fully registered bonds bearing interest rates and maturing in the stated years as follows: % due 2007 % due 2011 % due 2015 % due 2008 % due 2012 % due 2016 % due 2009 % due 2013 % due 2017 % due 2010 % due 2014 % due 2018 .. The City reserves the right to increase or decrease the principal amount of the Series 2005B Bonds on the day of sale, in increments of $S,OOO. lucreases or decreases may be made in any maturity. If any principal amounts are adjusted, the purchase price proposed will be adjusted to maintain the same gross spread per $1,000. We enclose our good faith deposit in the amount of$3S,500, to be held by you pending delivery and payment. Alternatively, we have provided a fmancial surety bond or have wired our good faith deposit to the U. S. Trust Company, N.A., Greenwich, CT, ABA No. 0211-13086, for further credit to Ehlers & Associates, Inc. Bond Issue Escrow Account No. 8S0-788-1. If our proposal is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditious and duties of Ehlers & Associates, luc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated September 8, 200S. This proposal is for prompt acceptance and is conditional upon deposit of said Series 200SB Bonds to The Depository Trust Company, New York, New York, in accordance with the Terms of Proposal. Delivery is anticipated to be on or about November 3, 2005. This proposal is subject to the City's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rule ISc2-l2 promulgated by the Securities and Exchange Connnission under the Securities Exchange Act of1934 as descnbed in the Preliminary Official Statement for this Issue. We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or correctious to the Final Official Statement. As Syndicate Manager, we agree to provide the City with the reoffering price of the Series 200SB Bonds within 24 hours of the proposal acceptance. Account Manager: Bv: Account Members: Award will be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from November 3, 200S of the above proposal is $ and the true interest cost (TIC) is %. ------------------------------------------------------------------------------------------------------- The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Hopkins, Minnesota, on September 20, 200S. By: Title: Bv: Title: