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CR 2003-082 Award sale of Bonds-G.O. Storm Sewer Revenue Bonds (' \. CITY Of: :~ .' HOPKINS May 20, 2003 Council Report 03-082 AWARD SALE OF BONDS - G.O. STORM SEWER REVENUE BONDS, SERIES 2003 Proposed Action Staff recommends approval of the following motion: Approve resolution No. 03-048 awarding the sale of $1.265,000 General Obligation Storm Sewer Revenue Bonds for the capital improvements in the Storm Sewer fund. With this motion, the sale of the bonds will be awarded based on the recommendation of Ehlers and Associates, Inc., financial advisor for this project. Overview .' Storm Sewer Revenue Bonds: The City of Hopkins has the authority to issue revenue bonds to pay for any utility or other public convenience from which a revenue is or may be derived. The current and future projects in the storm sewer fund qualify for bond issuance. In order to pay for the bonds the storm sewer rate may be increased in 2004 to generate an additional $50,000 in revenue each year. The bonds being issued will pay for projects approved in 2001, 2002 and those listed in the preliminary capital improvement plan for the year 2003 and 2004, for a total of approximately $1,265,000. The current Storm Sewer rate is projected to increase $.20 per month to help pay for principal and interest on the new bonds. At the May 6th, 2003 Council Meeting, the Council authorized the sale of bonds for the Storm Sewer capital improvements projects. The bids will be accepted until 11 :00 am on May 20, 2003 at which time they will be reviewed and the recommendation incorporated into Resolution 03-048. 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 known until after the closing of the bids on May 20th, 2003. Supportinf! Information · Resolution No. 03-048 . Official Statement ~~ Finance Director .' . , . . CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION NO. 03-048 A RESOLUTION A WARDING THE SALE OF $1,265,000 GENERAL OBLIGATION STORM SEWER REVENUE BONDS, SERIES 2003A; 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 (City) as follows: Section 1. Sale of Bonds. 1.01. It is hereby determined that: , (a) the City engineer has recommended the construction of various improvements to the City's storm sewer system (Project). (b) the City is authorized by Minnesota Statutes, Section 444.075 (Act) to finance all or a portion of the cost of the Project (Project Costs) by the issuance of general obligation bonds of the City payable from the net revenues of the storm sewer system. The Project Costs are presently estimated by the engineer to be as follows: Proiect Designation & Description: Total Proiect Cost Project Costs Discount Allowance Finance Related Expenses $1,221,188 15,812 28,000 Total Issue $1,265,000 (c) it is necessary and expedient to the sound financial management of the affairs of the City to issue $1,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003A (Bonds) pursuant to the Act to provide financing for the Project. SJB-231685vl HP 110-69 . 1.02. The proposal of (Purchaser) to purchase $1,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003A (Bonds) of the City described in the Terms of Proposal thereof is found and 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 of Maturity Interest Rate Year of Maturity Interest Rate 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 True interest cost: 1.03. The sum of $ being the amount proposed by the Purchaser in excess of $1,249,188 will be credited to the Debt Service Fund hereinafter created. 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, Section 444.075 (Act), in the total principal amount of $ , originally dated June 1, 2003, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-l, upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: . SJB-231685vl HPIIO-69 . 1.05. Optional Redemption. The City may elect on February 1, 2011, and on any day thereafter to prepay Bonds due on or after February 1,2012. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. 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 such 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 such Bond will be dated as of the date of original issue. The interest on the Bonds will be payable on February 1 and August I of each year, commencing February 1, 2004, to the owner of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.03. Registration. The City will appoint, and will maintain, a bond registrar, transfer agent, authenticating agent and paying agent (Registrar). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: SJB-231685vl HPIIO-69 . (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. . (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f), Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or. on account of, the principal of and interest on the Bond and for all other purposes, and payments so made to a registered owner or upon the owner's order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. (g) Taxes. Fees and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds, sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. . SJB-231685vl HPIIO-69 (h) Mutilated. Lost. Stolen or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for a 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) not more than 60 and not less than 30 days prior to the date fixed for redemption 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 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 moneys sufficient for the payment of all principal and interest then due. 2.05. Execution. Authentication and Delivery. The Bonds will be prepared under the direction of the City Manager and executed on behalf of the City by the signatures of the Mayor and the City Manager, provided that all signatures may be printed, engraved or lithographed . SJB-231685vl' HP 110-69 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, the signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated, the City Manager will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. 2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive Bonds one or more typewritten temporary Bonds in substantially the form set forth in 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 OBLIGA nON STORM SEWER REVENUE BOND, SERIES 2003A Rate Maturity Date of Original Issue CUSIP June 1, 2003 Registered Owner: Cede & Co. SJB-231685v I HPIIO-69 . The City of Hopkins, Minnesota, a duly organized and existing municipal corporation in Hennepin County, Minnesota (City), acknowledges itself to be indebted and for value received hereby promises to pay to the Registered Owner specified above or registered assigns, the principal sum of $ on the maturity date specified above, with interest thereon from the date hereof at the annual rate specified above, payable February 1 and August 1 in each year, commencing February 1, 2004, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by Bankers Trust Company, Des Moines, Iowa, as Bond Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. The City may elect on February 1,2011, 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. Ifless than all Bonds ofa maturity are called for redemption, the City will notify Depository Securities 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. The City Council has designated the Bonds 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 May 20, 2003 (the Resolution), for the purpose of providing money to aid in financing various improvements to the storm sewer system 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, Section 444.075 and Chapter 475 and the principal hereof and interest hereon are payable primarily from the net revenues of the storm sewer system of the City in a special debt service fund of 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 net revenues pledged, which taxes may be levied without limitation as to rate or amount. The Bonds of this . SJB-231685vl HPIIO-69 series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. IT IS HEREBY CERTIFIED AND RECITED That in and by the Resolution, the City has covenanted and agreed that it will continue to own and operate the storm sewer system free from competition by other like utilities; that adequate insurance on said plant and system and suitable fidelity bonds on employees will be carried; that proper and adequate books of account will be kept showing all receipts and disbursements relating to the Storm Sewer Fund, into which it will pay all of the gross revenues from the storm sewer system; that it will also create and maintain a General Obligation Storm Sewer Revenue Bonds, Series 2003A Debt Service Fund, into which it will pay, out of the net revenues from the storm sewer system a sum sufficient to pay principal hereof and interest thereon when due; and that it will provide, by ad valorem tax levies, for any deficiency in required net storm sewer system revenues. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the' books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the home rule charter of the City and the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, 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 Bond Registrar by manual signature of one of its authorized representatives. SJB-231685vl HPIIO-69 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: 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 COMPANY . 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 - (Cust) Custodian (Minor) TEN ENT -- as tenants by entireties under Uniform Gifts or Transfers to Minors . SJB-231685vl HP 110-69 . .' 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: 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 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 Bond Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. SJB-231685vl HP 110-69 .- 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. FederarID #13-2555119 3.02. The City Manager will obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, which will be complete except as to dating thereof and will cause the opinion to be printed on or accompany each Bond. Section 4. Pavment: Securitv: Pledges and Covenants. 4.01. The City will create and continue to operate its Storm Sewer Fund to which will be credited all gross revenues of the storm sewer system described in Section 1.01 and out of which will be paid all normal and reasonable expenses of current operations of the storm sewer system. Any balances therein are deemed net revenues and will be transferred, from time to time, to a General Obligation Storm Sewer Revenue Bonds, Series 2003A Debt Service Fund (Debt Service Fund) hereby created in the Storm Sewer Utility Fund, which fund will be used only to . SJB-231685vl HPIIO-69 . . . pay principal of and interest on the Bonds and any other bonds similarly authorized. There will always be retained in the Debt Service Fund a sufficient amount to pay principal of and interest on all the Bonds, and the City Finance Director must report any current or anticipated deficiency in the Debt Service Fund to the City Council. There is appropriated to the Debt Service Fund all capitalized interest financed from Bond proceeds, if any, any amount over the minimum purchase price of the Bonds paid by the Purchaser and all accrued interest paid by the Purchaser upon closing and delivery of the Bonds. 4.02. The City Council covenants and agrees with the holders of the Bonds that so long as any of the Bonds remain outstanding and unpaid, it will keep and enforce the following covenants and agreements: (a) The City will continue to maintain and efficiently operate the storm sewer system as public utilities and conveniences free from competition of other like utilities and will cause all revenues therefrom to be deposited in bank accounts and credited to the storm sewer system accounts as hereinabove provided, and will make no expenditures from those accounts except for a duly authorized purpose and in accordance with this resolution. (b) The City will also maintain the Debt Service Fund as a separate account in the Storm Sewer Fund and will cause money to be credited thereto from time to time, out of net revenues from the storm sewer plant and system in sums sufficient to pay principal of and interest on the Bonds when due. (c) The City will keep and maintain proper and adequate books of records and accounts separate from all other records of the City in which will be complete and correct entries as to all transactions relating to the storm sewer system and which will be open to inspection and copying by any bond holder, or the holder's agent or attorney, at any reasonable time, and it will furnish certified transcripts therefrom upon request and upon payment of a reasonable fee therefor, and said account will be audited at least annually by a qualified public accountant and statements of such audit and report will be furnished to all bondholders upon request. (d) The City Council will cause persons handling revenues of the storm sewer system to be bonded in reasonable amounts for the protection of the City and the bondholders and will cause the funds collected on account of the operations of the storm sewer system to be deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance Law. (e) The Council will keep the storm sewer system insured at all times against loss by fire, tornado and other risks customarily insured against with an insurer or insurers in good standing, in such amounts as are customary for like plants, to protect the SJB-231685vl HPIIO-69 . holders, from time to time, of the Bonds and the City from any loss due to any such casualty and will apply the proceeds of such insurance to make good any such loss. (f) The City and each and all of its officers will punctually perform all duties with reference to the storm sewer system as required by law. (g) The City will impose and collect charges of the nature authorized by Minnesota Statutes, section 444.075 at the times and in the amounts required to produce net revenues adequate to pay all principal and interest when due on the Bonds and to create and maintain such reserves securing said payments as may be provided in this resolution. (h) The City Council will levy general ad valorem taxes on all taxable property in the City, when required to meet any deficiency in net revenues. 4.03. It is hereby determined that the estimated collection of net revenues for the 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. 4.04. The City Manager 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. Section 5. Authentication of Transcript. 5.01. 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. 5.02. The Mayor and City Manager are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. 5.03. 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 . SJB-231685vl HPIIO-69 closing date for ,further distribution as directed by the City's financial adviser, Ehlers & Associates, Inc. Section 6. Tax Covenant. 6.01. 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 which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 6.02. (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 earnings to the United States if the Bonds (together with other obligations reasonably expected to be issued in calendar year 2003) exceed the small-issuer exception amount of $5,000,000. (b) F or 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(f)(4)(C) of the Code. 6.03. 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. 6.04. 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) 141 of the Code; the Bonds are not "private activity bonds" as defined in Section (b) the City designates the Bonds as "qualified tax~exempt obligations" for purposes of Section 265(b)(3) of the Code; SJB-231685vl HP 110-69 (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 2003 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2003 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. 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 7. Book-Entry System: Limited Obligation of City. 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 Bond 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 Bond Registrar in the name of Cede & Co., as nominee of DTC. . 7.02. With respect to Bonds registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as nominee of DTC, the City, the Bond Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, barks and other financial institutions from time to time for which DTC holds Bonds as securities depository (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 Bond 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 Bond 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 Bond 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 Bond 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 . SJB-231685vl HPIIO-69 . 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 Bond Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Manager of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of DTC; and upon receipt of such a notice, the City Manager will promptly deliver a copy of the same to the Bond Registrar and Paying Agent. 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (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 Bond 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 Bond Registrar and Paying Agent, respectively, to be complied with at all times. 7.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interest, 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 Bond Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereofwill apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision ofthis 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 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 is not to be considered an event of default with respect to the Bonds; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. SJB-231685vl HPII0-69 . . 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. Passed and adopted this _ day of Attest: Finance Director SJB-231685vl HPIIO-69 ,2003. CITY OF HOPKINS, MINNESOTA Mayor City Manager In the opinion of Bond Counsel, the interest on the Bonds is exempt from taxation by the State of Minnesota and its subdivIsions and municipalities and the interest to be paid on the 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 Minnesotafranchise taxes imposed on corporations, includingfinancial institutions, and measured by net income and the alternative minimum tax base) , ccording to presentfederal and Minnesota laws, regulations, rulings and decisions. (See "Tax Exemption" herein.) , The City will designate the Bonds as "qualified tax-exempt obligations "for purposes of Section 265(b)(3) of the Code relating to the ability offinancial institutions to deductfrom income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations, New Issue Rating: Moody's Investors Service and Standard & Poor's PRELIMINARY OFFICIAL STATEMENT DATED MAY 8,2003 CITY OF HOPKINS, MINNESOTA $1,265,000* GENERAL OBLIGATION STORM SEWER REVENUE BONDS, SERIES 2003A PROPOSAL OPENING: May 20, 2003,1:00 P.M., C.T. CONSIDERATION: May 20,2003,7:15 PM, C.T. PURPOSE/AUTHORITY/SECURITY: The $1 ,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003A (the "Bonds") are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, by the City of Hopkins, Minnesota (the "City") for the purpose of financing the construction of various storm sewer system improvements within the City. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. Delivery is subject to receipt of an approving legal opinion of Kennedy & Graven, Chartered, of Minneapolis, Minnesota. DATE OF BONDS: MATURITY: . MATURITY ADJUSTMENTS: TERM BONDS: INTEREST: OPTIONAL REDEMPTION: MINIMUM PROPOSAL: GOOD FAITH DEPOSIT: PAYING AGENT: BOOK-ENTRY-ONL Y: June I, 2003 February 1 as follows: Year Amount* Year Amount* 2004 $60,000 2ql I $55,000 2005 45,000 2012 55,000 2006 45,000 2013 60,000 2007 50,000 2014 60,000 2008 50,000 2015 65,000 2009 50,000 2016 65,000 2010 55,000 2017 70,000 * The City reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each and in a total amount not to exceed $200,000. 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. See "Term Bond Option" herein. February 1, 2004 and semiannually thereafter. Bonds maturing February 1, 2012 and thereafter are subject to call for prior redemption on February 1, 2011 and any date thereafter, at par. $1,249,188. $25,300. Bankers Trust Company, Des Moines, Iowa. See "Book-Entry-Only System" herein. Year 2018 2019 2020 2021 2022 2023 Amount* $70,000 75,000 80,000 80,000 85,000 90,000 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 information required by law, and, as supplemented, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as defined in S.E.C. Rule 15c2-12. .--:---~_.~'-'------~~-----''''''~-"._'''''''-~''---'-'''-". ,-.-- . e ~At1bl~,~,~ 1'" 1")" - ~ ......._~--~..............._~, - ~~~, ~ " _____ __ __ __ _ _A___ L E 'A 0 E fl SIN PUB lie FIN ^ NeE 3Q60'9'entre, POlote Drive. Ro~e\;iHe,""N 5St,t3.1105 65'1.697,.6500 'lax 651 6978555 www.ehltltlJ.inC.eorn , aiflees In K6sevi/J(!, UN, Brooid.eld. WI and N.~pe,vj/le. IL ", ....-...... ~......" I ~- ~ .... ------ ~-- ....... ~~...;:...::...\.~.. .... T ~t,,~ __ _ _ A__ _____ 'I , '~l"...... J . . . REPRESENT A TrONS 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 the Preliminary Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of these Bonds in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in suchjurisdiction. 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 municipal 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 information regarding these 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 Statement". 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. Comments or requests for the correction of omissions or inaccuracies must be submitted 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 not be considered a qualification of a proposal received from an underwriter. Ifthere are any changes, corrections or additions to the Preliminary Official Statement, 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 these 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 amount, 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" ofthe City with respect to the Bonds, as defined 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 these Bonds are exempt or required to comply with the Rule. CLOSING CERTIFICATES Upon delivery of these Bonds, the purchaser (underwriter) will be furnished with the following items: (I) a certificate of the appropriate officials to the effect that at the time of the sale of these Bonds and all times subsequent thereto up to and including the time of the delivery of these 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 receipt signed by the appropriate officer evidencing payment for these Bonds; (3) a certificate evidencing the due execution of these Bonds, including statements that (a) no litigation of any nature is pending, or to the knowledge of signers, threatened, restraining or enjoining the issuance and delivery of these 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 these 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 these Bonds in a manner that would cause them to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of applicable Treasury Regulations. ii . TABLE OF CONTENTS INTRODUCTORY STATEMENT...................... 1 THE BONDS ....................................... 1 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1 AUTHORITY; PURPOSE........................... 2 ESTIMATED SOURCES AND USES .................2 SECURITY ...................................... 2 RATING.........................................3 CONTINUING DISCLOSURE ....................... 3 LEGAL OPINION ................................. 3 TAX EXEMPTION ................................ 3 QUALIFIED TAX-EXEMPT OBLIGATIONS. . . . . . . . . . . 4 FINANCIAL ADVISOR ............................ 4 RISK FACTORS .................................. 5 VALUATIONS.....................................7 CURRENT PROPERTY VALUATIONS............... 8 2002/03 NET TAX CAPACITY BY CLASSIFICATION... 9 TREND OF VALUATIONS ..............,.......... 9 LARGER TAXPAYING PARCELS .................. 10 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11 DIRECT DEBT .................................. 11 SCHEDULES OF BONDED INDEBTEDNESS. . . . . . . .. 12 DEBT LIMIT.................................... 18 OVERLAPPING DEBT............................ 19 DEBT RATIOS .................................. 20 DEBT PAYMENT HISTORY. . . . . . . . . . . . . . . . . . . . . . . 20 FUTURE FINANCING ............................ 20 TAX LEVIES AND COLLECTIONS . . . . . . . . . . . . . . . . . . . 21 TAX COLLECTIONS ............................. 21 LEVY LIMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 21 TAX CAPACITY RATES.. .. .. . ... . .... .. .. . . . : . .. 22 THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 CITY GOVERNMENT ............................ 23 EMPLOYEES; PENSIONS; UNIONS. . . . . . . . . . . . . . . . . 23 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 FUNDS ON HAND ............................... 24 ENTERPRISE FUNDS ............................ 25 SUMMARY GENERAL FUND INFORMATION ....... 27 GENERAL INFORMATION.......................... 28 LOCATION ..................................:.. 28 LARGER EMPLOYERS ........................... 28 U.S. CENSUS DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 EMPLOYMENTIUNEMPLOYMENT DATA .......... 29 BUILDING PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 EDUCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30 FINANCIAL INSTITUTIONS. . . . . . . . . . . . . . . . . . . . . .. 30 IN-PATIENT MEDICAL FACILITIES................ 31 . EXCERPTS FROM FINANCIAL STATEMENTS. . . . . .. . A-I FORM OF LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . . . B-1 BOOK-ENTRY-ONLY SySTEM..................... C-l FORM OF CONTINUING DISCLOSURE CERTIFICATE . D-l TERMS OF PROPOSAL ............................ E-l iii . Eugene J. Maxwell Rick Brausen Karen Jensen Diane Johnson Bruce Rowan . CITY COUNCIL Mayor Council Member Council Member Council Member Council Member ADMINISTRATION Steve Mielke, City Manager Lori Yager, Finance Director Terry Obermaier, City Clerk PROFESSIONAL SERVICES Miller, Steiner & Curtiss, P.A., 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 Naperville, Illinois) . iv . INTRODUCTORY STATEMENT This Preliminary Official Statement contains certain information regarding the City of Hopkins, Minnesota (the "City") and the issuance of its $1,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003A (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 form of the Bonds to be included in the Award Resolution. Inquiries may be directed to Ehlers & Associates, Inc. ("Ehlers" or the "Financial Advisor"), Roseville, Minnesota, (651) 697-8500, the City's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at www.ehlers-inc.com by connecting to the link to the Bond Sales and following the directions at the top of the site. THE BONDS GENERAL . The 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 June 1,2003. The 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 1 and August 1 of each year, commencing February 1,2004, to the registered owners of the 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 Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate. The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"), New York, New York. (See "Book-Entry-Only System" herein.) As long as the Bonds are held under the book-entry system, beneficial ownership interests in the Bonds may be acquired in book-entry form only, and all payments of principal of, premium, if any, and interest on the 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 Bonds shall be payable as provided in the Award Resolution. 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, Bonds maturing on or after February 1, 2012 shall be subject to prior payment on February 1,2011 or any date thereafter, at a price of par and accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the Bonds remaining unpaid to be prepaid shall be at the discretion of the City. If only part of the Bonds having a common maturity date are called for prepayment, the City or Paying Agent, if any, will notify DTC of the particular 1 amount of such maturity to be prepaid. DTC will detennine 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 Bond to be redeemed at the address shown on the registration books. AUTHORITY; PURPOSE The $1,265,000 General Obligation Stonn Sewer Revenue Bonds, Series 2003A (the "Bonds") are being issued pursuant to Minnesota Statutes, Chapters 444 and 475, by the City of Hopkins, Minnesota (the "City") for the purpose of financing the construction of various stonn sewer system improvements within the City. ESTIMATED SOURCES AND USES Sources Par Amount of Bonds Total Sources $1,265,000 $1,265,000 Uses Project Costs Discount Allowance Finance Related Expenses Contingency Total Uses $1,220,739 15,812 28,000 449 $1,265,000 SECURITY The 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, together with net revenues of the stonn sewer utility system which is owned and operated by the City. Should the revenues pledged for payment of the Bonds be insufficient to pay the principal and interest as the same shall become due, the City is required to pay maturing principal and interest from moneys on hand in any other fund ofthe City not pledged for another purpose and/or to levy a tax for this purpose upon all the taxable property in the City, without limitation as to rate or amount. . 2 RA liNG General obligation debt of the City is currently rated "AI" by Moody's Investors Service, Inc., and "AA-" by Standard & Poor's. The outstanding debt of the Housing and Redevelopment Authority is currently rated "A2" by Moody's Investors Service, Inc., and "A+" by Standard & Poor's. The City has requested a rating on this issue from Moody's Investors Service, Inc. and Standard & Poor's, and bidders will be notified as to the assigned ratings prior to the sale. Such ratings, if and when received, will reflect only the view of the rating agencies and any explanations of the significance of such ratings may only be obtained from Moody's Investors Service, Inc. and Standard & Poor's. There is no assurance that such ratings, if and when received, will continue for any period of time or that either will not be revised or withdrawn. Any revision or withdrawal of a rating may have an effect on the market price of the Bonds. CONTINUING DISCLOSURE In order to comply with the provisions of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule") the City has entered into an undertaking (the "Undertaking") for the benefit of the holders of the Bonds. Through 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. 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, of 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. TAX EXEMPTION In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest on the Bonds is not includible in the "gross income" of the 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 Bonds with certain requirements ofthe Internal Revenue Code of 1986, as amended, (the "Code") and covenants of the bond resolution may result in the inclusion of interest on the Bonds in gross income (for federal tax purposes) and taxable net income (for State of Minnesota tax purposes) ofthe owners . 3 . thereof. 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. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the 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 respect to corporations. Adjusted current earnings include income received that is otherwise exempt from taxation such as interest on the 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 Bonds that is received or accrued during the taxable year. Interest on the Bonds 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 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 Bonds. The receipt of interest on the 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 Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the 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 Bonds of this 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 Bonds to the extent permitted under prior law. FINANCIAL ADVISOR Ehlers 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 ofthe Bonds. The financial information included in the Preliminary Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast offuture events and may not conform with accounting principles applicable to compilations of financial information. Ehlers is not a firm of certified public accountants. 4 . 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 ofthis 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 (storm sewer revenues) be insufficient. State Actions: Many elements of local government finance, 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 financial condition of the City, the taxable value of property within the City, and the ability ofthe City to levy property taxes. The Minnesota legislature is considering various bills that could significantly affect the [mancial condition of the City. Two bills pending in the Minnesota Legislature would affect the ability of municipalities to issue new debt and the total amount of taxes that may be levied. Senate File 330 ("SF 330") as currently drafted prohibits the issuance of new debt after March 31st if issuing the debt would require a debt service levy first becoming payable in 2004 or 2005. House File 1590 ("HF 1590") contains similar restrictions, but affects debt sold after May 31, 2003. Both bills contain exceptions for certain refunding debt and for debt if the total debt service levies first becoming payable in 2004 do not exceed the amount of the total debt service levies for taxes payable in 2003. An author's amendment to SF 330 was adopted by the Senate Tax Committee to change the March 31 date to May 31. This amendment was not included in the first engrossment of SF 330. The author of SF 330 has indicated that he will amend SF 330 to provide for a May 31 effective date (the same as the effective date in the companion HF 1590). However, if SF 330 is enacted with an effective date of March 31, 2003, by its terms it would retroactively prohibit the issuance of bonds issued after that date (unless the bonds are eligible for one of the exceptions described in the bill). It is not clear whether a court would uphold legislation that retroactively prohibits the issuance of the bonds. The Bonds meet certain exceptions in SF 330, and therefore may be issued even if that bill were enacted with a retroactive effective date of March 31, 2003. House File 751 ("HF 751 ") establishes levy limits for most municipalities and provides that many debt service payments are no longer treated as special levies outside levy limits. The Bonds meet certain exceptions such that levies for the Bonds are not limited by this bill, except as described in the next sentence. HF 751 makes increases in property taxes subject to a reverse referendum. If a referendum is required and voters do not approve an increase in property taxes, the municipality will be required to extend its debt service levies, but will have to reduce operating levies in order to stay within the levy limits. House File 1597 ("HF 1597") is an omnibus tax bill that incorporates certain features of HF 751, with important exceptions. The bill does not subject debt levies to levy limits, and it excludes general obligation bonds from reverse referendum procedures. IfHF 1597 becomes law instead ofHF 751, the ability of issuers to levy for most debt will be unaffected, though the bill could affect the financial condition of issuers in other respects. It is not possible to predict whether SF 330, HF 1590, HF 751 or HF 1597 will become law and, if enacted, what their impact will be on the financial condition of the City. 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 obligations for resale prior to maturity. . Tax Exemption: If the federal government 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 5 . . . 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 governmental 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 governmental 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 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 Disclosure: 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 flow problems 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 ofthe 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. 6 . 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 25% of all real properties are to be appraised by local assessors each year. (2) The tax capacity (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 detennines whether a levy is spread on tax capacity or market value. Major classifications and the percentages by which tax capacity is detennined are: Type of Property 2000/01 2001102 2002/03 Residential homestead I First $76,000 - 1.00% First $500,000 - 1.00% First $500,000 - 1.00% Over $76,000 - 1.65% Over $500,000 - 1.25% Over $500,000 - 1.25% Agricultural homestead I First $76,000 HGA - 1.00% First $500,000 HGA - 1.00% First $500,000 HGA - 1.00% Over $76,000 HGA - 1.65% Over $500,000 HGA - 1.25% Over $500,000 HGA - 1.25% Land to $115,000 - .35% First $600,000 - 0.55% 2 First $600,000 _ 0.55% 2 Land $115,000 - $600,000 - .8% Over $600,000 - 1.00% 2 Over $600,000 _ 1.00% 2 Land over S600,000 - 1.20% Agricultural non-homestead Land - 1.20% Land - 1.00% 2 Land - 1.00% 2 . Seasonal recreational residential3 First $76,000 - 1.20% First $500,000 - 1.00% 4 First $500,000 - 1.00% 4 Over $76,000 - 1.65% Over $500,000 - 1.25% 4 Over $500,000 - 1.25% 4 Residential non-homestead: I unit - First $76,000 - 1.20% I unit - 1st $500,000 - 1.00% I unit - 1st $500,000 - 1.00% Over $76,000 - 1.65% Over $500,000 - 1.25% Over $500,000 - 1.25% 2-3 units - 1.65% 2-3 units - 1.50%6 2-3 units - 1.25% 4 or more - 2.40% 4 or more - 1.80% 6 4 or more - 1.25% Small Citys - 2.15% Small City S _ 1.80% 6 Small City S - 1.25% IndustriallCommerciaVUtility7 First $150,000 - 2.40% First $150,000 - 1.50% First $150,000 - 1.50% Over $150,000 - 3.40% 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. Applies to land and buildings. Exempt from referendum market value tax. 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%. Exempt from referendum market value tax. 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. Rate falls to 1.25% in pay 2003 and thereafter. The estimated market value of utility property is determined by the Minnesota Department of Revenue. 7 . CURRENT PROPERTY VALUATIONS Estimated Full Value of Taxable Property, 2002/03 Real Estate Personal Property Total Valuation Less: Captured Tax Increment Tax Capacity2 Fiscal Disparities Contribution3 Taxable Net Tax Capacity Plus: Fiscal Disparities Distribution3 Adjusted Taxable Net Tax Capacity 2002/03 Assessor's Taxable Market Value $1,058,054,200 7,981,200 $1,066,035,400 $1.350.689.576 I 2002103 Net Tax Capacity $14,033,663 158,981 $14,192,644 (1,659,191) (1,405,135) $11,128,318 1,521,412 $12,649,730 According to the Minnesota Department of Revenue, the Assessor's Taxable Market Value (the "A TMV") for the City of Hopkins is about 78.8% of the actual selling prices of property most recently sold in the City. That sales ratio was calculated by comparing the selling prices with the A TMV. Dividing the A TMV of real estate by 0.788 and adding personal property and mobile home ATMV, ifany, results in an "Estimated Full Value of Taxable Property" for the City of$I,350,689,576. 2 The captured tax increment value shown above represents the captured net tax capacity of tax increment financing districts in the City of Hopkins. Each community in the seven-county metropolitan area contributes 40% of its new industrial and commercial valuation 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. . 8 . 2002/03 NET TAX CAPACITY BY CLASSIFICATION 2002103 Percent of Total Net Tax Capacity Net Tax Capacity Residential homestead $ 5,903,083 41.59% Commercial/industrial 4,996,301 35.20% Railroad operating property 26,320 0.19% Non-homestead residential 3,103,609 21.87% Commercial & residential seasonal/rec. 1,755 0.01% Other 2,595 0.02% Personal property 158,981 1.12% Total $14,192,644 100.00% TREND OF VALUATIONS . Adjusted Assessor's Taxable Levy Taxable Net Tax Net Tax Percent +/- in Assessor's Year Market Value Capacityl Capacity2 Taxable Market Value 3 3 1998/99 $ 733,284,400 $14,795,516 $13,502,822 + 9.66% 3 3 1999/00 795,182,000 15,771,599 14,442,812 + 8.44% 2000/01 884,899,400 17,820,610 16,025,438 + 11.28% 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% Net Tax Capacity is before fiscal disparities adjustments and includes tax increment values. Adjusted Taxable Net Tax Capacity is after fiscal disparities adjustments and does not include tax increment values. ' . The Minnesota Legislatures reduced some of the "class rates" used to calculate Net Tax Capacity values in levy years 1998, 1999, and 2001. The lower rates reduce the amount of Taxable Market Value that converts to value for the calculation of property taxes and tax rates. 9 . LARGER TAXPAYING PARCELS! 2002/03 2002/03 Assessor's Taxable Net Tax Taxpayer Type of Property Market Value Capacity2 Super Valu Stores Inc. Industrial $52,692,000 $1,05U90 Duke Realty Corporation ComrnerciallIndustrial 14,196,000 282,420 Southwest Real Estate Inc. Apartments 18,487,000 277,305 Ramsgate Apartments LLC Housing - low income 15,614,000 227,965 Glaser Financial Group Inc. Apartments 11,534,000 173,010 Auburn Limited Partnership Apartments 10,579,000 158,685 Greenfield Apartments General Partnership Apartments 10,554,000 158,310 Rosewood West Apartments 8,466,000 126,990 Fleming Companies Inc. Industrial 6,131,000 121,870 Westside Village Housing - low income 8,602,400 119,675 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 taxpaying parcels which appear on the tax rolls of the 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. 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. 10 DEBT DIRECT DEBT Long-Term General Obligation Debt (see schedules following) Total g.o. debt being paid from tax increment revenues Total g.o. debt being paid from special assessments and taxes Total g.o. debt being paid from special assessments, revenues and taxes Total g.o. debt being paid from housing improvement area fees Total g.o. debt being paid from revenues (includes the 2003A Bonds of the City) $ 6,945,709 1,595,000 3,265,000 5,900,000 4.270.000 Total Long-Term General Obligation Debt Less: Funds on hand for debt redemption as of March 31, 20031 Less: G.O. debt being paid entirely from revenues $21,975,709 (1,321,929) (4.270.000) Net Long~Term General Obligation Debt $16,383,780 Non-General Obligation Lease Payable from Annual Appropriations (see schedule following) Total non-general obligation lease being paid solely from annual appropriations (includes the Series 2003A Bonds of the Housing and Redevelopment Authority) $13,810,000 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. 11 z " 'i>>G'llnO mi' !i!: > 0mg.. ~ ~~~~~~~~~~~~~~~N~N~N~O a~ ~ ~~ ai~ ~ _~~_______o 0 0 _. ~ (D tI~~~4DClII....cnUl"'WN-OlQi.....i",gw .s ~I ~. s!. gi=. il e: ~ C50~"Tl ~ ~~a~ ~ ~iW~ Q;! ~ J i1 g'5.0 (i ~ ~~~;j ~ N !'C ::s ~ Z C;; ~;! ...... ~"tnR;m -c ~ ~ ~ i'~.sn )lo ::3- g .t-.~otv!. 11) co~ 0. 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NNNN~~~~~~~~~~QOOOQOQ S' -< WN~O~~~~~~WN~o~m~~~~w co CD .. .. "U Cil -0 Q) Cil 0. 0" '< m :;,- ~ U> )> U> CIl o o iii iii .w :> o ~ '" N o o w )> :> ::J c: !!!. )> -0 "0 a "0 .., ?l 5 :> CIl 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 definite or fixed maturity; (3) obligations issued to finance any public revenue producing convenience (e.g. the Series 2003A Bonds of the City); (4) obligations issued to create or maintain a permanent 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 ofa municipality under the provisions of the law authorizing their issuance. 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 issued after 6/1/97) (includes the Series 2003A Bonds ofthe HRA) Unused Debt Limit $1,066,035,400 0.02 $ 21,320,708 o (13,810,000) $ 7,510,708 . 18 . . OVERLAPPING DEBTl Taxing District Hennepin County I.S.D. No. 270 (Hopkins) I.S.D. No. 283 (St. Louis Park) Metropolitan Council Suburban Hennepin Reg. Park Dist. City's Share of Total Overlapping Debt 2002/03 Adjusted Taxable Net Tax Capacity $ 987,427,336 73,289,395 37,038,932 3 1,964,914,748 736,733,176 %In City 1.2811 % 17.2600% 0.4648% 0.6147% 1.7170% Total G.O. Debt 2 $333,715,000 83,260,000 49,645,000 4 130,495,000 2,035,000 City's Proportionate Share $ 4,275,155 14,370,654 230,762 802,093 34,941 $19,713,605 Only those taxing jurisdictions with general obligation debt outstanding are included in this section. Does not include non-general obligation debt, short-term general obligation debt, or general obligation tax/aid anticipation certificates of indebtedness. Hennepin County also has $81,680,000 General Obligation Solid Waste Revenue Bonds outstanding which are payable entirely from the County's solid waste enterprise fund; $14,935,000 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 $2,285,000 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. 4 Represents the 2001/02 Adjusted Taxable Net Tax Capacity. The 2002/03 value is not yet available. The above debt includes all outstanding general obligation debt supported by taxes ofthe Metropolitan Council. The Council also has general obligation sewer revenue bonds and loans outstanding which are supported entirely by revenues which have not been included in the Overlapping Debt or Debt Ratios sections. 19 DEBT RATIOS Debt/Estimated Full Value of Debt/17,250 Taxable Property Estimated G.O. Debt ($1,350,689,576) Population Direct G.O. Debt Being Paid From: Tax Increment Revenues $ 6,945,709 Special Assessments and Taxes 1,595,000 Special Assessments, Revenues and Taxes 3,265,000 Housing Improvement Area Fees 5,900,000 Revenues 4,270,000 Total General Obligation Debt $21,975,709 Less: Funds on HandI (1,321,929) Less: G.O. Debt Paid Entirely from Revenues (4,270,000) Net General Obligation Debt $ 20,653,780 1.53% $1,197.32 City's Share of Total Overlapping Debt $19,713,605 1.46% $1,142.82 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 of Hopkins is issuing $1,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003A on May 20,2003. The Housing and Redevelopment Authority in and for the City of Hopkins will also be issuing $3,050,000 Public Facility Lease Revenue Bonds, Series 2003A (Police Station Improvements) on May 20,2003. 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. 20 . . TAX LEVIES AND COLLECTIONS TAX COLLECTIONS Tax Year Certified Levyl $4,421,906 4,672,756 5,012,361 6,591,140 7,168,252 $4,367,820 $4,418,582 99.92% 4,600,451 4,667,385 99.89% 4,985,846 5,006,942 99.89% 6,547,935 6,547,935 99.34% ~-----------------------------------------------------, l________________~~P!~~~~~_~f~~l~~~~~~________________J . Total Collected Following Year Collected to Date2 % Collected 1998/99 1999/00 2000/01 2001/02 2002/03 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. LEVY LIMITS The State Legislature has periodically imposed limitations on the ability of municipalities to levy property taxes. In 200 I, the Legislature imposed levy limits for all counties and all cities over 2,500 population for taxes payable in 2002 and 2003. These limitations do not apply to taxes levied to pay debt service. While these limitations apply for two years, the potential exists for future legislation to limit the ability of local governments to levy property taxes. All previous limitations have not limited the ability to levy for the payment of debt service on bonded indebtedness. For more detailed infonnation about Minnesota levy limits, contact the Minnesota Department of Revenue or Ehlers & Associates. This reflects the Final Levy Certification of the City after all adjustments have been made. 2 Collections are through December 31, 2002. 21 . TAX CAPACITY RATES! 1998/99 1999/00 2000/01 2001/022 2002/03 Hennepin County 40.994% 39.655% 37.624% 50.409% 50.607% City of Hopkins 32.442% 32.192% 31.136% 54.796% 56.925% 3 I.S.D. No. 270 (Hopkins) 58.941% 56.560% 44.220% 15.034% 20.588% I.S.D. No. 283 (St. Louis Park) 63.140% 74.155% 51.126% 26.557% 26.238% Metro Mosquito 0.346% 0.351% 0.324% 0.506% 0.567% Metro Council 0.914% 0.869% 0.814% 1.490% 1.471% Metro Transit 4.775% 4.819% 4.691 % 1.541 % 1. 787% Hennepin Parks 1.546% 1.488% 1.434% 2.618% 2.695% Park Museum 0.463% 0.475% 0.476% 0.734% 0.762% HCRRA 0.509% 0.424% 0.387% 0.179% 0.475% Referendum Market Value Rates: I.S.D. No. 270 (Hopkins) 0.08706% 0.13081% 0.18074% 0.19380% 0.17666% I.S.D. No. 283 (St. Louis Park) 0.00000% 0.00000% 0.23312% 0.22045% 0.19446% . Source: Tax Collections and Tax Capacity Rates have been furnished by Hennepin County. After reduction 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. 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. 22 . 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, Assistant City Manager, City Clerk, and Finance Director are responsible for administrative duties and financial records. EMPLOYEES; PENSIONS; UNIONS The City currently has 114 full-time, 6 part-time, and 100 seasonal employees. All full-time and certain part-time employees ofthe 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 ofthe Plans. Recognized and Certified Bargaining Units Bargaining Unit Hopkins Municipal Employees Association International Union of Operating Engineers (Local 49 IUOE) Hopkins Police Officer Association L.E.L.S. Local 151 Hopkins Police Dispatcher & Public Service Officer Assoc. L.E.L.S. Hopkins Police Sergeants Union L.E.L.S. Locall?1 Status of Contracts Contracts which expired on December 31, 2002 are currently in negotiations. LITIGATION Expiration Date of Current Contract December 31, 2002 December 31, 2003 December 31, 2003 December 31, 2003 December 31, 2003 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. 23 . FUNDS ON HAND (As of March 31, 2003) Total Cash Fund and Investments General $ 2,013,704 Special Revenue 2,673,272 Tax Increment 3,629,338 Debt Service 744,139 Internal Service 2,048,719 Capital 13,920,494 Enterprise: Operating 1,689,928 Debt Service 577,790 Total Funds on Hand $27,297,384 . 24 . ENTERPRISE FUNDS Cash flows for the City's enterprise funds have been as follows as of December 31 each year: 1999 2000 2001 Water Total Operating Revenues $ 869,555 $1,065,766 $ 988,725 Less: Operating Expenses (670,177) (679,075) (695,921) Operating Income $ 199,378 $ 386,691 $ 292,804 Plus: Interest Income 29,758 106,312 64,689 Net Revenues $ 229,136 $ 493,003 $ 357,493 Sewer Total Operating Revenues $1,445,968 $1,430,939 $1,408,799 Less: Operating Expenses (1,206,811 ) (1,138,321) (1,225,777) Operating Income $ 239,157 $ 292,618 $ 183,022 Plus: InterestIncome 44,400 96,528 60,090 Net Revenues $ 283,557 $ 389,146 $ 243,112 . Refuse Total Operating Revenues $ 568,078 $ 564,190 $ 570,272 Less: Operating Expenses (571,782) (593,444) (642,534) Operating Income $ (3,704) $ (29,254) $ (72,262) Plus: InterestIncome 30,569 36,629 29,387 Net Revenues $ 26,865 $ 7,375 $ (42,875) Storm Sewer Total Operating Revenues $ 643,303 $ 661,776 $ 676,492 Less: Operating Expenses (84,281) (123,082) (118,498) Operating Income $ 559,022 $ 538,694 $ 557,994 Plus: InterestIncome 38,020 39,981 47,333 Net Revenues $ 597,042 $ 578,675 $ 605,327 Note: The 2002 audit is not yet available. Enterprise Funds - continued on next page 25 . ENTERPRISE FUNDS - continued 1999 2000 2001 PavilIion / Ice Arena Total Operating Revenues $ 251,114 $ 247,326 $ 266,753 Less: Operating Expenses (247,861) (224,013) (261,512) Operating Income $ 3,253 $ 23,313 $ 5,241 Plus: Interest Income 2,999 4,321 3,302 Net Revenues $ 6,252 $ 27,634 $ 8,543 Art Center Total Operating Revenues $ 238,509 $ 199,255 $ 202,617 Less: Operating Expenses (332,395) (340,583) (331,107) Operating Income $ (93,886) $ (141,328) $ (128,490) Plus: InterestIncome 12,207 5,208 400 Net Revenues $ (81,679) $ (136,120) $ (128,090) Skate Park Total Operating Revenues N/A $ 56,888 $ 39,299 Less: Operating Expenses N/A (33,739) (51,220) Operating Income N/A $ 23,149 $ (11,921) Plus: Interest Income N/A 1,103 750 Net Revenues N/A $ 24,252 $ (11,171) Housing Authority Total Operating Revenues $ 215,079 $ 225,551 $ 209,296 Less: Operating Expenses (209,422) (483,734) (294,619) Operating Income $ 5,657 $ (258,183) $ (85,323) Plus: Interest Income 1 ,402 2,269 210 Net Revenues $ 7,059 $ (255,914) $ (85,113) Note: The 2002 audit is not yet available. . 26 SUMMARY GENERAL FUND INFORMATION Following are summaries ofthe assets, liabilities, fund balances, revenues and expenditures for the City's General Fund for the past five fiscal years. These summaries are nqt purported to be the complete audited financial statements of the City. Copies of the complete statements are available upon request. See Appendix A for excerpts from the City's 1999,2000, and 2001 audited financial statements. FISCAL YEAR ENDING JUNE 30 COMBINED STATEMENT 1997 1998 1999 2000 2001 Total Revenues $ 6,305,461 $ 6,853,664 $ 7,147,372 $ 7,435,944 $ 7,855,491 Total Expenditures (6,329,523) (6,959,045) (7,101,515) (7,169,886) (7,652,034) Excess of revenues over (under) expenditures $ (24,062) $ (105,381) $ 45,857 $ 266,058 $ 203,457 Other Financing Sources (Uses) Operating transfers in 0 0 0 0 0 Operating transfers out (8,479) 0 (3,103) (16,943) (31,3 79) Total Other Financing Sources (Uses) $ (8,479) $ 0 $ (3,103) $ (16,943) $ (31,379) Excess of revenues and other financing sources over (under) expenditures and other $ (32,541) $ (105,381) $ 42,754 $ 249,115 $ 172,078 financing uses General Fund Balance January 1 3,013,865 2,940,139 2,834,758 2,877,512 3,126,627 Residual Equity Transfer in (out) (41,185) 0 0 0 (100,000) General Fund Balance June 30 $ 2,940,139 $ 2,834,758 $2,877,512 $ 3,126,627 $ 3,198,705 DETAILS OF JUNE 30 FUND BALANCE Reserved $ 74,900 $ 686,708 $ 669,259 $ 652,560 $ 617,388 Unreserved: Designated 2,627,400 2,143,920 2,202,634 2,446,396 2,561,426 Un designated 237,839 4,130 5.619 27,671 19,891 Total $ 2,940.139 $ 2,834,758 $2,877,512 $ 3,126,627 $3,198,705 Note: The 2002 audit is not yet available. . 27 . . . LOCATION GENERAL INFORMATION The City of Hopkins, with a current estimated population of 17,250, comprises an area of four square miles and is located approximately eight miles southwest of the City of Minneapolis. LARGER EMPLOYERS IN THE CITY Firm Super Valu Inc. I.S.D. No. 270 (Hopkins) Thermotech Oak Ridge Country Club Chapel View Care Center Walser Chrysler Jeep City of Hopkins Hopkins Care Center EDCO & Arrowhead Products, Inc. Rudy Luther's Hopkins Honda Sungard Financial Systems Drew Pearson Marketing, Inc. Type of Business/Product Food distributor/retailer Elementary and secondary education Precision injection moldings Country club Nursing home Auto dealership Municipal govermnent and services Nursing home Outdoor building products Auto dealership Data processing Sports hats & textile bags, aprons & bandanas No. of Employees! 1,457 2 1,430 324 190 167 150 145 135 132 125 112 100 Source: Written survey (May, 2003), 2003 Minnesota State Business Directory and the 2003 Minnesota Manufacturers Register. Includes full-time, part-time and seasonal. Includes total number of employees located in facilities throughout Independent School District No. 270 (Hopkins). 28 . 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 16,534 17,145 17,250 + 3.70% 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 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. Housing Statistics Citv of Hopkins All Housing Units 1990 8,572 Percent of Change -1.96% 2000 8,404 Source: 1990 and 2000 Census of Population and Housing. EMPLOYMENT/UNEMPLOYMENT DATA Rates are not compiled for individual communities within counties. Year A vera2e Emplovment Hennepin County 660,421 654,204 671,858 662,915 Hennepin County 2.6% 3.2% 4.2% 4.0% State of Minnesota 3.3% 3.7% 4.4% 4.9% Avera2e Unemplovment 2000 2001 2002 2003, March Source: Minnesota Department of Economic Security. . 29 State of Minnesota $23,198 $47,111 $56,874 $566 $122,400 35.4 yrs. . BUILDING PERMITS 1999 2000 2001 2002 20031 New Single Familv Homes , No. of building permits 9 64 14 38 28 Valuation $1,511,625 $7,716,800 $2,533,000 $7,016,600 $4,292,000 New Multiple Family Buildings No. of building permits 0 0 37 0 51 Valuation $0 $0 $3,508,033 $0 $5,336,550 New CommerciallIndustrial No. of building permits 7 0 0 5 0 Valuation $24,170,016 $0 $0 $10,901,200 $0 No. of All Building Permits (including additions and remodelings) 587 498 531 487 136 Valuation of All Building Permits (including additions and remodelings) $42,828,312 $19,764,446 $8,528,000 $34,562,884 $19,503,801 EDUCATION Independent School District No. 270 (Hopkins) provides education for 8,320 students in grades K through 12. The District, with 1,430 employees, owns and operates 3 elementary schools and 1 preschool facility in the City. Teachers' contracts in the District are currently settled. FINANCIAL INSTITUTIONS IN THE CITY 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, OH) Wells Fargo Bank Minnesota, National Association (Branch of Minneapolis) Source: American Financial Directory. As of March 31, 2003. 30 . IN-PATIENT MEDICAL FACILITIES IN THE City Name of Facility Chapel View Care Center Hopkins Care Center Type of Facility Nursing Home Nursing Home No. of Beds 128 138 Source: Directory of Licensed and Certified Health Care Facilities and Services, Minnesota Department of Health (2003). N,IMinnsotaIHOPKINSIBISUM\2003A$1265m.june (stonn sewer)\os,mtr,2003A (CIty - stonn sewer).wpd MR:SlIdll:dh . 31 . EXCERPTS FROM FINANCIAL 5T A TEMENTS APPENDIX A Reproduced on the following pages are excerpts from the City's audited Financial Statements for the fiscal years ending December 31, 1999,2000, and 2001. The Statements have been prepared by the City and audited by a certified public accountant. Notes (included here for fiscal year ending 200 I) are an integral part of the audits and any judgment ofthe Financial Statements should be based on the Statements as a whole. Copies of the audits and the current budget are available upon request from Ehlers. Note: The 2002 audit is not yet available. A-I . APPENDIX B FORM OF LEGAL OPINION Kennedy & Graven 470 Pillsbury Center 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax http://www .kennedy-graven.eom CHARTERED $1,265,000 General Obligation Storm Sewer Revenue Bonds, Series 2003B City of Hopkins Hennepin County, Minnesota . We have acted as bond counsel in connection with the issuance by the City of Hopkins, Hennepin County, Minnesota, of its General Obligation Storm Sewer Revenue Bonds, Series 2003B, (the "Bonds"), originally dated as of June 1,2003, in the original aggregate principal amount of$I,265,000. 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 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'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 from net revenues of the storm sewer system of 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. . B-1 . . 3. Interest on the Bonds is not includable in gross income ofthe 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 subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes and excluded fro'm 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 . . . APPENDIX C BOOK-ENTRY-ONL Y SYSTEM I. 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 of DTC. 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 qfSection 17 A ofthe Securities Exchange Act of 1934. 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 ofThe Depository Trust & Clearing Corporation ("DTCC'~. DTCC, in turn, is owned by a number of Direct Participants of DTC 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 welI 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 welI as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 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 of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners ofthe 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. 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 C-l . . . arrangements among them, subject to any statutory or regulatory 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 obtain 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. Redemption notices shall be sent to DTC. Ifless than all of the Securities within an issue are being redeemed, DTC's practice is to determine 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 Omnibus 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 or registered 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 or regulatory 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 ofthe City or the Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, 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 (Tender/Remarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the (Tender/Remarketing) 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 (Tender/Remarketing) 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 ofthe 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 $ 1,265,000 General Obligation Stonn Sewer Revenue Bonds, Series 2003B (the "Securities"). The Securities are being issued pursuant to an award resolution adopted by the City Council of the Issuer on May 20,2003 (the "Resolution") and delivered to the Purchaser(s) on the date hereof. Pursuant to the Resolution, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial infonnation and operating data and timely notices of the occurrence of certain events. In addition, the Issuer hereby covenants and agrees as follows: Section I. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (defmed herein) of the Securities in order to assist the Participating Underwriters (defined herein) in complying with SEC Rule 15c2-12(b)(5). This Disclosure Certificate, together with the Resolution, . constitutes the written agreement or contract for the benefit of the Holders of the Securities that is required by the Rule. Section 2. Definitions. In addition to the defmed tenns set forth in the Resolution, which apply to any capitalized tenn 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 described in, Sections 3 and 4 of this Disclosure Certificate. "Audited Financial Statements" means the Issuer's annual fmancial 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 , 2003 plus the addendum thereto which together constitute the fmal official statement delivered in connection with the Securities, 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 Securities. "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 infonnation repository as recognized from time to time by the SEC for purposes of the Rwe. . "Participating Underwriter" means any of the original underwriter(s) of the Securities (including the Purchaser(s)) required to comply with the Rule in connection with the offering of the Securities. D-I . . . "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. "SEC" 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) The Issuer shall provide, as soon as available, but not later than 12 months after the end ofthe Fiscal Year commencing with the year that ends December 31, 2002, each Repository with an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted 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 wi\1 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 determine each year prior to the date for providing the Annual Report the name and address of each Repository. ! Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. Current Property Valuations 2. Direct Debt 3. Tax Levies & Collections 4. Population Trend 5. EmploymentJUnemployment 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 SEC. 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. 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 Securities: D-2 . 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. (b) . Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt selVice reselVes reflecting [mancial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perfonn; Adverse tax opinions or events affecting the tax-exempt status of the security; Modifications to rights of security holders; Bond calls; Defeasances; Release, substitution or sale of property securing repayment of the securities; and Rating changes. 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 W1der this subsection any earlier than the notice (if any) of the W1derlying event is given to Holders of affected Securities pursuant to the Resolution. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of infonnation transmission as shall be requested or recommended by the designated recipients of the Issuer's infonnation. Section 6. Tennination of Reporting Obligation. The Issuer's obligations W1der the Resolution and this Disclosure Certificate shall tenninate upon the legal defeasance, or upon the redemption or payment in full of all the Securities. Section 7. Agent. The Issuer may, from time to time, appoint or engage a dissemination agentto assist it in canying out its obligations W1der the Resolution 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 Resolution 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 Resolution 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 to the effect that those portions of the Rule which require the Resolution and this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Securities. The provisions of the Resolution and this Disclosure Certificate may . D-3 . . . be amended without the consent of the Holders of the Securities, but only upon the delivery 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 Resolution and this Disclosure Certificate and by the Issuer with the Rule. Section 9. Additional Infonnation. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other infonnation, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other infonnation 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 infonnation 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 infonnation 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 Securities may take such actions as may be necessary and appropriate, including seeking mandamus or specific perfonnance by court order, to cause the Issuer to comply with its obligations under the Resolution and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Securities 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 perfonnance. Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Undetwriters and Holders from time to time of the Securities, and shall create no rights in any other person or entity. of IN WITNESS WHEREOF, we have executed this Certificate in our official capacities effective the ,2003. day HOPKINS, MINNESOTA Mayor (SEAL) City Manager D-4 . . . APPENDIX E TERMS OF PROPOSAL $1,265,000* GENERAL OBLIGATION STORM SEWER REVENUE BONDS, SERIES 2003A CITY OF HOPKINS, MINNESOTA Proposals for the purchase of$1 ,265,000 General Obligation Stonn Sewer Revenue Bonds, Series 2003A (the "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 1:00 P.M., Central Time, on May 20, 2003, when 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: 15 P.M., Central Time, on the same date. The proposal offering to purchase the Bonds upon the tenns 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 444 and 475, for the purpose of financing the construction of various stonn sewer system improvements within the City. The Bonds will be general obligations of the City for which its full faith, credit and taxing powers are pledged. DATES AND MATURITIES The Bonds will be dated June I, 2003 as the date of original issue, 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 follows: Year Amount* Year Amount* Year Amount* 2004 $60,000 2011 $55,000 2018 $70,000 2005 45,000 2012 55,000 2019 75,000 2006 45,000 2013 60,000 2020 80,000 2007 50,000 2014 60,000 2021 80,000 2008 50,000 2015 65,000 2022 85,000 2009 50,000 2016 65,000 2023 90,000 2010 55,000 2017 70,000 ADJUSTMENT OPTION * The City reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each and in a total amount not to exceed $200,000. 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. E-l . . TERM BOND OPTION All dates are inclusive. Proposals for the 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. INTEREST PAYMENT DATES AND RATES Interest will be payable on February 1 and August 1 of each year, commencing February 1, 2004, to the registered owners of the 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 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 Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5/1 00 or lI8 of 1 %. BOOK ENTRY ONLY FORMAT The Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository for the Bonds, and will be responsible for maintaining a book-entry system for recording 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 Of the individual purchasers of the Bonds. So long as Cede & Co. is the registered owner of the 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 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, Bonds maturing on or after February 1,2012 shall be subject to prior payment on February 1, 2011 or any date thereafter, at a price of par and accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the Bonds remaining unpaid to be prepaid shall be at the discretion of the City. If only part of the 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 days and not fewer than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books. E-2 DELIVERY On or about June 19,2003, the 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 Bonds is then pending or, to the best knowledge of officers of the City, threatened. Payment for the 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 of the Bonds and the exemption from taxation of the interest thereon will be furnished by Kennedy & Graven, Chartered, of 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 tenns, 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 $1,249,188 plus accrued interest on the principal sum of$I,265,000 from date of original issue of the 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 as 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$25,300, complying with the provisions below, must be submitted with each proposal. The Deposit must be in the fonn of a certified or cashiers check, or a financial surety bond or a wire transfer of funds to U. S. Trust Company, of Minneapolis, Minnesota, 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 Bonds. The good faith 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 good faith deposit to U. S. Trust Company, Minneapolis, Minnesota, 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 good faith deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the good faith 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 good faith deposit amount to the losing bidder; 3) If the proposal is accepted, the good faith 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 good faith deposit amount and shall have no liability hereunder except if it willfully fails to perfonn, 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. . E-3 .' . . 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 financial surety bond. If the 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 ofa 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 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 Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. AWARD The 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 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 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 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 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 Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. CUSIP NUMBERS The City will assume no obligation for the assignment or printing ofCUSIP numbers on the 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 City will designate the 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 15c2-12 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 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. E-4 . . .. 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 Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended. PRELIMINARY OFFICIAL STATEMENT Underwriters may obtain a copy of the Preliminary Official Statement by request to Ehlers prior to the proposal opening. The Syndicate Manager will be provided with 50 copies of the Final Official Statement within seven business days of the 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 55113-1105, Telephone (651) 697-8500. By Order of the City Council Terry Obermaier, City Clerk City of Hopkins, Minnesota E-5 PROPOSAL FORM The City Council City of Hopkins, Minnesota May 20, 2003 RE: $1,265,000* General Obligation Storm Sewer Revenue Bonds, Series 2003A DATED: June 1, 2003 For all or none of the above Bonds, in accordance with the Terms of Proposal and terms ofthe Global Book Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $1,249,188) plus accrued interest to date of delivery for fully registered Bonds bearing interest rates and maturing in the stated years as follows: % due 2004 % due 2011 % due 2005 % due 2012 %.due 2006 % due 2013 % due 2007 % due 2014 % due 2008 % due 2015 % due 2009 % due 2016 % due 2010 % due 2017 % due 2018 2019 2020 2021 2022 2023 % due % due % due % due % due * The City reserves the right to increase or decrease the principal amount of the Bonds on the day of sale, in increments of $5,000 each and in a total amount not to exceed $200,000. 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. . We enclose our good faith deposit in the amount of$25,300, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit to the U. S. Trust Company, Minneapolis, Minnesota, ABA No. 0211 ~ 13086, for further credit to 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 Ehlers & Associates, Inc" as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated May 8, 2003. This proposal is for prompt acceptance and is conditional upon deposit of said 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 June 19,2003. This proposal is subject to the City's covenant and agreement to enter into a written undertaking to provide continuing disclosure under Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 as described 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 Bonds within 24 hours of the proposal acceptance. Account Manager: By: 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 June 1, 2003 of the above proposal is $ and the true interest cost (TIC) is %. ---------------------------------------------------------------------------------------------------------- The foregoing offer is hereby accepted by and on behalfofthe City Council of the City of Hopkins, Minnesota on May 20, 2003. .. By: By: Title: Title: . . . May 20, 2003 Council Report 03-082 AWARD SALE OF BONDS - G.O. STORM SEWER REVENUE BONDS, SERIES 2003 Proposed Action Staff recommends approval of the following motion: Approve resolution No. 03-048 awarding the sale of $1,265,000 General Obligation Storm Sewer Revenue Bonds for the capital improvements in the Storm, Sewer fund. With this motion, the sale of the bonds will be awarded based on the recommendation of Ehlers and Associates, Inc., financial advisor for this project. Overview Storm Sewer Revenue Bonds: The City of Hopkins has the authority to issue revenue bonds to pay for any utility or other public convenience from which a revenue is or may be derived. The current and future projects in the storm sewer fund qualify for bond issuance. In order to pay for the bonds the storm sewer rate may be increased in 2004 to generate an additional $50,000 in revenue each year. The bonds being issued will pay for projects approved in 2001, 2002 and those listed in the preliminary capital improvement plan for the year 2003 and 2004, for a total of approximately $1,265,000. The current Storm Sewer rate is projected to increase $.20 per month to help pay for principal and interest on the new bonds. At the May 6th, 2003 Council Meeting, the Council authorized the sale of bonds for the Storm Sewer capital improvements projects. The bids will be accepted until 11 :00 am on May 20, 2003 at which time they will be reviewed and the recommendation incorporated into Resolution 03-048. Primary Issues to Consider At this time, there do not appear to be any primary issues relating to the award of the bond sales. Any significant issues affecting the sale will not be known until after the closing of the bids on May 201\ 2003. Supportine Information . Resolution No. 03-048 · Official Statement Lori Yager Finance Director . . . May 20, 2003 HRA Report 2003-09 AWARD SALE OF BONDS - PUBLIC FACILITY LEASE REVENUE BONDS, SERIES 2003A (POLICE STATION IMPROVEMENTS) Proposed Action Staff recommends approval of the following motion subject to City Council approval of resolutions No.03-047: .:. Adopt Resolution No. 412 awarding the sale of Public Facility Lease Revenue Bonds in the amount of $3,050,000 for the Police Station Facility Improvements proiec!; Adoption of this motion will result in the sale of the bonds being awarded based on the recommendation of Ehlers and Associates, Inc., financial advisor for this project. Overview HRA Public Facility Lease Revenue Bonds: The City CouncillHRA intend on providing the city police force with a safe and adequate facility to work from. The HRA will issue Public Facility Lease Revenue Bonds in the amount of$3,050,000. The proceeds of which will be used to remodel the existing police station and renovate the old fire station to accommodate the police department. The bond is structured to mature within 20 years. The City CouncillHRA has held the necessary meetings and the HRA will establish a lease agreement with the city. At the May 6t\ 2003 HRA Meeting, the Board authorized the sale of bonds for the Police remodel facility project. The bids will be accepted until 11 :00 am on May 20, 2002 at which time they will be reviewed and the recommendation incorporated into Resolution 412. Primary Issues to Consider At this time, there do not appear to be any primary issues relating to the award of the bond sales. Any significant issues affecting the sale will not be known until after the closing of the bids on May 20th, 2003. Supportine Information · Resolution No. 03-412 . Official Statement Lori Yager Finance Director